diff --git a/akka-stream-tests/src/test/scala/akka/stream/scaladsl/FlowFlattenMergeSpec.scala b/akka-stream-tests/src/test/scala/akka/stream/scaladsl/FlowFlattenMergeSpec.scala
index 9093c5d0a8..244e088e5b 100644
--- a/akka-stream-tests/src/test/scala/akka/stream/scaladsl/FlowFlattenMergeSpec.scala
+++ b/akka-stream-tests/src/test/scala/akka/stream/scaladsl/FlowFlattenMergeSpec.scala
@@ -6,7 +6,7 @@ package akka.stream.scaladsl
 import akka.NotUsed
 import akka.stream.stage.{ GraphStage, GraphStageLogic, OutHandler }
 import akka.stream._
-import akka.stream.testkit.Utils.assertAllStagesStopped
+import akka.stream.testkit.Utils.{ TE, assertAllStagesStopped }
 
 import scala.concurrent._
 import scala.concurrent.duration._
@@ -93,6 +93,22 @@ class FlowFlattenMergeSpec extends StreamSpec {
       }.cause.get should ===(ex)
     }
 
+    "bubble up substream materialization exception" in assertAllStagesStopped {
+      val matFail = TE("fail!")
+      object FailingInnerMat extends GraphStage[SourceShape[String]] {
+        val out = Outlet[String]("out")
+        val shape = SourceShape(out)
+        override def createLogic(inheritedAttributes: Attributes): GraphStageLogic = new GraphStageLogic(shape) {
+          throw matFail
+        }
+      }
+
+      val result = Source.single(()).flatMapMerge(4, _ ⇒ Source.fromGraph(FailingInnerMat)).runWith(Sink.ignore)
+
+      result.failed.futureValue should ===(matFail)
+
+    }
+
     "cancel substreams when failing from main stream" in assertAllStagesStopped {
       val p1, p2 = TestPublisher.probe[Int]()
       val ex = new Exception("buh")
diff --git a/akka-stream-tests/src/test/scala/akka/stream/scaladsl/FlowRecoverWithSpec.scala b/akka-stream-tests/src/test/scala/akka/stream/scaladsl/FlowRecoverWithSpec.scala
index c69a1ffb2e..e3813f8e7d 100644
--- a/akka-stream-tests/src/test/scala/akka/stream/scaladsl/FlowRecoverWithSpec.scala
+++ b/akka-stream-tests/src/test/scala/akka/stream/scaladsl/FlowRecoverWithSpec.scala
@@ -3,9 +3,10 @@
  */
 package akka.stream.scaladsl
 
+import akka.stream.stage.{ GraphStage, GraphStageLogic }
 import akka.stream.testkit.StreamSpec
 import akka.stream.testkit.scaladsl.TestSink
-import akka.stream.{ ActorMaterializer, ActorMaterializerSettings }
+import akka.stream._
 import akka.stream.testkit.Utils._
 
 import scala.util.control.NoStackTrace
@@ -132,5 +133,23 @@ class FlowRecoverWithSpec extends StreamSpec {
         Flow[Int].recoverWithRetries(-2, { case t: Throwable ⇒ Source.empty[Int] })
       }
     }
+
+    "fail correctly when materialization of recover source fails" in assertAllStagesStopped {
+      val matFail = TE("fail!")
+      object FailingInnerMat extends GraphStage[SourceShape[String]] {
+        val out = Outlet[String]("out")
+        val shape = SourceShape(out)
+        override def createLogic(inheritedAttributes: Attributes): GraphStageLogic = new GraphStageLogic(shape) {
+          throw matFail
+        }
+      }
+
+      val result = Source.failed(TE("trigger")).recoverWithRetries(1, {
+        case _: TE ⇒ Source.fromGraph(FailingInnerMat)
+      }).runWith(Sink.ignore)
+
+      result.failed.futureValue should ===(matFail)
+
+    }
   }
 }
diff --git a/akka-stream-tests/src/test/scala/akka/stream/scaladsl/LazySinkSpec.scala b/akka-stream-tests/src/test/scala/akka/stream/scaladsl/LazySinkSpec.scala
index 0a351558a7..654ca53ca7 100644
--- a/akka-stream-tests/src/test/scala/akka/stream/scaladsl/LazySinkSpec.scala
+++ b/akka-stream-tests/src/test/scala/akka/stream/scaladsl/LazySinkSpec.scala
@@ -5,15 +5,17 @@ package akka.stream.scaladsl
 
 import java.util.concurrent.TimeoutException
 
+import akka.NotUsed
 import akka.stream.ActorAttributes.supervisionStrategy
 import akka.stream.Supervision._
 import akka.stream._
+import akka.stream.stage.{ GraphStage, GraphStageLogic }
 import akka.stream.testkit.{ StreamSpec, TestPublisher }
 import akka.stream.testkit.TestSubscriber.Probe
 import akka.stream.testkit.Utils._
 import akka.stream.testkit.scaladsl.TestSink
 
