diff --git a/src/libs/actions/Report.ts b/src/libs/actions/Report.ts
index a8911cefa90..e53cac804b9 100644
--- a/src/libs/actions/Report.ts
+++ b/src/libs/actions/Report.ts
@@ -187,12 +187,12 @@ const allReportActions: OnyxCollection<ReportActions> = {};
 
 Onyx.connect({
     key: ONYXKEYS.COLLECTION.REPORT_ACTIONS,
-    callback: (action, key) => {
-        if (!key || !action) {
+    callback: (actions, key) => {
+        if (!key || !actions) {
             return;
         }
         const reportID = CollectionUtils.extractCollectionItemID(key);
-        allReportActions[reportID] = action;
+        allReportActions[reportID] = actions;
     },
 });
 
@@ -1357,6 +1357,15 @@ function handleReportChanged(report: OnyxEntry<Report>) {
         return;
     }
 
+    // Handle cleanup of stale optimistic IOU report and its report preview separately
+    if (report?.reportID && report.preexistingReportID && ReportUtils.isMoneyRequestReport(report) && report?.parentReportActionID) {
+        Onyx.merge(`${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${report.parentReportID}`, {
+            [report.parentReportActionID]: null,
+        });
+        Onyx.merge(`${ONYXKEYS.COLLECTION.REPORT}${report.reportID}`, null);
+        return;
+    }
+
     // It is possible that we optimistically created a DM/group-DM for a set of users for which a report already exists.
     // In this case, the API will let us know by returning a preexistingReportID.
     // We should clear out the optimistically created report and re-route the user to the preexisting report.