diff --git a/src/ObjCommon/SearchPath/IWD.cpp b/src/ObjCommon/SearchPath/IWD.cpp
index 0d04354d..7c75c9f7 100644
--- a/src/ObjCommon/SearchPath/IWD.cpp
+++ b/src/ObjCommon/SearchPath/IWD.cpp
@@ -78,7 +78,8 @@ namespace
 
             const auto result = unzReadCurrentFile(m_container, &m_peek_symbol, 1u);
 
-            if (result >= 0)
+            // minizip returns zero at the end of the current archive entry.
+            if (result > 0)
             {
                 m_peeked = true;
                 return m_peek_symbol;
@@ -96,21 +97,30 @@ namespace
             }
 
             const auto result = unzReadCurrentFile(m_container, &m_peek_symbol, 1u);
-            return result >= 0 ? m_peek_symbol : EOF;
+            return result > 0 ? m_peek_symbol : EOF;
         }
 
         std::streamsize xsgetn(char* ptr, std::streamsize count) override
         {
+            std::streamsize result{};
+
             if (m_peeked && count >= 1)
             {
                 *ptr = static_cast<char>(m_peek_symbol);
+                m_peeked = false;
                 ptr++;
                 count--;
+                result++;
             }
 
-            const auto result = unzReadCurrentFile(m_container, ptr, static_cast<unsigned>(count));
+            if (count <= 0)
+                return result;
 
-            return result >= 0 ? static_cast<std::streamsize>(result) : 0;
+            const auto readResult = unzReadCurrentFile(m_container, ptr, static_cast<unsigned>(count));
+            if (readResult > 0)
+                result += static_cast<std::streamsize>(readResult);
+
+            return result;
         }
 
         pos_type seekoff(const off_type off, const std::ios_base::seekdir dir, const std::ios_base::openmode mode) override
diff --git a/test/ObjCommonTests/SearchPath/IwdTests.cpp b/test/ObjCommonTests/SearchPath/IwdTests.cpp
new file mode 100644
index 00000000..f4d62f0e
--- /dev/null
+++ b/test/ObjCommonTests/SearchPath/IwdTests.cpp
@@ -0,0 +1,57 @@
+#include "OatTestPaths.h"
+#include "SearchPath/IWD.h"
+#include "Utils/FileToZlibWrapper.h"
+
+#include <array>
+#include <catch2/catch_test_macros.hpp>
+#include <cstdint>
+#include <filesystem>
+#include <fstream>
+#include <string_view>
+#include <zip.h>
+
+namespace fs = std::filesystem;
+
+namespace
+{
+    void WriteIwd(std::ostream& stream, const std::string& entryName, const std::string_view contents)
+    {
+        auto zlibFunctions = FileToZlibWrapper::CreateFunctions32ForFile(&stream);
+        const auto zipHandle = zipOpen2("foo.zip", 0, nullptr, &zlibFunctions);
+        zipOpenNewFileInZip2(zipHandle, entryName.c_str(), nullptr, nullptr, 0, nullptr, 0, nullptr, Z_DEFLATED, Z_DEFAULT_COMPRESSION, 0);
+        zipWriteInFileInZip(zipHandle, contents.data(), static_cast<unsigned>(contents.size()));
+        zipCloseFileInZip(zipHandle);
+        zipClose(zipHandle, nullptr);
+    }
+
+    TEST_CASE("Iwd: Reads a peeked entry through end of stream", "[searchpath][iwd]")
+    {
+        constexpr auto ENTRY_NAME = "test.txt";
+        constexpr auto CONTENTS = "IWD stream test";
+
+        const auto tempDirectory = oat::paths::GetTempDirectory("iwd");
+        fs::create_directories(tempDirectory);
+        const auto iwdPath = tempDirectory / "test.iwd";
+
+        {
+            std::ofstream stream(iwdPath, std::ios::out | std::ios::binary);
+            WriteIwd(stream, ENTRY_NAME, CONTENTS);
+            stream.close();
+        }
+
+        const auto searchPath = iwd::LoadFromFile(iwdPath.string());
+        REQUIRE(searchPath);
+
+        const auto file = searchPath->Open(ENTRY_NAME);
+        REQUIRE(file.IsOpen());
+
+        auto& stream = *file.m_stream;
+        REQUIRE(stream.peek() == CONTENTS[0]);
+
+        std::array<char, std::string_view{CONTENTS}.size()> buffer{};
+        stream.read(buffer.data(), buffer.size());
+        REQUIRE(stream.gcount() == static_cast<std::streamsize>(buffer.size()));
+        REQUIRE(std::string_view{buffer.data(), buffer.size()} == CONTENTS);
+        REQUIRE(stream.get() == std::char_traits<char>::eof());
+    }
+} // namespace