diff --git a/daemon/daemon.go b/daemon/daemon.go
index 1a382a4..3e86ab5 100644
--- a/daemon/daemon.go
+++ b/daemon/daemon.go
@@ -330,10 +330,15 @@
 
 			daemon.setStateCounter(c)
 
-			log.WithFields(logrus.Fields{
-				"running": c.IsRunning(),
-				"paused":  c.IsPaused(),
-			}).Debug("restoring container")
+			logger := func(c *container.Container) *logrus.Entry {
+				return log.WithFields(logrus.Fields{
+					"running":    c.IsRunning(),
+					"paused":     c.IsPaused(),
+					"restarting": c.IsRestarting(),
+				})
+			}
+
+			logger(c).Debug("restoring container")
 
 			var (
 				err      error
@@ -345,16 +350,24 @@
 
 			alive, _, process, err = daemon.containerd.Restore(context.Background(), c.ID, c.InitializeStdio)
 			if err != nil && !errdefs.IsNotFound(err) {
-				log.WithError(err).Error("failed to restore container with containerd")
+				logger(c).WithError(err).Error("failed to restore container with containerd")
 				return
 			}
-			if !alive && process != nil {
-				ec, exitedAt, err = process.Delete(context.Background())
-				if err != nil && !errdefs.IsNotFound(err) {
-					log.WithError(err).Error("failed to delete container from containerd")
-					return
+			logger(c).Debugf("alive: %v", alive)
+			if !alive {
+				// If process is not nil, cleanup dead container from containerd.
+				// If process is nil then the above `containerd.Restore` returned an errdefs.NotFoundError,
+				// and docker's view of the container state will be updated accorrdingly via SetStopped further down.
+				if process != nil {
+					logger(c).Debug("cleaning up dead container process")
+					ec, exitedAt, err = process.Delete(context.Background())
+					if err != nil && !errdefs.IsNotFound(err) {
+						logger(c).WithError(err).Error("failed to delete container from containerd")
+						return
+					}
 				}
 			} else if !daemon.configStore.LiveRestoreEnabled {
+				logger(c).Debug("shutting down container considered alive by containerd")
 				if err := daemon.shutdownContainer(c); err != nil && !errdefs.IsNotFound(err) {
 					log.WithError(err).Error("error shutting down container")
 					return
@@ -363,14 +376,16 @@
 			}
 
 			if c.IsRunning() || c.IsPaused() {
+				logger(c).Debug("syncing container on disk state with real state")
+
 				c.RestartManager().Cancel() // manually start containers because some need to wait for swarm networking
 
 				if c.IsPaused() && alive {
 					s, err := daemon.containerd.Status(context.Background(), c.ID)
 					if err != nil {
-						log.WithError(err).Error("failed to get container status")
+						logger(c).WithError(err).Error("failed to get container status")
 					} else {
-						log.WithField("state", s).Info("restored container paused")
+						logger(c).WithField("state", s).Info("restored container paused")
 						switch s {
 						case containerd.Paused, containerd.Pausing:
 							// nothing to do
@@ -392,6 +407,7 @@
 				}
 
 				if !alive {
+					logger(c).Debug("setting stopped state")
 					c.Lock()
 					c.SetStopped(&container.ExitStatus{ExitCode: int(ec), ExitedAt: exitedAt})
 					daemon.Cleanup(c)
@@ -399,6 +415,7 @@
 						log.WithError(err).Error("failed to update stopped container state")
 					}
 					c.Unlock()
+					logger(c).Debug("set stopped state")
 				}
 
 				// we call Mount and then Unmount to get BaseFs of the container
@@ -409,10 +426,10 @@
 					// stopped/restarted/removed.
 					// See #29365 for related information.
 					// The error is only logged here.
-					log.WithError(err).Warn("failed to mount container to get BaseFs path")
+					logger(c).WithError(err).Warn("failed to mount container to get BaseFs path")
 				} else {
 					if err := daemon.Unmount(c); err != nil {
-						log.WithError(err).Warn("failed to umount container to get BaseFs path")
+						logger(c).WithError(err).Warn("failed to umount container to get BaseFs path")
 					}
 				}
 
