diff --git a/CHANGELOG.md b/CHANGELOG.md
index 2025ce83652a..12968844377a 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -94,6 +94,10 @@ Every module contains its own CHANGELOG.md. Please refer to the module you are i
 * (crypto) [#19371](https://github.com/cosmos/cosmos-sdk/pull/19371) Avoid cli redundant log in stdout, log to stderr instead.
 * (client) [#19393](https://github.com/cosmos/cosmos-sdk/pull/19393/) Add `ReadDefaultValuesFromDefaultClientConfig` to populate the default values from the default client config in client.Context without creating a app folder.
 
+### State Machine Breaking
+
+* (x/staking) [#18841](https://github.com/cosmos/cosmos-sdk/pull/18841) In a undelegation or redelegation if the shares being left delegated correspond to less than 1 token (in base denom) the entire delegation gets removed.
+
 ### API Breaking Changes
 
 * (x/consensus) [#19488](https://github.com/cosmos/cosmos-sdk/pull/19488) Consensus module creation takes `appmodule.Environment` instead of individual services.
@@ -1234,7 +1238,7 @@ replace github.com/confio/ics23/go => github.com/cosmos/cosmos-sdk/ics23/go v0.8
 * (x/group) [#13214](https://github.com/cosmos/cosmos-sdk/pull/13214) Add `withdraw-proposal` command to group module's CLI transaction commands.
 * (x/auth) [#13048](https://github.com/cosmos/cosmos-sdk/pull/13048) Add handling of AccountNumberStoreKeyPrefix to the simulation decoder.
 * (simapp) [#13107](https://github.com/cosmos/cosmos-sdk/pull/13107) Call `SetIAVLCacheSize` with the configured value in simapp.
-* [#13301](https://github.com/cosmos/cosmos-sdk/pull/13301) Keep the balance query endpoint compatible with legacy blocks
+* [#13301](https://github.com/cosmos/cosmos-sdk/pull/13301) Keep the balance query endpoint compatible with legacy blocks
 * [#13321](https://github.com/cosmos/cosmos-sdk/pull/13321) Add flag to disable fast node migration and usage.
 
 ### Bug Fixes
diff --git a/x/staking/keeper/delegation.go b/x/staking/keeper/delegation.go
index 4dbe93dd81c6..6b70d5121a78 100644
--- a/x/staking/keeper/delegation.go
+++ b/x/staking/keeper/delegation.go
@@ -1195,11 +1195,15 @@ func (k Keeper) ValidateUnbondAmount(
 		return shares, errorsmod.Wrap(sdkerrors.ErrInvalidRequest, "invalid shares amount")
 	}
 
-	// Cap the shares at the delegation's shares. Shares being greater could occur
-	// due to rounding, however we don't want to truncate the shares or take the
-	// minimum because we want to allow for the full withdraw of shares from a
-	// delegation.
-	if shares.GT(delShares) {
+	// Depending on the share, amount can be smaller than unit amount(1stake).
+	// If the remain amount after unbonding is smaller than the minimum share,
+	// it's completely unbonded to avoid leaving dust shares.
+	tolerance, err := validator.SharesFromTokens(math.OneInt())
+	if err != nil {
+		return shares, err
+	}
+
+	if delShares.Sub(shares).LT(tolerance) {
 		shares = delShares
 	}
 
diff --git a/x/staking/keeper/delegation_test.go b/x/staking/keeper/delegation_test.go
index c2200e04867e..883073748965 100644
--- a/x/staking/keeper/delegation_test.go
+++ b/x/staking/keeper/delegation_test.go
@@ -1176,3 +1176,51 @@ func (s *KeeperTestSuite) TestSetUnbondingDelegationEntry() {
 	// unbondingID comes from a global counter -> gaps in unbondingIDs are OK as long as every unbondingID is unique
 	require.Equal(uint64(2), resUnbonding.Entries[1].UnbondingId)
 }
+
+func (s *KeeperTestSuite) TestUndelegateWithDustShare() {
+	ctx, keeper := s.ctx, s.stakingKeeper
+	require := s.Require()
+
+	addrDels, valAddrs := createValAddrs(2)
+
+	s.accountKeeper.EXPECT().AddressCodec().Return(address.NewBech32Codec("cosmos")).AnyTimes()
+
+	// construct the validators[0] & slash 1stake
+	amt := math.NewInt(100)
+	validator := testutil.NewValidator(s.T(), valAddrs[0], PKs[0])
+	validator, _ = validator.AddTokensFromDel(amt)
+	validator = validator.RemoveTokens(math.NewInt(1))
+	validator = stakingkeeper.TestingUpdateValidator(keeper, ctx, validator, true)
+
+	// first add a validators[0] to delegate too
+	bond1to1 := stakingtypes.NewDelegation(addrDels[0].String(), valAddrs[0].String(), math.LegacyNewDec(100))
+	require.NoError(keeper.SetDelegation(ctx, bond1to1))
+	resBond, err := keeper.Delegations.Get(ctx, collections.Join(addrDels[0], valAddrs[0]))
+	require.NoError(err)
+	require.Equal(bond1to1, resBond)
+
+	// second delegators[1] add a validators[0] to delegate
+	bond2to1 := stakingtypes.NewDelegation(addrDels[1].String(), valAddrs[0].String(), math.LegacyNewDec(1))
+	validator, delegatorShare := validator.AddTokensFromDel(math.NewInt(1))
+	bond2to1.Shares = delegatorShare
+	_ = stakingkeeper.TestingUpdateValidator(keeper, ctx, validator, true)
+	require.NoError(keeper.SetDelegation(ctx, bond2to1))
+	resBond, err = keeper.Delegations.Get(ctx, collections.Join(addrDels[1], valAddrs[0]))
+	require.NoError(err)
+	require.Equal(bond2to1, resBond)
+
+	// check delegation state
+	delegations, err := keeper.GetValidatorDelegations(ctx, valAddrs[0])
+	require.NoError(err)
+	require.Equal(2, len(delegations))
+
+	// undelegate all delegator[0]'s delegate
+	_, err = s.msgServer.Undelegate(ctx, stakingtypes.NewMsgUndelegate(addrDels[0].String(), valAddrs[0].String(), sdk.NewCoin(sdk.DefaultBondDenom, math.NewInt(99))))
+	require.NoError(err)
+
+	// remain only delegator[1]'s delegate
+	delegations, err = keeper.GetValidatorDelegations(ctx, valAddrs[0])
+	require.NoError(err)
+	require.Equal(1, len(delegations))
+	require.Equal(delegations[0].DelegatorAddress, addrDels[1].String())
+}