diff --git a/e2e/react-start/server-functions/src/routeTree.gen.ts b/e2e/react-start/server-functions/src/routeTree.gen.ts
index f4c74f657b7..c8fa692dcb7 100644
--- a/e2e/react-start/server-functions/src/routeTree.gen.ts
+++ b/e2e/react-start/server-functions/src/routeTree.gen.ts
@@ -44,6 +44,7 @@ import { Route as MiddlewareRequestMiddlewareRouteImport } from './routes/middle
 import { Route as MiddlewareMiddlewareFactoryRouteImport } from './routes/middleware/middleware-factory'
 import { Route as MiddlewareFunctionMetadataRouteImport } from './routes/middleware/function-metadata'
 import { Route as MiddlewareClientMiddlewareRouterRouteImport } from './routes/middleware/client-middleware-router'
+import { Route as MiddlewareCatchHandlerErrorRouteImport } from './routes/middleware/catch-handler-error'
 import { Route as CookiesSetRouteImport } from './routes/cookies/set'
 import { Route as AbortSignalMethodRouteImport } from './routes/abort-signal/$method'
 import { Route as MiddlewareRedirectWithMiddlewareIndexRouteImport } from './routes/middleware/redirect-with-middleware/index'
@@ -231,6 +232,12 @@ const MiddlewareClientMiddlewareRouterRoute =
     path: '/middleware/client-middleware-router',
     getParentRoute: () => rootRouteImport,
   } as any)
+const MiddlewareCatchHandlerErrorRoute =
+  MiddlewareCatchHandlerErrorRouteImport.update({
+    id: '/middleware/catch-handler-error',
+    path: '/middleware/catch-handler-error',
+    getParentRoute: () => rootRouteImport,
+  } as any)
 const CookiesSetRoute = CookiesSetRouteImport.update({
   id: '/cookies/set',
   path: '/cookies/set',
@@ -279,6 +286,7 @@ export interface FileRoutesByFullPath {
   '/submit-post-formdata': typeof SubmitPostFormdataRoute
   '/abort-signal/$method': typeof AbortSignalMethodRoute
   '/cookies/set': typeof CookiesSetRoute
+  '/middleware/catch-handler-error': typeof MiddlewareCatchHandlerErrorRoute
   '/middleware/client-middleware-router': typeof MiddlewareClientMiddlewareRouterRoute
   '/middleware/function-metadata': typeof MiddlewareFunctionMetadataRoute
   '/middleware/middleware-factory': typeof MiddlewareMiddlewareFactoryRoute
@@ -321,6 +329,7 @@ export interface FileRoutesByTo {
   '/submit-post-formdata': typeof SubmitPostFormdataRoute
   '/abort-signal/$method': typeof AbortSignalMethodRoute
   '/cookies/set': typeof CookiesSetRoute
+  '/middleware/catch-handler-error': typeof MiddlewareCatchHandlerErrorRoute
   '/middleware/client-middleware-router': typeof MiddlewareClientMiddlewareRouterRoute
   '/middleware/function-metadata': typeof MiddlewareFunctionMetadataRoute
   '/middleware/middleware-factory': typeof MiddlewareMiddlewareFactoryRoute
@@ -364,6 +373,7 @@ export interface FileRoutesById {
   '/submit-post-formdata': typeof SubmitPostFormdataRoute
   '/abort-signal/$method': typeof AbortSignalMethodRoute
   '/cookies/set': typeof CookiesSetRoute
+  '/middleware/catch-handler-error': typeof MiddlewareCatchHandlerErrorRoute
   '/middleware/client-middleware-router': typeof MiddlewareClientMiddlewareRouterRoute
   '/middleware/function-metadata': typeof MiddlewareFunctionMetadataRoute
   '/middleware/middleware-factory': typeof MiddlewareMiddlewareFactoryRoute
@@ -408,6 +418,7 @@ export interface FileRouteTypes {
     | '/submit-post-formdata'
     | '/abort-signal/$method'
     | '/cookies/set'
+    | '/middleware/catch-handler-error'
     | '/middleware/client-middleware-router'
     | '/middleware/function-metadata'
     | '/middleware/middleware-factory'
@@ -450,6 +461,7 @@ export interface FileRouteTypes {
     | '/submit-post-formdata'
     | '/abort-signal/$method'
     | '/cookies/set'
+    | '/middleware/catch-handler-error'
     | '/middleware/client-middleware-router'
     | '/middleware/function-metadata'
     | '/middleware/middleware-factory'
@@ -492,6 +504,7 @@ export interface FileRouteTypes {
     | '/submit-post-formdata'
     | '/abort-signal/$method'
     | '/cookies/set'
+    | '/middleware/catch-handler-error'
     | '/middleware/client-middleware-router'
     | '/middleware/function-metadata'
     | '/middleware/middleware-factory'
@@ -535,6 +548,7 @@ export interface RootRouteChildren {
   SubmitPostFormdataRoute: typeof SubmitPostFormdataRoute
   AbortSignalMethodRoute: typeof AbortSignalMethodRoute
   CookiesSetRoute: typeof CookiesSetRoute
+  MiddlewareCatchHandlerErrorRoute: typeof MiddlewareCatchHandlerErrorRoute
   MiddlewareClientMiddlewareRouterRoute: typeof MiddlewareClientMiddlewareRouterRoute
   MiddlewareFunctionMetadataRoute: typeof MiddlewareFunctionMetadataRoute
   MiddlewareMiddlewareFactoryRoute: typeof MiddlewareMiddlewareFactoryRoute
@@ -806,6 +820,13 @@ declare module '@tanstack/react-router' {
       preLoaderRoute: typeof MiddlewareClientMiddlewareRouterRouteImport
       parentRoute: typeof rootRouteImport
     }
+    '/middleware/catch-handler-error': {
+      id: '/middleware/catch-handler-error'
+      path: '/middleware/catch-handler-error'
+      fullPath: '/middleware/catch-handler-error'
