diff --git a/tests/v1/core/test_scheduler.py b/tests/v1/core/test_scheduler.py
index 07d7c12a4f5e..70e869178804 100644
--- a/tests/v1/core/test_scheduler.py
+++ b/tests/v1/core/test_scheduler.py
@@ -1293,7 +1293,8 @@ def create_requests_with_priority(
         mm_positions: Optional[list[list[PlaceholderRange]]] = None,
         max_tokens: int = 16,
         stop_token_ids: Optional[list[int]] = None,
-        prompt_logprobs: Optional[int] = None):
+        prompt_logprobs: Optional[int] = None,
+        starting_idx: int = 0):
     """Create requests with specified priorities and arrival times."""
     assert len(priorities) == num_requests
     if arrival_times is not None:
@@ -1315,8 +1316,8 @@ def create_requests_with_priority(
             mm_position = None
             mm_kwargs = None
         request = Request(
-            request_id=f"{i}",
-            prompt_token_ids=[i] * num_tokens,
+            request_id=f"{i + starting_idx}",
+            prompt_token_ids=[i + starting_idx] * num_tokens,
             sampling_params=sampling_params,
             pooling_params=None,
             multi_modal_kwargs=mm_kwargs,
@@ -1813,3 +1814,87 @@ def test_schedule_skip_tokenizer_init_structured_output_request():
     assert len(output.scheduled_new_reqs) == 0
     assert len(scheduler.running) == 0
     assert len(scheduler.waiting) == 1
+
+
+def test_priority_scheduling_preemption_when_out_of_kv():
+    """Test that priority scheduling preempts lower priority requests
+    when out of KV cache space."""
+    # Create scheduler with very limited memory to force preemption
+    scheduler = create_scheduler_with_priority(
+        max_num_seqs=2,  # Allow multiple requests
+        max_num_batched_tokens=200,
+        num_blocks=5,  # Can hold 64 tokens (first block is null)
+        block_size=16,  # Standard block size
+    )
+
+    # Create a request and schedule it
+    request_low = create_requests_with_priority(
+        num_requests=1,
+        priorities=[1],
+        arrival_times=[0.0],
+        num_tokens=30,
+        starting_idx=0,
+    )[0]
+    scheduler.add_request(request_low)
+    output = scheduler.schedule()
+    assert len(output.scheduled_new_reqs) == 1
+    assert len(scheduler.waiting) == 0
+    assert len(scheduler.running) == 1
+
+    # Simulate model execution
+    model_output = ModelRunnerOutput(
+        req_ids=[request_low.request_id],
+        req_id_to_index={request_low.request_id: 0},
+        sampled_token_ids=[[100]],
+        # spec_token_ids=None,
+        logprobs=None,
+        prompt_logprobs_dict={},
+        pooler_output=[],
+    )
+    scheduler.update_from_output(output, model_output)
+
+    # Create a high priority request and schedule it
+    request_high = create_requests_with_priority(
+        num_requests=1,
+        priorities=[0],
+        arrival_times=[1.0],
+        num_tokens=32,
+        starting_idx=1,
+    )[0]
+    scheduler.add_request(request_high)
+    output = scheduler.schedule()
+    # KV cache should be full at this point
+    assert scheduler.kv_cache_manager.block_pool.get_num_free_blocks() == 0
+    assert len(output.scheduled_new_reqs) == 1
+    assert output.scheduled_cached_reqs.num_reqs == 1
+    assert len(scheduler.waiting) == 0
+    assert len(scheduler.running) == 2
+
+    # Simulate model execution
+    requests = [request_low, request_high]
+    model_output = ModelRunnerOutput(
+        req_ids=[req.request_id for req in requests],
+        req_id_to_index={
+            req.request_id: i
+            for i, req in enumerate(requests)
+        },
+        sampled_token_ids=[[100] for _ in requests],
+        # spec_token_ids=None,
+        logprobs=None,
+        prompt_logprobs_dict={},
+        pooler_output=[],
+    )
+    scheduler.update_from_output(output, model_output)
+
+    # Schedule again - this should trigger preemption
+    # req_low needs 32 tokens = 2 blocks
+    # req_high needs 33 tokens = 3 blocks
+    # so doesn't fit in 4 blocks.
+    output = scheduler.schedule()
+
+    # Should have preempted req_low
+    assert len(output.scheduled_new_reqs) == 0
+    assert output.scheduled_cached_reqs.num_reqs == 1
+    assert output.scheduled_cached_reqs.req_ids[0] == request_high.request_id
+    assert len(scheduler.waiting) == 1
+    assert len(scheduler.running) == 1
\ No newline at end of file
diff --git a/vllm/v1/core/sched/scheduler.py b/vllm/v1/core/sched/scheduler.py
index 14a914d8f2f0..3bd2fe2f0515 100644
--- a/vllm/v1/core/sched/scheduler.py
+++ b/vllm/v1/core/sched/scheduler.py
@@ -253,6 +253,8 @@ class Scheduler(SchedulerInterface):
                             key=lambda r: (r.priority, r.arrival_time),
                         )
                         self.running.remove(preempted_req)
+                        if preempted_req in scheduled_running_reqs:
+                            scheduled_running_reqs.remove(preempted_req)
                     else:
                         preempted_req = self.running.pop()