diff --git a/src/runtime/internal/cache.ts b/src/runtime/internal/cache.ts
index f848b82c79..500daa6fa1 100644
--- a/src/runtime/internal/cache.ts
+++ b/src/runtime/internal/cache.ts
@@ -109,6 +109,16 @@ export function defineCachedFunction<T, ArgsT extends unknown[] = any[]>(
         // Make sure entries that reject get removed.
         if (!isPending) {
           delete pending[key];
+          // Remove stale cache entry when resolver throws (e.g. handler returns 404)
+          const promise = useStorage()
+            .removeItem(cacheKey)
+            .catch((error) => {
+              console.error(`[cache] Cache remove error.`, error);
+              useNitroApp().captureError(error, { event, tags: ["cache"] });
+            });
+          if (event?.waitUntil) {
+            event.waitUntil(promise);
+          }
         }
         // Re-throw error to make sure the caller knows the task failed.
         throw error;
@@ -119,7 +129,18 @@ export function defineCachedFunction<T, ArgsT extends unknown[] = any[]>(
         entry.mtime = Date.now();
         entry.integrity = integrity;
         delete pending[key];
-        if (validate(entry) !== false) {
+        if (validate(entry) === false) {
+          // Remove stale cache entry when revalidation produces an invalid response (e.g. 404)
+          const promise = useStorage()
+            .removeItem(cacheKey)
+            .catch((error) => {
+              console.error(`[cache] Cache remove error.`, error);
+              useNitroApp().captureError(error, { event, tags: ["cache"] });
+            });
+          if (event?.waitUntil) {
+            event.waitUntil(promise);
+          }
+        } else {
           let setOpts: TransactionOptions | undefined;
           if (opts.maxAge && !opts.swr /* TODO: respect staleMaxAge */) {
             setOpts = { ttl: opts.maxAge };
diff --git a/test/fixture/api/cached-error-toggle.ts b/test/fixture/api/cached-error-toggle.ts
new file mode 100644
index 0000000000..5de87cbbe5
--- /dev/null
+++ b/test/fixture/api/cached-error-toggle.ts
@@ -0,0 +1,7 @@
+import { setCachedError } from "../utils/cached-error-state";
+
+export default defineEventHandler((event) => {
+  const { error } = getQuery(event);
+  setCachedError(error === "true");
+  return { shouldError: error === "true" };
+});
diff --git a/test/fixture/api/cached-error.ts b/test/fixture/api/cached-error.ts
new file mode 100644
index 0000000000..4e6b26f214
--- /dev/null
+++ b/test/fixture/api/cached-error.ts
@@ -0,0 +1,13 @@
+import { cachedErrorShouldError } from "../utils/cached-error-state";
+
+export default defineCachedEventHandler(
+  () => {
+    if (cachedErrorShouldError) {
+      throw createError({ statusCode: 404, statusMessage: "Not found" });
+    }
+    return {
+      timestamp: Date.now(),
+    };
+  },
+  { swr: true, maxAge: 1 }
+);
diff --git a/test/fixture/utils/cached-error-state.ts b/test/fixture/utils/cached-error-state.ts
new file mode 100644
index 0000000000..6e9e7e3330
--- /dev/null
+++ b/test/fixture/utils/cached-error-state.ts
@@ -0,0 +1,5 @@
+export let cachedErrorShouldError = false;
+
+export function setCachedError(value: boolean) {
+  cachedErrorShouldError = value;
+}
diff --git a/test/presets/vercel.test.ts b/test/presets/vercel.test.ts
index 4d3a8c5416..6c274adad4 100644
--- a/test/presets/vercel.test.ts
+++ b/test/presets/vercel.test.ts
@@ -337,6 +337,14 @@ describe("nitro:preset:vercel", async () => {
                 "dest": "/api/db",
                 "src": "/api/db",
               },
+              {
+                "dest": "/api/cached-error-toggle",
+                "src": "/api/cached-error-toggle",
+              },
+              {
+                "dest": "/api/cached-error",
+                "src": "/api/cached-error",
+              },
               {
                 "dest": "/api/cached",
                 "src": "/api/cached",
@@ -469,6 +477,8 @@ describe("nitro:preset:vercel", async () => {
             "functions/__fallback.func/node_modules",
             "functions/__fallback.func/package.json",
             "functions/__fallback.func/timing.js",
+            "functions/api/cached-error-toggle.func (symlink)",
+            "functions/api/cached-error.func (symlink)",
             "functions/api/cached.func (symlink)",
             "functions/api/db.func (symlink)",
             "functions/api/echo.func (symlink)",
diff --git a/test/tests.ts b/test/tests.ts
index 6518d22aa3..dac6206847 100644
--- a/test/tests.ts
+++ b/test/tests.ts
@@ -755,6 +755,39 @@ export function testNitro(
         }
       }
     );
+
+    it.skipIf(ctx.isIsolated || (isWindows && ctx.preset === "nitro-dev"))(
+      "should invalidate cache when SWR revalidation returns error",
+      async () => {
+        // 0. Reset error state
+        await callHandler({ url: "/api/cached-error-toggle?error=false" });
+
+        // 1. Prime the cache with a successful response
+        const { data, status } = await callHandler({
+          url: "/api/cached-error",
+        });
+        expect(status).toBe(200);
+        expect(data.timestamp).toBeDefined();
+
+        // 2. Enable error state so handler throws 404
+        await callHandler({ url: "/api/cached-error-toggle?error=true" });
+
+        // 3. Wait for cache to expire (maxAge: 1 second)
+        await new Promise((resolve) => setTimeout(resolve, 1100));
+
+        // 4. First request after expiry: SWR serves stale, triggers background revalidation
+        const staleResult = await callHandler({ url: "/api/cached-error" });
+        expect(staleResult.status).toBe(200);
+        expect(staleResult.data.timestamp).toBe(data.timestamp);
+
+        // 5. Wait for background revalidation to complete and remove cache entry
+        await new Promise((resolve) => setTimeout(resolve, 100));
+
+        // 6. Subsequent request should return 404 (cache entry removed)
+        const errorResult = await callHandler({ url: "/api/cached-error" });
+        expect(errorResult.status).toBe(404);
+      }
+    );
   });
 
   describe("scanned files", () => {