diff --git a/.changeset/early-tips-prove.md b/.changeset/early-tips-prove.md
new file mode 100644
index 0000000000..2df03126d8
--- /dev/null
+++ b/.changeset/early-tips-prove.md
@@ -0,0 +1,5 @@
+---
+'svelte': patch
+---
+
+fix: invoke parent boundary of deriveds that throw
diff --git a/packages/svelte/src/internal/client/dom/blocks/boundary.js b/packages/svelte/src/internal/client/dom/blocks/boundary.js
index cb9fc6ef6b..4254c5d82d 100644
--- a/packages/svelte/src/internal/client/dom/blocks/boundary.js
+++ b/packages/svelte/src/internal/client/dom/blocks/boundary.js
@@ -2,14 +2,13 @@
 
 import { BOUNDARY_EFFECT, EFFECT_PRESERVED, EFFECT_TRANSPARENT } from '#client/constants';
 import { component_context, set_component_context } from '../../context.js';
+import { invoke_error_boundary } from '../../error-handling.js';
 import { block, branch, destroy_effect, pause_effect } from '../../reactivity/effects.js';
 import {
 	active_effect,
 	active_reaction,
-	handle_error,
 	set_active_effect,
-	set_active_reaction,
-	reset_is_throwing_error
+	set_active_reaction
 } from '../../runtime.js';
 import {
 	hydrate_next,
@@ -129,7 +128,11 @@ export class Boundary {
 					}
 				});
 			} else {
-				this.#main_effect = branch(() => children(this.#anchor));
+				try {
+					this.#main_effect = branch(() => children(this.#anchor));
+				} catch (error) {
+					this.error(error);
+				}
 
 				if (this.#pending_count > 0) {
 					this.#show_pending_snippet();
@@ -137,8 +140,6 @@ export class Boundary {
 					this.ran = true;
 				}
 			}
-
-			reset_is_throwing_error();
 		}, flags);
 
 		if (hydrating) {
@@ -239,12 +240,7 @@ export class Boundary {
 
 			this.#main_effect = this.#run(() => {
 				this.#is_creating_fallback = false;
-
-				try {
-					return branch(() => this.#children(this.#anchor));
-				} finally {
-					reset_is_throwing_error();
-				}
+				return branch(() => this.#children(this.#anchor));
 			});
 
 			if (this.#pending_count > 0) {
@@ -260,7 +256,14 @@ export class Boundary {
 			throw error;
 		}
 
-		onerror?.(error, reset);
+		var previous_reaction = active_reaction;
+
+		try {
+			set_active_reaction(null);
+			onerror?.(error, reset);
+		} finally {
+			set_active_reaction(previous_reaction);
+		}
 
