diff --git a/Sources/OpenWisprLib/AppDelegate.swift b/Sources/OpenWisprLib/AppDelegate.swift
index 62d889b..b01f5e1 100644
--- a/Sources/OpenWisprLib/AppDelegate.swift
+++ b/Sources/OpenWisprLib/AppDelegate.swift
@@ -7,19 +7,26 @@ public class AppDelegate: NSObject, NSApplicationDelegate {
     var transcriber: Transcriber!
     var inserter: TextInserter!
     var config: Config!
-    var isPressed = false
+    var recordingLifecycle = RecordingLifecycle()
+    var currentRecordingURL: URL?
+    private var sleepWakeObservers: [NSObjectProtocol] = []
     var isReady = false
     public var lastTranscription: String?
 
     public func applicationDidFinishLaunching(_ notification: Notification) {
         statusBar = StatusBarController()
         recorder = AudioRecorder()
+        registerSleepWakeObservers()
 
         DispatchQueue.global(qos: .userInitiated).async { [weak self] in
             self?.setup()
         }
     }
 
+    public func applicationWillTerminate(_ notification: Notification) {
+        unregisterSleepWakeObservers()
+    }
+
     private func setup() {
         do {
             try setupInner()
@@ -236,28 +243,27 @@ public class AppDelegate: NSObject, NSApplicationDelegate {
 
         let isToggle = config.toggleMode?.value ?? false
 
-        if isToggle {
-            if isPressed {
-                handleRecordingStop()
-            } else {
-                handleRecordingStart()
-            }
-        } else {
-            guard !isPressed else { return }
+        switch recordingLifecycle.keyDown(toggleMode: isToggle) {
+        case .startRecording:
             handleRecordingStart()
+        case .stopRecording:
+            handleRecordingStop()
+        case .none, .cancelRecording, .prepareRecorder:
+            break
         }
     }
 
     private func handleKeyUp() {
+        guard isReady else { return }
+
         let isToggle = config.toggleMode?.value ?? false
-        if isToggle { return }
 
-        handleRecordingStop()
+        if recordingLifecycle.keyUp(toggleMode: isToggle) == .stopRecording {
+            handleRecordingStop()
+        }
     }
 
     private func handleRecordingStart() {
-        guard !isPressed else { return }
-        isPressed = true
         statusBar.state = .recording
         do {
             let outputURL: URL
@@ -267,22 +273,23 @@ public class AppDelegate: NSObject, NSApplicationDelegate {
                 outputURL = RecordingStore.newRecordingURL()
             }
             try recorder.startRecording(to: outputURL)
+            currentRecordingURL = outputURL
         } catch {
             print("Error: \(error.localizedDescription)")
-            isPressed = false
+            recordingLifecycle.recordingStartFailed()
+            currentRecordingURL = nil
             statusBar.state = .idle
         }
     }
 
     private func handleRecordingStop() {
-        guard isPressed else { return }
-        isPressed = false
-
         guard let audioURL = recorder.stopRecording() else {
+            RecordingCancellation.discardTrackedPartialRecording(&currentRecordingURL)
             statusBar.state = .idle
             return
         }
 
+        currentRecordingURL = nil
         statusBar.state = .transcribing
 
         DispatchQueue.global(qos: .userInitiated).async { [weak self] in
@@ -326,6 +333,60 @@ public class AppDelegate: NSObject, NSApplicationDelegate {
         }
     }
 
