diff --git a/hw/vfio-user/proxy.c b/hw/vfio-user/proxy.c
index f2601eada5..314dfd23d8 100644
--- a/hw/vfio-user/proxy.c
+++ b/hw/vfio-user/proxy.c
@@ -412,11 +412,22 @@ err:
     for (i = 0; i < numfds; i++) {
         close(fdp[i]);
     }
-    if (isreply && msg != NULL) {
-        /* force an error to keep sending thread from hanging */
-        vfio_user_set_error(msg->hdr, EINVAL);
-        msg->complete = true;
-        qemu_cond_signal(&msg->cv);
+    if (msg != NULL) {
+        if (msg->type == VFIO_MSG_REQ) {
+            /*
+             * Clean up the request message on failure. Change type back to
+             * NOWAIT to free.
+             */
+            msg->type = VFIO_MSG_NOWAIT;
+            vfio_user_recycle(proxy, msg);
+        } else {
+            /*
+             * Report an error back to the sender. Sender will recycle msg.
+             */
+            vfio_user_set_error(msg->hdr, EINVAL);
+            msg->complete = true;
+            qemu_cond_signal(&msg->cv);
+        }
     }
     return -1;
 }