diff --git a/src/ansi.test.ts b/src/ansi.test.ts
index 0fa1611..c6fc227 100644
--- a/src/ansi.test.ts
+++ b/src/ansi.test.ts
@@ -285,14 +285,35 @@ test("multiple newlines with styling", () => {
   );
 });
 
-test("carriage return is stripped", () => {
+test("carriage return in \\r\\n is treated as line ending", () => {
   const result = ansiToHtml("line1\r\nline2");
   expect(result).toBe("line1\nline2");
 });
 
-test("standalone carriage return is stripped", () => {
+test("standalone carriage return overwrites from line start", () => {
   const result = ansiToHtml("text\rmore");
-  expect(result).toBe("textmore");
+  expect(result).toBe("more");
+});
+
+test("multiple carriage returns overwrite progressively", () => {
+  const result = ansiToHtml("loading...\rloading...\rdone      ");
+  // Note: trailing spaces are trimmed by trimLineEndPreserveAnsi
+  expect(result).toBe("done");
+});
+
+test("carriage return with newlines preserves lines", () => {
+  const result = ansiToHtml("line1\nloading...\rdone\nline3");
+  expect(result).toBe("line1\ndone\nline3");
+});
+
+test("carriage return with styling preserves style", () => {
+  const result = ansiToHtml("\x1b[31mloading...\rdone\x1b[0m");
+  expect(result).toBe('<span style="color:#f85149">done</span>');
+});
+
+test("carriage return at start of line", () => {
+  const result = ansiToHtml("\rtext");
+  expect(result).toBe("text");
 });
 
 // 9. trimLineEndPreserveAnsi tests
diff --git a/src/ansi.ts b/src/ansi.ts
index d787844..ce2260e 100644
--- a/src/ansi.ts
+++ b/src/ansi.ts
@@ -274,20 +274,45 @@ export function ansiToHtml(text: string): string {
       continue;
     }
 
-    // Track newlines in the content
-    if (text[i] === "\n" || text[i] === "\r") {
-      if (text[i] === "\n") {
-        // Close span before newline to prevent background color bleeding
-        if (inSpan) {
-          result += "</span>";
-        }
-        result += "\n";
-        // Reopen span after newline if we had styling
-        if (inSpan) {
-          result += `<span style="${currentStyle}">`;
-        }
+    // Track newlines and carriage returns
+    if (text[i] === "\n") {
+      // Close span before newline to prevent background color bleeding
+      if (inSpan) {
+        result += "</span>";
       }
-      // Skip carriage return - we only care about line feeds
+      result += "\n";
+      // Reopen span after newline if we had styling
+      if (inSpan) {
+        result += `<span style="${currentStyle}">`;
+      }
+      i++;
+      continue;
+    }
+
+    // Carriage return: overwrite from start of current line
+    if (text[i] === "\r") {
+      // Check if this is \r\n - if so, just skip the \r
+      if (text[i + 1] === "\n") {
+        i++;
+        continue;
+      }
+
+      // Standalone \r: truncate back to last newline (or start)
+      // Need to handle open spans carefully
+      const lastNewline = result.lastIndexOf("\n");
+      if (lastNewline >= 0) {
+        // Truncate after the last newline
+        result = result.substring(0, lastNewline + 1);
+      } else {
+        // No newline found, truncate everything
+        result = "";
+      }
+
+      // If we had a span open, we need to reopen it after truncation
+      if (inSpan) {
+        result += `<span style="${currentStyle}">`;
+      }
+
       i++;
       continue;
     }