diff --git a/aw-datastore/Cargo.toml b/aw-datastore/Cargo.toml
index 73d768b5..51f0a003 100644
--- a/aw-datastore/Cargo.toml
+++ b/aw-datastore/Cargo.toml
@@ -7,6 +7,8 @@ edition = "2021"
 [features]
 default = [] # no features by default
 legacy_import_tests = []
+# Test-only feature to enable panic triggering for testing catch_unwind behavior
+test-panic = []
 
 [dependencies]
 dirs = "6"
diff --git a/aw-datastore/src/worker.rs b/aw-datastore/src/worker.rs
index 18eaf665..81eac165 100644
--- a/aw-datastore/src/worker.rs
+++ b/aw-datastore/src/worker.rs
@@ -78,6 +78,10 @@ pub enum Command {
     SetKeyValue(String, String),
     DeleteKeyValue(String),
     Close(),
+    /// Test-only command to trigger a panic in the worker thread.
+    /// Only available with the `test-panic` feature.
+    #[cfg(feature = "test-panic")]
+    TriggerPanic(String),
 }
 
 fn _unwrap_response(
@@ -294,10 +298,26 @@ impl DatastoreWorker {
                 self.quit = true;
                 Ok(Response::Empty())
             }
+            #[cfg(feature = "test-panic")]
+            Command::TriggerPanic(msg) => {
+                panic!("{}", msg);
+            }
         }
     }
 }
 
