diff --git a/CHANGELOG.md b/CHANGELOG.md
index e4c9460669..c94600fadc 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -12,6 +12,7 @@ Next Release
 
 #### Fixes
 
+* [#651](https://github.com/intridea/grape/pull/651): The `rescue_from` keyword now properly defaults to rescuing subclasses of exceptions - [@xevix](https://github.com/xevix).
 * [#614](https://github.com/intridea/grape/pull/614): Params with `nil` value are now refused by `RegexpValidator` - [@dm1try](https://github.com/dm1try).
 * [#494](https://github.com/intridea/grape/issues/494): Fixed performance issue with requests carrying a large payload - [@dblock](https://github.com/dblock).
 * [#619](https://github.com/intridea/grape/pull/619): Convert specs to RSpec 3 syntax with Transpec - [@danielspector](https://github.com/danielspector).
diff --git a/lib/grape/api.rb b/lib/grape/api.rb
index 353e608f5f..336c9266f0 100644
--- a/lib/grape/api.rb
+++ b/lib/grape/api.rb
@@ -214,12 +214,22 @@ def rescue_from(*args, &block)
         options = args.last.is_a?(Hash) ? args.pop : {}
         handler ||= proc { options[:with] } if options.key?(:with)
 
-        handler_type = !!options[:rescue_subclasses] ? :rescue_handlers : :base_only_rescue_handlers
-        imbue handler_type, Hash[args.map { |arg| [arg, handler] }]
+        if args.include?(:all)
+          set(:rescue_all, true)
+          imbue :all_rescue_handler, handler
+        else
+          handler_type =
+            case options[:rescue_subclasses]
+            when nil, true
+              :rescue_handlers
+            else
+              :base_only_rescue_handlers
+            end
 
-        imbue(:rescue_options, options)
+          imbue handler_type, Hash[args.map { |arg| [arg, handler] }]
+        end
 
-        set(:rescue_all, true) if args.include?(:all)
+        imbue(:rescue_options, options)
       end
 
       # Allows you to specify a default representation entity for a
diff --git a/lib/grape/endpoint.rb b/lib/grape/endpoint.rb
index 41d24212f0..1e063f520f 100644
--- a/lib/grape/endpoint.rb
+++ b/lib/grape/endpoint.rb
@@ -441,7 +441,8 @@ def build_middleware
             error_formatters: settings[:error_formatters],
             rescue_options: settings[:rescue_options],
             rescue_handlers: merged_setting(:rescue_handlers),
-            base_only_rescue_handlers: merged_setting(:base_only_rescue_handlers)
+            base_only_rescue_handlers: merged_setting(:base_only_rescue_handlers),
+            all_rescue_handler: settings[:all_rescue_handler]
 
       aggregate_setting(:middleware).each do |m|
         m = m.dup
diff --git a/lib/grape/middleware/error.rb b/lib/grape/middleware/error.rb
index d824aea426..ffe9704dd9 100644
--- a/lib/grape/middleware/error.rb
+++ b/lib/grape/middleware/error.rb
@@ -14,7 +14,8 @@ def default_options
           rescue_subclasses: true, # rescue subclasses of exceptions listed
           rescue_options: { backtrace: false }, # true to display backtrace
           rescue_handlers: {}, # rescue handler blocks
-          base_only_rescue_handlers: {} # rescue handler blocks rescuing only the base class
+          base_only_rescue_handlers: {}, # rescue handler blocks rescuing only the base class
+          all_rescue_handler: nil # rescue handler block to rescue from all exceptions
         }
       end
 
@@ -40,7 +41,8 @@ def call!(env)
 
       def find_handler(klass)
         handler = options[:rescue_handlers].find(-> { [] }) { |error, _| klass <= error }[1]
-        handler = options[:base_only_rescue_handlers][klass] || options[:base_only_rescue_handlers][:all] unless handler
+        handler = options[:base_only_rescue_handlers][klass] unless handler
+        handler = options[:all_rescue_handler] unless handler
         handler
       end
 
diff --git a/spec/grape/api_spec.rb b/spec/grape/api_spec.rb
index 7c6c825467..1d32aa788d 100644
--- a/spec/grape/api_spec.rb
+++ b/spec/grape/api_spec.rb
@@ -1343,6 +1343,18 @@ class ChildError < ParentError; end
       expect { get '/uncaught_parent' }.to raise_error(StandardError)
     end
 
+    it 'sets rescue_subclasses to true by default' do
+      subject.rescue_from APIErrors::ParentError do |e|
+        rack_response("rescued from #{e.class.name}", 500)
+      end
+      subject.get '/caught_child' do
+        raise APIErrors::ChildError
+      end
+
+      get '/caught_child'
+      expect(last_response.status).to eql 500
+    end
+
     it 'does not rescue child errors if rescue_subclasses is false' do
       subject.rescue_from APIErrors::ParentError, rescue_subclasses: false do |e|
         rack_response("rescued from #{e.class.name}", 500)