diff --git a/application/src/main/java/org/thingsboard/server/service/state/DefaultDeviceStateService.java b/application/src/main/java/org/thingsboard/server/service/state/DefaultDeviceStateService.java
index 57765b613d..65bb01533b 100644
--- a/application/src/main/java/org/thingsboard/server/service/state/DefaultDeviceStateService.java
+++ b/application/src/main/java/org/thingsboard/server/service/state/DefaultDeviceStateService.java
@@ -284,6 +284,7 @@ public class DefaultDeviceStateService extends AbstractPartitionBasedService<Dev
         log.trace("on Device Activity Timeout Update device id {} inactivityTimeout {}", deviceId, inactivityTimeout);
         DeviceStateData stateData = getOrFetchDeviceStateData(deviceId);
         stateData.getState().setInactivityTimeout(inactivityTimeout);
+        checkAndUpdateState(deviceId, stateData);
     }
 
     @Override
@@ -398,12 +399,17 @@ public class DefaultDeviceStateService extends AbstractPartitionBasedService<Dev
     }
 
     void checkAndUpdateState(@Nonnull DeviceId deviceId, @Nonnull DeviceStateData state) {
-        if (state.getState().isActive()) {
+        var deviceState = state.getState();
+        if (deviceState.isActive()) {
             updateInactivityStateIfExpired(System.currentTimeMillis(), deviceId, state);
         } else {
             //trying to fix activity state
-            if (isActive(System.currentTimeMillis(), state.getState())) {
-                updateActivityState(deviceId, state, state.getState().getLastActivityTime());
+            if (isActive(System.currentTimeMillis(), deviceState)) {
+                updateActivityState(deviceId, state, deviceState.getLastActivityTime());
+                if (deviceState.getLastInactivityAlarmTime() != 0L && deviceState.getLastInactivityAlarmTime() >= deviceState.getLastActivityTime()) {
+                    deviceState.setLastInactivityAlarmTime(0L);
+                    save(deviceId, INACTIVITY_ALARM_TIME, 0L);
+                }
             }
         }
     }
diff --git a/application/src/test/java/org/thingsboard/server/service/state/DefaultDeviceStateServiceTest.java b/application/src/test/java/org/thingsboard/server/service/state/DefaultDeviceStateServiceTest.java
index 5a69702405..631a82f518 100644
--- a/application/src/test/java/org/thingsboard/server/service/state/DefaultDeviceStateServiceTest.java
+++ b/application/src/test/java/org/thingsboard/server/service/state/DefaultDeviceStateServiceTest.java
@@ -141,12 +141,12 @@ public class DefaultDeviceStateServiceTest {
     }
 
     @Test
-    public void givenUpdateInactivityTimeoutAndThenNoStateChange() throws Exception {
+    public void givenIncreaseInactivityTimeoutAndThenStateIsActive() throws Exception {
         TelemetrySubscriptionService telemetrySubscriptionService = Mockito.mock(TelemetrySubscriptionService.class);
         ReflectionTestUtils.setField(service, "tsSubService", telemetrySubscriptionService);
         ReflectionTestUtils.setField(service, "defaultStateCheckIntervalInSec", 60);
         ReflectionTestUtils.setField(service, "defaultActivityStatsIntervalInSec", 60);
-        ReflectionTestUtils.setField(service, "defaultInactivityTimeoutMs", 60000);
+        ReflectionTestUtils.setField(service, "defaultInactivityTimeoutMs", 1);
         ReflectionTestUtils.setField(service, "initFetchPackSize", 10);
 
         Mockito.when(entityQueryRepository.findEntityDataByQueryInternal(Mockito.any())).thenReturn(new PageData<>());
@@ -178,18 +178,43 @@ public class DefaultDeviceStateServiceTest {
 
         service.deviceStates.put(deviceId, deviceStateData);
 
+        service.getPartitionedEntities(tpi).add(deviceId);
+
         service.onDeviceActivity(tenantId, deviceId, System.currentTimeMillis());
 
         Mockito.verify(telemetrySubscriptionService, Mockito.times(1)).saveAttrAndNotify(Mockito.any(), Mockito.eq(deviceId), Mockito.any(), Mockito.eq("active"), Mockito.eq(true), Mockito.any());
 
+        Thread.sleep(1);
+
+        service.checkStates();
+
+        Mockito.verify(telemetrySubscriptionService, Mockito.times(1)).saveAttrAndNotify(Mockito.any(), Mockito.eq(deviceId), Mockito.any(), Mockito.eq("active"), Mockito.eq(false), Mockito.any());
+
         Mockito.reset(telemetrySubscriptionService);
 
+        service.onDeviceInactivityTimeoutUpdate(tenantId, deviceId, System.currentTimeMillis() - deviceState.getLastActivityTime() + 1000);
+
+        Mockito.verify(telemetrySubscriptionService, Mockito.times(1)).saveAttrAndNotify(Mockito.any(), Mockito.eq(deviceId), Mockito.any(), Mockito.eq("active"), Mockito.eq(true), Mockito.any());
+
+        Thread.sleep(2000);
+
+        service.checkStates();
+
+        Mockito.verify(telemetrySubscriptionService, Mockito.times(1)).saveAttrAndNotify(Mockito.any(), Mockito.eq(deviceId), Mockito.any(), Mockito.eq("active"), Mockito.eq(false), Mockito.any());
+
+        Mockito.reset(telemetrySubscriptionService);
+
+        service.onDeviceInactivityTimeoutUpdate(tenantId, deviceId, 2000);
+
+        Mockito.verify(telemetrySubscriptionService, Mockito.never()).saveAttrAndNotify(Mockito.any(), Mockito.eq(deviceId), Mockito.any(), Mockito.eq("active"), Mockito.eq(true), Mockito.any());
+
+        service.onDeviceActivity(tenantId, deviceId, System.currentTimeMillis());
+
+        Mockito.verify(telemetrySubscriptionService, Mockito.times(1)).saveAttrAndNotify(Mockito.any(), Mockito.eq(deviceId), Mockito.any(), Mockito.eq("active"), Mockito.eq(true), Mockito.any());
+
         service.onDeviceInactivityTimeoutUpdate(tenantId, deviceId, 1);
 
-        Mockito.verify(telemetrySubscriptionService, Mockito.never()).saveAttrAndNotify(Mockito.any(), Mockito.eq(deviceId), Mockito.any(), Mockito.eq("active"), Mockito.eq(false), Mockito.any());
-        service.onDeviceInactivityTimeoutUpdate(tenantId, deviceId, 60000);
-
-        Mockito.verify(telemetrySubscriptionService, Mockito.never()).saveAttrAndNotify(Mockito.any(), Mockito.eq(deviceId), Mockito.any(), Mockito.eq("active"), Mockito.eq(true), Mockito.any());
+        Mockito.verify(telemetrySubscriptionService, Mockito.times(1)).saveAttrAndNotify(Mockito.any(), Mockito.eq(deviceId), Mockito.any(), Mockito.eq("active"), Mockito.eq(false), Mockito.any());
     }
 
 }
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