diff --git a/internal/diff/diff.go b/internal/diff/diff.go
index 3f885666..538960c5 100644
--- a/internal/diff/diff.go
+++ b/internal/diff/diff.go
@@ -648,8 +648,9 @@ func applyHighlighting(content string, segments []Segment, segmentType LineType,
 			r, g, b, _ = bgColor.RGBA()
 			sb.WriteString(fmt.Sprintf("%d;%d;%dm", r>>8, g>>8, b>>8))
 			sb.WriteString(char)
-			// Reset foreground and background
-			sb.WriteString("\x1b[39m")
+			
+			// Full reset of all attributes to ensure clean state
+			sb.WriteString("\x1b[0m")
 
 			// Reapply the original ANSI sequence
 			sb.WriteString(currentStyle)
diff --git a/internal/diff/diff_test.go b/internal/diff/diff_test.go
new file mode 100644
index 00000000..4c014e45
--- /dev/null
+++ b/internal/diff/diff_test.go
@@ -0,0 +1,103 @@
+package diff
+
+import (
+	"fmt"
+	"testing"
+
+	"github.com/charmbracelet/lipgloss"
+	"github.com/stretchr/testify/assert"
+)
+
+// TestApplyHighlighting tests the applyHighlighting function with various ANSI sequences
+func TestApplyHighlighting(t *testing.T) {
+	t.Parallel()
+
+	// Mock theme colors for testing
+	mockHighlightBg := lipgloss.AdaptiveColor{
+		Dark:  "#FF0000", // Red background for highlighting
+		Light: "#FF0000",
+	}
+
+	// Test cases
+	tests := []struct {
+		name           string
+		content        string
+		segments       []Segment
+		segmentType    LineType
+		expectContains string
+	}{
+		{
+			name:        "Simple text with no ANSI",
+			content:     "This is a test",
+			segments:    []Segment{{Start: 0, End: 4, Type: LineAdded}},
+			segmentType: LineAdded,
+			// Should contain full reset sequence after highlighting
+			expectContains: "\x1b[0m",
+		},
+		{
+			name:        "Text with existing ANSI foreground",
+			content:     "This \x1b[32mis\x1b[0m a test", // "is" in green
+			segments:    []Segment{{Start: 5, End: 7, Type: LineAdded}},
+			segmentType: LineAdded,
+			// Should contain full reset sequence after highlighting
+			expectContains: "\x1b[0m",
+		},
+		{
+			name:        "Text with existing ANSI background",
+			content:     "This \x1b[42mis\x1b[0m a test", // "is" with green background
+			segments:    []Segment{{Start: 5, End: 7, Type: LineAdded}},
+			segmentType: LineAdded,
+			// Should contain full reset sequence after highlighting
+			expectContains: "\x1b[0m",
+		},
+		{
+			name:        "Text with complex ANSI styling",
+			content:     "This \x1b[1;32;45mis\x1b[0m a test", // "is" bold green on magenta
+			segments:    []Segment{{Start: 5, End: 7, Type: LineAdded}},
+			segmentType: LineAdded,
+			// Should contain full reset sequence after highlighting
+			expectContains: "\x1b[0m",
+		},
+	}
+
+	for _, tc := range tests {
+		tc := tc // Capture range variable for parallel testing
+		t.Run(tc.name, func(t *testing.T) {
+			t.Parallel()
+			result := applyHighlighting(tc.content, tc.segments, tc.segmentType, mockHighlightBg)
+			
+			// Verify the result contains the expected sequence
+			assert.Contains(t, result, tc.expectContains, 
+				"Result should contain full reset sequence")
+			
+			// Print the result for manual inspection if needed
+			if t.Failed() {
+				fmt.Printf("Original: %q\nResult: %q\n", tc.content, result)
+			}
+		})
+	}
+}
+
+// TestApplyHighlightingWithMultipleSegments tests highlighting multiple segments
+func TestApplyHighlightingWithMultipleSegments(t *testing.T) {
+	t.Parallel()
+
+	// Mock theme colors for testing
+	mockHighlightBg := lipgloss.AdaptiveColor{
+		Dark:  "#FF0000", // Red background for highlighting
+		Light: "#FF0000",
+	}
+
+	content := "This is a test with multiple segments to highlight"
+	segments := []Segment{
+		{Start: 0, End: 4, Type: LineAdded},   // "This"
+		{Start: 8, End: 9, Type: LineAdded},   // "a"
+		{Start: 15, End: 23, Type: LineAdded}, // "multiple"
+	}
+
+	result := applyHighlighting(content, segments, LineAdded, mockHighlightBg)
+	
+	// Verify the result contains the full reset sequence
+	assert.Contains(t, result, "\x1b[0m", 
+		"Result should contain full reset sequence")
+}
\ No newline at end of file