diff --git a/src/main/java/rx/internal/operators/OperatorMerge.java b/src/main/java/rx/internal/operators/OperatorMerge.java
index fa30f46b10..a52eee07e9 100644
--- a/src/main/java/rx/internal/operators/OperatorMerge.java
+++ b/src/main/java/rx/internal/operators/OperatorMerge.java
@@ -847,8 +847,11 @@ public void onNext(T t) {
         }
         @Override
         public void onError(Throwable e) {
-            done = true;
+            // Need to queue the error first before setting done, so that after emitLoop() removes the subscriber,
+            // it is guaranteed to notice the error. Otherwise it would be possible that inner subscribers count was 0,
+            // and at the same time the error queue was empty.
             parent.getOrCreateErrorQueue().offer(e);
+            done = true;
             parent.emit();
         }
         @Override
diff --git a/src/test/java/rx/internal/operators/OperatorMergeTest.java b/src/test/java/rx/internal/operators/OperatorMergeTest.java
index 7528cb88d8..bc13673f5e 100644
--- a/src/test/java/rx/internal/operators/OperatorMergeTest.java
+++ b/src/test/java/rx/internal/operators/OperatorMergeTest.java
@@ -1205,6 +1205,34 @@ public void onNext(Integer t) {
         assertTrue(latch.await(10, TimeUnit.SECONDS));
     }
 
+    @Test
+    public void testConcurrentMergeInnerError() {
+        for (int i = 0; i < 1000; i++) {
+            final TestSubscriber<Integer> ts = TestSubscriber.create();
+            final PublishSubject<Integer> ps1 = PublishSubject.create();
+            final PublishSubject<Integer> ps2 = PublishSubject.create();
+            final Exception error = new NullPointerException();
+            Action0 action1 = new Action0() {
+                @Override
+                public void call() {
+                    ps1.onNext(1);
+                    ps1.onCompleted();
+                }
+            };
+            Action0 action2 = new Action0() {
+                @Override
+                public void call() {
+                    ps2.onError(error);
+                }
+            };
+
+            Observable.mergeDelayError(ps1, ps2).subscribe(ts);
+            TestUtil.race(action1, action2);
+            ts.assertTerminalEvent();
+            ts.assertError(error);
+        }
+    }
+
     private static Action1<Integer> printCount() {
         return new Action1<Integer>() {
             long count;