diff --git a/contracts/streaming/src/lib.rs b/contracts/streaming/src/lib.rs
index 723100b..ebb31ef 100644
--- a/contracts/streaming/src/lib.rs
+++ b/contracts/streaming/src/lib.rs
@@ -293,6 +293,23 @@ pub struct CancelEvent {
     pub timestamp: u64,
 }
 
+/// Emitted when the sender partially cancels a stream via `partial_cancel`.
+///
+/// Unlike `cancel`, the stream is **not** terminated — only `amount_refunded` of
+/// the still-locked (unvested) balance is returned to the sender. The vesting
+/// schedule is re-anchored at the moment of the call so that funds already
+/// unlocked remain untouched, and the reduced remainder continues streaming
+/// linearly to `end_time`.
+#[soroban_sdk::contractevent]
+pub struct PartialCancelEvent {
+    pub stream_id: u64,
+    pub sender: Address,
+    pub recipient: Address,
+    pub amount_refunded: i128,
+    pub new_deposited_amount: i128,
+    pub timestamp: u64,
+}
+
 /// Emitted when the recipient transfers stream rights to a new address via `transfer_stream`.
 ///
 /// After this event, `new_recipient` becomes the new owner of the stream and can
@@ -1043,6 +1060,123 @@ impl StreamingContract {
         Ok(())
     }
 
+    // ── Write: Partial Cancel ────────────────────────────────────────────────
+
+    /// Partially cancel a stream. Only the sender can call this.
+    ///
+    /// Returns `amount` of the stream's still-locked (unvested) balance back
+    /// to the sender while leaving the stream **active** — this is the
+    /// non-terminal counterpart to [`cancel`], which returns the whole locked
+    /// balance and ends the stream.
+    ///
+    /// The vesting schedule is re-anchored at the current moment (mirroring
+    /// the re-anchoring [`top_up`] does in the opposite direction): whatever
+    /// is already unlocked as of `now` is frozen in place, and the reduced
+    /// remaining balance is spread linearly across the time left until
+    /// `end_time`.
+    ///
+    /// # Errors
+    /// - [`StreamError::StreamCancelled`] — the stream was already fully cancelled.
+    /// - [`StreamError::StreamEnded`] — the stream has already reached `end_time`.
+    /// - [`StreamError::InvalidAmount`] — `amount` is zero, negative, or exceeds
+    ///   the currently locked balance.
+    /// - [`StreamError::RateIsZero`] — the resulting remaining balance would
+    ///   produce a zero per-second streaming rate over the remaining duration.
+    pub fn partial_cancel(env: Env, stream_id: u64, amount: i128) -> Result<(), StreamError> {
+        let mut stream = Self::load_stream(&env, stream_id)?;
+
+        stream.sender.require_auth();
+        Self::require_not_paused(&env)?;
+
+        if stream.cancelled {
+            return Err(StreamError::StreamCancelled);
+        }
+
+        let now = env.ledger().timestamp();
+        if now >= stream.end_time {
+            return Err(StreamError::StreamEnded);
+        }
+
+        let unlocked = Self::unlocked_amount(&stream, now)?;
+        let locked = stream.deposited_amount - unlocked;
+
+        if amount <= 0 || amount > locked {
+            return Err(StreamError::InvalidAmount);
+        }
+
+        stream.deposited_amount = stream
+            .deposited_amount
+            .checked_sub(amount)
+            .expect("deposited_amount underflow");
+
+        // ── Re-anchor the vesting schedule ──────────────────────────────────
+        //
+        // Same idea as `top_up`'s re-anchoring, but shrinking the remaining
+        // balance instead of growing it. `unlocked_amount` stays the single
+        // source of truth for what has vested so far.
+        let remaining_seconds = (stream.end_time - now) as i128;
+
+        if now >= stream.cliff_time {
+            let remaining = stream
+                .deposited_amount
+                .checked_sub(unlocked)
+                .expect("deposited < unlocked — invariant broken");
+
+            let new_rate = if remaining_seconds > 0 {
+                remaining / remaining_seconds
+            } else {
+                0
+            };
+            if new_rate == 0 && remaining > 0 {
+                return Err(StreamError::RateIsZero);
+            }
+
+            stream.cliff_time = now;
+            stream.cliff_amount = unlocked;
+            stream.start_time = now;
+            stream.linear_amount = remaining;
+            stream.duration = remaining_seconds;
+            stream.amount_per_second = new_rate;
+        } else {
+            // Still before the cliff: nothing has unlocked yet, so the whole
+            // reduction comes out of the linear portion.
+            stream.linear_amount = stream
+                .linear_amount
+                .checked_sub(amount)
+                .expect("linear_amount underflow");
+            let new_rate = if stream.duration > 0 {
+                stream.linear_amount / stream.duration
+            } else {
+                0
+            };
+            if new_rate == 0 && stream.linear_amount > 0 {
+                return Err(StreamError::RateIsZero);
+            }
+            stream.amount_per_second = new_rate;
+        }
+
+        env.storage()
+            .persistent()
+            .set(&DataKey::Stream(stream_id), &stream);
+
+        Self::extend_stream_ttl(&env, stream_id);
+
+        let token_client = token::Client::new(&env, &stream.token);
+        token_client.transfer(&env.current_contract_address(), &stream.sender, &amount);
+
+        PartialCancelEvent {
+            stream_id,
+            sender: stream.sender.clone(),
+            recipient: stream.recipient.clone(),
+            amount_refunded: amount,
+            new_deposited_amount: stream.deposited_amount,
+            timestamp: now,
+        }
+        .publish(&env);
+
+        Ok(())
+    }
+
     // ── Read: Stream data ────────────────────────────────────────────────────
 