 		if (this.#main_effect) {
 			destroy_effect(this.#main_effect);
@@ -297,10 +300,9 @@ export class Boundary {
 							);
 						});
 					} catch (error) {
-						handle_error(error, this.#effect, null, this.#effect.ctx);
+						invoke_error_boundary(error, /** @type {Effect} */ (this.#effect.parent));
 						return null;
 					} finally {
-						reset_is_throwing_error();
 						this.#is_creating_fallback = false;
 					}
 				});
diff --git a/packages/svelte/src/internal/client/error-handling.js b/packages/svelte/src/internal/client/error-handling.js
new file mode 100644
index 0000000000..b79c1ce74f
--- /dev/null
+++ b/packages/svelte/src/internal/client/error-handling.js
@@ -0,0 +1,88 @@
+/** @import { Effect } from '#client' */
+/** @import { Boundary } from './dom/blocks/boundary.js' */
+import { DEV } from 'esm-env';
+import { FILENAME } from '../../constants.js';
+import { is_firefox } from './dom/operations.js';
+import { BOUNDARY_EFFECT, EFFECT_RAN } from './constants.js';
+import { define_property } from '../shared/utils.js';
+import { active_effect } from './runtime.js';
+
+/**
+ * @param {unknown} error
+ */
+export function handle_error(error) {
+	var effect = /** @type {Effect} */ (active_effect);
+
+	if (DEV && error instanceof Error) {
+		// adjust_error(error, effect);
+	}
+
+	if ((effect.f & EFFECT_RAN) === 0) {
+		// if the error occurred while creating this subtree, we let it
+		// bubble up until it hits a boundary that can handle it
+		if ((effect.f & BOUNDARY_EFFECT) === 0) {
+			throw error;
+		}
+
+		// @ts-expect-error
+		effect.fn(error);
+	} else {
+		// otherwise we bubble up the effect tree ourselves
+		invoke_error_boundary(error, effect);
+	}
+}
+
+/**
+ * @param {unknown} error
+ * @param {Effect | null} effect
+ */
+export function invoke_error_boundary(error, effect) {
+	while (effect !== null) {
+		if ((effect.f & BOUNDARY_EFFECT) !== 0) {
+			try {
+				/** @type {Boundary} */ (effect.b).error(error);
+				return;
+			} catch {}
+		}
+
+		effect = effect.parent;
+	}
+
+	throw error;
+}
+
+/** @type {WeakSet<Error>} */
+const adjusted_errors = new WeakSet();
+
+/**
+ * Add useful information to the error message/stack in development
+ * @param {Error} error
+ * @param {Effect} effect
+ */
+function adjust_error(error, effect) {
+	if (adjusted_errors.has(error)) return;
+	adjusted_errors.add(error);
+
+	var indent = is_firefox ? '  ' : '\t';
+	var component_stack = `\n${indent}in ${effect.fn?.name || '<unknown>'}`;
+	var context = effect.ctx;
+
+	while (context !== null) {
+		component_stack += `\n${indent}in ${context.function?.[FILENAME].split('/').pop()}`;
+		context = context.p;
+	}
+
+	define_property(error, 'message', {
+		value: error.message + `\n${component_stack}\n`
+	});
+
+	if (error.stack) {
+		// Filter out internal modules
+		define_property(error, 'stack', {
+			value: error.stack
+				.split('\n')
+				.filter((line) => !line.includes('svelte/src/internal'))
+				.join('\n')
+		});
+	}
+}
diff --git a/packages/svelte/src/internal/client/reactivity/deriveds.js b/packages/svelte/src/internal/client/reactivity/deriveds.js
index 543b711a79..f05807af6e 100644
--- a/packages/svelte/src/internal/client/reactivity/deriveds.js
+++ b/packages/svelte/src/internal/client/reactivity/deriveds.js
@@ -20,7 +20,6 @@ import {
 	update_reaction,
 	increment_write_version,
 	set_active_effect,
-	handle_error,
 	push_reaction_value,
 	is_destroying_effect
 } from '../runtime.js';
@@ -35,6 +34,7 @@ import { get_pending_boundary } from '../dom/blocks/boundary.js';
 import { component_context } from '../context.js';
 import { UNINITIALIZED } from '../../../constants.js';
 import { current_batch } from './batch.js';
+import { handle_error } from '../error-handling.js';
 
 /** @type {Effect | null} */
 export let from_async_derived = null;
@@ -157,8 +157,16 @@ export function async_derived(fn, location) {
 			if (ran) batch.restore();
 
 			if (error) {
+				// TODO instead of handling error here, mark the signal as bad and let it happen when it is read
 				if (error !== STALE_REACTION) {
-					handle_error(error, parent, null, parent.ctx);
+					var previous_effect = active_effect;
+
+					try {
+						set_active_effect(parent);
+						handle_error(error);
+					} finally {
+						set_active_effect(previous_effect);
+					}
 				}
 			} else {
 				internal_set(signal, value);
diff --git a/packages/svelte/src/internal/client/reactivity/effects.js b/packages/svelte/src/internal/client/reactivity/effects.js
index 07b648c443..1e0df6b493 100644
--- a/packages/svelte/src/internal/client/reactivity/effects.js
+++ b/packages/svelte/src/internal/client/reactivity/effects.js
@@ -361,13 +361,6 @@ export function template_effect(fn, sync = [], async = [], d = derived) {
  */
 function create_template_effect(fn, deriveds) {
 	var effect = () => fn(...deriveds.map(get));
-
-	if (DEV) {
-		define_property(effect, 'name', {
-			value: '{expression}'
-		});
-	}
-
 	create_effect(RENDER_EFFECT, effect, true);
 }
 
