diff --git a/docs/User/Project/Changelog.md b/docs/User/Project/Changelog.md
index f87c8c2215..68e9dc9bb9 100644
--- a/docs/User/Project/Changelog.md
+++ b/docs/User/Project/Changelog.md
@@ -4,6 +4,13 @@
 
 ## Unreleased
 
+### Bug Fixes
+
+* Fix `parDemuxScan` deadlock when a worker throws an exception while the
+  driver is blocked on a full input buffer.
+
+### Breaking Changes
+
 * The following deprecated modules have been removed:
   * Streamly.Data.Array.Foreign
   * Streamly.Data.Fold.Tee
diff --git a/src/Streamly/Internal/Data/Fold/Channel/Type.hs b/src/Streamly/Internal/Data/Fold/Channel/Type.hs
index 70fa41cb6d..e04146a09b 100644
--- a/src/Streamly/Internal/Data/Fold/Channel/Type.hs
+++ b/src/Streamly/Internal/Data/Fold/Channel/Type.hs
@@ -313,6 +313,8 @@ sendEOFToDriver sv = liftIO $ do
 sendExceptionToDriver :: Channel m a b -> SomeException -> IO ()
 sendExceptionToDriver sv e = do
     tid <- myThreadId
+    writeIORef (closedForInput sv) True
+    void $ tryPutMVar (inputSpaceDoorBell sv) ()
     void $ sendToDriver sv (FoldException tid e)
 
 data FromSVarState m a b =
diff --git a/test/Streamly/Test/Data/Scanl/Concurrent.hs b/test/Streamly/Test/Data/Scanl/Concurrent.hs
index 8b3507231b..6141d9e534 100644
--- a/test/Streamly/Test/Data/Scanl/Concurrent.hs
+++ b/test/Streamly/Test/Data/Scanl/Concurrent.hs
@@ -10,6 +10,7 @@
 module Streamly.Test.Data.Scanl.Concurrent (main) where
 
 import Control.Concurrent (threadDelay)
+import Control.Exception (ErrorCall(..), try)
 import Data.Function ( (&) )
 import Data.IORef (newIORef, atomicModifyIORef')
 import Data.List (sort)
@@ -103,6 +104,37 @@ parDemuxScan_StreamEnd concOpts = do
     map snd (filter fst res) `shouldBe` filter even [1..streamLen]
     map snd (filter (not . fst) res) `shouldBe` filter odd [1..streamLen]
 
+parDemuxScan_WorkerException :: (Scanl.Config -> Scanl.Config) -> IO ()
+parDemuxScan_WorkerException concOpts = do
+    let throwAfter = 3
+        -- All items go to the same key so the driver stays in sendToWorker_
+        -- for a single worker channel, maximizing the chance of blocking on a
+        -- full buffer.
+        demuxer _ = (0 :: Int)
+        gen _ = pure
+            $ Scanl.lmapM
+                (\x -> do
+                    -- Slow the worker down so the buffer fills up and the
+                    -- driver blocks in sendToWorker_ waiting for space.
+                    threadDelay 50000
+                    if (x :: Int) > throwAfter
+                    then error "worker exception"
+                    else pure x)
+            $ Scanl.mkScanl1 (\_ x -> x)
+        -- Send enough items to fill the buffer (maxBuffer 1) and block
+        inpList = [1..100]
+        inpStream = Stream.fromList inpList
+    res <- try
+        $ Scanl.parDemuxScanM concOpts demuxer gen inpStream
+            & Stream.concatMap Stream.fromList
+            & fmap (\x -> (fst x,) <$> snd x)
+            & Stream.catMaybes
+            & Stream.fold Fold.toList
+    case res of
+        Left (ErrorCall msg) -> msg `shouldBe` "worker exception"
+        Right _ -> expectationFailure
+            "Expected ErrorCall exception but stream completed successfully"
+
 main :: IO ()
 main = hspec
   $ H.parallel
@@ -118,3 +150,5 @@ main = hspec
             $ parDemuxScan_StreamEnd (Scanl.maxBuffer 1)
         it "parDemuxScanM (scan end) (maxBuffer 1)"
             $ parDemuxScan_ScanEnd (Scanl.maxBuffer 1)
+        it "parDemuxScanM (worker exception) (maxBuffer 1)"
+            $ parDemuxScan_WorkerException (Scanl.maxBuffer 1)