diff --git a/errors.go b/errors.go
index 9c32a49..add5dbe 100644
--- a/errors.go
+++ b/errors.go
@@ -14,6 +14,10 @@
 
 package fsm
 
+import (
+	"context"
+)
+
 // InvalidEventError is returned by FSM.Event() when the event cannot be called
 // in the current state.
 type InvalidEventError struct {
@@ -82,6 +86,9 @@ func (e CanceledError) Error() string {
 // asynchronous state transition.
 type AsyncError struct {
 	Err error
+
+	Ctx              context.Context
+	CancelTransition func()
 }
 
 func (e AsyncError) Error() string {
diff --git a/examples/cancel_async_transition.go b/examples/cancel_async_transition.go
new file mode 100644
index 0000000..d67cb4c
--- /dev/null
+++ b/examples/cancel_async_transition.go
@@ -0,0 +1,54 @@
+//go:build ignore
+// +build ignore
+
+package main
+
+import (
+	"context"
+	"fmt"
+	"time"
+
+	"github.com/looplab/fsm"
+)
+
+func main() {
+	f := fsm.NewFSM(
+		"start",
+		fsm.Events{
+			{Name: "run", Src: []string{"start"}, Dst: "end"},
+		},
+		fsm.Callbacks{
+			"leave_start": func(_ context.Context, e *fsm.Event) {
+				e.Async()
+			},
+		},
+	)
+
+	err := f.Event(context.Background(), "run")
+	asyncError, ok := err.(fsm.AsyncError)
+	if !ok {
+		panic(fmt.Sprintf("expected error to be 'AsyncError', got %v", err))
+	}
+	var asyncStateTransitionWasCanceled bool
+	go func() {
+		<-asyncError.Ctx.Done()
+		asyncStateTransitionWasCanceled = true
+		if asyncError.Ctx.Err() != context.Canceled {
+			panic(fmt.Sprintf("Expected error to be '%v' but was '%v'", context.Canceled, asyncError.Ctx.Err()))
+		}
+	}()
+	asyncError.CancelTransition()
+	time.Sleep(20 * time.Millisecond)
+
+	if err = f.Transition(); err != nil {
+		panic(fmt.Sprintf("Error encountered when transitioning: %v", err))
+	}
+	if !asyncStateTransitionWasCanceled {
+		panic("expected async state transition cancelation to have propagated")
+	}
+	if f.Current() != "start" {
+		panic("expected state to be 'start'")
+	}
+
+	fmt.Println("Successfully ran state machine.")
+}
diff --git a/examples/transition_callbacks.go b/examples/transition_callbacks.go
new file mode 100644
index 0000000..e84f795
--- /dev/null
+++ b/examples/transition_callbacks.go
@@ -0,0 +1,54 @@
+//go:build ignore
+// +build ignore
+
+package main
+
+import (
+	"context"
+	"fmt"
+
+	"github.com/looplab/fsm"
+)
+
+func main() {
+	var afterFinishCalled bool
+	fsm := fsm.NewFSM(
+		"start",
+		fsm.Events{
+			{Name: "run", Src: []string{"start"}, Dst: "end"},
+			{Name: "finish", Src: []string{"end"}, Dst: "finished"},
+			{Name: "reset", Src: []string{"end", "finished"}, Dst: "start"},
+		},
+		fsm.Callbacks{
+			"enter_end": func(ctx context.Context, e *fsm.Event) {
+				if err := e.FSM.Event(ctx, "finish"); err != nil {
+					fmt.Println(err)
+				}
+			},
+			"after_finish": func(ctx context.Context, e *fsm.Event) {
+				afterFinishCalled = true
+				if e.Src != "end" {
+					panic(fmt.Sprintf("source should have been 'end' but was '%s'", e.Src))
+				}
+				if err := e.FSM.Event(ctx, "reset"); err != nil {
+					fmt.Println(err)
+				}
+			},
+		},
+	)
+
+	if err := fsm.Event(context.Background(), "run"); err != nil {
+		panic(fmt.Sprintf("Error encountered when triggering the run event: %v", err))
+	}
+
+	if !afterFinishCalled {
+		panic(fmt.Sprintf("After finish callback should have run, current state: '%s'", fsm.Current()))
+	}
+
+	currentState := fsm.Current()
+	if currentState != "start" {
+		panic(fmt.Sprintf("expected state to be 'start', was '%s'", currentState))
+	}
+
+	fmt.Println("Successfully ran state machine.")
+}
diff --git a/fsm.go b/fsm.go
index 8ab2726..c5d9efd 100644
--- a/fsm.go
+++ b/fsm.go
@@ -289,7 +289,16 @@ func (f *FSM) SetMetadata(key string, dataValue interface{}) {
 // internal bug.
 func (f *FSM) Event(ctx context.Context, event string, args ...interface{}) error {
 	f.eventMu.Lock()
-	defer f.eventMu.Unlock()
+	// in order to always unlock the event mutex, the defer is added
+	// in case the state transition goes through and enter/after callbacks
+	// are called; because these must be able to trigger new state
+	// transitions, it is explicitly unlocked in the code below
+	var unlocked bool
+	defer func() {
+		if !unlocked {
+			f.eventMu.Unlock()
+		}
+	}()
 
