diff --git a/qa/L0_request_cancellation/grpc_cancellation_test.py b/qa/L0_request_cancellation/grpc_cancellation_test.py
index fadaa291e8..4b103e21e1 100755
--- a/qa/L0_request_cancellation/grpc_cancellation_test.py
+++ b/qa/L0_request_cancellation/grpc_cancellation_test.py
@@ -28,6 +28,7 @@
 
 import asyncio
 import queue
+import re
 import time
 import unittest
 from functools import partial
@@ -62,6 +63,7 @@ def setUp(self):
         self._callback = partial(callback, self._user_data)
         self._prepare_request()
         self._start_time = time.time()  # seconds
+        self.test_duration_delta = 0.5
 
     def tearDown(self):
         self._end_time = time.time()  # seconds
@@ -75,7 +77,7 @@ def _prepare_request(self):
         self._inputs[0].set_data_from_numpy(np.array([[10]], dtype=np.int32))
 
     def _assert_max_duration(self):
-        max_duration = self._model_delay * 0.5  # seconds
+        max_duration = self._model_delay * self.test_duration_delta  # seconds
         duration = self._end_time - self._start_time  # seconds
         self.assertLess(
             duration,
@@ -136,6 +138,59 @@ async def requests_generator():
             async for result, error in responses_iterator:
                 self._callback(result, error)
 
+    def test_grpc_async_infer_cancellation_at_step_start(self):
+        # This is a longer test
+        self.test_duration_delta = 4.5
+        server_log_name = "grpc_cancellation_test.test_grpc_async_infer_cancellation_at_step_start.server.log"
+        with open(server_log_name, "r") as f:
+            server_log = f.read()
+
+        prev_new_req_handl_count = len(
+            re.findall("New request handler for ModelInferHandler", server_log)
+        )
+        self.assertEqual(
+            prev_new_req_handl_count,
+            2,
+            "Expected 2 request handler for ModelInferHandler log entries, but got {}".format(
+                prev_new_req_handl_count
+            ),
+        )
+        future = self._client.async_infer(
+            model_name=self._model_name,
+            inputs=self._inputs,
+            callback=self._callback,
+            outputs=self._outputs,
+        )
+        time.sleep(2)  # ensure the inference request reached server
+        future.cancel()
+        # ensures TRITONSERVER_DELAY_GRPC_PROCESS delay passed on the server
+        time.sleep(self._model_delay * 2)
+
+        with open(server_log_name, "r") as f:
+            server_log = f.read()
+
+        cancel_at_start_count = len(
+            re.findall(
+                r"Cancellation notification received for ModelInferHandler, rpc_ok=1, context \d+, \d+ step START",
+                server_log,
+            )
+        )
+        cur_new_req_handl_count = len(
+            re.findall("New request handler for ModelInferHandler", server_log)
+        )
+        self.assertEqual(
+            cancel_at_start_count,
+            2,
+            "Expected 2 cancellation at step START log entries, but got {}".format(
+                cancel_at_start_count
+            ),
+        )
+        self.assertGreater(
+            cur_new_req_handl_count,
+            prev_new_req_handl_count,
+            "gRPC Cancellation on step START Test Failed: New request handler for ModelInferHandler was not created",
+        )
+
 
 if __name__ == "__main__":
     unittest.main()
diff --git a/qa/L0_request_cancellation/test.sh b/qa/L0_request_cancellation/test.sh
index b43089e3e7..0c9ab74086 100755
--- a/qa/L0_request_cancellation/test.sh
+++ b/qa/L0_request_cancellation/test.sh
@@ -78,10 +78,13 @@ mkdir -p models/custom_identity_int32/1 && (cd models/custom_identity_int32 && \
     echo 'instance_group [{ kind: KIND_CPU }]' >> config.pbtxt && \
     echo -e 'parameters [{ key: "execute_delay_ms" \n value: { string_value: "10000" } }]' >> config.pbtxt)
 
-for TEST_CASE in "test_grpc_async_infer" "test_grpc_stream_infer" "test_aio_grpc_async_infer" "test_aio_grpc_stream_infer"; do
+for TEST_CASE in "test_grpc_async_infer" "test_grpc_stream_infer" "test_aio_grpc_async_infer" "test_aio_grpc_stream_infer" "test_grpc_async_infer_cancellation_at_step_start"; do
 
