diff --git a/include/xrpl/tx/invariants/PermissionedDEXInvariant.h b/include/xrpl/tx/invariants/PermissionedDEXInvariant.h
index 3784a32840..654ed3e009 100644
--- a/include/xrpl/tx/invariants/PermissionedDEXInvariant.h
+++ b/include/xrpl/tx/invariants/PermissionedDEXInvariant.h
@@ -10,9 +10,10 @@ namespace xrpl {
 
 class ValidPermissionedDEX
 {
-    bool regularOffers_ = false;
-    bool badHybridsOld_ = false;  // pre-fixCleanup3_1_3: missing field/domain or size > 1
-    bool badHybrids_ = false;     // post-fixCleanup3_1_3: also catches size == 0 (size != 1)
+    bool regularOffersOld_ = false;  // pre-fixCleanup3_2_0: also flags deleted offers
+    bool regularOffers_ = false;     // post-fixCleanup3_2_0: excludes deleted offers
+    bool badHybridsOld_ = false;     // pre-fixCleanup3_1_3: missing field/domain or size > 1
+    bool badHybrids_ = false;        // post-fixCleanup3_1_3: also catches size == 0 (size != 1)
     hash_set<uint256> domains_;
 
 public:
diff --git a/src/libxrpl/tx/invariants/PermissionedDEXInvariant.cpp b/src/libxrpl/tx/invariants/PermissionedDEXInvariant.cpp
index b480b90a31..282df85302 100644
--- a/src/libxrpl/tx/invariants/PermissionedDEXInvariant.cpp
+++ b/src/libxrpl/tx/invariants/PermissionedDEXInvariant.cpp
@@ -20,7 +20,7 @@ namespace xrpl {
 
 void
 ValidPermissionedDEX::visitEntry(
-    bool,
+    bool isDelete,
     std::shared_ptr<SLE const> const& before,
     std::shared_ptr<SLE const> const& after)
 {
@@ -38,7 +38,9 @@ ValidPermissionedDEX::visitEntry(
         }
         else
         {
-            regularOffers_ = true;
+            regularOffersOld_ = true;
+            if (!isDelete)
+                regularOffers_ = true;
         }
 
         // pre-fixCleanup3_1_3: hybrid offer missing domain, missing
@@ -100,7 +102,9 @@ ValidPermissionedDEX::finalize(
         }
     }
 
-    if (regularOffers_)
+    bool const hasRegularOffers =
+        view.rules().enabled(fixCleanup3_2_0) ? regularOffers_ : regularOffersOld_;
+    if (hasRegularOffers)
     {
         JLOG(j.fatal()) << "Invariant failed: domain transaction"
                            " affected regular offers";
diff --git a/src/test/app/PermissionedDEX_test.cpp b/src/test/app/PermissionedDEX_test.cpp
index be377c0c1d..3a95fb2f92 100644
--- a/src/test/app/PermissionedDEX_test.cpp
+++ b/src/test/app/PermissionedDEX_test.cpp
@@ -7,6 +7,7 @@
 #include <test/jtx/balance.h>
 #include <test/jtx/credentials.h>
 #include <test/jtx/domain.h>
+#include <test/jtx/jtx_json.h>
 #include <test/jtx/offer.h>
 #include <test/jtx/owners.h>  // IWYU pragma: keep
 #include <test/jtx/paths.h>
@@ -34,6 +35,7 @@
 #include <xrpl/protocol/STLedgerEntry.h>
 #include <xrpl/protocol/TER.h>
 #include <xrpl/protocol/TxFlags.h>
+#include <xrpl/protocol/jss.h>
 
 #include <chrono>
 #include <cstddef>
@@ -1455,6 +1457,54 @@ class PermissionedDEX_test : public beast::unit_test::Suite
         }
     }
 
+    void
+    testCancelRegularOfferWithDomainCreate(FeatureBitset features)
+    {
+        bool const fixEnabled = features[fixCleanup3_2_0];
+
+        testcase << "Cancel regular offer via domain OfferCreate"
+                 << (fixEnabled ? " (fixCleanup3_2_0 enabled)" : " (fixCleanup3_2_0 disabled)");
+
+        // An OfferCreate with sfDomainID and sfOfferSequence pointing to
+        // the user's own non-domain offer should atomically cancel the
+        // regular offer and place the new domain offer.
+        //
+        // Pre-fixCleanup3_2_0: ValidPermissionedDEX flagged the deleted
+        // regular offer, so the transaction failed with tecINVARIANT_FAILED.
+        // Post-fixCleanup3_2_0: the invariant ignores deletions and the
+        // transaction succeeds.
+
+        Env env(*this, features);
+        auto const& [gw, domainOwner, alice, bob, carol, USD, domainID, credType] =
+            PermissionedDEX(env);
+
+        auto const regularSeq = env.seq(bob);
+        env(offer(bob, XRP(10), USD(10)));
+        env.close();
+        BEAST_EXPECT(checkOffer(env, bob, regularSeq, XRP(10), USD(10), 0, false));
+
+        auto const domainSeq = env.seq(bob);
+        if (fixEnabled)
+        {
+            env(offer(bob, XRP(20), USD(20)),
+                Domain(domainID),
+                Json(jss::OfferSequence, regularSeq));
+            env.close();
+            BEAST_EXPECT(!offerExists(env, bob, regularSeq));
+            BEAST_EXPECT(checkOffer(env, bob, domainSeq, XRP(20), USD(20), 0, true));
+        }
+        else
+        {
+            env(offer(bob, XRP(20), USD(20)),
+                Domain(domainID),
+                Json(jss::OfferSequence, regularSeq),
+                Ter(tecINVARIANT_FAILED));
+            env.close();
+            BEAST_EXPECT(offerExists(env, bob, regularSeq));
+            BEAST_EXPECT(!offerExists(env, bob, domainSeq));
+        }
+    }
+
 public:
     void
     run() override
@@ -1478,6 +1528,11 @@ public:
         testHybridOfferDirectories(all);
         testHybridMalformedOffer(all);
         testHybridMalformedOffer(all - fixCleanup3_1_3);
+
+        // Cancelling a regular offer in a domain OfferCreate is allowed
+        // only after fixCleanup3_2_0.
+        testCancelRegularOfferWithDomainCreate(all);
+        testCancelRegularOfferWithDomainCreate(all - fixCleanup3_2_0);
     }
 };