diff --git a/packages/cli/src/ui/hooks/useGeminiStream.ts b/packages/cli/src/ui/hooks/useGeminiStream.ts
index 2743c6be10..5ecd615c0c 100644
--- a/packages/cli/src/ui/hooks/useGeminiStream.ts
+++ b/packages/cli/src/ui/hooks/useGeminiStream.ts
@@ -759,6 +759,7 @@ export const useGeminiStream = (
             loopDetectedRef.current = true;
             break;
           case ServerGeminiEventType.Retry:
+          case ServerGeminiEventType.InvalidStream:
             // Will add the missing logic later
             break;
           default: {
diff --git a/packages/core/src/config/config.test.ts b/packages/core/src/config/config.test.ts
index 99d43b08aa..72c3e63628 100644
--- a/packages/core/src/config/config.test.ts
+++ b/packages/core/src/config/config.test.ts
@@ -619,6 +619,31 @@ describe('Server Config (config.ts)', () => {
     });
   });
 
+  describe('ContinueOnFailedApiCall Configuration', () => {
+    it('should default continueOnFailedApiCall to false when not provided', () => {
+      const config = new Config(baseParams);
+      expect(config.getContinueOnFailedApiCall()).toBe(true);
+    });
+
+    it('should set continueOnFailedApiCall to true when provided as true', () => {
+      const paramsWithContinueOnFailedApiCall: ConfigParameters = {
+        ...baseParams,
+        continueOnFailedApiCall: true,
+      };
+      const config = new Config(paramsWithContinueOnFailedApiCall);
+      expect(config.getContinueOnFailedApiCall()).toBe(true);
+    });
+
+    it('should set continueOnFailedApiCall to false when explicitly provided as false', () => {
+      const paramsWithContinueOnFailedApiCall: ConfigParameters = {
+        ...baseParams,
+        continueOnFailedApiCall: false,
+      };
+      const config = new Config(paramsWithContinueOnFailedApiCall);
+      expect(config.getContinueOnFailedApiCall()).toBe(false);
+    });
+  });
+
   describe('createToolRegistry', () => {
     it('should register a tool if coreTools contains an argument-specific pattern', async () => {
       const params: ConfigParameters = {
diff --git a/packages/core/src/config/config.ts b/packages/core/src/config/config.ts
index 6873497460..eb996cf9e3 100644
--- a/packages/core/src/config/config.ts
+++ b/packages/core/src/config/config.ts
@@ -270,6 +270,7 @@ export interface ConfigParameters {
   useModelRouter?: boolean;
   enableMessageBusIntegration?: boolean;
   enableSubagents?: boolean;
+  continueOnFailedApiCall?: boolean;
 }
 
 export class Config {
@@ -363,6 +364,7 @@ export class Config {
   private readonly useModelRouter: boolean;
   private readonly enableMessageBusIntegration: boolean;
   private readonly enableSubagents: boolean;
+  private readonly continueOnFailedApiCall: boolean;
 
   constructor(params: ConfigParameters) {
     this.sessionId = params.sessionId;
@@ -453,6 +455,7 @@ export class Config {
     this.enableMessageBusIntegration =
       params.enableMessageBusIntegration ?? false;
     this.enableSubagents = params.enableSubagents ?? false;
+    this.continueOnFailedApiCall = params.continueOnFailedApiCall ?? true;
     this.extensionManagement = params.extensionManagement ?? true;
     this.storage = new Storage(this.targetDir);
     this.enablePromptCompletion = params.enablePromptCompletion ?? false;
@@ -951,6 +954,10 @@ export class Config {
     return this.skipNextSpeakerCheck;
   }
 
