diff --git a/services/headless-lms/models/.sqlx/query-375b467ba026680d07ba6fa844de91afd942e86b2715431e41b6788df0d2b3c0.json b/services/headless-lms/models/.sqlx/query-3ad1dd4e432eba7a681e55b02ca8db9f4f52c921431259b90dd9bd3c79a6aa76.json
similarity index 91%
rename from services/headless-lms/models/.sqlx/query-375b467ba026680d07ba6fa844de91afd942e86b2715431e41b6788df0d2b3c0.json
rename to services/headless-lms/models/.sqlx/query-3ad1dd4e432eba7a681e55b02ca8db9f4f52c921431259b90dd9bd3c79a6aa76.json
index 5b8c573eaeae..835f2088c1f7 100644
--- a/services/headless-lms/models/.sqlx/query-375b467ba026680d07ba6fa844de91afd942e86b2715431e41b6788df0d2b3c0.json
+++ b/services/headless-lms/models/.sqlx/query-3ad1dd4e432eba7a681e55b02ca8db9f4f52c921431259b90dd9bd3c79a6aa76.json
@@ -1,6 +1,6 @@
 {
   "db_name": "PostgreSQL",
-  "query": "SELECT * FROM users WHERE upstream_id = $1",
+  "query": "SELECT * FROM users WHERE upstream_id = $1 AND deleted_at IS NULL",
   "describe": {
     "columns": [
       {
@@ -84,5 +84,5 @@
       true
     ]
   },
-  "hash": "375b467ba026680d07ba6fa844de91afd942e86b2715431e41b6788df0d2b3c0"
+  "hash": "3ad1dd4e432eba7a681e55b02ca8db9f4f52c921431259b90dd9bd3c79a6aa76"
 }
diff --git a/services/headless-lms/models/src/users.rs b/services/headless-lms/models/src/users.rs
index ba8f8a262199..802b7265f9c5 100644
--- a/services/headless-lms/models/src/users.rs
+++ b/services/headless-lms/models/src/users.rs
@@ -128,7 +128,7 @@ pub async fn find_by_upstream_id(
 ) -> ModelResult<Option<User>> {
     let user = sqlx::query_as!(
         User,
-        "SELECT * FROM users WHERE upstream_id = $1",
+        "SELECT * FROM users WHERE upstream_id = $1 AND deleted_at IS NULL",
         upstream_id
     )
     .fetch_optional(conn)
@@ -209,7 +209,7 @@ pub async fn update_email_for_user(
 
     let user = sqlx::query_as!(
         User,
-        "SELECT * FROM users WHERE upstream_id = $1",
+        "SELECT * FROM users WHERE upstream_id = $1 AND deleted_at IS NULL",
         upstream_id
     )
     .fetch_one(&mut *tx)
diff --git a/services/headless-lms/server/src/controllers/auth.rs b/services/headless-lms/server/src/controllers/auth.rs
index 735e391b7993..70456306626e 100644
--- a/services/headless-lms/server/src/controllers/auth.rs
+++ b/services/headless-lms/server/src/controllers/auth.rs
@@ -218,24 +218,37 @@ pub async fn signup(
         .await;
         let user = match user {
             Ok(user) => user,
-            Err(error) => match error.error_type() {
-                ModelErrorType::DatabaseConstraint { constraint, .. }
-                    if constraint == "users_email"
-                        || constraint == "users_upstream_id_active_uniq_idx" =>
-                {
-                    // Either the email or the upstream_id already belongs to an existing account,
-                    // so the caller already has a courses.mooc.fi user.
-                    let token = skip_authorize();
-                    return token.authorized_ok(web::Json(SignupResponse::EmailAlreadyExists));
-                }
-                _ => {
-                    return Err(controller_err!(
-                        InternalServerError,
-                        "Failed to insert user.".to_string(),
-                        anyhow!(error)
-                    ));
-                }
-            },
+            Err(error)
+                if matches!(
+                    error.error_type(),
+                    ModelErrorType::DatabaseConstraint { constraint, .. }
+                        if constraint == "users_email"
+                ) =>
+            {
+                let token = skip_authorize();
+                return token.authorized_ok(web::Json(SignupResponse::EmailAlreadyExists));
+            }
+            // TMC synchronously posts the new user back to /api/v0/tmc-server/users/create
+            // while post_new_user_to_tmc is still in flight, so that callback has usually
+            // already created the user; continue with the existing row.
+            Err(error)
+                if matches!(
+                    error.error_type(),
+                    ModelErrorType::DatabaseConstraint { constraint, .. }
+                        if constraint == "users_upstream_id_active_uniq_idx"
+                ) =>
+            {
+                models::users::find_by_upstream_id(&mut conn, upstream_id)
+                    .await?
+                    .ok_or(error)?
+            }
+            Err(error) => {
+                return Err(controller_err!(
+                    InternalServerError,
+                    "Failed to insert user.".to_string(),
+                    anyhow!(error)
+                ));
+            }
         };
 
         let country = user_details.country.clone();