diff --git a/src/main/java/io/reactivex/rxjava3/internal/operators/flowable/BlockingFlowableIterable.java b/src/main/java/io/reactivex/rxjava3/internal/operators/flowable/BlockingFlowableIterable.java
index 36436d1370..11239d04a7 100644
--- a/src/main/java/io/reactivex/rxjava3/internal/operators/flowable/BlockingFlowableIterable.java
+++ b/src/main/java/io/reactivex/rxjava3/internal/operators/flowable/BlockingFlowableIterable.java
@@ -138,9 +138,12 @@ public void onSubscribe(Subscription s) {
         @Override
         public void onNext(T t) {
             if (!queue.offer(t)) {
+                // Error must be set first before calling cancel to avoid race
+                // with hasNext(), which checks for cancel first before checking
+                // for error.
+                error = new QueueOverflowException();
                 SubscriptionHelper.cancel(this);
-
-                onError(new QueueOverflowException());
+                onComplete();
             } else {
                 signalConsumer();
             }