diff --git a/packages/core/src/plugin/supervisor.ts b/packages/core/src/plugin/supervisor.ts
index 2677aec148d..f782ddc8839 100644
--- a/packages/core/src/plugin/supervisor.ts
+++ b/packages/core/src/plugin/supervisor.ts
@@ -125,9 +125,9 @@ export const layer = Layer.effect(
       Stream.debounce("100 millis"),
       Stream.runForEach((target) =>
         Effect.gen(function* () {
-          yield* activate()
+          yield* activate().pipe(Effect.catchCause((cause) => Effect.logError("failed to reload plugins", { cause })))
           if (observed === target) yield* ready.open
-        }).pipe(Effect.catchCause((cause) => Effect.logError("failed to reload plugins", { cause }))),
+        }),
       ),
       Effect.forkScoped({ startImmediately: true }),
     )
diff --git a/packages/core/test/config/plugin.test.ts b/packages/core/test/config/plugin.test.ts
index c243a5ef5ce..2d119f87496 100644
--- a/packages/core/test/config/plugin.test.ts
+++ b/packages/core/test/config/plugin.test.ts
@@ -427,6 +427,20 @@ describe("PluginSupervisor config", () => {
       }),
     ),
   )
+
+  it.live("unblocks flush when plugin activation fails", () =>
+    Effect.gen(function* () {
+      const sdk = yield* SdkPlugins.Service
+      yield* sdk.register(EffectPlugin.define({ id: "duplicate-id", effect: () => Effect.void }))
+      yield* sdk.register(EffectPlugin.define({ id: "duplicate-id", effect: () => Effect.void }))
+      yield* withLocation(
+        undefined,
+        Effect.gen(function* () {
+          yield* ready().pipe(Effect.timeout("2 seconds"))
+        }),
+      )
+    }),
+  )
 })
 
 const ready = Effect.fnUntraced(function* () {