diff --git a/test/test_distributed.py b/test/test_distributed.py
index 176e0ee84..80fa9f1cc 100644
--- a/test/test_distributed.py
+++ b/test/test_distributed.py
@@ -149,6 +149,14 @@ def _test_fullsync(rank, world_size, backend, q):
         except Exception as e:
             assert isinstance(e, PrefetchTimeoutError)
 
+        # Test that reset/shutdown does not hang while paused
+        dp3 = dp.fullsync()
+        it = iter(dp3)
+        next(it)
+        dp3.pause()
+        it2 = iter(dp3)  # Reset
+        next(it2)
+
         _finalize_distributed_queue(rank, q)
 
     @world_size_parametrize
diff --git a/torchdata/datapipes/iter/util/distributed.py b/torchdata/datapipes/iter/util/distributed.py
index ff534bb98..bb1ff1aa7 100644
--- a/torchdata/datapipes/iter/util/distributed.py
+++ b/torchdata/datapipes/iter/util/distributed.py
@@ -69,8 +69,9 @@ def __init__(
         self._executor = ThreadPoolExecutor(max_workers=1)
         self._futures: Deque[Future] = deque()
         self._lock = threading.RLock()
-        self._end_flag = False
-        self._paused = False
+        self._end_flag: bool = False
+        self._paused: bool = False
+        self._is_shutdown: bool = False
         self._idx = 0
         for _ in range(prefetch_size):
             with self._lock:
@@ -93,7 +94,7 @@ def _done_callback_fn(self, index: int, f: Future):
         if f.exception():
             with self._lock:
                 self._end_flag = True
-        if self.callback_fn is not None:
+        if self.callback_fn is not None and not self._is_shutdown:
             self._executor.submit(self.callback_fn, Expected(index, f.exception()))
 
     def return_next(self):
@@ -104,7 +105,7 @@ def return_next(self):
             except TimeoutError:
                 raise PrefetchTimeoutError(self.timeout)
             with self._lock:
-                if not self._end_flag:
+                if not self._end_flag and not self._is_shutdown:
                     next_future = self._executor.submit(self.fetch_next)
                     next_future.add_done_callback(partial(self._done_callback_fn, self._idx))
                     self._futures.append(next_future)
@@ -114,6 +115,8 @@ def return_next(self):
         return data
 
     def shutdown(self):
+        self._paused = False
+        self._is_shutdown = True
         self._executor.shutdown(wait=True)
 
     def pause(self):