diff --git a/src/__phutil_library_map__.php b/src/__phutil_library_map__.php
index aa63bbc9d2..5e865c6787 100644
--- a/src/__phutil_library_map__.php
+++ b/src/__phutil_library_map__.php
@@ -59,6 +59,7 @@ phutil_register_library_map(array(
     'AphrontKeyboardShortcutsAvailableView' => 'view/widget/keyboardshortcuts',
     'AphrontListFilterView' => 'view/layout/listfilter',
     'AphrontMySQLDatabaseConnection' => 'storage/connection/mysql',
+    'AphrontMySQLDatabaseConnectionTestCase' => 'storage/connection/mysql/__tests__',
     'AphrontNullView' => 'view/null',
     'AphrontPHPHTTPSink' => 'aphront/sink/php',
     'AphrontPageView' => 'view/page/base',
@@ -883,6 +884,7 @@ phutil_register_library_map(array(
     'AphrontKeyboardShortcutsAvailableView' => 'AphrontView',
     'AphrontListFilterView' => 'AphrontView',
     'AphrontMySQLDatabaseConnection' => 'AphrontDatabaseConnection',
+    'AphrontMySQLDatabaseConnectionTestCase' => 'PhabricatorTestCase',
     'AphrontNullView' => 'AphrontView',
     'AphrontPHPHTTPSink' => 'AphrontHTTPSink',
     'AphrontPageView' => 'AphrontView',
diff --git a/src/storage/connection/base/AphrontDatabaseConnection.php b/src/storage/connection/base/AphrontDatabaseConnection.php
index 823e75d0a5..62e185db13 100644
--- a/src/storage/connection/base/AphrontDatabaseConnection.php
+++ b/src/storage/connection/base/AphrontDatabaseConnection.php
@@ -23,7 +23,6 @@
 abstract class AphrontDatabaseConnection {
 
   private static $transactionStates = array();
-  private $initializingTransactionState;
 
   abstract public function getInsertID();
   abstract public function getAffectedRows();
@@ -121,9 +120,6 @@ abstract class AphrontDatabaseConnection {
    * @task xaction
    */
   public function isInsideTransaction() {
-    if ($this->initializingTransactionState) {
-      return false;
-    }
     $state = $this->getTransactionState();
     return ($state->getDepth() > 0);
   }
@@ -137,17 +133,10 @@ abstract class AphrontDatabaseConnection {
    * @task xaction
    */
   protected function getTransactionState() {
-
-    // Establishing a connection may be required to get the transaction key,
-    // and may also perform a test for transaction state. While establishing
-    // transaction state, avoid infinite recursion.
-    $this->initializingTransactionState = true;
-      $key = $this->getTransactionKey();
-      if (empty(self::$transactionStates[$key])) {
-        self::$transactionStates[$key] = new AphrontDatabaseTransactionState();
-      }
-    $this->initializingTransactionState = false;
-
+    $key = $this->getTransactionKey();
+    if (empty(self::$transactionStates[$key])) {
+      self::$transactionStates[$key] = new AphrontDatabaseTransactionState();
+    }
     return self::$transactionStates[$key];
   }
 
diff --git a/src/storage/connection/mysql/AphrontMySQLDatabaseConnection.php b/src/storage/connection/mysql/AphrontMySQLDatabaseConnection.php
index de1aa92e53..311d935252 100644
--- a/src/storage/connection/mysql/AphrontMySQLDatabaseConnection.php
+++ b/src/storage/connection/mysql/AphrontMySQLDatabaseConnection.php
@@ -24,6 +24,8 @@ class AphrontMySQLDatabaseConnection extends AphrontDatabaseConnection {
   private $config;
   private $connection;
 
+  private $nextError;
+
   private static $connectionCache = array();
 
   public function __construct(array $configuration) {
@@ -113,11 +115,6 @@ class AphrontMySQLDatabaseConnection extends AphrontDatabaseConnection {
       return;
     }
 
-    if ($this->isInsideTransaction()) {
-      throw new Exception(
-        "Connection was lost inside a transaction! Recovery is impossible.");
-    }
-
     $start = microtime(true);
 
     if (!function_exists('mysql_connect')) {
@@ -245,6 +242,10 @@ class AphrontMySQLDatabaseConnection extends AphrontDatabaseConnection {
 
         $profiler->endServiceCall($call_id, array());
 
+        if ($this->nextError) {
+          $result = null;
+        }
+
         if ($result) {
           $this->lastResult = $result;
           break;
@@ -252,23 +253,45 @@ class AphrontMySQLDatabaseConnection extends AphrontDatabaseConnection {
 
