diff --git a/src/nvim/edit.c b/src/nvim/edit.c
index 08a2f42f74..ca62679fab 100644
--- a/src/nvim/edit.c
+++ b/src/nvim/edit.c
@@ -462,7 +462,7 @@ static void insert_enter(InsertState *s)
 
   // Always update o_lnum, so that a "CTRL-O ." that adds a line
   // still puts the cursor back after the inserted text.
-  if (ins_at_eol && gchar_cursor() == NUL) {
+  if (ins_at_eol) {
     o_lnum = curwin->w_cursor.lnum;
   }
 
diff --git a/test/functional/insert/ctrl_o_spec.lua b/test/functional/insert/ctrl_o_spec.lua
new file mode 100644
index 0000000000..fbdff8a3a0
--- /dev/null
+++ b/test/functional/insert/ctrl_o_spec.lua
@@ -0,0 +1,43 @@
+local helpers = require('test.functional.helpers')(after_each)
+local clear = helpers.clear
+local eq = helpers.eq
+local eval = helpers.eval
+local expect = helpers.expect
+local feed = helpers.feed
+local insert = helpers.insert
+
+describe('insert-mode Ctrl-O', function()
+  before_each(clear)
+
+  it('enters command mode for one command', function()
+    feed('ihello world<C-o>')
+    feed(':let ctrlo = "test"<CR>')
+    feed('iii')
+    expect('hello worldiii')
+    eq(1, eval('ctrlo ==# "test"'))
+  end)
+
+  it('re-enters insert mode at the end of the line when running startinsert', function()
+    -- #6962
+    feed('ihello world<C-o>')
+    feed(':startinsert<CR>')
+    feed('iii')
+    expect('hello worldiii')
+  end)
+
+  it('re-enters insert mode at the beginning of the line when running startinsert', function()
+    insert('hello world')
+    feed('0<C-o>')
+    feed(':startinsert<CR>')
+    feed('aaa')
+    expect('aaahello world')
+  end)
+
+  it('re-enters insert mode in the middle of the line when running startinsert', function()
+    insert('hello world')
+    feed('bi<C-o>')
+    feed(':startinsert<CR>')
+    feed('ooo')
+    expect('hello oooworld')
+  end)
+end)