diff --git a/rollout/sync.go b/rollout/sync.go
index 167430a702..875949ee55 100644
--- a/rollout/sync.go
+++ b/rollout/sync.go
@@ -578,6 +578,19 @@ func isIndefiniteStep(r *v1alpha1.Rollout) bool {
 	return false
 }
 
+// isWaitingForReplicaSetScaleDown returns whether or not the rollout still has other replica sets with a scale down deadline annotation
+func isWaitingForReplicaSetScaleDown(r *v1alpha1.Rollout, newRS, stableRS *appsv1.ReplicaSet, allRSs []*appsv1.ReplicaSet) bool {
+	otherRSs := replicasetutil.GetOtherRSs(r, newRS, stableRS, allRSs)
+
+	for _, rs := range otherRSs {
+		if replicasetutil.HasScaleDownDeadline(rs) {
+			return true
+		}
+	}
+
+	return false
+}
+
 func (c *rolloutContext) calculateRolloutConditions(newStatus v1alpha1.RolloutStatus) v1alpha1.RolloutStatus {
 	isPaused := len(c.rollout.Status.PauseConditions) > 0 || c.rollout.Spec.Paused
 	isAborted := c.pauseContext.IsAborted()
@@ -663,7 +676,8 @@ func (c *rolloutContext) calculateRolloutConditions(newStatus v1alpha1.RolloutSt
 				conditions.RemoveRolloutCondition(&newStatus, v1alpha1.RolloutProgressing)
 			}
 			conditions.SetRolloutCondition(&newStatus, *condition)
-		case !isIndefiniteStep(c.rollout) && conditions.RolloutTimedOut(c.rollout, &newStatus):
+		case !isIndefiniteStep(c.rollout) && !isWaitingForReplicaSetScaleDown(c.rollout, c.newRS, c.stableRS, c.allRSs) && conditions.RolloutTimedOut(c.rollout, &newStatus):
+
 			// Update the rollout with a timeout condition. If the condition already exists,
 			// we ignore this update.
 			msg := fmt.Sprintf(conditions.RolloutTimeOutMessage, c.rollout.Name)
diff --git a/test/e2e/canary_test.go b/test/e2e/canary_test.go
index d42abb6a79..2c68ec8bd7 100644
--- a/test/e2e/canary_test.go
+++ b/test/e2e/canary_test.go
@@ -465,6 +465,31 @@ spec:
 		WaitForRolloutStatus("Healthy")
 }
 
+// TestCanaryScaleDownDelayWithProgressDeadline verifies that a rollout with a pending scale down doesn't trigger a ProgressDeadlineExceeded event and renders the rollout degraded
+func (s *CanarySuite) TestCanaryScaleDownDelayWithProgressDeadline() {
+	s.Given().
+		HealthyRollout(`@functional/canary-scaledowndelay.yaml`).
+		When().
+		UpdateSpec(`
+spec:
+  progressDeadlineSeconds: 5`).
+		Then().
+		When().
+		UpdateSpec(`
+spec:
+  template:
+    metadata:
+      annotations:
+        rev: two`). // update to revision 2
+		WaitForRolloutStatus("Healthy").
+		Sleep(10 * time.Second). // sleep > progressDeadlineSeconds
+		Then().
+		Assert(func(t *fixtures.Then) {
+			status := string(t.GetRollout().Status.Phase)
+			assert.Equal(s.T(), "Healthy", status)
+		})
+}
+
 // TestCanaryScaleDownDelay verifies canary uses a scaleDownDelay when traffic routing is used,
 // and verifies the annotation is properly managed
 func (s *CanarySuite) TestCanaryScaleDownDelay() {