diff --git a/packages/@headlessui-react/CHANGELOG.md b/packages/@headlessui-react/CHANGELOG.md
index 54259325c..624f22081 100644
--- a/packages/@headlessui-react/CHANGELOG.md
+++ b/packages/@headlessui-react/CHANGELOG.md
@@ -15,6 +15,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Don't assume `<Tab />` components are available when setting the next index ([#2642](https://github.com/tailwindlabs/headlessui/pull/2642))
 - Fix incorrectly focused `Combobox.Input` component on page load ([#2654](https://github.com/tailwindlabs/headlessui/pull/2654))
 - Ensure `appear` works using the `Transition` component (even when used with SSR) ([#2646](https://github.com/tailwindlabs/headlessui/pull/2646))
+- Improve resetting values when using the `nullable` prop on the `Combobox` component ([#2660](https://github.com/tailwindlabs/headlessui/pull/2660))
 
 ## [1.7.16] - 2023-07-27
 
diff --git a/packages/@headlessui-react/src/components/combobox/combobox.test.tsx b/packages/@headlessui-react/src/components/combobox/combobox.test.tsx
index eb57a61e5..e1f4b5580 100644
--- a/packages/@headlessui-react/src/components/combobox/combobox.test.tsx
+++ b/packages/@headlessui-react/src/components/combobox/combobox.test.tsx
@@ -2735,9 +2735,9 @@ describe('Keyboard interactions', () => {
         await press(Keys.Backspace)
         expect(getComboboxInput()?.value).toBe('')
 
-        // Verify that we don't have an active option anymore since we are in `nullable` mode
+        // Verify that we don't have an selected option anymore since we are in `nullable` mode
         assertNotActiveComboboxOption(options[1])
-        assertNoActiveComboboxOption()
+        assertNoSelectedComboboxOption()
 
         // Verify that we saw the `null` change coming in
         expect(handleChange).toHaveBeenCalledTimes(1)
diff --git a/packages/@headlessui-react/src/components/combobox/combobox.tsx b/packages/@headlessui-react/src/components/combobox/combobox.tsx
index d551fc920..5e7f38a1e 100644
--- a/packages/@headlessui-react/src/components/combobox/combobox.tsx
+++ b/packages/@headlessui-react/src/components/combobox/combobox.tsx
@@ -745,6 +745,14 @@ function InputFn<
 
   let d = useDisposables()
 
+  let clear = useEvent(() => {
+    actions.onChange(null)
+    if (data.optionsRef.current) {
+      data.optionsRef.current.scrollTop = 0
+    }
+    actions.goToOption(Focus.Nothing)
+  })
+
   // When a `displayValue` prop is given, we should use it to transform the current selected
   // option(s) so that the format can be chosen by developers implementing this. This is useful if
   // your data is an object and you just want to pick a certain property or want to create a dynamic
@@ -871,23 +879,6 @@ function InputFn<
     switch (event.key) {
       // Ref: https://www.w3.org/WAI/ARIA/apg/patterns/menu/#keyboard-interaction-12
 
-      case Keys.Backspace:
-      case Keys.Delete:
-        if (data.mode !== ValueMode.Single) return
-        if (!data.nullable) return
-
-        let input = event.currentTarget
-        d.requestAnimationFrame(() => {
-          if (input.value === '') {
-            actions.onChange(null)
-            if (data.optionsRef.current) {
-              data.optionsRef.current.scrollTop = 0
-            }
-            actions.goToOption(Focus.Nothing)
-          }
-        })
-        break
-
       case Keys.Enter:
         isTyping.current = false
         if (data.comboboxState !== ComboboxState.Open) return
@@ -981,6 +972,18 @@ function InputFn<
         if (data.optionsRef.current && !data.optionsPropsRef.current.static) {
           event.stopPropagation()
         }
+
+        if (data.nullable && data.mode === ValueMode.Single) {
+          // We want to clear the value when the user presses escape if and only if the current
+          // value is not set (aka, they didn't select anything yet, or they cleared the input which
+          // caused the value to be set to `null`). If the current value is set, then we want to
+          // fallback to that value when we press escape (this part is handled in the watcher that
+          // syncs the value with the input field again).
+          if (data.value === null) {
+            clear()
+          }
+        }
+
         return actions.closeCombobox()
 
       case Keys.Tab:
@@ -1001,6 +1004,17 @@ function InputFn<
     // options while typing won't work at all because we are still in "composing" mode.
     onChange?.(event)
 
