diff --git a/pkg/states/state_manager.go b/pkg/states/state_manager.go
index 3b74885c..61cf76dc 100644
--- a/pkg/states/state_manager.go
+++ b/pkg/states/state_manager.go
@@ -14,6 +14,7 @@ func SetApprovedManually(userSignup *toolchainv1alpha1.UserSignup, approved bool
 		setState(userSignup, toolchainv1alpha1.UserSignupStateVerificationRequired, false)
 		setState(userSignup, toolchainv1alpha1.UserSignupStateDeactivating, false)
 		setState(userSignup, toolchainv1alpha1.UserSignupStateDeactivated, false)
+		setState(userSignup, toolchainv1alpha1.UserSignupStateRejected, false)
 	}
 }
 
diff --git a/pkg/states/state_manager_test.go b/pkg/states/state_manager_test.go
index 92723774..d1976ae3 100644
--- a/pkg/states/state_manager_test.go
+++ b/pkg/states/state_manager_test.go
@@ -41,6 +41,14 @@ func TestStateManager(t *testing.T) {
 
 		// Setting approved should remove deactivating
 		require.False(t, Deactivating(u))
+
+		SetApprovedManually(u, false)
+
+		SetRejected(u, true)
+		SetApprovedManually(u, true)
+
+		// Setting approved should remove rejected
+		require.False(t, Rejected(u))
 	})
 
 	t.Run("test verification required", func(t *testing.T) {