+    func handleSystemWillSleep() {
+        guard recordingLifecycle.systemWillSleep() == .cancelRecording else { return }
+
+        recorder.teardown()
+        RecordingCancellation.discardTrackedPartialRecording(&currentRecordingURL)
+        resetRecordingStatusToIdleIfNeeded()
+    }
+
+    func handleSystemDidWake() {
+        guard recordingLifecycle.systemDidWake(isReady: isReady) == .prepareRecorder else { return }
+
+        recorder.preferredDeviceID = AudioDeviceManager.resolveConfiguredDeviceID(
+            uid: config.audioInputDeviceUID,
+            legacyID: config.audioInputDeviceID
+        )
+        recorder.reload()
+    }
+
+    private func registerSleepWakeObservers() {
+        guard sleepWakeObservers.isEmpty else { return }
+
+        let center = NSWorkspace.shared.notificationCenter
+        sleepWakeObservers = [
+            center.addObserver(
+                forName: NSWorkspace.willSleepNotification,
+                object: nil,
+                queue: .main
+            ) { [weak self] _ in
+                self?.handleSystemWillSleep()
+            },
+            center.addObserver(
+                forName: NSWorkspace.didWakeNotification,
+                object: nil,
+                queue: .main
+            ) { [weak self] _ in
+                self?.handleSystemDidWake()
+            },
+        ]
+    }
+
+    private func unregisterSleepWakeObservers() {
+        let center = NSWorkspace.shared.notificationCenter
+        for observer in sleepWakeObservers {
+            center.removeObserver(observer)
+        }
+        sleepWakeObservers = []
+    }
+
+    private func resetRecordingStatusToIdleIfNeeded() {
+        guard case .recording = statusBar.state else { return }
+        statusBar.state = .idle
+        statusBar.buildMenu()
+    }
+
     public func reprocess(audioURL: URL) {
         guard case .idle = statusBar.state else { return }
 
