Abstract An analytical cancellation nanoflare model has recently been established to show the fundamental role that ubiquitous small-scale cancellation nanoflares play in solar atmospheric heating. Although this model is well supported by simulations, observational evidence is needed to deepen our understanding of cancellation nanoflares. We present observations of a small-scale cancellation nanoflare event, analyzing its magnetic topology evolution, triggers, and physical parameters. Using coordinated observations from the Solar Dynamics Observatory and Goode Solar Telescope, we identify a photospheric flow-driven cancellation event with a flux cancellation rate of ∼1015 Mx s−1 and a heating rate of 8.7 × 106 erg cm−2 s−1. The event shows the characteristic transition from π-shaped to X-shaped magnetic configuration before the formation of a 2″ current sheet, closely matching model predictions. This event provides critical observational support for the cancellation nanoflare model and its role in solar atmospheric heating.