diff --git a/vllm/engine/multiprocessing/__init__.py b/vllm/engine/multiprocessing/__init__.py
index 34c161e9395ae..2a67609654ea7 100644
--- a/vllm/engine/multiprocessing/__init__.py
+++ b/vllm/engine/multiprocessing/__init__.py
@@ -18,6 +18,12 @@
 IPC_DATA_EXT = "_data_socket"
 
 
+# Generic exception when the engine
+# fails to process a batch
+class MQEngineBatchError(Exception):
+    pass
+
+
 class MQEngineDeadError(RuntimeError):
     pass
 
diff --git a/vllm/engine/multiprocessing/client.py b/vllm/engine/multiprocessing/client.py
index b0d061dbab4a1..3924dde80e66b 100644
--- a/vllm/engine/multiprocessing/client.py
+++ b/vllm/engine/multiprocessing/client.py
@@ -21,9 +21,11 @@
 from vllm.engine.multiprocessing import (ENGINE_DEAD_ERROR, IPC_DATA_EXT,
                                          IPC_HEALTH_EXT, IPC_INPUT_EXT,
                                          IPC_OUTPUT_EXT, RPC_REQUEST_T,
-                                         VLLM_RPC_SUCCESS_STR, RPCAbortRequest,
-                                         RPCError, RPCProcessRequest,
-                                         RPCStartupRequest, RPCStartupResponse,
+                                         VLLM_RPC_SUCCESS_STR,
+                                         MQEngineBatchError, MQEngineDeadError,
+                                         RPCAbortRequest, RPCError,
+                                         RPCProcessRequest, RPCStartupRequest,
+                                         RPCStartupResponse,
                                          RPCUProfileRequest)
 # yapf: enable
 from vllm.envs import VLLM_RPC_TIMEOUT
@@ -203,8 +205,23 @@ async def run_output_handler_loop(self):
                         self._errored_with = exception
 
                     if request_id is None:
+
                         for queue_i in tuple(self.output_queues.values()):
-                            queue_i.put_nowait(exception)
+
+                            msg = str("A batch generation failed. Inspect the "
+                                      "stacktrace to find the original error: "
+                                      f"{repr(exception)}")
+                            # If it is a runtime exception, we assume that
+                            # the engine is already dead, let's pass this
+                            # information ahead. Otherwise we just set as
+                            # batch error, and maybe the engine is still
+                            # up running.
+                            # For runtime exceptions vLLM process will
+                            # shutdown immediately.
+                            batch_error = MQEngineDeadError(msg) if isinstance(
+                                exception,
+                                RuntimeError) else MQEngineBatchError(msg)
+                            queue_i.put_nowait(batch_error)
                     else:
                         queue = self.output_queues.get(request_id)
                         if queue is not None:
diff --git a/vllm/entrypoints/launcher.py b/vllm/entrypoints/launcher.py
index 5dcf50bd1b0a1..2591cf2195e36 100644
--- a/vllm/entrypoints/launcher.py
+++ b/vllm/entrypoints/launcher.py
@@ -8,7 +8,7 @@
 
 from vllm import envs
 from vllm.engine.async_llm_engine import AsyncEngineDeadError
-from vllm.engine.multiprocessing import MQEngineDeadError
+from vllm.engine.multiprocessing import MQEngineBatchError, MQEngineDeadError
 from vllm.logger import init_logger
 from vllm.utils import find_process_using_port
 
@@ -28,7 +28,7 @@ async def serve_http(app: FastAPI, **uvicorn_kwargs: Any):
 
     config = uvicorn.Config(app, **uvicorn_kwargs)
     server = uvicorn.Server(config)
-    _add_shutdown_handlers(app, server)
+    _add_exception_handles(app, server)
 
     loop = asyncio.get_running_loop()
 
@@ -58,8 +58,9 @@ async def dummy_shutdown() -> None:
         return server.shutdown()
 
 
-def _add_shutdown_handlers(app: FastAPI, server: uvicorn.Server) -> None:
-    """Adds handlers for fatal errors that should crash the server"""
+def _add_exception_handles(app: FastAPI, server: uvicorn.Server) -> None:
+    """Adds handlers for custom errors that may crash the server or
+       improve the readability of the stacktrace"""
 
     @app.exception_handler(RuntimeError)
     async def runtime_error_handler(request: Request, __):
@@ -101,3 +102,12 @@ async def mq_engine_dead_handler(_, __):
             server.should_exit = True
 
         return Response(status_code=HTTPStatus.INTERNAL_SERVER_ERROR)
+
+    @app.exception_handler(MQEngineBatchError)
+    async def mq_engine_batch_error_handler(_, err):
+        """Log the error and pass an internal server error.
+        This error might be propagated to all requests of
+        a batch that failed to generate"""
+        logger.error("%s", repr(err))
+
+        return Response(status_code=HTTPStatus.INTERNAL_SERVER_ERROR)