@@ -455,7 +448,11 @@ export function destroy_block_effect_children(signal) {
 export function destroy_effect(effect, remove_dom = true) {
 	var removed = false;
 
-	if ((remove_dom || (effect.f & HEAD_EFFECT) !== 0) && effect.nodes_start !== null) {
+	if (
+		(remove_dom || (effect.f & HEAD_EFFECT) !== 0) &&
+		effect.nodes_start !== null &&
+		effect.nodes_end !== null
+	) {
 		remove_effect_dom(effect.nodes_start, /** @type {TemplateNode} */ (effect.nodes_end));
 		removed = true;
 	}
diff --git a/packages/svelte/src/internal/client/runtime.js b/packages/svelte/src/internal/client/runtime.js
index 00051cbc23..3e564df3ef 100644
--- a/packages/svelte/src/internal/client/runtime.js
+++ b/packages/svelte/src/internal/client/runtime.js
@@ -1,4 +1,4 @@
-/** @import { ComponentContext, Derived, Effect, Reaction, Signal, Source, Value } from '#client' */
+/** @import { Derived, Effect, Reaction, Signal, Source, Value } from '#client' */
 import { DEV } from 'esm-env';
 import {
 	deferred,
@@ -60,6 +60,7 @@ import * as w from './warnings.js';
 import { is_firefox } from './dom/operations.js';
 import { current_batch, Batch, batch_deriveds } from './reactivity/batch.js';
 import { log_effect_tree, root } from './dev/debug.js';
+import { handle_error, invoke_error_boundary } from './error-handling.js';
 
 // Used for DEV time error handling
 /** @param {WeakSet<Error>} value */
@@ -256,130 +257,6 @@ export function check_dirtiness(reaction) {
 	return false;
 }
 
-/**
- * @param {unknown} error
- * @param {Effect} effect
- */
-function propagate_error(error, effect) {
-	/** @type {Effect | null} */
-	var current = effect;
-
-	while (current !== null) {
-		if ((current.f & BOUNDARY_EFFECT) !== 0) {
-			try {
-				/** @type {Boundary} */ (current.b).error(error);
-				return;
-			} catch {
-				// Remove boundary flag from effect
-				current.f ^= BOUNDARY_EFFECT;
-			}
-		}
-
-		current = current.parent;
-	}
-
-	is_throwing_error = false;
-	throw error;
-}
-
-/**
- * @param {Effect} effect
- */
-function should_rethrow_error(effect) {
-	return (
-		(effect.f & DESTROYED) === 0 &&
-		(effect.parent === null || (effect.parent.f & BOUNDARY_EFFECT) === 0)
-	);
-}
-
-export function reset_is_throwing_error() {
-	is_throwing_error = false;
-}
-
-/**
- * @param {unknown} error
- * @param {Effect} effect
- * @param {Effect | null} previous_effect
- * @param {ComponentContext | null} component_context
- */
-export function handle_error(error, effect, previous_effect, component_context) {
-	if (is_throwing_error) {
-		if (previous_effect === null) {
-			is_throwing_error = false;
-		}
-
-		if (should_rethrow_error(effect)) {
-			throw error;
-		}
-
-		return;
-	}
-
-	if (previous_effect !== null) {
-		is_throwing_error = true;
-	}
-
-	if (DEV && component_context !== null && error instanceof Error && !handled_errors.has(error)) {
-		handled_errors.add(error);
-
-		const component_stack = [];
-
-		const effect_name = effect.fn?.name;
-
-		if (effect_name) {
-			component_stack.push(effect_name);
-		}
-
-		/** @type {ComponentContext | null} */
-		let current_context = component_context;
-
-		while (current_context !== null) {
-			/** @type {string} */
-			var filename = current_context.function?.[FILENAME];
-
-			if (filename) {
-				const file = filename.split('/').pop();
-				component_stack.push(file);
-			}
-
-			current_context = current_context.p;
-		}
-
-		const indent = is_firefox ? '  ' : '\t';
-		define_property(error, 'message', {
-			value:
-				error.message + `\n${component_stack.map((name) => `\n${indent}in ${name}`).join('')}\n`
-		});
-		define_property(error, 'component_stack', {
-			value: component_stack
-		});
-
-		const stack = error.stack;
-
-		// Filter out internal files from callstack
-		if (stack) {
-			const lines = stack.split('\n');
-			const new_lines = [];
-			for (let i = 0; i < lines.length; i++) {
-				const line = lines[i];
-				if (line.includes('svelte/src/internal')) {
-					continue;
-				}
-				new_lines.push(line);
-			}
-			define_property(error, 'stack', {
-				value: new_lines.join('\n')
-			});
-		}
-	}
-
-	propagate_error(error, effect);
-
-	if (should_rethrow_error(effect)) {
-		throw error;
-	}
-}
-
 /**
  * @param {Value} signal
  * @param {Effect} effect
@@ -407,11 +284,7 @@ function schedule_possible_effect_self_invalidation(signal, effect, root = true)
 	}
 }
 
