diff --git a/lib/readline.js b/lib/readline.js
index 6fb5e9fd67..75eb7fe08d 100644
--- a/lib/readline.js
+++ b/lib/readline.js
@@ -91,7 +91,7 @@ function Interface(input, output, completer, terminal) {
       self._normalWrite(data);
     });
     input.on('end', function() {
-      self.emit('end');
+      self.close();
     });
     var StringDecoder = require('string_decoder').StringDecoder; // lazy load
     this._decoder = new StringDecoder('utf8');
@@ -236,13 +236,21 @@ Interface.prototype._refreshLine = function() {
 };
 
 
-Interface.prototype.pause = function() {
-  if (this.paused) return;
+Interface.prototype.close = function() {
+  if (this.closed) return;
   if (this.terminal) {
     if (typeof this.input.setRawMode === 'function') {
-      this.input.setRawMode(true);
+      this.input.setRawMode(false);
     }
   }
+  this.pause();
+  this.closed = true;
+  this.emit('close');
+};
+
+
+Interface.prototype.pause = function() {
+  if (this.paused) return;
   this.input.pause();
   this.paused = true;
   this.emit('pause');
@@ -250,12 +258,8 @@ Interface.prototype.pause = function() {
 
 
 Interface.prototype.resume = function() {
+  if (!this.paused) return;
   this.input.resume();
-  if (this.terminal) {
-    if (typeof this.input.setRawMode === 'function') {
-      this.input.setRawMode(true);
-    }
-  }
   this.paused = false;
   this.emit('resume');
 };
@@ -584,8 +588,8 @@ Interface.prototype._ttyWrite = function(s, key) {
         if (this.listeners('SIGINT').length) {
           this.emit('SIGINT');
         } else {
-          // Pause the stream
-          this.pause();
+          // This readline instance is finished
+          this.close();
         }
         break;
 
@@ -595,8 +599,8 @@ Interface.prototype._ttyWrite = function(s, key) {
 
       case 'd': // delete right or EOF
         if (this.cursor === 0 && this.line.length === 0) {
-          this.pause();
-          this.emit('end');
+          // This readline instance is finished
+          this.close();
         } else if (this.cursor < this.line.length) {
           this._deleteRight();
         }
diff --git a/test/simple/test-readline-setRawMode.js b/test/simple/test-readline-setRawMode.js
new file mode 100644
index 0000000000..a300f7a268
--- /dev/null
+++ b/test/simple/test-readline-setRawMode.js
@@ -0,0 +1,87 @@
+// Copyright Joyent, Inc. and other Node contributors.
+//
+// Permission is hereby granted, free of charge, to any person obtaining a
+// copy of this software and associated documentation files (the
+// "Software"), to deal in the Software without restriction, including
+// without limitation the rights to use, copy, modify, merge, publish,
+// distribute, sublicense, and/or sell copies of the Software, and to permit
+// persons to whom the Software is furnished to do so, subject to the
+// following conditions:
+//
+// The above copyright notice and this permission notice shall be included
+// in all copies or substantial portions of the Software.
+//
+// THE SOFTWARE IS PROVIDED "AS IS", WITHOUT WARRANTY OF ANY KIND, EXPRESS
+// OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF
+// MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. IN
+// NO EVENT SHALL THE AUTHORS OR COPYRIGHT HOLDERS BE LIABLE FOR ANY CLAIM,
+// DAMAGES OR OTHER LIABILITY, WHETHER IN AN ACTION OF CONTRACT, TORT OR
+// OTHERWISE, ARISING FROM, OUT OF OR IN CONNECTION WITH THE SOFTWARE OR THE
+// USE OR OTHER DEALINGS IN THE SOFTWARE.
+
+
+
+var assert = require('assert');
+var readline = require('readline');
+var Stream = require('stream');
+
+var stream = new Stream();
+var expectedRawMode = true;
+var rawModeCalled = false;
+var resumeCalled = false;
+var pauseCalled = false;
+
+stream.setRawMode = function(mode) {
+  rawModeCalled = true;
+  assert.equal(mode, expectedRawMode);
+};
+stream.resume = function() {
+  resumeCalled = true;
+};
+stream.pause = function() {
+  pauseCalled = true;
+};
+
+// when the "readline" starts in "terminal" mode,
+// then setRawMode(true) should be called
+var rli = readline.createInterface({
+  input: stream,
+  output: stream,
+  terminal: true
+});
+assert(rli.terminal)
+assert(rawModeCalled);
+assert(resumeCalled);
+assert(!pauseCalled);
+
+
+// pause() should call *not* call setRawMode()
+rawModeCalled = false;
+resumeCalled = false;
+pauseCalled = false;
+rli.pause();
+assert(!rawModeCalled);
+assert(!resumeCalled);
+assert(pauseCalled);
+
+
+// resume() should *not* call setRawMode()
+rawModeCalled = false;
+resumeCalled = false;
+pauseCalled = false;
+rli.resume();
+assert(!rawModeCalled);
+assert(resumeCalled);
+assert(!pauseCalled);
+
+
+// close() should call setRawMode(false)
+expectedRawMode = false;
+rawModeCalled = false;
+resumeCalled = false;
+pauseCalled = false;
+rli.close();
+assert(rawModeCalled);
+assert(!resumeCalled);
+assert(pauseCalled);
+