diff -r 3e66e4517744 -r 5228a6dc212b mercurial/merge.py
--- a/mercurial/merge.py	Tue Oct 19 16:14:46 2021 -0700
+++ b/mercurial/merge.py	Tue Oct 19 16:14:53 2021 -0700
@@ -1713,6 +1713,10 @@
             progress.increment(item=f, total=numupdates)
             ms.resolve(f, wctx)
 
+    except error.InterventionRequired:
+        # If the user has merge.on-failure=halt, catch the error and close the
+        # merge state "properly".
+        pass
     finally:
         ms.commit()