diff --git a/TUnit.Engine/Enums/FailureCategory.cs b/TUnit.Engine/Enums/FailureCategory.cs
new file mode 100644
index 0000000000..6b84ad7150
--- /dev/null
+++ b/TUnit.Engine/Enums/FailureCategory.cs
@@ -0,0 +1,42 @@
+namespace TUnit.Engine.Enums;
+
+/// <summary>
+/// Categorizes test failures to help users quickly understand what went wrong.
+/// </summary>
+internal enum FailureCategory
+{
+    /// <summary>
+    /// TUnit assertion failure (AssertionException).
+    /// </summary>
+    Assertion,
+
+    /// <summary>
+    /// Timeout or cancellation failure (OperationCanceledException, TaskCanceledException, TimeoutException).
+    /// </summary>
+    Timeout,
+
+    /// <summary>
+    /// NullReferenceException in user code.
+    /// </summary>
+    NullReference,
+
+    /// <summary>
+    /// Failure in a Before/BeforeEvery hook.
+    /// </summary>
+    Setup,
+
+    /// <summary>
+    /// Failure in an After/AfterEvery hook.
+    /// </summary>
+    Teardown,
+
+    /// <summary>
+    /// File, network, or other I/O exception.
+    /// </summary>
+    Infrastructure,
+
+    /// <summary>
+    /// Unrecognized failure type.
+    /// </summary>
+    Unknown
+}
diff --git a/TUnit.Engine/Services/FailureCategorizer.cs b/TUnit.Engine/Services/FailureCategorizer.cs
new file mode 100644
index 0000000000..5b088a257e
--- /dev/null
+++ b/TUnit.Engine/Services/FailureCategorizer.cs
@@ -0,0 +1,92 @@
+using TUnit.Core.Exceptions;
+using TUnit.Engine.Enums;
+
+namespace TUnit.Engine.Services;
+
+/// <summary>
+/// Examines exceptions from test failures and categorizes them to help users
+/// quickly understand what went wrong.
+/// </summary>
+internal static class FailureCategorizer
+{
+    /// <summary>
+    /// Categorizes the given exception into a <see cref="FailureCategory"/>.
+    /// Unwraps <see cref="AggregateException"/> to inspect the first inner exception.
+    /// </summary>
+    public static FailureCategory Categorize(Exception exception)
+    {
+        // Unwrap AggregateException to get the real cause
+        var ex = exception is AggregateException { InnerExceptions.Count: > 0 } agg
+            ? agg.InnerExceptions[0]
+            : exception;
+
+        // Setup hooks (Before*)
+        if (ex is BeforeTestException
+            or BeforeClassException
+            or BeforeAssemblyException
+            or BeforeTestSessionException
+            or BeforeTestDiscoveryException)
+        {
+            return FailureCategory.Setup;
+        }
+
+        // Teardown hooks (After*)
+        if (ex is AfterTestException
+            or AfterClassException
+            or AfterAssemblyException
+            or AfterTestSessionException
+            or AfterTestDiscoveryException)
+        {
+            return FailureCategory.Teardown;
+        }
+
+        // Assertion failures - check by type name to support third-party assertion libraries
+        if (ex.GetType().Name.Contains("Assertion", StringComparison.Ordinal)
+            || ex.GetType().Name.Contains("Assert", StringComparison.Ordinal))
+        {
+            return FailureCategory.Assertion;
+        }
+
+        // Timeout / cancellation
+        if (ex is OperationCanceledException
+            or TaskCanceledException
+            or System.TimeoutException
+            or TUnit.Core.Exceptions.TimeoutException)
+        {
+            return FailureCategory.Timeout;
+        }
+
+        // NullReference
+        if (ex is NullReferenceException)
+        {
+            return FailureCategory.NullReference;
+        }
+
+        // Infrastructure (I/O, network, file system)
+        if (ex is IOException
+            or System.Net.Sockets.SocketException
+            or System.Net.Http.HttpRequestException
+            or UnauthorizedAccessException)
+        {
+            return FailureCategory.Infrastructure;
+        }
+
+        return FailureCategory.Unknown;
+    }
+
+    /// <summary>
+    /// Returns a short human-readable label for the category,
+    /// suitable for prefixing failure messages in reports.
+    /// </summary>
+    public static string GetLabel(FailureCategory category) => category switch
+    {
+        FailureCategory.Assertion => "Assertion Failure",
+        FailureCategory.Timeout => "Timeout",
+        FailureCategory.NullReference => "Null Reference",
+        FailureCategory.Setup => "Setup Failure",
+        FailureCategory.Teardown => "Teardown Failure",
+        FailureCategory.Infrastructure => "Infrastructure Failure",
+        FailureCategory.Unknown => "Test Failure",
+        _ => "Test Failure"
+    };
+}
diff --git a/TUnit.Engine/TUnitMessageBus.cs b/TUnit.Engine/TUnitMessageBus.cs
index e85505dd03..24b9bb2fa4 100644
--- a/TUnit.Engine/TUnitMessageBus.cs
+++ b/TUnit.Engine/TUnitMessageBus.cs
@@ -6,6 +6,7 @@
 using Microsoft.Testing.Platform.TestHost;
 using TUnit.Core;
 using TUnit.Engine.CommandLineProviders;
+using TUnit.Engine.Enums;
 using TUnit.Engine.Exceptions;
 using TUnit.Engine.Extensions;
 using TUnit.Engine.Services;
@@ -143,19 +144,27 @@ public ValueTask PublishOutputUpdate(TestNode testNode)
 
     private static TestNodeStateProperty GetFailureStateProperty(TestContext testContext, Exception e, TimeSpan duration)
     {
-        if (testContext.Metadata.TestDetails.Timeout != null
-            && e is TaskCanceledException or OperationCanceledException or TimeoutException
+        // Unwrap AggregateException once so all downstream logic sees the real cause
+        var unwrapped = e is AggregateException { InnerExceptions.Count: > 0 } agg
+            ? agg.InnerExceptions[0]
+            : e;
+
+        var category = FailureCategorizer.Categorize(unwrapped);
+        var categoryLabel = FailureCategorizer.GetLabel(category);
+
+        if (category == FailureCategory.Timeout
+            && testContext.Metadata.TestDetails.Timeout != null
             && duration >= testContext.Metadata.TestDetails.Timeout.Value)
         {
-            return new TimeoutTestNodeStateProperty($"Test timed out after {testContext.Metadata.TestDetails.Timeout.Value.TotalMilliseconds}ms");
+            return new TimeoutTestNodeStateProperty($"[{categoryLabel}] Test timed out after {testContext.Metadata.TestDetails.Timeout.Value.TotalMilliseconds}ms");
         }
 
-        if (e.GetType().Name.Contains("Assertion", StringComparison.InvariantCulture))
+        if (category == FailureCategory.Assertion)
         {
-            return new FailedTestNodeStateProperty(e);
+            return new FailedTestNodeStateProperty(unwrapped, $"[{categoryLabel}] {unwrapped.Message}");
         }
 
-        return new ErrorTestNodeStateProperty(e);
+        return new ErrorTestNodeStateProperty(unwrapped, $"[{categoryLabel}] {unwrapped.Message}");
     }
 
     public Task<bool> IsEnabledAsync()