+  getContinueOnFailedApiCall(): boolean {
+    return this.continueOnFailedApiCall;
+  }
+
   getShellExecutionConfig(): ShellExecutionConfig {
     return this.shellExecutionConfig;
   }
diff --git a/packages/core/src/core/client.test.ts b/packages/core/src/core/client.test.ts
index 039debac09..aec1976844 100644
--- a/packages/core/src/core/client.test.ts
+++ b/packages/core/src/core/client.test.ts
@@ -315,6 +315,7 @@ describe('Gemini Client (client.ts)', () => {
       getSkipNextSpeakerCheck: vi.fn().mockReturnValue(false),
       getUseSmartEdit: vi.fn().mockReturnValue(false),
       getUseModelRouter: vi.fn().mockReturnValue(false),
+      getContinueOnFailedApiCall: vi.fn(),
       getProjectRoot: vi.fn().mockReturnValue('/test/project/root'),
       storage: {
         getProjectTempDir: vi.fn().mockReturnValue('/test/temp'),
@@ -1288,6 +1289,9 @@ ${JSON.stringify(
     });
 
     it('should stop infinite loop after MAX_TURNS when nextSpeaker always returns model', async () => {
+      vi.spyOn(client['config'], 'getContinueOnFailedApiCall').mockReturnValue(
+        true,
+      );
       // Get the mocked checkNextSpeaker function and configure it to trigger infinite loop
       const { checkNextSpeaker } = await import(
         '../utils/nextSpeakerChecker.js'
@@ -1784,6 +1788,131 @@ ${JSON.stringify(
       });
     });
 
