diff --git a/src/strands/hooks/events.py b/src/strands/hooks/events.py
index 80b50770a..78730536d 100644
--- a/src/strands/hooks/events.py
+++ b/src/strands/hooks/events.py
@@ -330,9 +330,9 @@ class BeforeNodeCallEvent(BaseHookEvent, _Interruptible):
         source: The multi-agent orchestrator instance
         node_id: ID of the node about to execute
         invocation_state: Configuration that user passes in
-        cancel_node: A user defined message that when set, will cancel the node execution with status FAILED.
-            The message will be emitted under a MultiAgentNodeCancel event. If set to `True`, Strands will cancel the
-            node using a default cancel message.
+        cancel_node: A user defined message that when set, will skip the node and mark it as completed, allowing
+            downstream nodes to continue executing. The message will be emitted under a MultiAgentNodeCancel event.
+            If set to `True`, Strands will skip the node using a default cancel message.
     """
 
     source: "MultiAgentBase"
diff --git a/src/strands/multiagent/graph.py b/src/strands/multiagent/graph.py
index 8da8314ea..09e6f70f5 100644
--- a/src/strands/multiagent/graph.py
+++ b/src/strands/multiagent/graph.py
@@ -899,9 +899,25 @@ async def _execute_node(self, node: GraphNode, invocation_state: dict[str, Any])
                 cancel_message = (
                     before_event.cancel_node if isinstance(before_event.cancel_node, str) else "node cancelled by user"
                 )
-                logger.debug("reason=<%s> | cancelling execution", cancel_message)
+                logger.debug("reason=<%s> | node skipped, graph continues", cancel_message)
                 yield MultiAgentNodeCancelEvent(node.node_id, cancel_message)
-                raise RuntimeError(cancel_message)
+                node_result = NodeResult(
+                    result=RuntimeError(cancel_message),
+                    execution_time=0,
+                    status=Status.COMPLETED,
+                    accumulated_usage=Usage(inputTokens=0, outputTokens=0, totalTokens=0),
+                    accumulated_metrics=Metrics(latencyMs=0),
+                    execution_count=0,
+                )
+                node.result = node_result
+                node.execution_time = 0
+                node.execution_status = Status.COMPLETED
+                self.state.completed_nodes.add(node)
+                self.state.results[node.node_id] = node_result
+                self.state.execution_order.append(node)
+                self._accumulate_metrics(node_result)
+                yield MultiAgentNodeStopEvent(node_id=node.node_id, node_result=node_result)
+                return
 
             # Build node input from satisfied dependencies
             node_input = self._build_node_input(node)
diff --git a/tests/strands/multiagent/test_graph.py b/tests/strands/multiagent/test_graph.py
index a6085627c..d63f018c7 100644
--- a/tests/strands/multiagent/test_graph.py
+++ b/tests/strands/multiagent/test_graph.py
@@ -2113,20 +2113,53 @@ def cancel_callback(event):
     graph = builder.build()
     graph.hooks.add_callback(BeforeNodeCallEvent, cancel_callback)
 
-    stream = graph.stream_async("test task")
-
     tru_cancel_event = None
-    with pytest.raises(RuntimeError, match=cancel_message):
-        async for event in stream:
-            if event.get("type") == "multiagent_node_cancel":
-                tru_cancel_event = event
+    async for event in graph.stream_async("test task"):
+        if event.get("type") == "multiagent_node_cancel":
+            tru_cancel_event = event
 
     exp_cancel_event = MultiAgentNodeCancelEvent(node_id="test_agent", message=cancel_message)
     assert tru_cancel_event == exp_cancel_event
 
-    tru_status = graph.state.status
-    exp_status = Status.FAILED
-    assert tru_status == exp_status
+    assert graph.state.status == Status.COMPLETED
+    assert any(n.node_id == "test_agent" for n in graph.state.completed_nodes)
+    assert "test_agent" in graph.state.results
+    agent.__call__.assert_not_called()
+
+
+@pytest.mark.asyncio
+async def test_graph_cancel_node_downstream_executes():
+    """Downstream nodes must run after an upstream node is skipped via cancel_node."""
+    cancelled_nodes: list[str] = []
+
+    def cancel_step_a(event):
+        if event.node_id == "step_a":
+            event.cancel_node = "step_a skipped"
+        return event
+
+    step_a = create_mock_agent("step_a", "Should not run")
+    step_b = create_mock_agent("step_b", "Step B completed")
+
+    builder = GraphBuilder()
+    builder.add_node(step_a, "step_a")
+    builder.add_node(step_b, "step_b")
+    builder.add_edge("step_a", "step_b")
+    builder.set_entry_point("step_a")
+    graph = builder.build()
+    graph.hooks.add_callback(BeforeNodeCallEvent, cancel_step_a)
+
+    async for event in graph.stream_async("test task"):
+        if event.get("type") == "multiagent_node_cancel":
+            cancelled_nodes.append(event["node_id"])
+
+    assert cancelled_nodes == ["step_a"]
+    assert graph.state.status == Status.COMPLETED
+    step_a.__call__.assert_not_called()
+    step_b.__call__.assert_not_called()  # stream_async uses stream_async on agent, not __call__
+    assert any(n.node_id == "step_a" for n in graph.state.completed_nodes)
+    assert any(n.node_id == "step_b" for n in graph.state.completed_nodes)
+    assert "step_a" in graph.state.results
+    assert "step_b" in graph.state.results
 
 
 def test_graph_interrupt_on_before_node_call_event(interrupt_hook):