diff --git a/src/ONYXKEYS.ts b/src/ONYXKEYS.ts
index 2b3ae6da46ac..1eafd9d898ec 100755
--- a/src/ONYXKEYS.ts
+++ b/src/ONYXKEYS.ts
@@ -336,9 +336,10 @@ const ONYXKEYS = {
         SECURITY_GROUP: 'securityGroup_',
         TRANSACTION: 'transactions_',
         TRANSACTION_VIOLATIONS: 'transactionViolations_',
+        TRANSACTION_DRAFT: 'transactionsDraft_',
 
         // Holds temporary transactions used during the creation and edit flow
-        TRANSACTION_DRAFT: 'transactionsDraft_',
+        TRANSACTION_BACKUP: 'transactionsBackup_',
         SPLIT_TRANSACTION_DRAFT: 'splitTransactionDraft_',
         PRIVATE_NOTES_DRAFT: 'privateNotesDraft_',
         NEXT_STEP: 'reportNextStep_',
@@ -538,6 +539,7 @@ type OnyxCollectionValuesMapping = {
     [ONYXKEYS.COLLECTION.SECURITY_GROUP]: OnyxTypes.SecurityGroup;
     [ONYXKEYS.COLLECTION.TRANSACTION]: OnyxTypes.Transaction;
     [ONYXKEYS.COLLECTION.TRANSACTION_DRAFT]: OnyxTypes.Transaction;
+    [ONYXKEYS.COLLECTION.TRANSACTION_BACKUP]: OnyxTypes.Transaction;
     [ONYXKEYS.COLLECTION.TRANSACTION_VIOLATIONS]: OnyxTypes.TransactionViolations;
     [ONYXKEYS.COLLECTION.SPLIT_TRANSACTION_DRAFT]: OnyxTypes.Transaction;
     [ONYXKEYS.COLLECTION.POLICY_RECENTLY_USED_TAGS]: OnyxTypes.RecentlyUsedTags;
diff --git a/src/libs/actions/TransactionEdit.ts b/src/libs/actions/TransactionEdit.ts
index b1710aa72cbb..26219d72920e 100644
--- a/src/libs/actions/TransactionEdit.ts
+++ b/src/libs/actions/TransactionEdit.ts
@@ -16,24 +16,24 @@ function createBackupTransaction(transaction: OnyxEntry<Transaction>) {
     };
 
     // Use set so that it will always fully overwrite any backup transaction that could have existed before
-    Onyx.set(`${ONYXKEYS.COLLECTION.TRANSACTION_DRAFT}${transaction.transactionID}`, newTransaction);
+    Onyx.set(`${ONYXKEYS.COLLECTION.TRANSACTION_BACKUP}${transaction.transactionID}`, newTransaction);
 }
 
 /**
  * Removes a transaction from Onyx that was only used temporary in the edit flow
  */
 function removeBackupTransaction(transactionID: string) {
-    Onyx.set(`${ONYXKEYS.COLLECTION.TRANSACTION_DRAFT}${transactionID}`, null);
+    Onyx.set(`${ONYXKEYS.COLLECTION.TRANSACTION_BACKUP}${transactionID}`, null);
 }
 
-function restoreOriginalTransactionFromBackup(transactionID: string) {
+function restoreOriginalTransactionFromBackup(transactionID: string, isDraft: boolean) {
     const connectionID = Onyx.connect({
-        key: `${ONYXKEYS.COLLECTION.TRANSACTION_DRAFT}${transactionID}`,
+        key: `${ONYXKEYS.COLLECTION.TRANSACTION_BACKUP}${transactionID}`,
         callback: (backupTransaction) => {
             Onyx.disconnect(connectionID);
 
