diff --git a/server/mergin/sync/public_api_controller.py b/server/mergin/sync/public_api_controller.py
index 5aada5b6..45957482 100644
--- a/server/mergin/sync/public_api_controller.py
+++ b/server/mergin/sync/public_api_controller.py
@@ -13,6 +13,7 @@
 import uuid
 from datetime import datetime
 
+import gevent
 import psycopg2
 from blinker import signal
 from connexion import NoContent, request
@@ -951,6 +952,9 @@ def project_push(namespace, project_name):
                 f"Failed to upload a new project version using transaction id: {upload.id}: {str(err)}"
             )
             abort(422, "Failed to upload a new project version. Please try later.")
+        except gevent.timeout.Timeout:
+            db.session.rollback()
+            raise
         finally:
             upload.clear()
 
@@ -1165,6 +1169,10 @@ def push_finish(transaction_id):
             f"transaction id: {transaction_id}.: {str(err)}"
         )
         abort(422, "Failed to create new version: {}".format(str(err)))
+    # catch exception during pg transaction so we can rollback and prevent PendingRollbackError during upload clean up
+    except gevent.timeout.Timeout:
+        db.session.rollback()
+        raise
     finally:
         # remove artifacts
         upload.clear()
diff --git a/server/mergin/tests/test_middleware.py b/server/mergin/tests/test_middleware.py
index 09f4bf05..508334d0 100644
--- a/server/mergin/tests/test_middleware.py
+++ b/server/mergin/tests/test_middleware.py
@@ -3,9 +3,11 @@
 # SPDX-License-Identifier: AGPL-3.0-only OR LicenseRef-MerginMaps-Commercial
 
 import gevent
+import psycogreen.gevent
 import pytest
+import sqlalchemy
 
-from ..app import create_simple_app, GeventTimeoutMiddleware
+from ..app import create_simple_app, GeventTimeoutMiddleware, db
 from ..config import Configuration
 
 
@@ -31,3 +33,41 @@ def ping():
         if use_middleware
         else 200
     )
+
+
+def test_catch_timeout():
+    """Test proper handling of gevent timeout with db.session.rollback"""
+    psycogreen.gevent.patch_psycopg()
+    Configuration.GEVENT_WORKER = True
+    Configuration.GEVENT_REQUEST_TIMEOUT = 1
+    application = create_simple_app()
+
+    def unhandled():
+        try:
+            db.session.execute("SELECT pg_sleep(1.1);")
+        finally:
+            db.session.execute("SELECT 1;")
+        return ""
+
+    def timeout():
+        try:
+            db.session.execute("SELECT pg_sleep(1.1);")
+        except gevent.timeout.Timeout:
+            db.session.rollback()
+            raise
+        finally:
+            db.session.execute("SELECT 1;")
+        return ""
+
+    application.add_url_rule("/unhandled", "unhandled", unhandled)
+    application.add_url_rule("/timeout", "timeout", timeout)
+    app_context = application.app_context()
+    app_context.push()
+
+    assert application.test_client().get("/timeout").status_code == 504
+
+    # in case of missing rollback sqlalchemy would raise error
+    with pytest.raises(sqlalchemy.exc.PendingRollbackError):
+        application.test_client().get("/unhandled")
+
+    db.session.rollback()