diff --git a/lib/model/user.dart b/lib/model/user.dart
index aa4666c359..7d195e3197 100644
--- a/lib/model/user.dart
+++ b/lib/model/user.dart
@@ -35,7 +35,10 @@ mixin UserStore on PerAccountStoreBase, RealmStore {
   /// Consider using [userDisplayName].
   User? getUser(int userId);
 
-  /// All known users in the realm.
+  /// All known users in the realm, including deactivated users.
+  ///
+  /// Before presenting these users in the UI, consider whether to exclude
+  /// users who are deactivated (see [User.isActive]) or muted ([isUserMuted]).
   ///
   /// This may have a large number of elements, like tens of thousands.
   /// Consider [getUser] or other alternatives to iterating through this.
diff --git a/lib/widgets/new_dm_sheet.dart b/lib/widgets/new_dm_sheet.dart
index 682adea91c..93fbf5c354 100644
--- a/lib/widgets/new_dm_sheet.dart
+++ b/lib/widgets/new_dm_sheet.dart
@@ -1,4 +1,3 @@
-import 'package:collection/collection.dart';
 import 'package:flutter/material.dart';
 import '../api/model/model.dart';
 import '../generated/l10n/zulip_localizations.dart';
@@ -69,9 +68,9 @@ class _NewDmPickerState extends State<NewDmPicker> with PerAccountStoreAwareStat
   }
 
   void _initSortedUsers(PerAccountStore store) {
-    final sansMuted = store.allUsers
-      .whereNot((user) => store.isUserMuted(user.userId));
-    sortedUsers = List<User>.from(sansMuted)
+    final users = store.allUsers
+      .where((user) => user.isActive && !store.isUserMuted(user.userId));
+    sortedUsers = List<User>.from(users)
       ..sort((a, b) => MentionAutocompleteView.compareByDms(a, b, store: store));
     _updateFilteredUsers(store);
   }
diff --git a/test/widgets/new_dm_sheet_test.dart b/test/widgets/new_dm_sheet_test.dart
index ae77e9643f..a95d42dc1a 100644
--- a/test/widgets/new_dm_sheet_test.dart
+++ b/test/widgets/new_dm_sheet_test.dart
@@ -116,24 +116,19 @@ void main() {
   });
 
   group('user filtering', () {
-    final mutedUser = eg.user(fullName: 'Someone Muted');
     final testUsers = [
       eg.user(fullName: 'Alice Anderson'),
       eg.user(fullName: 'Bob Brown'),
       eg.user(fullName: 'Charlie Carter'),
-      mutedUser,
     ];
 
-    testWidgets('shows all non-muted users initially', (tester) async {
-      await setupSheet(tester, users: testUsers, mutedUserIds: [mutedUser.userId]);
+    testWidgets('shows full list initially', (tester) async {
+      await setupSheet(tester, users: testUsers);
       check(findText(includePlaceholders: false, 'Alice Anderson')).findsOne();
       check(findText(includePlaceholders: false, 'Bob Brown')).findsOne();
       check(findText(includePlaceholders: false, 'Charlie Carter')).findsOne();
-
       check(find.byIcon(ZulipIcons.check_circle_unchecked)).findsExactly(3);
       check(find.byIcon(ZulipIcons.check_circle_checked)).findsNothing();
-      check(findText(includePlaceholders: false, 'Someone Muted')).findsNothing();
-      check(findText(includePlaceholders: false, 'Muted user')).findsNothing();
     });
 
     testWidgets('shows filtered users based on search', (tester) async {
@@ -145,6 +140,43 @@ void main() {
       check(findText(includePlaceholders: false, 'Bob Brown')).findsNothing();
     });
 
+    testWidgets('deactivated users excluded', (tester) async {
+      // Omit a deactivated user both before there's a query…
+      final deactivatedUser = eg.user(fullName: 'Impostor Charlie', isActive: false);
+      await setupSheet(tester, users: [...testUsers, deactivatedUser]);
+      check(findText(includePlaceholders: false, 'Impostor Charlie')).findsNothing();
+      check(findText(includePlaceholders: false, 'Charlie Carter')).findsOne();
+      check(find.byIcon(ZulipIcons.check_circle_unchecked)).findsExactly(3);
+
+      // … and after a query that would match their name.
+      await tester.enterText(find.byType(TextField), 'Charlie');
+      await tester.pump();
+      check(findText(includePlaceholders: false, 'Impostor Charlie')).findsNothing();
+      check(findText(includePlaceholders: false, 'Charlie Carter')).findsOne();
+      check(find.byIcon(ZulipIcons.check_circle_unchecked)).findsExactly(1);
+    });
+
+    testWidgets('muted users excluded', (tester) async {
+      // Omit muted users both before there's a query…
+      final mutedUser = eg.user(fullName: 'Someone Muted');
+      await setupSheet(tester,
+        users: [...testUsers, mutedUser], mutedUserIds: [mutedUser.userId]);
+      check(findText(includePlaceholders: false, 'Someone Muted')).findsNothing();
+      check(findText(includePlaceholders: false, 'Muted user')).findsNothing();
+      check(findText(includePlaceholders: false, 'Alice Anderson')).findsOne();
+      check(find.byIcon(ZulipIcons.check_circle_unchecked)).findsExactly(3);
+
+      // … and after a query.  One which matches both the user's actual name and
+      // the replacement text "Muted user", for good measure.
+      await tester.enterText(find.byType(TextField), 'e');
+      await tester.pump();
+      check(findText(includePlaceholders: false, 'Someone Muted')).findsNothing();
+      check(findText(includePlaceholders: false, 'Muted user')).findsNothing();
+      check(findText(includePlaceholders: false, 'Alice Anderson')).findsOne();
+      check(findText(includePlaceholders: false, 'Charlie Carter')).findsOne();
+      check(find.byIcon(ZulipIcons.check_circle_unchecked)).findsExactly(2);
+    });
+
     // TODO test sorting by recent-DMs
     // TODO test that scroll position resets on query change