diff --git a/src/fetch.ts b/src/fetch.ts
index 10c91583..f89fdf42 100644
--- a/src/fetch.ts
+++ b/src/fetch.ts
@@ -167,20 +167,26 @@ export function createFetch(globalOptions: CreateFetchOptions = {}): $Fetch {
     }
 
     let abortTimeout: NodeJS.Timeout | undefined;
+    let fetchOptions = context.options;
 
+    // The timeout signal is derived per attempt: reusing it across retries
+    // would forward an already aborted signal.
     if (context.options.timeout) {
-      context.options.signal = context.options.signal
-        ? AbortSignal.any([
-            AbortSignal.timeout(context.options.timeout),
-            context.options.signal,
-          ])
-        : AbortSignal.timeout(context.options.timeout);
+      fetchOptions = {
+        ...context.options,
+        signal: context.options.signal
+          ? AbortSignal.any([
+              AbortSignal.timeout(context.options.timeout),
+              context.options.signal,
+            ])
+          : AbortSignal.timeout(context.options.timeout),
+      };
     }
 
     try {
       context.response = await fetch(
         context.request,
-        context.options as RequestInit
+        fetchOptions as RequestInit
       );
     } catch (error) {
       context.error = error as Error;
diff --git a/test/index.test.ts b/test/index.test.ts
index 5ac20b07..2871c692 100644
--- a/test/index.test.ts
+++ b/test/index.test.ts
@@ -13,6 +13,7 @@ import { $fetch } from "../src/index.ts";
 
 describe("ofetch", () => {
   let listener: ReturnType<typeof serve>;
+  let timeoutOnceRequests = 0;
   const getURL = (url: string = "/") =>
     listener.url! + (url.replace(/^\//, "") || "");
 
@@ -62,6 +63,15 @@ describe("ofetch", () => {
             resolve(new HTTPError({ status: 408 }));
           }, 1000 * 5);
         });
+      })
+      .all("/timeout-once", async () => {
+        timeoutOnceRequests++;
+        if (timeoutOnceRequests === 1) {
+          await new Promise((resolve) => {
+            setTimeout(resolve, 1000 * 5);
+          });
+        }
+        return "ok";
       });
 
     listener = await serve(app, { port: 0, hostname: "localhost" }).ready();
@@ -344,6 +354,16 @@ describe("ofetch", () => {
     });
   });
 
+  it("retrying after a timeout", async () => {
+    const result = await $fetch<string>(getURL("timeout-once"), {
+      timeout: 100,
+      retry: 1,
+    });
+
+    expect(result).to.equal("ok");
+    expect(timeoutOnceRequests).to.equal(2);
+  });
+
   it("deep merges defaultOptions", async () => {
     const _customFetch = $fetch.create({
       query: {