diff --git a/src/modules/MouseUtils/CursorWrap/dllmain.cpp b/src/modules/MouseUtils/CursorWrap/dllmain.cpp
index add9fb7f92..b172f1c8b6 100644
--- a/src/modules/MouseUtils/CursorWrap/dllmain.cpp
+++ b/src/modules/MouseUtils/CursorWrap/dllmain.cpp
@@ -198,6 +198,10 @@ public:
         // Start listening for external trigger event so we can invoke the same logic as the activation hotkey.
         m_triggerEventHandle = CreateEventW(nullptr, false, false, CommonSharedConstants::CURSOR_WRAP_TRIGGER_EVENT);
         m_terminateEventHandle = CreateEventW(nullptr, false, false, nullptr);
+        if (m_triggerEventHandle)
+        {
+            ResetEvent(m_triggerEventHandle);
+        }
         if (m_triggerEventHandle && m_terminateEventHandle)
         {
             m_listening = true;
@@ -212,8 +216,16 @@ public:
                 // Create message window for display change notifications
                 RegisterForDisplayChanges();
 
-                StartMouseHook();
-                Logger::info("CursorWrap enabled - mouse hook started");
+                // Only start the mouse hook automatically if auto-activate is enabled
+                if (m_autoActivate)
+                {
+                    StartMouseHook();
+                    Logger::info("CursorWrap enabled - mouse hook started (auto-activate on)");
+                }
+                else
+                {
+                    Logger::info("CursorWrap enabled - waiting for activation hotkey (auto-activate off)");
+                }
 
                 while (m_listening)
                 {
diff --git a/src/settings-ui/Settings.UI/ViewModels/MouseUtilsViewModel.cs b/src/settings-ui/Settings.UI/ViewModels/MouseUtilsViewModel.cs
index bd6a431a20..678c090397 100644
--- a/src/settings-ui/Settings.UI/ViewModels/MouseUtilsViewModel.cs
+++ b/src/settings-ui/Settings.UI/ViewModels/MouseUtilsViewModel.cs
@@ -1006,13 +1006,6 @@ namespace Microsoft.PowerToys.Settings.UI.ViewModels
                     GeneralSettingsConfig.Enabled.CursorWrap = value;
                     OnPropertyChanged(nameof(IsCursorWrapEnabled));
 
-                    // Auto-enable the AutoActivate setting when CursorWrap is enabled
-                    // This ensures cursor wrapping is active immediately after enabling
-                    if (value && !_cursorWrapAutoActivate)
-                    {
-                        CursorWrapAutoActivate = true;
-                    }
-
                     OutGoingGeneralSettings outgoing = new OutGoingGeneralSettings(GeneralSettingsConfig);
                     SendConfigMSG(outgoing.ToString());