             // Use set to completely overwrite the original transaction
-            Onyx.set(`${ONYXKEYS.COLLECTION.TRANSACTION}${transactionID}`, backupTransaction);
+            Onyx.set(`${isDraft ? ONYXKEYS.COLLECTION.TRANSACTION_DRAFT : ONYXKEYS.COLLECTION.TRANSACTION}${transactionID}`, backupTransaction);
             removeBackupTransaction(transactionID);
         },
     });
diff --git a/src/pages/iou/request/step/IOURequestStepDistance.js b/src/pages/iou/request/step/IOURequestStepDistance.js
index 145bd6ff6e33..398b2f83712b 100644
--- a/src/pages/iou/request/step/IOURequestStepDistance.js
+++ b/src/pages/iou/request/step/IOURequestStepDistance.js
@@ -22,6 +22,7 @@ import variables from '@styles/variables';
 import * as IOU from '@userActions/IOU';
 import * as MapboxToken from '@userActions/MapboxToken';
 import * as Transaction from '@userActions/Transaction';
+import * as TransactionEdit from '@userActions/TransactionEdit';
 import CONST from '@src/CONST';
 import ONYXKEYS from '@src/ONYXKEYS';
 import ROUTES from '@src/ROUTES';
@@ -84,6 +85,7 @@ function IOURequestStepDistance({
     const duplicateWaypointsError = useMemo(() => nonEmptyWaypointsCount >= 2 && _.size(validatedWaypoints) !== nonEmptyWaypointsCount, [nonEmptyWaypointsCount, validatedWaypoints]);
     const atLeastTwoDifferentWaypointsError = useMemo(() => _.size(validatedWaypoints) < 2, [validatedWaypoints]);
     const isEditing = action === CONST.IOU.ACTION.EDIT;
+    const transactionWasSaved = useRef(false);
     const isCreatingNewRequest = !(backTo || isEditing);
 
     useEffect(() => {
@@ -112,6 +114,29 @@ function IOURequestStepDistance({
         setShouldShowAtLeastTwoDifferentWaypointsError(false);
     }, [atLeastTwoDifferentWaypointsError, duplicateWaypointsError, hasRouteError, isLoading, isLoadingRoute, nonEmptyWaypointsCount, transaction]);
 
+    // This effect runs when the component is mounted and unmounted. It's purpose is to be able to properly
+    // discard changes if the user cancels out of making any changes. This is accomplished by backing up the
+    // original transaction, letting the user modify the current transaction, and then if the user ever
+    // cancels out of the modal without saving changes, the original transaction is restored from the backup.
+    useEffect(() => {
+        if (isCreatingNewRequest) {
+            return () => {};
+        }
+
+        // On mount, create the backup transaction.
+        TransactionEdit.createBackupTransaction(transaction);
+
+        return () => {
+            // If the user cancels out of the modal without without saving changes, then the original transaction
+            // needs to be restored from the backup so that all changes are removed.
+            if (transactionWasSaved.current) {
+                return;
+            }
+            TransactionEdit.restoreOriginalTransactionFromBackup(lodashGet(transaction, 'transactionID', ''), action === CONST.IOU.ACTION.CREATE);
+        };
+        // eslint-disable-next-line react-hooks/exhaustive-deps
+    }, []);
+
     const navigateBack = () => {
         Navigation.goBack(backTo);
     };
@@ -191,6 +216,9 @@ function IOURequestStepDistance({
             setShouldShowAtLeastTwoDifferentWaypointsError(true);
             return;
         }
+        if (!isCreatingNewRequest) {
+            transactionWasSaved.current = true;
+        }
         if (isEditing) {
             // If nothing was changed, simply go to transaction thread
             // We compare only addresses because numbers are rounded while backup
@@ -213,6 +241,7 @@ function IOURequestStepDistance({
         hasRouteError,
         isLoadingRoute,
         isLoading,
+        isCreatingNewRequest,
         isEditing,
         navigateToNextStep,
         transactionBackup,
@@ -292,7 +321,10 @@ export default compose(
     withFullTransactionOrNotFound,
     withOnyx({
         transactionBackup: {
-            key: (props) => `${ONYXKEYS.COLLECTION.TRANSACTION_DRAFT}${props.transactionID}`,
+            key: ({route}) => {
+                const transactionID = lodashGet(route, 'params.transactionID', 0);
+                return `${ONYXKEYS.COLLECTION.TRANSACTION_BACKUP}${transactionID}`;
+            },
         },
     }),
 )(IOURequestStepDistance);