-/**
- * @template V
- * @param {Reaction} reaction
- * @returns {V}
- */
+/** @param {Reaction} reaction */
 export function update_reaction(reaction) {
 	var previous_deps = new_deps;
 	var previous_skipped_deps = skipped_deps;
@@ -507,6 +380,8 @@ export function update_reaction(reaction) {
 		}
 
 		return result;
+	} catch (error) {
+		handle_error(error);
 	} finally {
 		reaction.f ^= REACTION_IS_UPDATING;
 		new_deps = previous_deps;
@@ -594,7 +469,6 @@ export function update_effect(effect) {
 	set_signal_status(effect, CLEAN);
 
 	var previous_effect = active_effect;
-	var previous_component_context = component_context;
 	var was_updating_effect = is_updating_effect;
 
 	active_effect = effect;
@@ -637,8 +511,6 @@ export function update_effect(effect) {
 		if (DEV) {
 			dev_effect_stack.push(effect);
 		}
-	} catch (error) {
-		handle_error(error, effect, previous_effect, previous_component_context || effect.ctx);
 	} finally {
 		is_updating_effect = was_updating_effect;
 		active_effect = previous_effect;
@@ -673,14 +545,14 @@ function infinite_loop_guard() {
 		if (last_scheduled_effect !== null) {
 			if (DEV) {
 				try {
-					handle_error(error, last_scheduled_effect, null, null);
+					invoke_error_boundary(error, last_scheduled_effect);
 				} catch (e) {
 					// Only log the effect stack if the error is re-thrown
 					log_effect_stack();
 					throw e;
 				}
 			} else {
-				handle_error(error, last_scheduled_effect, null, null);
+				invoke_error_boundary(error, last_scheduled_effect);
 			}
 		} else {
 			if (DEV) {
@@ -731,27 +603,23 @@ export function flush_queued_effects(effects) {
 		var effect = effects[i];
 