+    // When the value becomes empty in a single value mode while being nullable then we want to clear
+    // the option entirely.
+    //
+    // This is can happen when you press backspace, but also when you select all the text and press
+    // ctrl/cmd+x.
+    if (data.nullable && data.mode === ValueMode.Single) {
+      if (event.target.value === '') {
+        clear()
+      }
+    }
+
     // Open the combobox to show the results based on what the user has typed
     actions.openCombobox()
   })
diff --git a/packages/@headlessui-react/src/test-utils/interactions.ts b/packages/@headlessui-react/src/test-utils/interactions.ts
index 747ef523f..dd0298fd7 100644
--- a/packages/@headlessui-react/src/test-utils/interactions.ts
+++ b/packages/@headlessui-react/src/test-utils/interactions.ts
@@ -157,7 +157,9 @@ let order: Record<
             value: element.value.slice(0, -1),
           }),
         })
-        return fireEvent.keyDown(element, ev)
+
+        fireEvent.keyDown(element, ev)
+        return fireEvent.input(element, ev)
       }
 
       return fireEvent.keyDown(element, event)
diff --git a/packages/@headlessui-vue/CHANGELOG.md b/packages/@headlessui-vue/CHANGELOG.md
index 0d08b0dad..2613dc8ae 100644
--- a/packages/@headlessui-vue/CHANGELOG.md
+++ b/packages/@headlessui-vue/CHANGELOG.md
@@ -16,6 +16,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Don't assume `<Tab />` components are available when setting the next index ([#2642](https://github.com/tailwindlabs/headlessui/pull/2642))
 - Improve SSR of the `Disclosure` component ([#2645](https://github.com/tailwindlabs/headlessui/pull/2645))
 - Fix incorrectly focused `ComboboxInput` component on page load ([#2654](https://github.com/tailwindlabs/headlessui/pull/2654))
+- Improve resetting values when using the `nullable` prop on the `Combobox` component ([#2660](https://github.com/tailwindlabs/headlessui/pull/2660))
 
 ## [1.7.15] - 2023-07-27
 
diff --git a/packages/@headlessui-vue/src/components/combobox/combobox.test.ts b/packages/@headlessui-vue/src/components/combobox/combobox.test.ts
index a66d0930a..dedeeaca8 100644
--- a/packages/@headlessui-vue/src/components/combobox/combobox.test.ts
+++ b/packages/@headlessui-vue/src/components/combobox/combobox.test.ts
@@ -4554,9 +4554,9 @@ describe('Keyboard interactions', () => {
           await press(Keys.Backspace)
           expect(getComboboxInput()?.value).toBe('')
 
-          // Verify that we don't have an active option anymore since we are in `nullable` mode
+          // Verify that we don't have an selected option anymore since we are in `nullable` mode
           assertNotActiveComboboxOption(options[1])
-          assertNoActiveComboboxOption()
+          assertNoSelectedComboboxOption()
 
           // Verify that we saw the `null` change coming in
           expect(handleChange).toHaveBeenCalledTimes(1)
diff --git a/packages/@headlessui-vue/src/components/combobox/combobox.ts b/packages/@headlessui-vue/src/components/combobox/combobox.ts
index 18baa4140..a5bec8643 100644
--- a/packages/@headlessui-vue/src/components/combobox/combobox.ts
+++ b/packages/@headlessui-vue/src/components/combobox/combobox.ts
@@ -281,13 +281,13 @@ export let Combobox = defineComponent({
         comboboxState.value = ComboboxStates.Open
       },
       goToOption(focus: Focus, id?: string, trigger?: ActivationTrigger) {
+        defaultToFirstOption.value = false
+
         if (goToOptionRaf !== null) {
           cancelAnimationFrame(goToOptionRaf)
         }
 
         goToOptionRaf = requestAnimationFrame(() => {
-          defaultToFirstOption.value = false
-
           if (props.disabled) return
           if (
             optionsRef.value &&
@@ -707,6 +707,15 @@ export let ComboboxInput = defineComponent({
 
     expose({ el: api.inputRef, $el: api.inputRef })
 
