diff --git a/main/src/main/scala/sbt/internal/Output.scala b/main/src/main/scala/sbt/internal/Output.scala
index 3205b1747..4a0c8c21b 100644
--- a/main/src/main/scala/sbt/internal/Output.scala
+++ b/main/src/main/scala/sbt/internal/Output.scala
@@ -19,6 +19,7 @@ import Aggregation.{ KeyValue, Values }
 import Types.idFun
 import Highlight.{ bold, showMatches }
 import annotation.tailrec
+import sbt.internal.util.EscHelpers
 
 import sbt.io.IO
 
@@ -43,7 +44,12 @@ object Output {
       printLines: Seq[String] => Unit
   )(using display: Show[ScopedKey[?]]): Unit = {
     val pattern = Pattern.compile(patternString)
-    val lines = flatLines(lastLines(keys, streams))(_ flatMap showMatches(pattern))
+    val lines = flatLines(lastLines(keys, streams)) { rawLines =>
+      rawLines.flatMap { line =>
+        val stripped = EscHelpers.stripColorsAndMoves(line)
+        showMatches(pattern)(stripped)
+      }
+    }
     printLines(lines)
   }
 
@@ -55,8 +61,13 @@ object Output {
   ): Unit =
     printLines(grep(tailLines(file, tailDelim), patternString))
 
-  def grep(lines: Seq[String], patternString: String): Seq[String] =
-    lines.flatMap(showMatches(Pattern.compile(patternString)))
+  def grep(lines: Seq[String], patternString: String): Seq[String] = {
+    val pattern = Pattern.compile(patternString)
+    lines.flatMap { line =>
+      val stripped = EscHelpers.stripColorsAndMoves(line)
+      showMatches(pattern)(stripped)
+    }
+  }
 
   def flatLines(outputs: Values[Seq[String]])(f: Seq[String] => Seq[String])(using
       display: Show[ScopedKey[?]]
diff --git a/main/src/test/scala/sbt/internal/OutputSpec.scala b/main/src/test/scala/sbt/internal/OutputSpec.scala
new file mode 100644
index 000000000..3d9597fc0
--- /dev/null
+++ b/main/src/test/scala/sbt/internal/OutputSpec.scala
@@ -0,0 +1,35 @@
+/*
+ * sbt
+ * Copyright 2023, Scala center
+ * Copyright 2011 - 2022, Lightbend, Inc.
+ * Copyright 2008 - 2010, Mark Harrah
+ * Licensed under Apache License 2.0 (see LICENSE)
+ */
+
+package sbt.internal
+
+import scala.Console.{ RED, RESET }
+import verify.BasicTestSuite
+import sbt.internal.Output.grep
+
+object OutputSpec extends BasicTestSuite {
+
+  test(
+    "grep should match pattern against visible text when lines contain ANSI escape sequences (#4840)"
+  ) {
+    // Line with ANSI color around "error" - user searching for "error" should find it (strip before match)
+    val lineWithAnsi = s"${RED}error${RESET}: something failed"
+    val lines = Seq("info: ok", lineWithAnsi, "warn: deprecated")
+    val result = grep(lines, "error")
+    assert(result.size == 1, s"expected 1 match, got ${result.size}: $result")
+    // Pattern matched the visible "error" (ANSI was stripped before matching); result may have highlight from showMatches
+    assert(result.head.contains("error"), s"result should contain 'error': ${result.head}")
+  }
+
+  test("grep should not match when pattern appears only inside ANSI sequence") {
+    // Line where "error" is not in the visible text (only in escape code - unrealistic but ensures we strip first)
+    val lines = Seq("info: ok", "something failed")
+    val result = grep(lines, "error")
+    assert(result.isEmpty, s"expected no match, got: $result")
+  }
+}