 	f.stateMu.RLock()
 	defer f.stateMu.RUnlock()
@@ -323,18 +332,48 @@ func (f *FSM) Event(ctx context.Context, event string, args ...interface{}) erro
 	}
 
 	// Setup the transition, call it later.
-	f.transition = func() {
-		f.stateMu.Lock()
-		f.current = dst
-		f.stateMu.Unlock()
+	transitionFunc := func(ctx context.Context, async bool) func() {
+		return func() {
+			if ctx.Err() != nil {
+				if e.Err == nil {
+					e.Err = ctx.Err()
+				}
+				return
+			}
 
-		f.enterStateCallbacks(ctx, e)
-		f.afterEventCallbacks(ctx, e)
+			f.stateMu.Lock()
+			f.current = dst
+			f.stateMu.Unlock()
+
+			// at this point, we unlock the event mutex in order to allow
+			// enter state callbacks to trigger another transition
+			// for aynchronous state transitions this doesn't happen because
+			// the event mutex has already been unlocked
+			if !async {
+				f.eventMu.Unlock()
+				unlocked = true
+			}
+			f.transition = nil // treat the state transition as done
+			f.enterStateCallbacks(ctx, e)
+			f.afterEventCallbacks(ctx, e)
+		}
 	}
 
+	f.transition = transitionFunc(ctx, false)
+
 	if err = f.leaveStateCallbacks(ctx, e); err != nil {
 		if _, ok := err.(CanceledError); ok {
 			f.transition = nil
+		} else if asyncError, ok := err.(AsyncError); ok {
+			// setup a new context in order for async state transitions to work correctly
+			// this "uncancels" the original context which ignores its cancelation
+			// but keeps the values of the original context available to callers
+			ctx, cancel := uncancelContext(ctx)
+			e.cancelFunc = cancel
+			asyncError.Ctx = ctx
+			asyncError.CancelTransition = cancel
+			f.transition = transitionFunc(ctx, true)
+			return asyncError
 		}
 		return err
 	}
@@ -405,7 +444,7 @@ func (f *FSM) leaveStateCallbacks(ctx context.Context, e *Event) error {
 		if e.canceled {
 			return CanceledError{e.Err}
 		} else if e.async {
-			return AsyncError{e.Err}
+			return AsyncError{Err: e.Err}
 		}
 	}
 	if fn, ok := f.callbacks[cKey{"", callbackLeaveState}]; ok {
@@ -413,7 +452,7 @@ func (f *FSM) leaveStateCallbacks(ctx context.Context, e *Event) error {
 		if e.canceled {
 			return CanceledError{e.Err}
 		} else if e.async {
-			return AsyncError{e.Err}
+			return AsyncError{Err: e.Err}
 		}
 	}
 	return nil
diff --git a/fsm_test.go b/fsm_test.go
index c5e90bc..985b0ea 100644
--- a/fsm_test.go
+++ b/fsm_test.go
@@ -16,6 +16,7 @@ package fsm
 
 import (
 	"context"
+	"errors"
 	"fmt"
 	"sort"
 	"sync"
@@ -526,6 +527,42 @@ func TestAsyncTransitionNotInProgress(t *testing.T) {
 	}
 }
 
