diff --git a/packages/coding-agent/src/session/agent-session.ts b/packages/coding-agent/src/session/agent-session.ts
index d37fb4557..6eaacae4d 100644
--- a/packages/coding-agent/src/session/agent-session.ts
+++ b/packages/coding-agent/src/session/agent-session.ts
@@ -9675,6 +9675,7 @@ export class AgentSession {
 		if (isContextOverflow(message, contextWindow)) return false;
 
 		if (this.#isClassifierRefusal(message)) return true;
+		if (this.#isProviderErrorFinishReasonBeforeToolUse(message)) return true;
 		if (this.#streamInterruptedAfterObservableOutput(message)) return false;
 		if (this.#isStaleOpenAIResponsesReplayError(message)) return true;
 
@@ -9719,6 +9720,12 @@ export class AgentSession {
 		return stopType === "refusal" || stopType === "sensitive";
 	}
 
+	#isProviderErrorFinishReasonBeforeToolUse(message: AssistantMessage): boolean {
+		if (!message.errorMessage) return false;
+		if (message.content.some(block => block.type === "toolCall")) return false;
+		return /\bProvider (?:returned error finish_reason|finish_reason:\s*error)\b/i.test(message.errorMessage);
+	}
+
 	#isTransientErrorMessage(errorMessage: string): boolean {
 		return (
 			this.#isTransientEnvelopeErrorMessage(errorMessage) || this.#isTransientTransportErrorMessage(errorMessage)
diff --git a/packages/coding-agent/src/task/executor.ts b/packages/coding-agent/src/task/executor.ts
index 5610a7108..551518467 100644
--- a/packages/coding-agent/src/task/executor.ts
+++ b/packages/coding-agent/src/task/executor.ts
@@ -516,6 +516,7 @@ export function finalizeSubprocessOutput(args: FinalizeSubprocessOutputArgs): Fi
 	const { yieldItems, reportFindings, doneAborted, signalAborted, outputSchema } = args;
 	let abortedViaYield = false;
 	const hasYield = Array.isArray(yieldItems) && yieldItems.length > 0;
+	const hadFailureBeforeYield = exitCode !== 0 && stderr.trim().length > 0;
 
