diff --git a/tokens/escrow/anchor/programs/escrow/src/instructions/cancel_offer.rs b/tokens/escrow/anchor/programs/escrow/src/instructions/cancel_offer.rs
new file mode 100644
index 000000000..8bed173da
--- /dev/null
+++ b/tokens/escrow/anchor/programs/escrow/src/instructions/cancel_offer.rs
@@ -0,0 +1,92 @@
+use anchor_lang::prelude::*;
+use anchor_spl::{
+    token_2022::{close_account, transfer_checked, CloseAccount, TransferChecked},
+    token_interface::{Mint, TokenAccount, TokenInterface},
+};
+
+use crate::Offer;
+
+#[derive(Accounts)]
+#[instruction(id: u64)]
+pub struct CancelOffer<'a> {
+    #[account(mut)]
+    pub maker: Signer<'a>,
+
+    #[account(
+        mut,
+        close = maker,
+        seeds = [b"offer", maker.key().as_ref(), &id.to_le_bytes()],
+        bump = offer.bump,
+        has_one = maker,
+        has_one = token_mint_a
+    )]
+    pub offer: Account<'a, Offer>,
+
+    #[account(
+        mut,
+        associated_token::authority = offer,
+        associated_token::mint = token_mint_a,
+        associated_token::token_program = token_program,
+    )]
+    pub vault: InterfaceAccount<'a, TokenAccount>,
+
+    #[account(
+        mut,
+        associated_token::mint = token_mint_a,
+        associated_token::authority = maker,
+        associated_token::token_program = token_program,
+    )]
+    pub maker_token_account_a: InterfaceAccount<'a, TokenAccount>,
+
+    #[account(mint::token_program = token_program)]
+    pub token_mint_a: InterfaceAccount<'a, Mint>,
+
+    pub token_program: Interface<'a, TokenInterface>,
+    pub system_program: Program<'a, System>,
+}
+
+pub fn handler(ctx: Context<CancelOffer>, id: u64) -> Result<()> {
+    // 1. Transfer Token A from the vault back to the maker
+    let seeds = &[
+        b"offer",
+        ctx.accounts.maker.to_account_info().key.as_ref(),
+        &id.to_le_bytes(),
+        &[ctx.accounts.offer.bump],
+    ];
+
+    let signer_seeds = &[&seeds[..]];
+
+    let transfer_accounts = TransferChecked {
+        from: ctx.accounts.vault.to_account_info(),
+        to: ctx.accounts.maker_token_account_a.to_account_info(),
+        authority: ctx.accounts.offer.to_account_info(),
+        mint: ctx.accounts.token_mint_a.to_account_info(),
+    };
+
+    let cpi_cotext = CpiContext::new_with_signer(
+        ctx.accounts.token_program.to_account_info(),
+        transfer_accounts,
+        signer_seeds,
+    );
+
+    transfer_checked(
+        cpi_cotext,
+        ctx.accounts.vault.amount,
+        ctx.accounts.token_mint_a.decimals,
+    )?;
+
+    // 2. Close the vault account and reclaim rent to the maker
+    let close_accounts = CloseAccount {
+        account: ctx.accounts.vault.to_account_info(),
+        destination: ctx.accounts.maker.to_account_info(),
+        authority: ctx.accounts.offer.to_account_info(),
+    };
+
+    let cpi_context = CpiContext::new_with_signer(
+        ctx.accounts.token_program.to_account_info(),
+        close_accounts,
+        signer_seeds,
+    );
+    close_account(cpi_context)?;
+    Ok(())
+}
diff --git a/tokens/escrow/anchor/programs/escrow/src/instructions/mod.rs b/tokens/escrow/anchor/programs/escrow/src/instructions/mod.rs
index cf1dd986b..c0cd489c3 100644
--- a/tokens/escrow/anchor/programs/escrow/src/instructions/mod.rs