+/// Extracts a human-readable message from a panic payload.
+/// Handles the two common payload types (&str and String), with a fallback for other types.
+fn extract_panic_message(panic_info: &Box<dyn std::any::Any + Send>) -> String {
+    if let Some(s) = panic_info.downcast_ref::<&str>() {
+        s.to_string()
+    } else if let Some(s) = panic_info.downcast_ref::<String>() {
+        s.clone()
+    } else {
+        "Unknown panic".to_string()
+    }
+}
+
 impl Datastore {
     pub fn new(dbpath: String, legacy_import: bool) -> Self {
         let method = DatastoreMethod::File(dbpath);
@@ -314,7 +334,22 @@ impl Datastore {
             mpsc_requests::channel::<Command, Result<Response, DatastoreError>>();
         let _thread = thread::spawn(move || {
             let mut di = DatastoreWorker::new(responder, legacy_import);
-            di.work_loop(method);
+            // Wrap work_loop in catch_unwind to handle any unexpected panics gracefully.
+            // This prevents panics from poisoning locks and leaving the server in an
+            // unusable state. Instead, the worker exits cleanly and the channel closes,
+            // allowing clients to receive proper errors instead of "poisoned lock" errors.
+            // See: https://github.com/ActivityWatch/aw-server-rust/issues/405
+            let result = std::panic::catch_unwind(std::panic::AssertUnwindSafe(|| {
+                di.work_loop(method);
+            }));
+            if let Err(panic_info) = result {
+                let panic_msg = extract_panic_message(&panic_info);
+                error!(
+                    "Datastore worker panicked: {}. Worker shutting down gracefully.",
+                    panic_msg
+                );
+            }
+            // Worker exits, channel closes, future requests get clean errors
         });
         Datastore { requester }
     }
@@ -527,4 +562,56 @@ impl Datastore {
             Err(e) => panic!("Error closing database: {:?}", e),
         }
     }
+
+    /// Test-only method to trigger a panic in the worker thread.
+    /// Used to verify that catch_unwind properly handles panics.
+    /// Only available with the `test-panic` feature.
+    #[cfg(feature = "test-panic")]
+    pub fn trigger_panic(&self, msg: &str) -> Result<(), DatastoreError> {
+        let cmd = Command::TriggerPanic(msg.to_string());
+        match self.requester.request(cmd) {
+            Ok(receiver) => match receiver.collect() {
+                Ok(result) => match result {
+                    Ok(_) => Ok(()),
+                    Err(e) => Err(e),
+                },
+                Err(_) => Err(DatastoreError::InternalError(
+                    "Channel closed (worker panicked)".to_string(),
+                )),
+            },
+            Err(_) => Err(DatastoreError::InternalError(
+                "Failed to send command (channel closed)".to_string(),
+            )),
+        }
+    }
+}
+
+#[cfg(test)]
+mod tests {
+    use super::extract_panic_message;
+
+    /// &str panic payload (produced by panic!("literal"))
+    #[test]
+    fn test_extract_panic_message_str_literal() {
+        let panic_info = std::panic::catch_unwind(|| panic!("static str panic")).unwrap_err();
+        assert_eq!(extract_panic_message(&panic_info), "static str panic");
+    }
+
+    /// String panic payload (produced by panic!("{}", expr))
+    #[test]
+    fn test_extract_panic_message_string() {
+        let msg = format!("formatted panic {}", 42);
+        let panic_info =
+            std::panic::catch_unwind(std::panic::AssertUnwindSafe(|| panic!("{}", msg)))
+                .unwrap_err();
+        assert_eq!(extract_panic_message(&panic_info), "formatted panic 42");
+    }
+
+    /// Unknown payload type falls back to "Unknown panic"
+    #[test]
+    fn test_extract_panic_message_unknown() {
+        let panic_info =
+            std::panic::catch_unwind(|| std::panic::panic_any(42u32)).unwrap_err();
+        assert_eq!(extract_panic_message(&panic_info), "Unknown panic");
+    }
 }
diff --git a/aw-datastore/tests/datastore.rs b/aw-datastore/tests/datastore.rs
index 739e8ade..9560daa2 100644
--- a/aw-datastore/tests/datastore.rs
+++ b/aw-datastore/tests/datastore.rs
@@ -531,4 +531,115 @@ mod datastore_tests {
             );
         }
     }
+
+    /// Test that when the worker thread panics, it shuts down gracefully
+    /// and subsequent requests receive clean errors instead of "poisoned lock" errors.
+    /// This tests the catch_unwind wrapper around work_loop().
+    #[cfg(feature = "test-panic")]
+    #[test]
+    fn test_worker_panic_graceful_shutdown() {
+        // Setup datastore
+        let ds = Datastore::new_in_memory(false);
+        let bucket = create_test_bucket(&ds);
+
+        // Verify datastore is working normally
+        let fetched_bucket = ds.get_bucket(&bucket.id).unwrap();
+        assert_eq!(fetched_bucket.id, bucket.id);
+
+        // Trigger a panic in the worker thread
+        let panic_result = ds.trigger_panic("Test panic for graceful shutdown");
+
+        // The panic should cause the worker to exit and close the channel.
+        // We may or may not get an error from the trigger_panic call itself
+        // depending on timing (whether the response was sent before the panic).
+        info!("trigger_panic result: {:?}", panic_result);
+
+        // Give the worker thread a moment to fully shut down
+        std::thread::sleep(std::time::Duration::from_millis(100));
+
+        // Subsequent requests will fail. The current API uses .unwrap() which panics
+        // on closed channels, so we need to catch the panic and verify it's NOT
+        // a "poisoned lock" error (which would indicate catch_unwind didn't work).
+        let result = std::panic::catch_unwind(std::panic::AssertUnwindSafe(|| {
+            ds.get_buckets()
+        }));
+
+        // We expect either:
+        // 1. A panic with "SendError" (channel closed) - this is expected
+        // 2. An Ok(Err(...)) with a clean error - this is also fine
+        // What we must NOT see is a "poisoned" error which would mean catch_unwind failed
+        match result {
+            Ok(inner_result) => {
+                // If we got through without panic, check the error doesn't mention poison
+                if let Err(e) = inner_result {
+                    let err_msg = format!("{:?}", e);
+                    assert!(
+                        !err_msg.to_lowercase().contains("poison"),
+                        "Error should not be a poisoned lock error, got: {}",
+                        err_msg
+                    );
+                    info!("Got expected clean error: {}", err_msg);
+                }
+            }
+            Err(panic_info) => {
+                // We got a panic - extract the message and verify it's not about poisoned locks
+                let panic_msg = if let Some(s) = panic_info.downcast_ref::<&str>() {
+                    s.to_string()
+                } else if let Some(s) = panic_info.downcast_ref::<String>() {
+                    s.clone()
+                } else {
+                    format!("{:?}", panic_info)
+                };
+                assert!(
+                    !panic_msg.to_lowercase().contains("poison"),
+                    "Panic should not be about poisoned lock, got: {}",
+                    panic_msg
+                );
+                info!(
+                    "Got expected panic (channel closed, not poisoned lock): {}",
+                    panic_msg
+                );
+            }
+        }
+    }
+
+    /// Test that panic handling correctly extracts both &str and String panic messages.
+    #[cfg(feature = "test-panic")]
+    #[test]
+    fn test_worker_panic_with_string_message() {
+        let ds = Datastore::new_in_memory(false);
+
+        // The trigger_panic method accepts a &str which gets converted to String,
+        // so this tests the String panic message extraction path.
+        let _ = ds.trigger_panic("String panic message test");
+
+        std::thread::sleep(std::time::Duration::from_millis(100));
+
+        // Verify the datastore is no longer usable (channel closed)
+        let result = std::panic::catch_unwind(std::panic::AssertUnwindSafe(|| {
+            ds.get_buckets()
+        }));
+
+        // Should fail in some way (panic or error), just not with "poisoned"
+        match result {
+            Ok(inner_result) => {
+                assert!(inner_result.is_err(), "Expected error after worker panic");
+            }
+            Err(panic_info) => {
+                // Got a panic (expected behavior with current API that uses unwrap)
+                let panic_msg = if let Some(s) = panic_info.downcast_ref::<&str>() {
+                    s.to_string()
+                } else if let Some(s) = panic_info.downcast_ref::<String>() {
+                    s.clone()
+                } else {
+                    format!("{:?}", panic_info)
+                };
+                assert!(
+                    !panic_msg.to_lowercase().contains("poison"),
+                    "Panic should not be about poisoned lock, got: {}",
+                    panic_msg
+                );
+            }
+        }
+    }
 }