diff --git a/backend/app/api/subscription.py b/backend/app/api/subscription.py
index ea5d6e9..eaa21db 100644
--- a/backend/app/api/subscription.py
+++ b/backend/app/api/subscription.py
@@ -310,9 +310,13 @@ async def cancel_subscription(
     """
     Cancel subscription and downgrade to Scout.
     
-    Note: For Stripe-managed subscriptions, use the Customer Portal instead.
-    This endpoint is for manual cancellation.
+    This will:
+    1. Cancel the subscription in Stripe (if exists)
+    2. Downgrade the user to Scout tier locally
     """
+    from app.services.stripe_service import StripeService
+    from datetime import datetime
+    
     result = await db.execute(
         select(Subscription).where(Subscription.user_id == current_user.id)
     )
@@ -330,12 +334,24 @@ async def cancel_subscription(
             detail="Already on free plan",
         )
     
-    # Downgrade to Scout
     old_tier = subscription.tier.value
+    stripe_sub_id = subscription.stripe_subscription_id
+    
+    # Cancel in Stripe first (if we have a Stripe subscription)
+    if stripe_sub_id:
+        cancelled = await StripeService.cancel_subscription(stripe_sub_id)
+        if not cancelled:
+            raise HTTPException(
+                status_code=status.HTTP_500_INTERNAL_SERVER_ERROR,
+                detail="Failed to cancel subscription in Stripe. Please try again or contact support.",
+            )
+    
+    # Downgrade to Scout locally
     subscription.tier = SubscriptionTier.SCOUT
     subscription.max_domains = TIER_CONFIG[SubscriptionTier.SCOUT]["domain_limit"]
     subscription.check_frequency = TIER_CONFIG[SubscriptionTier.SCOUT]["check_frequency"]
     subscription.stripe_subscription_id = None
+    subscription.cancelled_at = datetime.utcnow()
     
     await db.commit()
     
@@ -343,4 +359,5 @@ async def cancel_subscription(
         "status": "cancelled",
         "message": f"Subscription cancelled. Downgraded from {old_tier} to Scout.",
         "new_tier": "scout",
+        "stripe_cancelled": bool(stripe_sub_id),
     }
diff --git a/backend/app/services/stripe_service.py b/backend/app/services/stripe_service.py
index 5866967..feff099 100644
--- a/backend/app/services/stripe_service.py
+++ b/backend/app/services/stripe_service.py
@@ -206,6 +206,38 @@ class StripeService:
             logger.error(f"Stripe error creating portal session: {e}")
             raise
     
+    @staticmethod
+    async def cancel_subscription(stripe_subscription_id: str) -> bool:
+        """
+        Cancel a subscription in Stripe.
+        
+        Args:
+            stripe_subscription_id: The Stripe subscription ID to cancel
+            
+        Returns:
+            True if cancelled successfully, False otherwise
+        """
+        if not StripeService.is_configured():
+            logger.warning("Stripe not configured, skipping cancel")
+            return False
+        
+        if not stripe_subscription_id:
+            logger.warning("No Stripe subscription ID provided")
+            return False
+        
+        try:
+            # Cancel the subscription immediately
+            stripe.Subscription.cancel(stripe_subscription_id)
+            logger.info(f"Cancelled Stripe subscription: {stripe_subscription_id}")
+            return True
+        except stripe.error.InvalidRequestError as e:
+            # Subscription might already be cancelled
+            logger.warning(f"Stripe subscription cancel failed (may already be cancelled): {e}")
+            return True  # Consider it success if already cancelled
+        except stripe.error.StripeError as e:
+            logger.error(f"Stripe error cancelling subscription: {e}")
+            return False
+
     @staticmethod
     async def handle_webhook(
         payload: bytes,