+    it('should recursively call sendMessageStream with "Please continue." when InvalidStream event is received', async () => {
+      vi.spyOn(client['config'], 'getContinueOnFailedApiCall').mockReturnValue(
+        true,
+      );
+      // Arrange
+      const mockStream1 = (async function* () {
+        yield { type: GeminiEventType.InvalidStream };
+      })();
+      const mockStream2 = (async function* () {
+        yield { type: GeminiEventType.Content, value: 'Continued content' };
+      })();
+
+      mockTurnRunFn
+        .mockReturnValueOnce(mockStream1)
+        .mockReturnValueOnce(mockStream2);
+
+      const mockChat: Partial<GeminiChat> = {
+        addHistory: vi.fn(),
+        getHistory: vi.fn().mockReturnValue([]),
+      };
+      client['chat'] = mockChat as GeminiChat;
+
+      const initialRequest = [{ text: 'Hi' }];
+      const promptId = 'prompt-id-invalid-stream';
+      const signal = new AbortController().signal;
+
+      // Act
+      const stream = client.sendMessageStream(initialRequest, signal, promptId);
+      const events = await fromAsync(stream);
+
+      // Assert
+      expect(events).toEqual([
+        { type: GeminiEventType.InvalidStream },
+        { type: GeminiEventType.Content, value: 'Continued content' },
+      ]);
+
+      // Verify that turn.run was called twice
+      expect(mockTurnRunFn).toHaveBeenCalledTimes(2);
+
+      // First call with original request
+      expect(mockTurnRunFn).toHaveBeenNthCalledWith(
+        1,
+        expect.any(String),
+        initialRequest,
+        expect.any(Object),
+      );
+
+      // Second call with "Please continue."
+      expect(mockTurnRunFn).toHaveBeenNthCalledWith(
+        2,
+        expect.any(String),
+        [{ text: 'System: Please continue.' }],
+        expect.any(Object),
+      );
+    });
+
+    it('should not recursively call sendMessageStream with "Please continue." when InvalidStream event is received and flag is false', async () => {
+      vi.spyOn(client['config'], 'getContinueOnFailedApiCall').mockReturnValue(
+        false,
+      );
+      // Arrange
+      const mockStream1 = (async function* () {
+        yield { type: GeminiEventType.InvalidStream };
+      })();
+
+      mockTurnRunFn.mockReturnValueOnce(mockStream1);
+
+      const mockChat: Partial<GeminiChat> = {
+        addHistory: vi.fn(),
+        getHistory: vi.fn().mockReturnValue([]),
+      };
+      client['chat'] = mockChat as GeminiChat;
+
+      const initialRequest = [{ text: 'Hi' }];
+      const promptId = 'prompt-id-invalid-stream';
+      const signal = new AbortController().signal;
+
+      // Act
+      const stream = client.sendMessageStream(initialRequest, signal, promptId);
+      const events = await fromAsync(stream);
+
+      // Assert
+      expect(events).toEqual([{ type: GeminiEventType.InvalidStream }]);
+
+      // Verify that turn.run was called only once
+      expect(mockTurnRunFn).toHaveBeenCalledTimes(1);
+    });
+
+    it('should stop recursing after one retry when InvalidStream events are repeatedly received', async () => {
+      vi.spyOn(client['config'], 'getContinueOnFailedApiCall').mockReturnValue(
+        true,
+      );
+      // Arrange
+      // Always return a new invalid stream
+      mockTurnRunFn.mockImplementation(() =>
+        (async function* () {
+          yield { type: GeminiEventType.InvalidStream };
+        })(),
+      );
+
+      const mockChat: Partial<GeminiChat> = {
+        addHistory: vi.fn(),
+        getHistory: vi.fn().mockReturnValue([]),
+      };
+      client['chat'] = mockChat as GeminiChat;
+
+      const initialRequest = [{ text: 'Hi' }];
+      const promptId = 'prompt-id-infinite-invalid-stream';
+      const signal = new AbortController().signal;
+
+      // Act
+      const stream = client.sendMessageStream(initialRequest, signal, promptId);
+      const events = await fromAsync(stream);
+
+      // Assert
+      // We expect 2 InvalidStream events (original + 1 retry)
+      expect(events.length).toBe(2);
+      expect(
+        events.every((e) => e.type === GeminiEventType.InvalidStream),
+      ).toBe(true);
+
+      // Verify that turn.run was called twice
+      expect(mockTurnRunFn).toHaveBeenCalledTimes(2);
+    });
+
     describe('Editor context delta', () => {
       const mockStream = (async function* () {
         yield { type: 'content', value: 'Hello' };
diff --git a/packages/core/src/core/client.ts b/packages/core/src/core/client.ts
index 2df71de211..849249f4c9 100644
--- a/packages/core/src/core/client.ts
+++ b/packages/core/src/core/client.ts
@@ -40,9 +40,11 @@ import { LoopDetectionService } from '../services/loopDetectionService.js';
 import { ideContextStore } from '../ide/ideContext.js';
 import {
   logChatCompression,
+  logContentRetryFailure,
   logNextSpeakerCheck,
 } from '../telemetry/loggers.js';
 import {
+  ContentRetryFailureEvent,
   makeChatCompressionEvent,
   NextSpeakerCheckEvent,
 } from '../telemetry/types.js';
@@ -476,6 +478,7 @@ My setup is complete. I will provide my first command in the next turn.
     signal: AbortSignal,
     prompt_id: string,
     turns: number = MAX_TURNS,
+    isInvalidStreamRetry: boolean = false,
   ): AsyncGenerator<ServerGeminiStreamEvent, Turn> {
     if (this.lastPromptId !== prompt_id) {
       this.loopDetector.reset(prompt_id);
@@ -586,6 +589,31 @@ My setup is complete. I will provide my first command in the next turn.
         return turn;
       }
       yield event;
+      if (event.type === GeminiEventType.InvalidStream) {
+        if (this.config.getContinueOnFailedApiCall()) {
+          if (isInvalidStreamRetry) {
+            // We already retried once, so stop here.
+            logContentRetryFailure(
+              this.config,
+              new ContentRetryFailureEvent(
+                4, // 2 initial + 2 after injections
+                'FAILED_AFTER_PROMPT_INJECTION',
+                modelToUse,
+              ),
+            );
+            return turn;
+          }
+          const nextRequest = [{ text: 'System: Please continue.' }];
+          yield* this.sendMessageStream(
+            nextRequest,
+            signal,
+            prompt_id,
+            boundedTurns - 1,
+            true, // Set isInvalidStreamRetry to true
+          );
+          return turn;
+        }
+      }
       if (event.type === GeminiEventType.Error) {
         return turn;
       }
@@ -623,6 +651,7 @@ My setup is complete. I will provide my first command in the next turn.
           signal,
           prompt_id,
           boundedTurns - 1,
+          // isInvalidStreamRetry is false here, as this is a next speaker check
         );
       }
     }
diff --git a/packages/core/src/core/turn.test.ts b/packages/core/src/core/turn.test.ts
index 45f78a26a5..97e7195d30 100644
--- a/packages/core/src/core/turn.test.ts
+++ b/packages/core/src/core/turn.test.ts
@@ -13,7 +13,7 @@ import { Turn, GeminiEventType } from './turn.js';
 import type { GenerateContentResponse, Part, Content } from '@google/genai';
 import { reportError } from '../utils/errorReporting.js';
 import type { GeminiChat } from './geminiChat.js';
-import { StreamEventType } from './geminiChat.js';
+import { InvalidStreamError, StreamEventType } from './geminiChat.js';
 