+++ b/tokens/escrow/anchor/programs/escrow/src/instructions/mod.rs
@@ -6,3 +6,6 @@ pub use take_offer::*;
 
 pub mod shared;
 pub use shared::*;
+
+pub mod cancel_offer;
+pub use cancel_offer::*;
diff --git a/tokens/escrow/anchor/programs/escrow/src/lib.rs b/tokens/escrow/anchor/programs/escrow/src/lib.rs
index 686b770d6..9068cf43e 100644
--- a/tokens/escrow/anchor/programs/escrow/src/lib.rs
+++ b/tokens/escrow/anchor/programs/escrow/src/lib.rs
@@ -29,4 +29,8 @@ pub mod escrow {
         instructions::take_offer::send_wanted_tokens_to_maker(&context)?;
         instructions::take_offer::withdraw_and_close_vault(context)
     }
+
+    pub fn cancel_offer(ctx: Context<CancelOffer>, id: u64) -> Result<()> {
+        instructions::cancel_offer::handler(ctx, id)
+    }
 }
diff --git a/tokens/escrow/anchor/tests/escrow.test.ts b/tokens/escrow/anchor/tests/escrow.test.ts
index b1d55165b..f54be593a 100644
--- a/tokens/escrow/anchor/tests/escrow.test.ts
+++ b/tokens/escrow/anchor/tests/escrow.test.ts
@@ -165,4 +165,67 @@ describe('escrow', async () => {
     const aliceTokenAccountBalanceAfter = new BN(aliceTokenAccountBalanceAfterResponse.value.amount);
     assert(aliceTokenAccountBalanceAfter.eq(tokenBWantedAmount));
   }).slow(ANCHOR_SLOW_TEST_THRESHOLD);
+
+  it('Allows Alice to cancel an offer and reclaim her tokens', async () => {
+    // Pick a random ID for the offer we'll make
+    const offerId = getRandomBigNumber();
+
+    // Then determine the account addresses we'll use for the offer and the vault
+    const offer = PublicKey.findProgramAddressSync(
+      [
+        Buffer.from('offer'),
+        accounts.maker.toBuffer(),
+        offerId.toArrayLike(Buffer, 'le', 8),
+      ],
+      program.programId,
+    )[0];
+
+    const vault = getAssociatedTokenAddressSync(
+      accounts.tokenMintA,
+      offer,
+      true,
+      TOKEN_PROGRAM,
+    );
+
+    accounts.offer = offer;
+    accounts.vault = vault;
+
+    // Get initial balance
+    const initialBalanceResponse = await connection.getTokenAccountBalance(
+      accounts.makerTokenAccountA,
+    );
+    const initialBalance = new BN(initialBalanceResponse.value.amount);
+
+    // Make the offer
+    await program.methods
+      .makeOffer(offerId, tokenAOfferedAmount, tokenBWantedAmount)
+      .accounts({ ...accounts })
+      .signers([alice])
+      .rpc();
+
+    // Check balance decreased
+    const postOfferBalanceResponse = await connection.getTokenAccountBalance(
+      accounts.makerTokenAccountA,
+    );
+    const postOfferBalance = new BN(postOfferBalanceResponse.value.amount);
+    assert(postOfferBalance.eq(initialBalance.sub(tokenAOfferedAmount)));
+
+    // Cancel the offer
+    await program.methods
+      .cancelOffer(offerId)
+      .accounts({ ...accounts })
+      .signers([alice])
+      .rpc();
+
+    // Check balance restored
+    const finalBalanceResponse = await connection.getTokenAccountBalance(
+      accounts.makerTokenAccountA,
+    );
+    const finalBalance = new BN(finalBalanceResponse.value.amount);
+    assert(finalBalance.eq(initialBalance));
+
+    // Check vault account is closed
+    const vaultAccountInfo = await connection.getAccountInfo(vault);
+    assert.isNull(vaultAccountInfo, 'Vault account should be closed');
+  }).slow(ANCHOR_SLOW_TEST_THRESHOLD);
 });