diff --git a/Core/HLE/sceKernelThread.cpp b/Core/HLE/sceKernelThread.cpp
index b4132b0f9a..8cd668313b 100644
--- a/Core/HLE/sceKernelThread.cpp
+++ b/Core/HLE/sceKernelThread.cpp
@@ -1629,8 +1629,17 @@ static PSPThread *__KernelNextThread() {
 		return 0;
 }
 
+// Set by sceKernelStartThread when the new thread outranks the caller, for the reschedule right
+// after it. The firmware hands the CPU straight to the new thread, even when a thread of better
+// priority is ready but hasn't been dispatched (say, one that a sceKernelTerminateThread woke.)
+// See tests/threads/threads/termsuspended.
+static SceUID g_startThreadHandoff = 0;
+
 void __KernelReSchedule(const char *reason)
 {
+	const SceUID handoff = g_startThreadHandoff;
+	g_startThreadHandoff = 0;
+
 	// First, let's check if there are any pending callbacks to trigger.
 	// TODO: Could probably take this out of __KernelReSchedule() which is a bit hot.
 	__KernelCheckCallbacks();
@@ -1643,6 +1652,16 @@ void __KernelReSchedule(const char *reason)
 		return;
 	}
 
+	if (handoff != 0) {
+		u32 error;
+		PSPThread *started = kernelObjects.Get<PSPThread>(handoff, error);
+		if (started && started->nt.status == THREADSTATUS_READY) {
+			threadReadyQueue.remove(started->nt.currentPriority, handoff);
+			__KernelSwitchContext(started, reason);
+			return;
+		}
+	}
+
 	PSPThread *nextThread = __KernelNextThread();
 	if (nextThread) {
 		__KernelSwitchContext(nextThread, reason);
@@ -1971,8 +1990,10 @@ int __KernelStartThread(SceUID threadToStartID, int argSize, u32 argBlockPtr, bo
 	if (cur && cur->nt.currentPriority > startThread->nt.currentPriority) {
 		KernelValidateThreadTarget(startThread->context.pc);
 		__KernelChangeReadyState(cur, currentThread, true);
-		if (__InterruptsEnabled())
+		if (__InterruptsEnabled()) {
+			g_startThreadHandoff = threadToStartID;
 			hleReSchedule("thread started");
+		}
 	}
 
 	// Starting a thread automatically resumes the dispatch thread if the new thread has worse priority.
diff --git a/pspautotests b/pspautotests
index fa87488fb7..c67239046d 160000
--- a/pspautotests
+++ b/pspautotests
@@ -1 +1 @@
-Subproject commit fa87488fb7f034ce006490285297ca290d8d23b7
+Subproject commit c67239046db47d83351ced09e4e66d0cf3382f9c