diff --git a/packages/test/src/failing-payload-converter.ts b/packages/test/src/failing-payload-converter.ts
new file mode 100644
index 000000000..864e978bf
--- /dev/null
+++ b/packages/test/src/failing-payload-converter.ts
@@ -0,0 +1,11 @@
+import { defaultPayloadConverter, Payload } from '@temporalio/common';
+import { PayloadConverter } from '@temporalio/common/lib/converter/payload-converter';
+
+export const payloadConverter: PayloadConverter = {
+  toPayload<T>(value: T): Payload {
+    return defaultPayloadConverter.toPayload(value);
+  },
+  fromPayload<T>(_payload: Payload): T {
+    throw new Error('Intentional payload converter failure for testing');
+  },
+};
diff --git a/packages/test/src/test-nexus-codec-converter-errors.ts b/packages/test/src/test-nexus-codec-converter-errors.ts
new file mode 100644
index 000000000..56ea61eaf
--- /dev/null
+++ b/packages/test/src/test-nexus-codec-converter-errors.ts
@@ -0,0 +1,113 @@
+import { randomUUID } from 'crypto';
+import * as nexus from 'nexus-rpc';
+import { NexusOperationFailure, Payload } from '@temporalio/common';
+import { Client, WorkflowFailedError } from '@temporalio/client';
+import type { PayloadCodec } from '@temporalio/common/lib/converter/payload-codec';
+import * as workflow from '@temporalio/workflow';
+import { helpers, makeTestFunction } from './helpers-integration';
+
+const test = makeTestFunction({
+  workflowsPath: __filename,
+  workflowInterceptorModules: [__filename],
+});
+
+const testService = nexus.service('codec-converter-test', {
+  echoOp: nexus.operation<string, string>(),
+});
+
+export async function nexusEchoCaller(endpoint: string): Promise<string> {
+  const client = workflow.createNexusClient({
+    endpoint,
+    service: testService,
+  });
+  const handle = await client.startOperation('echoOp', 'hello');
+  return await handle.result();
+}
+
+////////////////////////////////////////////////////////////////////////////////////////////////////
+
+test('Nexus operation codec failure is retried', async (t) => {
+  const { createWorker, registerNexusEndpoint, taskQueue } = helpers(t);
+  const { endpointName } = await registerNexusEndpoint();
+
+  let decodeCount = 0;
+  const failingCodec: PayloadCodec = {
+    async encode(payloads: Payload[]): Promise<Payload[]> {
+      return payloads;
+    },
+    async decode(payloads: Payload[]): Promise<Payload[]> {
+      decodeCount++;
+      if (decodeCount === 1) {
+        throw new Error('Intentional codec decode failure');
+      }
+      return payloads;
+    },
+  };
+
+  const worker = await createWorker({
+    dataConverter: { payloadCodecs: [failingCodec] },
+    nexusServices: [
+      nexus.serviceHandler(testService, {
+        async echoOp(_ctx, input) {
+          return input;
+        },
+      }),
+    ],
+  });
+
+  const customClient = new Client({
+    connection: t.context.env.connection,
+    dataConverter: { payloadCodecs: [failingCodec] },
+  });
+
+  await worker.runUntil(async () => {
+    const result = await customClient.workflow.execute(nexusEchoCaller, {
+      taskQueue,
+      workflowId: randomUUID(),
+      args: [endpointName],
+    });
+    t.is(result, 'hello');
+  });
+
+  t.true(decodeCount >= 2, `Expected decode count >= 2, got ${decodeCount}`);
+});
+
+////////////////////////////////////////////////////////////////////////////////////////////////////
+
+test('Nexus operation converter failure is not retried', async (t) => {
+  const { createWorker, registerNexusEndpoint, taskQueue } = helpers(t);
+  const { endpointName } = await registerNexusEndpoint();
+
+  const worker = await createWorker({
+    dataConverter: { payloadConverterPath: require.resolve('./failing-payload-converter') },
+    nexusServices: [
+      nexus.serviceHandler(testService, {
+        async echoOp(_ctx, input) {
+          return input;
+        },
+      }),
+    ],
+  });
+
+  await worker.runUntil(async () => {
+    const err = await t.throwsAsync(
+      () =>
+        t.context.env.client.workflow.execute(nexusEchoCaller, {
+          taskQueue,
+          workflowId: randomUUID(),
+          args: [endpointName],
+        }),
+      {
+        instanceOf: WorkflowFailedError,
+      }
+    );
+    t.true(err instanceof WorkflowFailedError);
+    t.true(err!.cause instanceof NexusOperationFailure);
+    const nexusFailure = err!.cause as NexusOperationFailure;
+    t.true(nexusFailure.cause instanceof nexus.HandlerError);
+    const handlerError = nexusFailure.cause as nexus.HandlerError;
+    t.is(handlerError.type, 'BAD_REQUEST');
+    t.false(handlerError.retryable);
+    t.regex(handlerError.message, /Intentional payload converter failure for testing/);
+  });
+});
diff --git a/packages/test/src/test-nexus-handler.ts b/packages/test/src/test-nexus-handler.ts
index 3ce174a5a..99baea9ed 100644
--- a/packages/test/src/test-nexus-handler.ts
+++ b/packages/test/src/test-nexus-handler.ts
@@ -407,12 +407,7 @@ test('start Operation Handler errors', async (t) => {
       t.is(res.status, 400);
       const { message } = (await res.json()) as { message: string };
       // Exact error message varies between Node versions and runtimes.
-      t.regex(
-        message,
-        isBun
-          ? /Failed to deserialize input: SyntaxError: JSON Parse error:/
-          : /Failed to deserialize input: SyntaxError: Unexpected token .* JSON/
-      );
+      t.regex(message, isBun ? /JSON Parse error:/ : /Unexpected token .* JSON/);
     }
   });
 });
diff --git a/packages/worker/src/nexus/conversions.ts b/packages/worker/src/nexus/conversions.ts
index 32ad7a35f..2739da83a 100644
--- a/packages/worker/src/nexus/conversions.ts
+++ b/packages/worker/src/nexus/conversions.ts
@@ -20,7 +20,10 @@ export async function decodePayloadIntoLazyValue(
   try {
     decoded = await decodeOptionalSingle(dataConverter.payloadCodecs, payload);
   } catch (err) {
-    throw new nexus.HandlerError('BAD_REQUEST', `Failed to decode payload: ${err}`);
+    if (err instanceof ApplicationFailure) {
+      throw err;
+    }
+    throw new nexus.HandlerError('INTERNAL', `Payload codec failed to decode Nexus operation input`, { cause: err });
   }
 
   // Nexus headers have string values and Temporal Payloads have binary values. Instead of
@@ -47,7 +50,12 @@ class PayloadSerializer implements nexus.Serializer {
     try {
       return this.payloadConverter.fromPayload(this.payload);
     } catch (err) {
-      throw new nexus.HandlerError('BAD_REQUEST', `Failed to deserialize input: ${err}`);
+      if (err instanceof ApplicationFailure) {
+        throw err;
+      }
+      throw new nexus.HandlerError('BAD_REQUEST', `Payload converter failed to decode Nexus operation input`, {
+        cause: err,
+      });
     }
   }