diff --git a/Sources/OpenWisprLib/RecordingLifecycle.swift b/Sources/OpenWisprLib/RecordingLifecycle.swift
new file mode 100644
index 0000000..ec12f1d
--- /dev/null
+++ b/Sources/OpenWisprLib/RecordingLifecycle.swift
@@ -0,0 +1,60 @@
+import Foundation
+
+struct RecordingLifecycle {
+    enum Action: Equatable {
+        case none
+        case startRecording
+        case stopRecording
+        case cancelRecording
+        case prepareRecorder
+    }
+
+    private(set) var isRecording = false
+
+    mutating func keyDown(toggleMode: Bool) -> Action {
+        if toggleMode {
+            if isRecording {
+                isRecording = false
+                return .stopRecording
+            }
+            isRecording = true
+            return .startRecording
+        }
+
+        guard !isRecording else { return .none }
+        isRecording = true
+        return .startRecording
+    }
+
+    mutating func keyUp(toggleMode: Bool) -> Action {
+        guard !toggleMode, isRecording else { return .none }
+        isRecording = false
+        return .stopRecording
+    }
+
+    mutating func systemWillSleep() -> Action {
+        guard isRecording else { return .none }
+        isRecording = false
+        return .cancelRecording
+    }
+
+    func systemDidWake(isReady: Bool) -> Action {
+        isReady ? .prepareRecorder : .none
+    }
+
+    mutating func recordingStartFailed() {
+        isRecording = false
+    }
+}
+
+enum RecordingCancellation {
+    static func discardPartialRecording(at url: URL?, fileManager: FileManager = .default) {
+        guard let url else { return }
+        try? fileManager.removeItem(at: url)
+    }
+
+    static func discardTrackedPartialRecording(_ url: inout URL?, fileManager: FileManager = .default) {
+        discardPartialRecording(at: url, fileManager: fileManager)
+        url = nil
+    }
+}
diff --git a/Tests/OpenWisprTests/RecordingLifecycleTests.swift b/Tests/OpenWisprTests/RecordingLifecycleTests.swift
new file mode 100644
index 0000000..686e354
--- /dev/null
+++ b/Tests/OpenWisprTests/RecordingLifecycleTests.swift
@@ -0,0 +1,83 @@
+import XCTest
+@testable import OpenWisprLib
+
+final class RecordingLifecycleTests: XCTestCase {
+    func testHoldToTalkStartsOnceAndStopsOnKeyUp() {
+        var lifecycle = RecordingLifecycle()
+
+        XCTAssertEqual(lifecycle.keyDown(toggleMode: false), .startRecording)
+        XCTAssertEqual(lifecycle.keyDown(toggleMode: false), .none)
+        XCTAssertEqual(lifecycle.keyUp(toggleMode: false), .stopRecording)
+        XCTAssertFalse(lifecycle.isRecording)
+    }
+
+    func testToggleModeStartsAndStopsOnKeyDown() {
+        var lifecycle = RecordingLifecycle()
+
+        XCTAssertEqual(lifecycle.keyDown(toggleMode: true), .startRecording)
+        XCTAssertEqual(lifecycle.keyUp(toggleMode: true), .none)
+        XCTAssertEqual(lifecycle.keyDown(toggleMode: true), .stopRecording)
+        XCTAssertFalse(lifecycle.isRecording)
+    }
+
+    func testSleepWhileIdleDoesNotRequestTranscription() {
+        var lifecycle = RecordingLifecycle()
+
+        XCTAssertEqual(lifecycle.systemWillSleep(), .none)
+        XCTAssertFalse(lifecycle.isRecording)
+    }
+
+    func testSleepWhileRecordingCancelsInsteadOfStopping() {
+        var lifecycle = RecordingLifecycle()
+
+        XCTAssertEqual(lifecycle.keyDown(toggleMode: false), .startRecording)
+        XCTAssertEqual(lifecycle.systemWillSleep(), .cancelRecording)
+        XCTAssertFalse(lifecycle.isRecording)
+        XCTAssertEqual(lifecycle.keyDown(toggleMode: false), .startRecording)
+        XCTAssertEqual(lifecycle.keyUp(toggleMode: false), .stopRecording)
+    }
+
+    func testWakePreparesOnlyWhenReady() {
+        let lifecycle = RecordingLifecycle()
+
+        XCTAssertEqual(lifecycle.systemDidWake(isReady: false), .none)
+        XCTAssertEqual(lifecycle.systemDidWake(isReady: true), .prepareRecorder)
+    }
+
+    func testStartFailureReturnsLifecycleToIdle() {
+        var lifecycle = RecordingLifecycle()
+
+        XCTAssertEqual(lifecycle.keyDown(toggleMode: false), .startRecording)
+        lifecycle.recordingStartFailed()
+        XCTAssertFalse(lifecycle.isRecording)
+        XCTAssertEqual(lifecycle.keyDown(toggleMode: false), .startRecording)
+    }
+
+    func testDiscardCancelledRecordingRemovesPartialFile() throws {
+        let url = FileManager.default.temporaryDirectory.appendingPathComponent("open-wispr-cancel-\(UUID().uuidString).wav")
+        try Data("partial".utf8).write(to: url)
+
+        RecordingCancellation.discardPartialRecording(at: url)
+
+        XCTAssertFalse(FileManager.default.fileExists(atPath: url.path))
+    }
+
+    func testDiscardCancelledRecordingAllowsMissingFile() {
+        let url = FileManager.default.temporaryDirectory.appendingPathComponent("open-wispr-cancel-\(UUID().uuidString).wav")
+
+        RecordingCancellation.discardPartialRecording(at: url)
+
+        XCTAssertFalse(FileManager.default.fileExists(atPath: url.path))
+    }
+
+    func testDiscardTrackedPartialRecordingRemovesFileBeforeClearingURL() throws {
+        var trackedURL: URL? = FileManager.default.temporaryDirectory.appendingPathComponent("open-wispr-cancel-\(UUID().uuidString).wav")
+        let path = try XCTUnwrap(trackedURL?.path)
+        try Data("partial".utf8).write(to: XCTUnwrap(trackedURL))
+
+        RecordingCancellation.discardTrackedPartialRecording(&trackedURL)
+
+        XCTAssertNil(trackedURL)
+        XCTAssertFalse(FileManager.default.fileExists(atPath: path))
+    }
+}