diff --git a/e2e/playwright/snapshot-tests.spec.ts b/e2e/playwright/snapshot-tests.spec.ts
index 6c0805f8b..191edecc2 100644
--- a/e2e/playwright/snapshot-tests.spec.ts
+++ b/e2e/playwright/snapshot-tests.spec.ts
@@ -521,7 +521,6 @@ test(
     const startXPx = 600
 
     // Equip the rectangle tool
-    await page.getByRole('button', { name: 'line Line', exact: true }).click()
     await page
       .getByRole('button', { name: 'rectangle Corner rectangle', exact: true })
       .click()
diff --git a/e2e/playwright/testing-selections.spec.ts b/e2e/playwright/testing-selections.spec.ts
index eb3aba829..c162f910f 100644
--- a/e2e/playwright/testing-selections.spec.ts
+++ b/e2e/playwright/testing-selections.spec.ts
@@ -1208,6 +1208,12 @@ extrude001 = extrude(50, sketch001)
   test('Deselecting line tool should mean nothing happens on click', async ({
     page,
   }) => {
+    /**
+     * If the line tool is clicked when the state is 'No Points' it will exit Sketch mode.
+     * This is the same exact workflow as pressing ESC.
+     *
+     * To continue to test this workflow, we now enter sketch mode and place a single point before exiting the line tool.
+     */
     const u = await getUtils(page)
     await page.setViewportSize({ width: 1200, height: 500 })
 
@@ -1228,6 +1234,7 @@ extrude001 = extrude(50, sketch001)
       200
     )
 
+    // Clicks the XZ Plane in the page
     await page.mouse.click(700, 200)
 
     await expect(page.locator('.cm-content')).toHaveText(
@@ -1236,6 +1243,11 @@ extrude001 = extrude(50, sketch001)
 
     await page.waitForTimeout(600)
 
+    // Place a point because the line tool will exit if no points are pressed
+    await page.mouse.click(650, 200)
+    await page.waitForTimeout(600)
+
+    // Code before exiting the tool
     let previousCodeContent = await page.locator('.cm-content').innerText()
 
     // deselect the line tool by clicking it
diff --git a/src/components/ModelingMachineProvider.tsx b/src/components/ModelingMachineProvider.tsx
index 0b0d73dbf..dfe76e2c5 100644
--- a/src/components/ModelingMachineProvider.tsx
+++ b/src/components/ModelingMachineProvider.tsx
@@ -149,6 +149,13 @@ export const ModelingMachineProvider = ({
         },
         'sketch exit execute': ({ context: { store } }) => {
           ;(async () => {
+            // When cancelling the sketch mode we should disable sketch mode within the engine.
+            await engineCommandManager.sendSceneCommand({
+              type: 'modeling_cmd_req',
+              cmd_id: uuidv4(),
+              cmd: { type: 'sketch_mode_disable' },
+            })
+
             sceneInfra.camControls.syncDirection = 'clientToEngine'
 
             if (cameraProjection.current === 'perspective') {
diff --git a/src/lang/KclSingleton.ts b/src/lang/KclSingleton.ts
index d29d953bf..f0ebb915c 100644
--- a/src/lang/KclSingleton.ts
+++ b/src/lang/KclSingleton.ts
@@ -295,6 +295,12 @@ export class KclManager {
       this._cancelTokens.delete(currentExecutionId)
       return
     }
+
+    // Exit sketch mode if the AST is empty
+    if (this._isAstEmpty(ast)) {
+      await this.disableSketchMode()
+    }
+
     this.logs = logs
     // Do not add the errors since the program was interrupted and the error is not a real KCL error
     this.addKclErrors(isInterrupted ? [] : errors)
@@ -553,6 +559,24 @@ export class KclManager {
   defaultSelectionFilter() {
     defaultSelectionFilter(this.programMemory, this.engineCommandManager)
   }
+
+  /**
+   * We can send a single command of 'enable_sketch_mode' or send this in a batched request.
+   * When there is no code in the KCL editor we should be sending 'sketch_mode_disable' since any previous half finished
+   * code could leave the state of the application in sketch mode on the engine side.
+   */
+  async disableSketchMode() {
+    await this.engineCommandManager.sendSceneCommand({
+      type: 'modeling_cmd_req',
+      cmd_id: uuidv4(),
+      cmd: { type: 'sketch_mode_disable' },
+    })
+  }
+
+  // Determines if there is no KCL code which means it is executing a blank KCL file
+  _isAstEmpty(ast: Program) {
+    return ast.start === 0 && ast.end === 0 && ast.body.length === 0
+  }
 }
 
 function defaultSelectionFilter(
diff --git a/src/lib/toolbar.ts b/src/lib/toolbar.ts
index 6917de76c..988a29d47 100644
--- a/src/lib/toolbar.ts
+++ b/src/lib/toolbar.ts
@@ -295,15 +295,24 @@ export const toolbarConfig: Record<ToolbarModeName, ToolbarMode> = {
       'break',
       {
         id: 'line',
-        onClick: ({ modelingState, modelingSend }) =>
-          modelingSend({
-            type: 'change tool',
-            data: {
-              tool: !modelingState.matches({ Sketch: 'Line tool' })
-                ? 'line'
-                : 'none',
-            },
-          }),
+        onClick: ({ modelingState, modelingSend }) => {
+          if (modelingState.matches({ Sketch: { 'Line tool': 'No Points' } })) {
+            // Exit the sketch state if there are no points and they press ESC
+            modelingSend({
+              type: 'Cancel',
+            })
+          } else {
+            // Exit the tool if there are points and they press ESC
+            modelingSend({
+              type: 'change tool',
+              data: {
+                tool: !modelingState.matches({ Sketch: 'Line tool' })
+                  ? 'line'
+                  : 'none',
+              },
+            })
+          }
+        },
         icon: 'line',
         status: 'available',
         disabled: (state) =>