+    function clear() {
+      api.change(null)
+      let options = dom(api.optionsRef)
+      if (options) {
+        options.scrollTop = 0
+      }
+      api.goToOption(Focus.Nothing)
+    }
+
     // When a `displayValue` prop is given, we should use it to transform the current selected
     // option(s) so that the format can be chosen by developers implementing this. This is useful if
     // your data is an object and you just want to pick a certain property or want to create a dynamic
@@ -837,24 +846,6 @@ export let ComboboxInput = defineComponent({
       switch (event.key) {
         // Ref: https://www.w3.org/WAI/ARIA/apg/patterns/menu/#keyboard-interaction-12
 
-        case Keys.Backspace:
-        case Keys.Delete:
-          if (api.mode.value !== ValueMode.Single) return
-          if (!api.nullable.value) return
-
-          let input = event.currentTarget as HTMLInputElement
-          requestAnimationFrame(() => {
-            if (input.value === '') {
-              api.change(null)
-              let options = dom(api.optionsRef)
-              if (options) {
-                options.scrollTop = 0
-              }
-              api.goToOption(Focus.Nothing)
-            }
-          })
-          break
-
         case Keys.Enter:
           isTyping.value = false
           if (api.comboboxState.value !== ComboboxStates.Open) return
@@ -942,6 +933,18 @@ export let ComboboxInput = defineComponent({
           if (api.optionsRef.value && !api.optionsPropsRef.value.static) {
             event.stopPropagation()
           }
+
+          if (api.nullable.value && api.mode.value === ValueMode.Single) {
+            // We want to clear the value when the user presses escape if and only if the current
+            // value is not set (aka, they didn't select anything yet, or they cleared the input which
+            // caused the value to be set to `null`). If the current value is set, then we want to
+            // fallback to that value when we press escape (this part is handled in the watcher that
+            // syncs the value with the input field again).
+            if (api.value.value === null) {
+              clear()
+            }
+          }
+
           api.closeCombobox()
           break
 
@@ -963,6 +966,17 @@ export let ComboboxInput = defineComponent({
       // options while typing won't work at all because we are still in "composing" mode.
       emit('change', event)
 
+      // When the value becomes empty in a single value mode while being nullable then we want to clear
+      // the option entirely.
+      //
+      // This is can happen when you press backspace, but also when you select all the text and press
+      // ctrl/cmd+x.
+      if (api.nullable.value && api.mode.value === ValueMode.Single) {
+        if (event.target.value === '') {
+          clear()
+        }
+      }
+
       // Open the combobox to show the results based on what the user has typed
       api.openCombobox()
     }
diff --git a/packages/@headlessui-vue/src/components/transitions/utils/transition.ts b/packages/@headlessui-vue/src/components/transitions/utils/transition.ts
index 008a01375..a269ba5cf 100644
--- a/packages/@headlessui-vue/src/components/transitions/utils/transition.ts
+++ b/packages/@headlessui-vue/src/components/transitions/utils/transition.ts
@@ -86,7 +86,7 @@ export function transition(
   // then we have some leftovers that should be cleaned.
   d.add(() => removeClasses(node, ...base, ...from, ...to, ...entered))
 
-  // When we get disposed early, than we should also call the done method but switch the reason.
+  // When we get disposed early, then we should also call the done method but switch the reason.
   d.add(() => _done(Reason.Cancelled))
 
   return d.dispose
diff --git a/packages/@headlessui-vue/src/test-utils/interactions.ts b/packages/@headlessui-vue/src/test-utils/interactions.ts
index 57c2ac7f3..612849023 100644
--- a/packages/@headlessui-vue/src/test-utils/interactions.ts
+++ b/packages/@headlessui-vue/src/test-utils/interactions.ts
@@ -155,7 +155,9 @@ let order: Record<
             value: element.value.slice(0, -1),
           }),
         })
-        return fireEvent.keyDown(element, ev)
+
+        fireEvent.keyDown(element, ev)
+        return fireEvent.input(element, ev)
       }
 
       return fireEvent.keyDown(element, event)