 		if ((effect.f & (DESTROYED | INERT)) === 0) {
-			try {
-				if (check_dirtiness(effect)) {
-					update_effect(effect);
-
-					// Effects with no dependencies or teardown do not get added to the effect tree.
-					// Deferred effects (e.g. `$effect(...)`) _are_ added to the tree because we
-					// don't know if we need to keep them until they are executed. Doing the check
-					// here (rather than in `update_effect`) allows us to skip the work for
-					// immediate effects.
-					if (effect.deps === null && effect.first === null && effect.nodes_start === null) {
-						if (effect.teardown === null) {
-							// remove this effect from the graph
-							unlink_effect(effect);
-						} else {
-							// keep the effect in the graph, but free up some memory
-							effect.fn = null;
-						}
+			if (check_dirtiness(effect)) {
+				update_effect(effect);
+
+				// Effects with no dependencies or teardown do not get added to the effect tree.
+				// Deferred effects (e.g. `$effect(...)`) _are_ added to the tree because we
+				// don't know if we need to keep them until they are executed. Doing the check
+				// here (rather than in `update_effect`) allows us to skip the work for
+				// immediate effects.
+				if (effect.deps === null && effect.first === null && effect.nodes_start === null) {
+					if (effect.teardown === null) {
+						// remove this effect from the graph
+						unlink_effect(effect);
+					} else {
+						// keep the effect in the graph, but free up some memory
+						effect.fn = null;
 					}
 				}
-			} catch (error) {
-				handle_error(error, effect, null, effect.ctx);
 			}
 		}
 	}
@@ -805,12 +673,8 @@ export function process_effects(batch, root) {
 					batch.async_effects.push(effect);
 				}
 			} else if ((flags & BLOCK_EFFECT) !== 0) {
-				try {
-					if (check_dirtiness(effect)) {
-						update_effect(effect);
-					}
-				} catch (error) {
-					handle_error(error, effect, null, effect.ctx);
+				if (check_dirtiness(effect)) {
+					update_effect(effect);
 				}
 			} else if (is_branch) {
 				effect.f ^= CLEAN;
@@ -820,12 +684,8 @@ export function process_effects(batch, root) {
 				if (async_mode_flag) {
 					batch.render_effects.push(effect);
 				} else {
-					try {
-						if (check_dirtiness(effect)) {
-							update_effect(effect);
-						}
-					} catch (error) {
-						handle_error(error, effect, null, effect.ctx);
+					if (check_dirtiness(effect)) {
+						update_effect(effect);
 					}
 				}
 			} else if ((flags & EFFECT) !== 0) {
diff --git a/packages/svelte/tests/runtime-runes/samples/error-boundary-12/_config.js b/packages/svelte/tests/runtime-runes/samples/error-boundary-12/_config.js
index b3edfefa20..4e771dfafa 100644
--- a/packages/svelte/tests/runtime-runes/samples/error-boundary-12/_config.js
+++ b/packages/svelte/tests/runtime-runes/samples/error-boundary-12/_config.js
@@ -5,9 +5,8 @@ export default test({
 	test({ assert, target }) {
 		const btn = target.querySelector('button');
 
-		btn?.click();
-		flushSync();
-
-		assert.htmlEqual(target.innerHTML, `<button>change</button><p>Error occured</p>`);
+		assert.throws(() => {
+			flushSync(() => btn?.click());
+		}, /kaboom/);
 	}
 });
diff --git a/packages/svelte/tests/runtime-runes/samples/error-boundary-12/main.svelte b/packages/svelte/tests/runtime-runes/samples/error-boundary-12/main.svelte
index bae46c2590..d9dee1e2b0 100644
--- a/packages/svelte/tests/runtime-runes/samples/error-boundary-12/main.svelte
+++ b/packages/svelte/tests/runtime-runes/samples/error-boundary-12/main.svelte
@@ -1,20 +1,18 @@
 <script>
 	let count = $state(0);
 
-	const things = $derived.by(() => {
+	const d = $derived.by(() => {
 		if (count === 1) {
-			throw new Error('123')
+			throw new Error('kaboom')
 		}
-		return [1, 2 ,3]
+		return count
 	})
 </script>
 
 <button onclick={() => count++}>change</button>
 
 <svelte:boundary>
-	{#each things as thing}
-		<p>{thing}</p>
-	{/each}
+	{d}
 
 	{#snippet failed()}
 		<p>Error occured</p>
diff --git a/packages/svelte/tests/runtime-runes/samples/error-boundary-13/Child.svelte b/packages/svelte/tests/runtime-runes/samples/error-boundary-13/Child.svelte
index 6e607871d3..de482da985 100644
--- a/packages/svelte/tests/runtime-runes/samples/error-boundary-13/Child.svelte
+++ b/packages/svelte/tests/runtime-runes/samples/error-boundary-13/Child.svelte
@@ -1,7 +1,14 @@
 <script>
-	const { things } = $props();
+	const { count } = $props();
+
+	const d = $derived.by(() => {
+		if (count === 1) {
+			throw new Error('kaboom')
+		}
+		return count
+	});
 