 	if (hasYield) {
 		const lastYield = yieldItems[yieldItems.length - 1];
@@ -553,12 +554,16 @@ export function finalizeSubprocessOutput(args: FinalizeSubprocessOutputArgs): Fi
 						const errorMessage = err instanceof Error ? err.message : String(err);
 						rawOutput = `{"error":"Failed to serialize yield data: ${errorMessage}"}`;
 					}
-					exitCode = 0;
-					stderr = overridden
-						? SUBAGENT_WARNING_SCHEMA_OVERRIDDEN
-						: schemaError
-							? `invalid output schema: ${schemaError}`
-							: "";
+					if (!hadFailureBeforeYield) {
+						exitCode = 0;
+						stderr = overridden
+							? SUBAGENT_WARNING_SCHEMA_OVERRIDDEN
+							: schemaError
+								? `invalid output schema: ${schemaError}`
+								: "";
+					} else if (!stderr) {
+						stderr = "Subagent failed after yielding a result.";
+					}
 				}
 			}
 		}
diff --git a/packages/coding-agent/test/agent-session-retry-fallback.test.ts b/packages/coding-agent/test/agent-session-retry-fallback.test.ts
index 96687c7d4..fa2d600f3 100644
--- a/packages/coding-agent/test/agent-session-retry-fallback.test.ts
+++ b/packages/coding-agent/test/agent-session-retry-fallback.test.ts
@@ -1513,4 +1513,63 @@ describe("AgentSession retry fallback", () => {
 		}
 		expect(contentBlock.text).toBe("Recovered after Gemini malformed function call");
 	});
+
+	it("auto-retries provider finish_reason errors after partial text", async () => {
+		const model = getBundledModel("openai", "gpt-4o-mini");
+		if (!model) {
+			throw new Error("Expected bundled OpenAI test model to exist");
+		}
+
+		const errorMessage = "Provider returned error finish_reason";
+		const mock = createMockModel({
+			responses: [
+				{ content: ["partial output before gateway error"], stopReason: "error", errorMessage },
+				{ content: ["Recovered after provider finish_reason error"] },
+			],
+		});
+		const agent = new Agent({
+			getApiKey: model => `${model.provider}-test-key`,
+			initialState: {
+				model,
+				systemPrompt: ["Test"],
+				tools: [],
+				messages: [],
+			},
+			streamFn: (requestedModel, context, options) => mock.stream(requestedModel, context, options),
+		});
+
+		const settings = Settings.isolated({
+			"compaction.enabled": false,
+			"retry.baseDelayMs": 5,
+			"retry.maxRetries": 1,
+			"retry.modelFallback": false,
+		});
+		settings.setModelRole("default", `${model.provider}/${model.id}`);
+
+		session = new AgentSession({
+			agent,
+			sessionManager: SessionManager.inMemory(),
+			settings,
+			modelRegistry,
+		});
+		const { retryStartEvents, retryEndEvents } = trackRetryEvents(session);
+
+		await session.prompt("recover from provider finish_reason error");
+		await session.waitForIdle();
+
+		expect(mock.calls).toHaveLength(2);
+		expect(retryStartEvents).toHaveLength(1);
+		expect(retryStartEvents[0].errorMessage).toBe(errorMessage);
+		expect(retryEndEvents).toHaveLength(1);
+		expect(session.agent.state.messages).toHaveLength(2);
+		const assistantMsg = session.agent.state.messages[1];
+		if (assistantMsg.role !== "assistant") {
+			throw new Error(`Expected assistant message, got ${assistantMsg.role}`);
+		}
+		const contentBlock = assistantMsg.content[0];
+		if (contentBlock.type !== "text") {
+			throw new Error(`Expected text content block, got ${contentBlock.type}`);
+		}
+		expect(contentBlock.text).toBe("Recovered after provider finish_reason error");
+	});
 });
diff --git a/packages/coding-agent/test/task/executor-subagent-reminders.test.ts b/packages/coding-agent/test/task/executor-subagent-reminders.test.ts
index 7f69af243..d3023329f 100644
--- a/packages/coding-agent/test/task/executor-subagent-reminders.test.ts
+++ b/packages/coding-agent/test/task/executor-subagent-reminders.test.ts
@@ -7,7 +7,11 @@ import type { CreateAgentSessionResult } from "@oh-my-pi/pi-coding-agent/sdk";
 import * as sdkModule from "@oh-my-pi/pi-coding-agent/sdk";
 import type { AgentSession, AgentSessionEvent, PromptOptions } from "@oh-my-pi/pi-coding-agent/session/agent-session";
 import type { AuthStorage } from "@oh-my-pi/pi-coding-agent/session/auth-storage";
-import { runSubprocess, SUBAGENT_WARNING_MISSING_YIELD } from "@oh-my-pi/pi-coding-agent/task/executor";
+import {
+	finalizeSubprocessOutput,
+	runSubprocess,
+	SUBAGENT_WARNING_MISSING_YIELD,
+} from "@oh-my-pi/pi-coding-agent/task/executor";
 import type { AgentDefinition } from "@oh-my-pi/pi-coding-agent/task/types";
 import { EventBus } from "@oh-my-pi/pi-coding-agent/utils/event-bus";
 import { logger } from "@oh-my-pi/pi-utils";
@@ -336,6 +340,38 @@ describe("runSubprocess yield reminders", () => {
 		expect(result.exitCode).toBe(0);
 		expect(result.output).toContain('"ok": true');
 	});
+
+	it("keeps a real run failure from being masked by a successful yield", () => {
+		const result = finalizeSubprocessOutput({
+			rawOutput: "partial output",
+			exitCode: 1,
+			stderr: "Provider returned error finish_reason",
+			doneAborted: false,
+			signalAborted: false,
+			yieldItems: [{ status: "success", data: { ok: true } }],
+			outputSchema: undefined,
+		});
+
+		expect(result.exitCode).toBe(1);
+		expect(result.stderr).toBe("Provider returned error finish_reason");
+		expect(result.rawOutput).toContain('"ok": true');
+	});
+
+	it("lets a valid yield clear internal termination without stderr", () => {
+		const result = finalizeSubprocessOutput({
+			rawOutput: "",
+			exitCode: 1,
+			stderr: "",
+			doneAborted: true,
+			signalAborted: false,
+			yieldItems: [{ status: "success", data: { ok: true } }],
+			outputSchema: undefined,
+		});
+
+		expect(result.exitCode).toBe(0);
+		expect(result.stderr).toBe("");
+		expect(result.rawOutput).toContain('"ok": true');
+	});
 	it("uses provided thinking level when model override has no explicit suffix", async () => {
 		vi.clearAllMocks();
 		const session = createMockSession(({ emit }) => {