diff --git a/src/aiida/engine/processes/process.py b/src/aiida/engine/processes/process.py
index dfe385b530..b6d83c67f0 100644
--- a/src/aiida/engine/processes/process.py
+++ b/src/aiida/engine/processes/process.py
@@ -414,8 +414,19 @@ def on_create(self) -> None:
     @override
     def on_entered(self, from_state: Optional[plumpy.process_states.State]) -> None:
         """After entering a new state, save a checkpoint and update the latest process state change timestamp."""
+        from plumpy import ProcessState
+
         from aiida.engine.utils import set_process_state_change_timestamp
 
+        super().on_entered(from_state)
+
+        if self._state.LABEL is ProcessState.EXCEPTED:
+            # The process is already excepted so simply update the process state on the node and let the process
+            # complete the state transition to the terminal state. If another exception is raised during this exception
+            # handling, the process transitioning is cut short and never makes it to the terminal state.
+            self.node.set_process_state(self._state.LABEL)
+            return
+
         # For reasons unknown, it is important to update the outputs first, before doing anything else, otherwise there
         # is the risk that certain outputs do not get attached before the process reaches a terminal state. Nevertheless
         # we need to guarantee that the process state gets updated even if the ``update_outputs`` call excepts, for
@@ -431,7 +442,6 @@ def on_entered(self, from_state: Optional[plumpy.process_states.State]) -> None:
 
         self._save_checkpoint()
         set_process_state_change_timestamp(self.node)
-        super().on_entered(from_state)
 
     @override
     def on_terminated(self) -> None:
diff --git a/tests/engine/test_work_chain.py b/tests/engine/test_work_chain.py
index e7288a3806..1fbb578b2a 100644
--- a/tests/engine/test_work_chain.py
+++ b/tests/engine/test_work_chain.py
@@ -422,6 +422,7 @@ def illegal(self):
             orm.QueryBuilder().append(orm.ProcessNode, tag='node').order_by({'node': {'id': 'desc'}}).first(flat=True)
         )
         assert node.is_excepted
+        assert node.is_sealed
         assert 'ValueError: Workflow<IllegalWorkChain> tried returning an unstored `Data` node.' in node.exception
 
     def test_same_input_node(self):