     /// Get a stream by ID.
diff --git a/contracts/streaming/src/test_features.rs b/contracts/streaming/src/test_features.rs
index 8e7f189..999f0a7 100644
--- a/contracts/streaming/src/test_features.rs
+++ b/contracts/streaming/src/test_features.rs
@@ -550,3 +550,96 @@ fn test_get_received_stream_count_accurate() {
     let count = client.get_received_stream_count(&t.recipient);
     assert_eq!(count, 5);
 }
+
+// ─── #217: partial_cancel ────────────────────────────────────────────────────
+
+#[test]
+fn test_partial_cancel_returns_locked_funds_and_keeps_stream_active() {
+    let t = TestEnv::setup();
+    let now = 1_000_000u64;
+    t.set_time(now);
+
+    let client = t.client();
+    let params = t.default_params(now);
+    let total = params.total_amount;
+
+    t.token().approve(
+        &t.sender,
+        &t.contract_id,
+        &total,
+        &(t.env.ledger().sequence() + 500),
+    );
+    let stream_id = client.create_stream(&t.sender, &params);
+
+    t.set_time(now + 500);
+
+    let withdrawable_before = client.get_withdrawable(&stream_id);
+    let locked_before = total - withdrawable_before;
+    let refund = locked_before / 2;
+
+    client.partial_cancel(&stream_id, &refund);
+
+    let stream = client.get_stream(&stream_id);
+    // Stream stays active — only `cancel` terminates it.
+    assert!(!stream.cancelled);
+    assert_eq!(stream.deposited_amount, total - refund);
+
+    // What was already unlocked before the call is preserved.
+    let withdrawable_after = client.get_withdrawable(&stream_id);
+    assert_eq!(withdrawable_after, withdrawable_before);
+
+    // The stream keeps streaming afterwards.
+    t.set_time(now + 600);
+    let withdrawable_later = client.get_withdrawable(&stream_id);
+    assert!(withdrawable_later > withdrawable_after);
+}
+
+#[test]
+#[should_panic(expected = "Error(Contract, #1)")]
+fn test_partial_cancel_rejects_amount_exceeding_locked_balance() {
+    let t = TestEnv::setup();
+    let now = 1_000_000u64;
+    t.set_time(now);
+
+    let client = t.client();
+    let params = t.default_params(now);
+    let total = params.total_amount;
+
+    t.token().approve(
+        &t.sender,
+        &t.contract_id,
+        &total,
+        &(t.env.ledger().sequence() + 500),
+    );
+    let stream_id = client.create_stream(&t.sender, &params);
+
+    t.set_time(now + 500);
+
+    // Requesting more than the currently locked balance must fail.
+    client.partial_cancel(&stream_id, &total);
+}
+
+#[test]
+#[should_panic(expected = "Error(Contract, #6)")]
+fn test_partial_cancel_rejects_already_cancelled_stream() {
+    let t = TestEnv::setup();
+    let now = 1_000_000u64;
+    t.set_time(now);
+
+    let client = t.client();
+    let params = t.default_params(now);
+    let total = params.total_amount;
+
+    t.token().approve(
+        &t.sender,
+        &t.contract_id,
+        &total,
+        &(t.env.ledger().sequence() + 500),
+    );
+    let stream_id = client.create_stream(&t.sender, &params);
+
+    t.set_time(now + 500);
+    client.cancel(&stream_id);
+
+    client.partial_cancel(&stream_id, &1);
+}