diff --git a/TUnit.Engine/Framework/TUnitServiceProvider.cs b/TUnit.Engine/Framework/TUnitServiceProvider.cs
index 2799b12d17..92e6a5ac82 100644
--- a/TUnit.Engine/Framework/TUnitServiceProvider.cs
+++ b/TUnit.Engine/Framework/TUnitServiceProvider.cs
@@ -57,7 +57,7 @@ public ITestExecutionFilter? Filter
     public CancellationTokenSource FailFastCancellationSource { get; }
     public ParallelLimitLockProvider ParallelLimitLockProvider { get; }
     public ObjectLifecycleService ObjectLifecycleService { get; }
-    public bool AfterSessionHooksFailed { get; set; }
+    public bool SessionFailed { get; set; }
 
     [UnconditionalSuppressMessage("Trimming", "IL2026", Justification = "Reflection mode is not used in AOT/trimmed scenarios")]
     [UnconditionalSuppressMessage("AOT", "IL3050", Justification = "Reflection mode is not used in AOT scenarios")]
diff --git a/TUnit.Engine/Framework/TUnitTestFramework.cs b/TUnit.Engine/Framework/TUnitTestFramework.cs
index f2a334056a..c8f8acdd07 100644
--- a/TUnit.Engine/Framework/TUnitTestFramework.cs
+++ b/TUnit.Engine/Framework/TUnitTestFramework.cs
@@ -69,24 +69,23 @@ public async Task ExecuteRequestAsync(ExecuteRequestContext context)
         }
         catch (Exception e) when (IsCancellationException(e))
         {
-            // Check if this is a normal cancellation or fail-fast cancellation
-            if (context.CancellationToken.IsCancellationRequested)
-            {
-                await GetOrCreateServiceProvider(context).Logger.LogErrorAsync("The test run was cancelled.");
-            }
-            else
-            {
-                // This is likely a fail-fast cancellation
-                await GetOrCreateServiceProvider(context).Logger.LogErrorAsync("Test execution stopped due to fail-fast.");
-            }
+            var message = context.CancellationToken.IsCancellationRequested
+                ? "The test run was cancelled."
+                : "Test execution stopped due to fail-fast.";
+            await GetOrCreateServiceProvider(context).Logger.LogErrorAsync(message);
 
+            // Re-throw is safe here — MTP handles OperationCanceledException specially.
             throw;
         }
         catch (Exception e)
         {
-            await GetOrCreateServiceProvider(context).Logger.LogErrorAsync(e);
+            var serviceProvider = GetOrCreateServiceProvider(context);
+            await serviceProvider.Logger.LogErrorAsync(e);
             await ReportUnhandledException(context, e);
-            throw;
+
+            // Do NOT re-throw — MTP hosts expect errors via CloseTestSessionResult,
+            // not propagated exceptions. Re-throwing breaks JSON-RPC transports (#5263).
+            serviceProvider.SessionFailed = true;
         }
         finally
         {
@@ -100,8 +99,7 @@ public async Task<CloseTestSessionResult> CloseTestSessionAsync(CloseTestSession
 
         if (_serviceProvidersPerSession.TryRemove(context.SessionUid.Value, out var serviceProvider))
         {
-            // Check if After(TestSession) hooks failed
-            if (serviceProvider.AfterSessionHooksFailed)
+            if (serviceProvider.SessionFailed)
             {
                 isSuccess = false;
             }
diff --git a/TUnit.Engine/TestSessionCoordinator.cs b/TUnit.Engine/TestSessionCoordinator.cs
index bcecb5e828..398378b947 100644
--- a/TUnit.Engine/TestSessionCoordinator.cs
+++ b/TUnit.Engine/TestSessionCoordinator.cs
@@ -99,10 +99,9 @@ private async Task ExecuteTestsCore(List<AbstractExecutableTest> testList, Cance
         // Schedule and execute tests (batch approach to preserve ExecutionContext)
         var success = await _testScheduler.ScheduleAndExecuteAsync(testList, linkedCts.Token);
 
-        // Track whether After(TestSession) hooks failed
         if (!success)
         {
-            _serviceProvider.AfterSessionHooksFailed = true;
+            _serviceProvider.SessionFailed = true;
         }
     }