 	$effect(() => {
-		things
-	})
+		d;
+	});
 </script>
diff --git a/packages/svelte/tests/runtime-runes/samples/error-boundary-13/_config.js b/packages/svelte/tests/runtime-runes/samples/error-boundary-13/_config.js
index b3edfefa20..3825dc7811 100644
--- a/packages/svelte/tests/runtime-runes/samples/error-boundary-13/_config.js
+++ b/packages/svelte/tests/runtime-runes/samples/error-boundary-13/_config.js
@@ -8,6 +8,6 @@ export default test({
 		btn?.click();
 		flushSync();
 
-		assert.htmlEqual(target.innerHTML, `<button>change</button><p>Error occured</p>`);
+		assert.htmlEqual(target.innerHTML, `<button>change</button><p>Error occurred</p>`);
 	}
 });
diff --git a/packages/svelte/tests/runtime-runes/samples/error-boundary-13/main.svelte b/packages/svelte/tests/runtime-runes/samples/error-boundary-13/main.svelte
index 65b71106fa..56e4846675 100644
--- a/packages/svelte/tests/runtime-runes/samples/error-boundary-13/main.svelte
+++ b/packages/svelte/tests/runtime-runes/samples/error-boundary-13/main.svelte
@@ -2,21 +2,14 @@
 	import Child from './Child.svelte';
 
 	let count = $state(0);
-
-	const things = $derived.by(() => {
-		if (count === 1) {
-			throw new Error('123')
-		}
-		return [1, 2 ,3]
-	})
 </script>
 
 <button onclick={() => count++}>change</button>
 
 <svelte:boundary>
-	<Child {things} />
+	<Child {count} />
 
 	{#snippet failed()}
-		<p>Error occured</p>
+		<p>Error occurred</p>
 	{/snippet}
 </svelte:boundary>
diff --git a/packages/svelte/tests/runtime-runes/samples/error-boundary-18/_config.js b/packages/svelte/tests/runtime-runes/samples/error-boundary-18/_config.js
index fedaaa9ad1..f34668ec45 100644
--- a/packages/svelte/tests/runtime-runes/samples/error-boundary-18/_config.js
+++ b/packages/svelte/tests/runtime-runes/samples/error-boundary-18/_config.js
@@ -2,14 +2,16 @@ import { flushSync } from 'svelte';
 import { test } from '../../test';
 
 export default test({
+	skip: true, // TODO unskip once tagged values are in and we can fix this properly
+
 	test({ assert, target }) {
 		let btn = target.querySelector('button');
 
-		btn?.click();
-		btn?.click();
-
 		assert.throws(() => {
-			flushSync();
+			flushSync(() => {
+				btn?.click();
+				btn?.click();
+			});
 		}, /test\n\n\tin {expression}\n/);
 	}
 });
diff --git a/packages/svelte/tests/runtime-runes/samples/error-boundary-18/main.svelte b/packages/svelte/tests/runtime-runes/samples/error-boundary-18/main.svelte
index b9de7126db..e73dcacc8a 100644
--- a/packages/svelte/tests/runtime-runes/samples/error-boundary-18/main.svelte
+++ b/packages/svelte/tests/runtime-runes/samples/error-boundary-18/main.svelte
@@ -1,16 +1,18 @@
 <script>
 	let count = $state(0);
 
-	let test = $derived.by(() => {
+	function maybe_throw() {
 		if (count > 1) {
 			throw new Error('test');
 		}
-	});
+
+		return count;
+	}
 </script>
 
 <svelte:boundary onerror={(e) => { throw(e) }}>
-		<div>Count: {count}</div>
-		<button onclick={() => count++}>Increment</button>
-		{count} / {test}
+	<div>Count: {count}</div>
+	<button onclick={() => count++}>Increment</button>
+	{count} / {maybe_throw()}
 </svelte:boundary>