diff --git a/news/fix-tracer-shutdown.rst b/news/fix-tracer-shutdown.rst
new file mode 100644
index 000000000..befa0c34e
--- /dev/null
+++ b/news/fix-tracer-shutdown.rst
@@ -0,0 +1,5 @@
+**Fixed:**
+
+* Using ``trace on`` with ``.xsh`` scripts could previously lead to
+  a spurious ignored exception showing up on stderr. This is now fixed.
+
diff --git a/tests/built_ins/test_tracer.py b/tests/built_ins/test_tracer.py
index 7883015bf..eceba79f7 100644
--- a/tests/built_ins/test_tracer.py
+++ b/tests/built_ins/test_tracer.py
@@ -1,10 +1,18 @@
+import os
 import re
+import subprocess
+import sys
+from pathlib import Path
+from textwrap import dedent
 
 import pytest
 
 from xonsh.procs.specs import cmds_to_specs
 from xonsh.tracer import tracermain
 
+# Minimum set of environment variables on Windows
+W_ENV = "SYSTEMDRIVE SYSTEMROOT ALLUSERSPROFILE HOMEDRIVE HOMEPATH APPDATA LOCALAPPDATA"
+
 
 def test_tracer_help(capsys, xsh_with_aliases):
     """verify can invoke it, and usage knows about all the options"""
@@ -17,3 +25,31 @@ def test_tracer_help(capsys, xsh_with_aliases):
     assert m[1]
     verbs = {v.strip().lower() for v in m[1].split(",")}
     assert verbs == {"rm", "start", "add", "on", "off", "del", "color", "stop", "ls"}
+
+
+def test_trace_in_script():
+    CURRENT_DIR = Path(__file__).parent
+    cmd = [sys.executable, "-m", "xonsh", str(CURRENT_DIR / "tracer" / "example.xsh")]
+    env = {"XONSH_SHOW_TRACEBACK": "True"}
+    if sys.platform == "win32":
+        # required for an empty environment on Windows. see python/cpython#120836
+        for ev in W_ENV.split():
+            env[ev] = os.environ[ev]
+    expected = dedent(
+        """\
+        Some output!
+        tests/built_ins/tracer/example.xsh:3:variable = ""
+        tests/built_ins/tracer/example.xsh:4:for part in parts:
+        tests/built_ins/tracer/example.xsh:5:    variable += part
+        tests/built_ins/tracer/example.xsh:4:for part in parts:
+        tests/built_ins/tracer/example.xsh:5:    variable += part
+        tests/built_ins/tracer/example.xsh:4:for part in parts:
+        tests/built_ins/tracer/example.xsh:5:    variable += part
+        tests/built_ins/tracer/example.xsh:4:for part in parts:
+        tests/built_ins/tracer/example.xsh:6:echo Some @(variable)
+        """
+    ).replace("/", os.sep)
+    proc = subprocess.run(cmd, capture_output=True, encoding="utf8", env=env)
+    assert proc.returncode == 0
+    assert proc.stderr == ""
+    assert proc.stdout == expected
diff --git a/tests/built_ins/tracer/example.xsh b/tests/built_ins/tracer/example.xsh
new file mode 100755
index 000000000..4eed0cca6
--- /dev/null
+++ b/tests/built_ins/tracer/example.xsh
@@ -0,0 +1,6 @@
+parts = ["out", "put", "!"]
+trace on
+variable = ""
+for part in parts:
+    variable += part
+echo Some @(variable)
\ No newline at end of file
diff --git a/xonsh/tracer.py b/xonsh/tracer.py
index e7d88703e..6023e1249 100644
--- a/xonsh/tracer.py
+++ b/xonsh/tracer.py
@@ -81,7 +81,7 @@ class TracerType:
                     frame.f_trace = self.prev_tracer
             self.prev_tracer = DefaultNotGiven
 
-    def trace(self, frame, event, arg):
+    def trace(self, frame, event, arg, *, find_file=find_file, print_color=print_color):
         """Implements a line tracing function."""
         if event not in self.valid_events:
             return self.trace