     TEST_LOG="./grpc_cancellation_test.$TEST_CASE.log"
     SERVER_LOG="grpc_cancellation_test.$TEST_CASE.server.log"
+    if [ "$TEST_CASE" == "test_grpc_async_infer_cancellation_at_step_start" ]; then
+        export TRITONSERVER_DELAY_GRPC_PROCESS=5000
+    fi
 
     SERVER_ARGS="--model-repository=`pwd`/models --log-verbose=1"
     run_server
@@ -108,6 +111,10 @@ for TEST_CASE in "test_grpc_async_infer" "test_grpc_stream_infer" "test_aio_grpc
 
     kill $SERVER_PID
     wait $SERVER_PID
+
+    if [ "$TEST_CASE" == "test_grpc_async_infer_cancellation_at_step_start" ]; then
+        unset TRITONSERVER_DELAY_GRPC_PROCESS
+    fi
 done
 
 #
diff --git a/src/grpc/infer_handler.cc b/src/grpc/infer_handler.cc
index 4cd16cee16..35659f4900 100644
--- a/src/grpc/infer_handler.cc
+++ b/src/grpc/infer_handler.cc
@@ -691,9 +691,35 @@ ModelInferHandler::Process(InferHandler::State* state, bool rpc_ok)
   // Need to protect the state transitions for these cases.
   std::lock_guard<std::recursive_mutex> lock(state->step_mtx_);
 
+  if (state->delay_process_ms_ != 0) {
+    // Will delay the Process execution by the specified time.
+    // This can be used to test the flow when cancellation request
+    // issued for the request, which is still at START step.
+    LOG_INFO << "Delaying the write of the response by "
+             << state->delay_process_ms_ << " ms...";
+    std::this_thread::sleep_for(
+        std::chrono::milliseconds(state->delay_process_ms_));
+  }
+
   // Handle notification for cancellation which can be raised
   // asynchronously if detected on the network.
   if (state->IsGrpcContextCancelled()) {
+    if (rpc_ok && (state->step_ == Steps::START) &&
+        (state->context_->step_ != Steps::CANCELLED)) {
+#ifdef TRITON_ENABLE_TRACING
+      // Can't create trace as we don't know the model to be requested,
+      // track timestamps in 'state'
+      state->trace_timestamps_.emplace_back(std::make_pair(
+          "GRPC_WAITREAD_END", TraceManager::CaptureTimestamp()));
+#endif  // TRITON_ENABLE_TRACING
+      // Need to create a new request object here explicitly for step START,
+      // because we will never leave this if body. Refer to PR 7325.
+      // This is a special case for ModelInferHandler, since we have 2 threads,
+      // and each of them can process cancellation. ModelStreamInfer has only 1
+      // thread, and  cancellation at step START was not reproducible in a
+      // single thread scenario.
+      StartNewRequest();
+    }
     bool resume = state->context_->HandleCancellation(state, rpc_ok, Name());
     return resume;
   }
diff --git a/src/grpc/infer_handler.h b/src/grpc/infer_handler.h
index 1e25e72c7f..6ef03807a2 100644
--- a/src/grpc/infer_handler.h
+++ b/src/grpc/infer_handler.h
@@ -1024,6 +1024,11 @@ class InferHandlerState {
     if (cstr != nullptr) {
       delay_complete_ms_ = atoi(cstr);
     }
+    const char* pstr = getenv("TRITONSERVER_DELAY_GRPC_PROCESS");
+    delay_process_ms_ = 0;
+    if (pstr != nullptr) {
+      delay_process_ms_ = atoi(pstr);
+    }
 
     response_queue_.reset(new ResponseQueue<ResponseType>());
     Reset(context, start_step);
@@ -1120,6 +1125,7 @@ class InferHandlerState {
   // For testing and debugging
   int delay_response_ms_;
   int delay_complete_ms_;
+  int delay_process_ms_;
 
   // For inference requests the allocator payload, unused for other
   // requests.