+      preLoaderRoute: typeof MiddlewareCatchHandlerErrorRouteImport
+      parentRoute: typeof rootRouteImport
+    }
     '/cookies/set': {
       id: '/cookies/set'
       path: '/cookies/set'
@@ -863,6 +884,7 @@ const rootRouteChildren: RootRouteChildren = {
   SubmitPostFormdataRoute: SubmitPostFormdataRoute,
   AbortSignalMethodRoute: AbortSignalMethodRoute,
   CookiesSetRoute: CookiesSetRoute,
+  MiddlewareCatchHandlerErrorRoute: MiddlewareCatchHandlerErrorRoute,
   MiddlewareClientMiddlewareRouterRoute: MiddlewareClientMiddlewareRouterRoute,
   MiddlewareFunctionMetadataRoute: MiddlewareFunctionMetadataRoute,
   MiddlewareMiddlewareFactoryRoute: MiddlewareMiddlewareFactoryRoute,
diff --git a/e2e/react-start/server-functions/src/routes/middleware/catch-handler-error.tsx b/e2e/react-start/server-functions/src/routes/middleware/catch-handler-error.tsx
new file mode 100644
index 00000000000..44c054d941b
--- /dev/null
+++ b/e2e/react-start/server-functions/src/routes/middleware/catch-handler-error.tsx
@@ -0,0 +1,67 @@
+import { createFileRoute } from '@tanstack/react-router'
+import { createMiddleware, createServerFn } from '@tanstack/react-start'
+import { useState } from 'react'
+
+const errorCatchingMiddleware = createMiddleware({ type: 'function' }).server(
+  async ({ next }) => {
+    try {
+      return await next()
+    } catch (error) {
+      const originalMessage =
+        error instanceof Error ? error.message : 'Unknown error'
+      throw new Error(`Middleware caught and transformed: ${originalMessage}`)
+    }
+  },
+)
+
+const $serverFnThatThrows = createServerFn({ method: 'GET' })
+  .middleware([errorCatchingMiddleware])
+  .handler(() => {
+    throw new Error('This error should be caught by middleware')
+  })
+
+export const Route = createFileRoute('/middleware/catch-handler-error')({
+  component: RouteComponent,
+})
+
+function RouteComponent() {
+  const [error, setError] = useState<string | null>(null)
+  const [loading, setLoading] = useState(false)
+
+  const handleClick = async () => {
+    setLoading(true)
+    setError(null)
+    try {
+      await $serverFnThatThrows()
+    } catch (e) {
+      setError(e instanceof Error ? e.message : String(e))
+    } finally {
+      setLoading(false)
+    }
+  }
+
+  return (
+    <div className="p-4">
+      <h1 data-testid="catch-handler-error-title">
+        Middleware Error Catching Test
+      </h1>
+      <p className="mt-2">
+        This tests that middleware can catch and transform errors thrown by
+        server function handlers
+      </p>
+      <button
+        data-testid="trigger-error-btn"
+        className="mt-4 px-4 py-2 bg-blue-500 text-white rounded hover:bg-blue-600"
+        onClick={handleClick}
+        disabled={loading}
+      >
+        {loading ? 'Loading' : 'Call Server Function That Throws'}
+      </button>
+      {error && (
+        <div data-testid="transformed-error" className="mt-4 text-red-500">
+          Error: {error}
+        </div>
+      )}
+    </div>
+  )
+}
diff --git a/e2e/react-start/server-functions/tests/server-functions.spec.ts b/e2e/react-start/server-functions/tests/server-functions.spec.ts
index 2bc4873d1b6..62d6a0df94f 100644
--- a/e2e/react-start/server-functions/tests/server-functions.spec.ts
+++ b/e2e/react-start/server-functions/tests/server-functions.spec.ts
@@ -1021,3 +1021,25 @@ test('server function receives serverFnMeta in options', async ({ page }) => {
   expect(nestingPostMetadata.inner.post.name.length).toBeGreaterThan(0)
   expect(nestingPostMetadata.inner.post.filename.length).toBeGreaterThan(0)
 })
+
+test('middleware can catch errors thrown by server function handlers', async ({
+  page,
+}) => {
+  await page.goto('/middleware/catch-handler-error')
+
+  await page.waitForLoadState('networkidle')
+
+  await expect(page.getByTestId('catch-handler-error-title')).toBeVisible()
+
+  await page.getByTestId('trigger-error-btn').click()
+
+  await expect(page.getByTestId('transformed-error')).toBeVisible()
+
+  await expect(page.getByTestId('transformed-error')).toContainText(
+    'Middleware caught and transformed',
+  )
+
+  await expect(page.getByTestId('transformed-error')).toContainText(
+    'This error should be caught by middleware',
+  )
+})
diff --git a/packages/start-client-core/src/createServerFn.ts b/packages/start-client-core/src/createServerFn.ts
index 45a9b45163f..b2944e8b533 100644
--- a/packages/start-client-core/src/createServerFn.ts
+++ b/packages/start-client-core/src/createServerFn.ts
@@ -266,14 +266,13 @@ export async function executeMiddleware(
             error: userCtx.error ?? (ctx as any).error,
           }
 
-          try {
-            return await callNextMiddleware(nextCtx)
-          } catch (error: any) {
-            return {
-              ...nextCtx,
-              error,
-            }
+          const result = await callNextMiddleware(nextCtx)
+
+          if (result.error) {
+            throw result.error
           }
+
+          return result
         }
 
         // Execute the middleware