+func TestCancelAsyncTransition(t *testing.T) {
+	fsm := NewFSM(
+		"start",
+		Events{
+			{Name: "run", Src: []string{"start"}, Dst: "end"},
+		},
+		Callbacks{
+			"leave_start": func(_ context.Context, e *Event) {
+				e.Async()
+			},
+		},
+	)
+	err := fsm.Event(context.Background(), "run")
+	asyncError, ok := err.(AsyncError)
+	if !ok {
+		t.Errorf("expected error to be 'AsyncError', got %v", err)
+	}
+	var asyncStateTransitionWasCanceled bool
+	go func() {
+		<-asyncError.Ctx.Done()
+		asyncStateTransitionWasCanceled = true
+	}()
+	asyncError.CancelTransition()
+	time.Sleep(20 * time.Millisecond)
+
+	if err = fsm.Transition(); err != nil {
+		t.Errorf("expected no error, got %v", err)
+	}
+	if !asyncStateTransitionWasCanceled {
+		t.Error("expected async state transition cancelation to have propagated")
+	}
+	if fsm.Current() != "start" {
+		t.Error("expected state to be 'start'")
+	}
+}
+
 func TestCallbackNoError(t *testing.T) {
 	fsm := NewFSM(
 		"start",
@@ -695,6 +732,47 @@ func TestDoubleTransition(t *testing.T) {
 	wg.Wait()
 }
 
+func TestTransitionInCallbacks(t *testing.T) {
+	var fsm *FSM
+	var afterFinishCalled bool
+	fsm = NewFSM(
+		"start",
+		Events{
+			{Name: "run", Src: []string{"start"}, Dst: "end"},
+			{Name: "finish", Src: []string{"end"}, Dst: "finished"},
+			{Name: "reset", Src: []string{"end", "finished"}, Dst: "start"},
+		},
+		Callbacks{
+			"enter_end": func(ctx context.Context, e *Event) {
+				if err := e.FSM.Event(ctx, "finish"); err != nil {
+					fmt.Println(err)
+				}
+			},
+			"after_finish": func(ctx context.Context, e *Event) {
+				afterFinishCalled = true
+				if e.Src != "end" {
+					panic(fmt.Sprintf("source should have been 'end' but was '%s'", e.Src))
+				}
+				if err := e.FSM.Event(ctx, "reset"); err != nil {
+					fmt.Println(err)
+				}
+			},
+		},
+	)
+
+	if err := fsm.Event(context.Background(), "run"); err != nil {
+		t.Errorf("expected no error, got %v", err)
+	}
+	if !afterFinishCalled {
+		t.Error("expected after_finish callback to have been executed but it wasn't")
+	}
+
+	currentState := fsm.Current()
+	if currentState != "start" {
+		t.Errorf("expected state to be 'start', was '%s'", currentState)
+	}
+}
+
 func TestContextInCallbacks(t *testing.T) {
 	var fsm *FSM
 	var enterEndAsyncWorkDone bool
@@ -711,6 +789,11 @@ func TestContextInCallbacks(t *testing.T) {
 					<-ctx.Done()
 					enterEndAsyncWorkDone = true
 				}()
+
+				<-ctx.Done()
+				if err := e.FSM.Event(ctx, "finish"); err != nil {
+					e.Err = fmt.Errorf("transitioning to the finished state failed: %w", err)
+				}
 			},
 		},
 	)
@@ -719,7 +802,10 @@ func TestContextInCallbacks(t *testing.T) {
 	go func() {
 		cancel()
 	}()
-	fsm.Event(ctx, "run")
+	err := fsm.Event(ctx, "run")
+	if !errors.Is(err, context.Canceled) {
+		t.Errorf("expected 'context canceled' error, got %v", err)
+	}
 	time.Sleep(20 * time.Millisecond)
 
