diff --git a/packages/playwright-test/src/runner/dispatcher.ts b/packages/playwright-test/src/runner/dispatcher.ts
index f11e45ada7..f8076c8b76 100644
--- a/packages/playwright-test/src/runner/dispatcher.ts
+++ b/packages/playwright-test/src/runner/dispatcher.ts
@@ -76,6 +76,9 @@ export class Dispatcher {
       }
       this._queue.shift();
     }
+
+    // If all remaining tests were skipped, resolve finished state.
+    this._checkFinished();
   }
 
   private async _scheduleJob() {
diff --git a/tests/playwright-test/shard.spec.ts b/tests/playwright-test/shard.spec.ts
index 3fad2be4ed..d0b7d076f3 100644
--- a/tests/playwright-test/shard.spec.ts
+++ b/tests/playwright-test/shard.spec.ts
@@ -96,3 +96,26 @@ test('should respect shard=1/2 in config', async ({ runInlineTest }) => {
   expect(result.output).toContain('test2-done');
   expect(result.output).toContain('test3-done');
 });
+
+test('should work with workers=1 and --fully-parallel', async ({ runInlineTest }) => {
+  test.info().annotations.push({ type: 'issue', description: 'https://github.com/microsoft/playwright/issues/21226' });
+  const tests = {
+    'a1.spec.ts': `
+      import { test } from '@playwright/test';
+      test('should pass', async ({ }) => {
+      });
+      test.skip('should skip', async ({ }) => {
+      });
+    `,
+    'a2.spec.ts': `
+    import { test } from '@playwright/test';
+    test('shoul pass', async ({ }) => {
+    });
+  `,
+  };
+
+  const result = await runInlineTest(tests, { shard: '1/2', ['fully-parallel']: true, workers: 1 });
+  expect(result.exitCode).toBe(0);
+  expect(result.passed).toBe(1);
+  expect(result.skipped).toBe(1);
+});