 const mockSendMessageStream = vi.fn();
 const mockGetHistory = vi.fn();
@@ -223,6 +223,28 @@ describe('Turn', () => {
       expect(turn.getDebugResponses().length).toBe(1);
     });
 
+    it('should yield InvalidStream event if sendMessageStream throws InvalidStreamError', async () => {
+      const error = new InvalidStreamError(
+        'Test invalid stream',
+        'NO_FINISH_REASON',
+      );
+      mockSendMessageStream.mockRejectedValue(error);
+      const reqParts: Part[] = [{ text: 'Trigger invalid stream' }];
+
+      const events = [];
+      for await (const event of turn.run(
+        'test-model',
+        reqParts,
+        new AbortController().signal,
+      )) {
+        events.push(event);
+      }
+
+      expect(events).toEqual([{ type: GeminiEventType.InvalidStream }]);
+      expect(turn.getDebugResponses().length).toBe(0);
+      expect(reportError).not.toHaveBeenCalled(); // Should not report as error
+    });
+
     it('should yield Error event and report if sendMessageStream throws', async () => {
       const error = new Error('API Error');
       mockSendMessageStream.mockRejectedValue(error);
diff --git a/packages/core/src/core/turn.ts b/packages/core/src/core/turn.ts
index 66f2df4b46..fc6772bf3e 100644
--- a/packages/core/src/core/turn.ts
+++ b/packages/core/src/core/turn.ts
@@ -27,6 +27,7 @@ import {
   toFriendlyError,
 } from '../utils/errors.js';
 import type { GeminiChat } from './geminiChat.js';
+import { InvalidStreamError } from './geminiChat.js';
 import { parseThought, type ThoughtSummary } from '../utils/thoughtUtils.js';
 import { createUserContent } from '@google/genai';
 
@@ -60,6 +61,7 @@ export enum GeminiEventType {
   Citation = 'citation',
   Retry = 'retry',
   ContextWindowWillOverflow = 'context_window_will_overflow',
+  InvalidStream = 'invalid_stream',
 }
 
 export type ServerGeminiRetryEvent = {
@@ -74,6 +76,10 @@ export type ServerGeminiContextWindowWillOverflowEvent = {
   };
 };
 
+export type ServerGeminiInvalidStreamEvent = {
+  type: GeminiEventType.InvalidStream;
+};
+
 export interface StructuredError {
   message: string;
   status?: number;
@@ -203,7 +209,8 @@ export type ServerGeminiStreamEvent =
   | ServerGeminiToolCallResponseEvent
   | ServerGeminiUserCancelledEvent
   | ServerGeminiRetryEvent
-  | ServerGeminiContextWindowWillOverflowEvent;
+  | ServerGeminiContextWindowWillOverflowEvent
+  | ServerGeminiInvalidStreamEvent;
 
 // A turn manages the agentic loop turn within the server context.
 export class Turn {
@@ -312,6 +319,11 @@ export class Turn {
         return;
       }
 
+      if (e instanceof InvalidStreamError) {
+        yield { type: GeminiEventType.InvalidStream };
+        return;
+      }
+
       const error = toFriendlyError(e);
       if (error instanceof UnauthorizedError) {
         throw error;