-import scala.concurrent.{ Promise, Future, Await }
+import scala.concurrent.{ Await, Future, Promise }
 import scala.concurrent.duration._
 
 class LazySinkSpec extends StreamSpec {
@@ -141,6 +143,25 @@ class LazySinkSpec extends StreamSpec {
       val futureProbe = Source.empty.runWith(Sink.lazyInit[Int, Future[Int]](_ ⇒ Future.successful(Sink.fold[Int, Int](0)(_ + _)), () ⇒ throw ex))
       a[TE] shouldBe thrownBy { Await.result(futureProbe, 300.millis) }
     }
+
+    "fail correctly when materialization of inner sink fails" in assertAllStagesStopped {
+      val matFail = TE("fail!")
+      object FailingInnerMat extends GraphStage[SinkShape[String]] {
+        val in = Inlet[String]("in")
+        val shape = SinkShape(in)
+        override def createLogic(inheritedAttributes: Attributes): GraphStageLogic = new GraphStageLogic(shape) {
+          throw matFail
+        }
+      }
+
+      val result = Source.single("whatever")
+        .runWith(
+          Sink.lazyInit[String, NotUsed](
+            str ⇒ Future.successful(Sink.fromGraph(FailingInnerMat)),
+            () ⇒ NotUsed))
+
+      result.failed.futureValue should ===(matFail)
+    }
   }
 
 }
diff --git a/akka-stream-tests/src/test/scala/akka/stream/scaladsl/LazySourceSpec.scala b/akka-stream-tests/src/test/scala/akka/stream/scaladsl/LazySourceSpec.scala
index 14298abf27..c91d7d9fd0 100644
--- a/akka-stream-tests/src/test/scala/akka/stream/scaladsl/LazySourceSpec.scala
+++ b/akka-stream-tests/src/test/scala/akka/stream/scaladsl/LazySourceSpec.scala
@@ -115,6 +115,22 @@ class LazySourceSpec extends StreamSpec with DefaultTimeout with ScalaFutures {
       attributes should contain(Attributes.Name("outer"))
       attributes.indexOf(Attributes.Name("inner")) < attributes.indexOf(Attributes.Name("outer")) should be(true)
     }
+
+    "fail correctly when materialization of inner source fails" in assertAllStagesStopped {
+      val matFail = TE("fail!")
+      object FailingInnerMat extends GraphStage[SourceShape[String]] {
+        val out = Outlet[String]("out")
+        val shape = SourceShape(out)
+        override def createLogic(inheritedAttributes: Attributes): GraphStageLogic = new GraphStageLogic(shape) {
+          throw matFail
+        }
+      }
+
+      val result = Source.lazily(() ⇒ Source.fromGraph(FailingInnerMat)).to(Sink.ignore).run()
+
+      result.failed.futureValue should ===(matFail)
+
+    }
   }
 
 }
diff --git a/akka-stream/src/main/scala/akka/stream/impl/Sinks.scala b/akka-stream/src/main/scala/akka/stream/impl/Sinks.scala
index 0a43c76706..eaf71962d5 100644
--- a/akka-stream/src/main/scala/akka/stream/impl/Sinks.scala
+++ b/akka-stream/src/main/scala/akka/stream/impl/Sinks.scala
@@ -552,7 +552,14 @@ import akka.util.OptionVal
         }
 
         switchToFirstElementHandlers()
-        promise.trySuccess(Source.fromGraph(sourceOut.source).runWith(sink)(interpreter.subFusingMaterializer))
+        try {
+          val matVal = Source.fromGraph(sourceOut.source).runWith(sink)(interpreter.subFusingMaterializer)
+          promise.trySuccess(matVal)
+        } catch {
+          case NonFatal(ex) ⇒
+            promise.tryFailure(ex)
+            failStage(ex)
+        }
       }
 
     }
diff --git a/akka-stream/src/main/scala/akka/stream/impl/Sources.scala b/akka-stream/src/main/scala/akka/stream/impl/Sources.scala
index d833e0b8e0..95e0894ba0 100644
--- a/akka-stream/src/main/scala/akka/stream/impl/Sources.scala
+++ b/akka-stream/src/main/scala/akka/stream/impl/Sources.scala
@@ -391,10 +391,15 @@ import scala.util.control.NonFatal
           }
         })
 
-        matPromise.tryComplete(
-          Try {
-            subFusingMaterializer.materialize(source.toMat(subSink.sink)(Keep.left), inheritedAttributes)
-          })
+        try {
+          val matVal = subFusingMaterializer.materialize(source.toMat(subSink.sink)(Keep.left), inheritedAttributes)
+          matPromise.trySuccess(matVal)
+        } catch {
+          case NonFatal(ex) ⇒
+            subSink.cancel()
+            failStage(ex)
+            matPromise.tryFailure(ex)
+        }
       }
 
       setHandler(out, this)