 	if !enterEndAsyncWorkDone {
diff --git a/uncancel_context.go b/uncancel_context.go
new file mode 100644
index 0000000..eabdeac
--- /dev/null
+++ b/uncancel_context.go
@@ -0,0 +1,21 @@
+package fsm
+
+import (
+	"context"
+	"time"
+)
+
+type uncancel struct {
+	context.Context
+}
+
+func (*uncancel) Deadline() (deadline time.Time, ok bool) { return }
+func (*uncancel) Done() <-chan struct{}                   { return nil }
+func (*uncancel) Err() error                              { return nil }
+
+// uncancelContext returns a context which ignores the cancellation of the parent and only keeps the values.
+// Also returns a new cancel function.
+// This is useful to keep a background task running while the initial request is finished.
+func uncancelContext(ctx context.Context) (context.Context, context.CancelFunc) {
+	return context.WithCancel(&uncancel{ctx})
+}
diff --git a/uncancel_context_test.go b/uncancel_context_test.go
new file mode 100644
index 0000000..086da78
--- /dev/null
+++ b/uncancel_context_test.go
@@ -0,0 +1,91 @@
+package fsm
+
+import (
+	"context"
+	"testing"
+)
+
+func TestUncancel(t *testing.T) {
+	t.Run("create a new context", func(t *testing.T) {
+		t.Run("and cancel it", func(t *testing.T) {
+			ctx := context.Background()
+			ctx = context.WithValue(ctx, "key1", "value1")
+			ctx, cancelFunc := context.WithCancel(ctx)
+			cancelFunc()
+
+			if ctx.Err() != context.Canceled {
+				t.Errorf("expected context error 'context canceled', got %v", ctx.Err())
+			}
+			select {
+			case <-ctx.Done():
+			default:
+				t.Error("expected context to be done but it wasn't")
+			}
+
+			t.Run("and uncancel it", func(t *testing.T) {
+				ctx, newCancelFunc := uncancelContext(ctx)
+				if ctx.Err() != nil {
+					t.Errorf("expected context error to be nil, got %v", ctx.Err())
+				}
+				select {
+				case <-ctx.Done():
+					t.Fail()
+				default:
+				}
+
+				t.Run("now it should still contain the values", func(t *testing.T) {
+					if ctx.Value("key1") != "value1" {
+						t.Errorf("expected context value of key 'key1' to be 'value1', got %v", ctx.Value("key1"))
+					}
+				})
+				t.Run("and cancel the child", func(t *testing.T) {
+					newCancelFunc()
+					if ctx.Err() != context.Canceled {
+						t.Errorf("expected context error 'context canceled', got %v", ctx.Err())
+					}
+					select {
+					case <-ctx.Done():
+					default:
+						t.Error("expected context to be done but it wasn't")
+					}
+				})
+			})
+		})
+		t.Run("and uncancel it", func(t *testing.T) {
+			ctx := context.Background()
+			parent := ctx
+			ctx, newCancelFunc := uncancelContext(ctx)
+			if ctx.Err() != nil {
+				t.Errorf("expected context error to be nil, got %v", ctx.Err())
+			}
+			select {
+			case <-ctx.Done():
+				t.Fail()
+			default:
+			}
+
+			t.Run("and cancel the child", func(t *testing.T) {
+				newCancelFunc()
+				if ctx.Err() != context.Canceled {
+					t.Errorf("expected context error 'context canceled', got %v", ctx.Err())
+				}
+				select {
+				case <-ctx.Done():
+				default:
+					t.Error("expected context to be done but it wasn't")
+				}
+
+				t.Run("and ensure the parent is not affected", func(t *testing.T) {
+					if parent.Err() != nil {
+						t.Errorf("expected parent context error to be nil, got %v", ctx.Err())
+					}
+					select {
+					case <-parent.Done():
+						t.Fail()
+					default:
+					}
+				})
+			})
+		})
+	})
+}