@@ -420,7 +437,7 @@
 				if !c.HostConfig.NetworkMode.IsContainer() && c.IsRunning() {
 					options, err := daemon.buildSandboxOptions(c)
 					if err != nil {
-						log.WithError(err).Warn("failed to build sandbox option to restore container")
+						logger(c).WithError(err).Warn("failed to build sandbox option to restore container")
 					}
 					mapLock.Lock()
 					activeSandboxes[c.NetworkSettings.SandboxID] = options
@@ -465,6 +482,7 @@
 				}
 			}
 			c.Unlock()
+			logger(c).Debug("done restoring container")
 		}(c)
 	}
 	group.Wait()
diff --git a/integration/container/daemon_linux_test.go b/integration/container/daemon_linux_test.go
index 328bd12..ea8fde2 100644
--- a/integration/container/daemon_linux_test.go
+++ b/integration/container/daemon_linux_test.go
@@ -2,13 +2,18 @@
 
 import (
 	"context"
+	"encoding/json"
 	"fmt"
 	"io/ioutil"
+	"path/filepath"
 	"strconv"
 	"strings"
 	"testing"
+	"time"
 
 	"github.com/docker/docker/api/types"
+	containerapi "github.com/docker/docker/api/types/container"
+	realcontainer "github.com/docker/docker/container"
 	"github.com/docker/docker/integration/internal/container"
 	"github.com/docker/docker/testutil/daemon"
 	"golang.org/x/sys/unix"
@@ -166,3 +171,65 @@
 	d.Stop(t)
 
 }
+
+// TestRestartDaemonWithRestartingContainer simulates a case where a container is in "restarting" state when
+// dockerd is killed (due to machine reset or something else).
+//
+// Related to moby/moby#41817
+//
+// In this test we'll change the container state to "restarting".
+// This means that the container will not be 'alive' when we attempt to restore in on daemon startup.
+//
+// We could do the same with `docker run -d --resetart=always busybox:latest exit 1`, and then
+// `kill -9` dockerd while the container is in "restarting" state. This is difficult to reproduce reliably
+// in an automated test, so we manipulate on disk state instead.
+func TestRestartDaemonWithRestartingContainer(t *testing.T) {
+	skip.If(t, testEnv.IsRemoteDaemon, "cannot start daemon on remote test run")
+	skip.If(t, testEnv.DaemonInfo.OSType == "windows")
+
+	t.Parallel()
+
+	d := daemon.New(t)
+	defer d.Cleanup(t)
+
+	d.StartWithBusybox(t, "--iptables=false")
+	defer d.Kill()
+
+	ctx := context.Background()
+	client := d.NewClientT(t)
+
+	// Just create the container, no need to start it to be started.
+	// We really want to make sure there is no process running when docker starts back up.
+	// We will manipulate the on disk state later
+	id := container.Create(ctx, t, client, container.WithRestartPolicy("always"), container.WithCmd("/bin/sh", "-c", "exit 1"))
+
+	// SIGKILL the daemon
+	assert.NilError(t, d.Kill())
+
+	configPath := filepath.Join(d.Root, "containers", id, "config.v2.json")
+	configBytes, err := ioutil.ReadFile(configPath)
+	assert.NilError(t, err)
+
+	var c realcontainer.Container
+
+	assert.NilError(t, json.Unmarshal(configBytes, &c))
+
+	c.State = realcontainer.NewState()
+	c.SetRestarting(&realcontainer.ExitStatus{ExitCode: 1})
+	c.HasBeenStartedBefore = true
+
+	configBytes, err = json.Marshal(&c)
+	assert.NilError(t, err)
+	assert.NilError(t, ioutil.WriteFile(configPath, configBytes, 0600))
+
+	d.Start(t)
+
+	ctxTimeout, cancel := context.WithTimeout(ctx, 30*time.Second)
+	defer cancel()
+	chOk, chErr := client.ContainerWait(ctxTimeout, id, containerapi.WaitConditionNextExit)
+	select {
+	case <-chOk:
+	case err := <-chErr:
+		assert.NilError(t, err)
+	}
+}
diff --git a/testutil/daemon/daemon.go b/testutil/daemon/daemon.go
index 1b29654..52882e4 100644
--- a/testutil/daemon/daemon.go
+++ b/testutil/daemon/daemon.go
@@ -288,6 +288,7 @@
 func (d *Daemon) Start(t testing.TB, args ...string) {
 	t.Helper()
 	if err := d.StartWithError(args...); err != nil {
+		d.DumpStackAndQuit() // in case the daemon is stuck
 		t.Fatalf("[%s] failed to start daemon with arguments %v : %v", d.id, d.args, err)
 	}
 }