diff --git a/internal/servers/plugin/v3/plugin.go b/internal/servers/plugin/v3/plugin.go
index c84771597b..83dcc9a0c6 100644
--- a/internal/servers/plugin/v3/plugin.go
+++ b/internal/servers/plugin/v3/plugin.go
@@ -427,16 +427,23 @@ func (s *Server) Transform(stream pb.Plugin_TransformServer) error {
 	// The reading never closes the writer, because it's up to the Plugin to decide when to finish
 	// writing, regardless of if the reading finished.
 	eg.Go(func() error {
+		var sendErr error
 		for record := range sendRecords {
+			// We cannot terminate the stream here, because the plugin may still be sending records. So if error was returned channel has to be drained
+			if sendErr != nil {
+				continue
+			}
 			recordBytes, err := pb.RecordToBytes(record)
 			if err != nil {
-				return status.Errorf(codes.Internal, "failed to convert record to bytes: %v", err)
+				sendErr = status.Errorf(codes.Internal, "failed to convert record to bytes: %v", err)
+				continue
 			}
 			if err := stream.Send(&pb.Transform_Response{Record: recordBytes}); err != nil {
-				return status.Errorf(codes.Internal, "error sending response: %v", err)
+				sendErr = status.Errorf(codes.Internal, "error sending response: %v", err)
+				continue
 			}
 		}
-		return nil
+		return sendErr
 	})
 
 	// Read records from source to transformer
diff --git a/internal/servers/plugin/v3/plugin_test.go b/internal/servers/plugin/v3/plugin_test.go
index b6cf41302a..5ad3c47e13 100644
--- a/internal/servers/plugin/v3/plugin_test.go
+++ b/internal/servers/plugin/v3/plugin_test.go
@@ -2,8 +2,12 @@ package plugin
 
 import (
 	"context"
+	"errors"
 	"io"
+	"strings"
+	"sync/atomic"
 	"testing"
+	"time"
 
 	"github.com/apache/arrow-go/v18/arrow"
 	"github.com/apache/arrow-go/v18/arrow/array"
@@ -248,3 +252,143 @@ func (*mockSourceColumnAdderPluginClient) TransformSchema(_ context.Context, old
 	return old.AddField(1, arrow.Field{Name: "source", Type: arrow.BinaryTypes.String})
 }
 func (*mockSourceColumnAdderPluginClient) Close(context.Context) error { return nil }
+
+type testTransformPluginClient struct {
+	plugin.UnimplementedDestination
+	plugin.UnimplementedSource
+	recordsSent int32
+}
+
+func (c *testTransformPluginClient) Transform(ctx context.Context, recvRecords <-chan arrow.Record, sendRecords chan<- arrow.Record) error {
+	for record := range recvRecords {
+		select {
+		default:
+			time.Sleep(1 * time.Second)
+			sendRecords <- record
+			atomic.AddInt32(&c.recordsSent, 1)
+		case <-ctx.Done():
+			return ctx.Err()
+		}
+	}
+	return nil
+}
+
+func (*testTransformPluginClient) TransformSchema(_ context.Context, old *arrow.Schema) (*arrow.Schema, error) {
+	return old, nil
+}
+
+func (*testTransformPluginClient) Close(context.Context) error {
+	return nil
+}
+
+func TestTransformNoDeadlockOnSendError(t *testing.T) {
+	client := &testTransformPluginClient{}
+	p := plugin.NewPlugin("test", "development", func(context.Context, zerolog.Logger, []byte, plugin.NewClientOptions) (plugin.Client, error) {
+		return client, nil
+	})
+	s := Server{
+		Plugin: p,
+	}
+	_, err := s.Init(context.Background(), &pb.Init_Request{})
+	require.NoError(t, err)
+
+	// Create a channel to signal when Send was called
+	sendCalled := make(chan struct{})
+	// Create a channel to signal when we should return from the test
+	done := make(chan struct{})
+	defer close(done)
+
+	stream := &mockTransformServerWithBlockingSend{
+		incomingMessages: makeRequests(3), // Multiple messages to ensure Transform tries to keep sending
+		sendCalled:       sendCalled,
+		done:             done,
+	}
+
+	// Run Transform in a goroutine with a timeout
+	errCh := make(chan error)
+	go func() {
+		errCh <- s.Transform(stream)
+	}()
+
+	// Wait for the first Send to be called
+	select {
+	case <-sendCalled:
+		// Send was called, good
+	case <-time.After(5 * time.Second):
+		t.Fatal("timeout waiting for Send to be called")
+	}
+
+	// Now wait for Transform to complete or timeout
+	select {
+	case err := <-errCh:
+		require.Error(t, err)
+		// Check for either the simulated error or context cancellation
+		if !strings.Contains(err.Error(), "simulated stream send error") &&
+			!strings.Contains(err.Error(), "context canceled") {
+			t.Fatalf("unexpected error: %v", err)
+		}
+	case <-time.After(5 * time.Second):
+		t.Fatal("Transform got deadlocked")
+	}
+}
+
+type mockTransformServerWithBlockingSend struct {
+	grpc.ServerStream
+	incomingMessages []*pb.Transform_Request
+	sendCalled       chan struct{}
+	done             chan struct{}
+	sendCount        int32
+}
+
+func (s *mockTransformServerWithBlockingSend) Recv() (*pb.Transform_Request, error) {
+	if len(s.incomingMessages) > 0 {
+		msg := s.incomingMessages[0]
+		s.incomingMessages = s.incomingMessages[1:]
+		return msg, nil
+	}
+	return nil, io.EOF
+}
+
+func (s *mockTransformServerWithBlockingSend) Send(*pb.Transform_Response) error {
+	// Signal that Send was called
+	select {
+	case s.sendCalled <- struct{}{}:
+	default:
+	}
+
+	// Return error on first send
+	if atomic.AddInt32(&s.sendCount, 1) == 1 {
+		return errors.New("simulated stream send error")
+	}
+
+	// Block until test is done
+	<-s.done
+	return nil
+}
+
+func (*mockTransformServerWithBlockingSend) Context() context.Context {
+	return context.Background()
+}
+
+func makeRequests(i int) []*pb.Transform_Request {
+	requests := make([]*pb.Transform_Request, i)
+	for i := range i {
+		requests[i] = makeRequestFromString("test")
+	}
+	return requests
+}
+
+func makeRequestFromString(s string) *pb.Transform_Request {
+	record := makeRecordFromString(s)
+	bs, _ := pb.RecordToBytes(record)
+	return &pb.Transform_Request{Record: bs}
+}
+
+func makeRecordFromString(s string) arrow.Record {
+	str := array.NewStringBuilder(memory.DefaultAllocator)
+	str.AppendString(s)
+	arr := str.NewStringArray()
+	sch := arrow.NewSchema([]arrow.Field{{Name: "col1", Type: arrow.BinaryTypes.String}}, nil)
+
+	return array.NewRecord(sch, []arrow.Array{arr}, 1)
+}