diff --git a/TUnit.Engine.Tests/DataSourceExceptionPropagationTests.cs b/TUnit.Engine.Tests/DataSourceExceptionPropagationTests.cs
index ab8005332a..dce13ef648 100644
--- a/TUnit.Engine.Tests/DataSourceExceptionPropagationTests.cs
+++ b/TUnit.Engine.Tests/DataSourceExceptionPropagationTests.cs
@@ -53,4 +53,27 @@ await RunTestsWithFilter(
                 }
             ]);
     }
+
+    [Test]
+    public async Task NestedClassDataSource_ConstructorThrows_FailsTestWithException()
+    {
+        await RunTestsWithFilter(
+            "/*/*/NestedDataSourcesThrow/*",
+            [
+                result => result.ResultSummary.Outcome.ShouldBe("Failed"),
+                result => result.ResultSummary.Counters.Total.ShouldBe(1),
+                result => result.ResultSummary.Counters.Passed.ShouldBe(0),
+                result => result.ResultSummary.Counters.Failed.ShouldBe(1),
+                result =>
+                {
+                    var errorMessage = result.Results.First().Output?.ErrorInfo?.Message;
+                    errorMessage.ShouldNotBeNull("Expected an error message");
+                    // Should contain the original exception message from the DataSource3 constructor
+                    errorMessage.ShouldContain("Oops something went wrong");
+                    // Should indicate the nested property injection failure path
+                    errorMessage.ShouldContain("Failed to inject properties for type 'DataSource'");
+                    errorMessage.ShouldContain("Failed to inject properties for type 'DataSource2'");
+                }
+            ]);
+    }
 }
diff --git a/TUnit.Engine/Services/TestExecution/TestCoordinator.cs b/TUnit.Engine/Services/TestExecution/TestCoordinator.cs
index 683a9e8f4c..8d3797392e 100644
--- a/TUnit.Engine/Services/TestExecution/TestCoordinator.cs
+++ b/TUnit.Engine/Services/TestExecution/TestCoordinator.cs
@@ -65,6 +65,17 @@ private async ValueTask ExecuteTestInternalAsync(AbstractExecutableTest test, Ca
 
             _contextRestorer.RestoreContext(test);
 
+            // Check if test was already marked as failed during registration (e.g., property injection failure)
+            // If so, skip execution and report the failure immediately
+            var existingResult = test.Context.Execution.Result;
+            if (existingResult?.State == TestState.Failed)
+            {
+                var exception = existingResult.Exception ?? new InvalidOperationException("Test failed during registration");
+                await _stateManager.MarkFailedAsync(test, exception).ConfigureAwait(false);
+                await _eventReceiverOrchestrator.InvokeTestEndEventReceiversAsync(test.Context, cancellationToken).ConfigureAwait(false);
+                return;
+            }
+
             // Clear Result and timing from any previous execution (important for repeated tests)
             test.Context.Execution.Result = null;
             test.Context.TestStart = null;
diff --git a/TUnit.TestProject/NestedDataSourcesThrow.cs b/TUnit.TestProject/NestedDataSourcesThrow.cs
new file mode 100644
index 0000000000..b309cf396e
--- /dev/null
+++ b/TUnit.TestProject/NestedDataSourcesThrow.cs
@@ -0,0 +1,61 @@
+using TUnit.Core.Interfaces;
+
+namespace TUnit.TestProject;
+
+public class NestedDataSourcesThrow
+{
+    [ClassDataSource]
+    public DataSource Data { get; set; } = null!;
+
+    [Test]
+    public Task Test1()
+    {
+        // This test body should never execute - the test should fail during property injection
+        // with "Oops something went wrong" from DataSource3's constructor
+        Assert.Fail("Test body should not have executed - expected property injection to fail with 'Oops something went wrong'");
+        return Task.CompletedTask;
+    }
+
+    public class DataSource : IAsyncInitializer
+    {
+        [ClassDataSource]
+        public DataSource2 DataSource2 { get; set; } = null!;
+
+        public bool IsInitialized { get; set; }
+
+        public Task InitializeAsync()
+        {
+            IsInitialized = true;
+            return Task.CompletedTask;
+        }
+    }
+
+    public class DataSource2 : IAsyncInitializer
+    {
+        [ClassDataSource]
+        public DataSource3 DataSource3 { get; set; } = null!;
+
+        public bool IsInitialized { get; set; }
+
+        public Task InitializeAsync()
+        {
+            IsInitialized = true;
+            return Task.CompletedTask;
+        }
+    }
+
+    public class DataSource3 : IAsyncInitializer
+    {
+        public DataSource3()
+        {
+            throw new Exception("Oops something went wrong");
+        }
+        public bool IsInitialized { get; set; }
+
+        public Task InitializeAsync()
+        {
+            IsInitialized = true;
+            return Task.CompletedTask;
+        }
+    }
+}