         $this->throwQueryException($this->connection);
       } catch (AphrontQueryConnectionLostException $ex) {
+        if ($this->isInsideTransaction()) {
+          // Zero out the transaction state to prevent a second exception
+          // ("program exited with open transaction") from being thrown, since
+          // we're about to throw a more relevant/useful one instead.
+          $state = $this->getTransactionState();
+          while ($state->getDepth()) {
+            $state->decreaseDepth();
+          }
+
+          // We can't close the connection before this because
+          // isInsideTransaction() and getTransactionState() depend on the
+          // connection.
+          $this->closeConnection();
+
+          throw $ex;
+        }
+
+        $this->closeConnection();
+
         if (!$retries) {
           throw $ex;
         }
-        if ($this->isInsideTransaction()) {
-          throw $ex;
-        }
+
         $class = get_class($ex);
         $message = $ex->getMessage();
         phlog("Retrying ({$retries}) after {$class}: {$message}");
-        $this->closeConnection();
       }
     }
   }
 
   private function throwQueryException($connection) {
-    $errno = mysql_errno($connection);
-    $error = mysql_error($connection);
+    if ($this->nextError) {
+      $errno = $this->nextError;
+      $error = 'Simulated error.';
+      $this->nextError = null;
+    } else {
+      $errno = mysql_errno($connection);
+      $error = mysql_error($connection);
+    }
 
     switch ($errno) {
       case 2013: // Connection Dropped
@@ -294,4 +317,13 @@ class AphrontMySQLDatabaseConnection extends AphrontDatabaseConnection {
     }
   }
 
+  /**
+   * Force the next query to fail with a simulated error. This should be used
+   * ONLY for unit tests.
+   */
+  public function simulateErrorOnNextQuery($error) {
+    $this->nextError = $error;
+    return $this;
+  }
+
 }
diff --git a/src/storage/connection/mysql/__tests__/AphrontMySQLDatabaseConnectionTestCase.php b/src/storage/connection/mysql/__tests__/AphrontMySQLDatabaseConnectionTestCase.php
new file mode 100644
index 0000000000..bca29e9310
--- /dev/null
+++ b/src/storage/connection/mysql/__tests__/AphrontMySQLDatabaseConnectionTestCase.php
@@ -0,0 +1,53 @@
+<?php
+
+/*
+ * Copyright 2012 Facebook, Inc.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *   http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+final class AphrontMySQLDatabaseConnectionTestCase
+  extends PhabricatorTestCase {
+
+  protected function getPhabricatorTestCaseConfiguration() {
+    return array(
+      // We disable this here because we're testing live MySQL connections.
+      self::PHABRICATOR_TESTCONFIG_ISOLATE_LISK => false,
+    );
+  }
+
+  public function testConnectionFailures() {
+    $conn = id(new PhabricatorPHID())->establishConnection('r');
+
+    queryfx($conn, 'SELECT 1');
+
+    // We expect the connection to recover from a 2006 (lost connection) when
+    // outside of a transaction...
+    $conn->simulateErrorOnNextQuery(2006);
+    queryfx($conn, 'SELECT 1');
+
+    // ...but when transactional, we expect the query to throw when the
+    // connection is lost, because it indicates the transaction was aborted.
+    $conn->openTransaction();
+      $conn->simulateErrorOnNextQuery(2006);
+
+      $caught = null;
+      try {
+        queryfx($conn, 'SELECT 1');
+      } catch (AphrontQueryConnectionLostException $ex) {
+        $caught = $ex;
+      }
+      $this->assertEqual(true, $caught instanceof Exception);
+  }
+
+}
diff --git a/src/storage/connection/mysql/__tests__/__init__.php b/src/storage/connection/mysql/__tests__/__init__.php
new file mode 100644
index 0000000000..aa3e537fbf
--- /dev/null
+++ b/src/storage/connection/mysql/__tests__/__init__.php
@@ -0,0 +1,16 @@
+<?php
+/**
+ * This file is automatically generated. Lint this module to rebuild it.
+ * @generated
+ */
+
+
+
+phutil_require_module('phabricator', 'applications/phid/storage/phid');
+phutil_require_module('phabricator', 'infrastructure/testing/testcase');
+phutil_require_module('phabricator', 'storage/queryfx');
+
+phutil_require_module('phutil', 'utils');
+
+
+phutil_require_source('AphrontMySQLDatabaseConnectionTestCase.php');