diff --git a/toolkit/mozapps/extensions/XPIProvider.jsm b/toolkit/mozapps/extensions/XPIProvider.jsm
index 0011ec85ce73..94a3a9334f3f 100644
--- a/toolkit/mozapps/extensions/XPIProvider.jsm
+++ b/toolkit/mozapps/extensions/XPIProvider.jsm
@@ -3218,7 +3218,7 @@ AddonInstall.prototype = {
   cancel: function AI_cancel() {
     switch (this.state) {
     case AddonManager.STATE_DOWNLOADING:
-      break;
+      this.channel.cancel(Cr.NS_BINDING_ABORTED);
     case AddonManager.STATE_AVAILABLE:
     case AddonManager.STATE_DOWNLOADED:
       LOG("Cancelling download of " + this.sourceURL.spec);
@@ -3327,6 +3327,11 @@ AddonInstall.prototype = {
     }
   },
 
+  observe: function AI_observe(subject, topic, data) {
+    // Network is going offline
+    this.cancel();
+  },
+
   /**
    * Starts downloading the add-on's XPI file.
    */
@@ -3378,15 +3383,17 @@ AddonInstall.prototype = {
       let listener = Cc["@mozilla.org/network/stream-listener-tee;1"].
                      createInstance(Ci.nsIStreamListenerTee);
       listener.init(this, this.stream);
-      let channel = NetUtil.newChannel(this.sourceURL);
+      this.channel = NetUtil.newChannel(this.sourceURL);
       if (this.loadGroup)
-        channel.loadGroup = this.loadGroup;
+        this.channel.loadGroup = this.loadGroup;
+
+      Services.obs.addObserver(this, "network:offline-about-to-go-offline", false);
 
       // Verify that we don't end up on an insecure channel if we haven't got a
       // hash to verify with (see bug 537761 for discussion)
       if (!this.hash)
-        channel.notificationCallbacks = new BadCertHandler();
-      channel.asyncOpen(listener, null);
+        this.channel.notificationCallbacks = new BadCertHandler();
+      this.channel.asyncOpen(listener, null);
     }
     catch (e) {
       WARN("Failed to start download: " + e);
@@ -3442,6 +3449,13 @@ AddonInstall.prototype = {
    */
   onStopRequest: function AI_onStopRequest(request, context, status) {
     this.stream.close();
+    this.channel = null;
+    Services.obs.removeObserver(this, "network:offline-about-to-go-offline");
+
+    // If the download was cancelled then all events will have already been sent
+    if (status == Cr.NS_BINDING_ABORTED)
+      return;
+
     LOG("Download of " + this.sourceURL.spec + " completed.");
 
     if (Components.isSuccessCode(status)) {
diff --git a/toolkit/mozapps/extensions/test/xpinstall/browser_offline.js b/toolkit/mozapps/extensions/test/xpinstall/browser_offline.js
index f742825bdbf8..ffd1ab13c768 100644
--- a/toolkit/mozapps/extensions/test/xpinstall/browser_offline.js
+++ b/toolkit/mozapps/extensions/test/xpinstall/browser_offline.js
@@ -2,7 +2,6 @@
 // Tests that going offline cancels an in progress download.
 function test() {
   Harness.downloadProgressCallback = download_progress;
-  Harness.downloadFailedCallback = download_failed;
   Harness.installsCompletedCallback = finish_test;
   Harness.setup();
 
@@ -25,10 +24,6 @@ function download_progress(addon, value, maxValue) {
   }
 }
 
-function download_failed(install, status) {
-  is(status, -210, "Install should be cancelled");
-}
-
 function finish_test(count) {
   is(count, 0, "No add-ons should have been installed");
   try {
diff --git a/toolkit/mozapps/extensions/test/xpinstall/head.js b/toolkit/mozapps/extensions/test/xpinstall/head.js
index 67df687a3b9c..ffdf050f4c8d 100644
--- a/toolkit/mozapps/extensions/test/xpinstall/head.js
+++ b/toolkit/mozapps/extensions/test/xpinstall/head.js
@@ -32,6 +32,8 @@ var Harness = {
   downloadProgressCallback: null,
   // If set will be called when an xpi fails to download.
   downloadFailedCallback: null,
+  // If set will be called when an xpi download is cancelled.
+  downloadCancelledCallback: null,
   // If set will be called when downloading of an item has ended.
   downloadEndedCallback: null,
   // If set will be called when installation by the extension manager of an xpi
@@ -96,8 +98,11 @@ var Harness = {
     this.installConfirmCallback = null;
     this.downloadStartedCallback = null;
     this.downloadProgressCallback = null;
+    this.downloadCancelledCallback = null;
+    this.downloadFailedCallback = null;
     this.downloadEndedCallback = null;
     this.installStartedCallback = null;
+    this.installFailedCallback = null;
     this.installEndedCallback = null;
     this.installsCompletedCallback = null;
   },
@@ -203,6 +208,12 @@ var Harness = {
       this.downloadEndedCallback(install);
   },
 
+  onDownloadCancelled: function(install) {
+    if (this.downloadCancelledCallback)
+      this.downloadCancelledCallback(install);
+    this.checkTestEnded();
+  },
+
   onDownloadFailed: function(install, status) {
     if (this.downloadFailedCallback)
       this.downloadFailedCallback(install, status);