diff --git a/library/swift/src/GRPCResponseHandler.swift b/library/swift/src/GRPCResponseHandler.swift
index 70dedf7d78..5e33a20437 100644
--- a/library/swift/src/GRPCResponseHandler.swift
+++ b/library/swift/src/GRPCResponseHandler.swift
@@ -3,6 +3,8 @@ import Foundation
 /// Handler for responses sent over gRPC.
 @objcMembers
 public final class GRPCResponseHandler: NSObject {
+  private var internalErrorClosure: ((_ error: EnvoyError) -> Void)?
+
   /// Represents the state of a response stream's body data.
   private enum State {
     /// Awaiting a gRPC compression flag.
@@ -56,10 +58,12 @@ public final class GRPCResponseHandler: NSObject {
     var buffer = Data()
     var state = State.expectingCompressionFlag
     self.underlyingHandler.onData { chunk, _ in
+      // This closure deliberately retains `self` while the underlying handler's
+      // `onData` closure is kept in memory so that messages/errors can be processed.
       // Appending might result in extra copying that can be optimized in the future.
       buffer.append(chunk)
       // gRPC always sends trailers, so the stream will not complete here.
-      GRPCResponseHandler.processBuffer(&buffer, state: &state, onMessage: closure)
+      self.processBuffer(&buffer, state: &state, onMessage: closure)
     }
 
     return self
@@ -91,6 +95,7 @@ public final class GRPCResponseHandler: NSObject {
     @escaping (_ error: EnvoyError) -> Void)
     -> GRPCResponseHandler
   {
+    self.internalErrorClosure = closure
     self.underlyingHandler.onError(closure)
     return self
   }
@@ -114,8 +119,8 @@ public final class GRPCResponseHandler: NSObject {
   /// - parameter buffer:    The buffer of data from which to determine state and messages.
   /// - parameter state:     The current state of the buffering.
   /// - parameter onMessage: Closure to call when a new message is available.
-  private static func processBuffer(_ buffer: inout Data, state: inout State,
-                                    onMessage: (_ message: Data) -> Void)
+  private func processBuffer(_ buffer: inout Data, state: inout State,
+                             onMessage: (_ message: Data) -> Void)
   {
     switch state {
     case .expectingCompressionFlag:
@@ -125,7 +130,11 @@ public final class GRPCResponseHandler: NSObject {
 
       guard compressionFlag == 0 else {
         // TODO: Support gRPC compression https://github.com/lyft/envoy-mobile/issues/501
-        assertionFailure("gRPC decompression is not supported")
+        // Call the handler with an error and ignore all future updates.
+        let error = EnvoyError(
+          errorCode: 0, message: "Unable to read compressed gRPC response message", cause: nil)
+        self.internalErrorClosure?(error)
+        self.resetHandlers()
         buffer.removeAll()
         state = .expectingCompressionFlag
         return
@@ -158,4 +167,13 @@ public final class GRPCResponseHandler: NSObject {
 
     self.processBuffer(&buffer, state: &state, onMessage: onMessage)
   }
+
+  private func resetHandlers() {
+    self.internalErrorClosure = nil
+    self.underlyingHandler
+      .onHeaders { _, _, _ in }
+      .onData { _, _ in }
+      .onTrailers { _ in }
+      .onError { _ in }
+  }
 }
diff --git a/library/swift/test/GRPCResponseHandlerTests.swift b/library/swift/test/GRPCResponseHandlerTests.swift
index 6bbc8f6dd8..61211a9ca0 100644
--- a/library/swift/test/GRPCResponseHandlerTests.swift
+++ b/library/swift/test/GRPCResponseHandlerTests.swift
@@ -129,6 +129,47 @@ final class GRPCResponseHandlerTests: XCTestCase {
     XCTAssertTrue(expectedMessages.isEmpty)
   }
 
+  // TODO: Support gRPC compression https://github.com/lyft/envoy-mobile/issues/501
+  func testCalledWithErrorWhenCompressedMessageReceived() {
+    let expectation = self.expectation(description: "Error closure is called")
+    let firstMessage = Data([
+      0x1, // Compression flag
+      0x0, 0x0, 0x0, 0x5, // Length bytes
+    ] + kMessage1)
+
+    let handler = GRPCResponseHandler()
+      .onMessage { _ in } // Compiler segfaults without this
+      .onError { error in
+        let message = "Unable to read compressed gRPC response message"
+        XCTAssertEqual(message, error.message)
+        expectation.fulfill()
+      }
+
+    handler.underlyingHandler.underlyingCallbacks.onData(firstMessage, false)
+    self.waitForExpectations(timeout: 0.1)
+  }
+
+  // TODO: Support gRPC compression https://github.com/lyft/envoy-mobile/issues/501
+  func testDoesNotCallOtherCallbacksAfterReceivingCompressedMessageError() {
+    let errorExpectation = self.expectation(description: "Error closure is called")
+    let otherExpectation = self.expectation(description: "Other closures are not called")
+    otherExpectation.isInverted = true
+    let firstMessage = Data([
+      0x1, // Compression flag
+      0x0, 0x0, 0x0, 0x5, // Length bytes
+    ] + kMessage1)
+
+    let handler = GRPCResponseHandler()
+      .onMessage { _ in otherExpectation.fulfill() }
+      .onTrailers { _ in otherExpectation.fulfill() }
+      .onError { _ in errorExpectation.fulfill() }
+
+    handler.underlyingHandler.underlyingCallbacks.onData(firstMessage, false)
+    handler.underlyingHandler.underlyingCallbacks.onData(firstMessage, false)
+    handler.underlyingHandler.underlyingCallbacks.onTrailers([:])
+    self.waitForExpectations(timeout: 0.1)
+  }
+
   // MARK: - gRPC status parsing
 
   func testParsingGRPCStatusFromHeadersReturnsFirstStatus() {