diff --git a/changelog.d/17127.bugfix b/changelog.d/17127.bugfix
new file mode 100644
index 000000000..93c731409
--- /dev/null
+++ b/changelog.d/17127.bugfix
@@ -0,0 +1 @@
+Fix a bug which meant that to-device messages received over federation could be dropped when the server was under load or networking problems caused problems between Synapse processes or the database.
diff --git a/synapse/federation/federation_server.py b/synapse/federation/federation_server.py
index 65d3a661f..7ffc650aa 100644
--- a/synapse/federation/federation_server.py
+++ b/synapse/federation/federation_server.py
@@ -546,7 +546,25 @@ class FederationServer(FederationBase):
                 edu_type=edu_dict["edu_type"],
                 content=edu_dict["content"],
             )
-            await self.registry.on_edu(edu.edu_type, origin, edu.content)
+            try:
+                await self.registry.on_edu(edu.edu_type, origin, edu.content)
+            except Exception:
+                # If there was an error handling the EDU, we must reject the
+                # transaction.
+                #
+                # Some EDU types (notably, to-device messages) are, despite their name,
+                # expected to be reliable; if we weren't able to do something with it,
+                # we have to tell the sender that, and the only way the protocol gives
+                # us to do so is by sending an HTTP error back on the transaction.
+                #
+                # We log the exception now, and then raise a new SynapseError to cause
+                # the transaction to be failed.
+                logger.exception("Error handling EDU of type %s", edu.edu_type)
+                raise SynapseError(500, f"Error handing EDU of type {edu.edu_type}")
+
+                # TODO: if the first EDU fails, we should probably abort the whole
+                #   thing rather than carrying on with the rest of them. That would
+                #   probably be best done inside `concurrently_execute`.
 
         await concurrently_execute(
             _process_edu,
@@ -1414,12 +1432,7 @@ class FederationHandlerRegistry:
         handler = self.edu_handlers.get(edu_type)
         if handler:
             with start_active_span_from_edu(content, "handle_edu"):
-                try:
-                    await handler(origin, content)
-                except SynapseError as e:
-                    logger.info("Failed to handle edu %r: %r", edu_type, e)
-                except Exception:
-                    logger.exception("Failed to handle edu %r", edu_type)
+                await handler(origin, content)
             return
 
         # Check if we can route it somewhere else that isn't us
@@ -1428,17 +1441,12 @@ class FederationHandlerRegistry:
             # Pick an instance randomly so that we don't overload one.
             route_to = random.choice(instances)
 
-            try:
-                await self._send_edu(
-                    instance_name=route_to,
-                    edu_type=edu_type,
-                    origin=origin,
-                    content=content,
-                )
-            except SynapseError as e:
-                logger.info("Failed to handle edu %r: %r", edu_type, e)
-            except Exception:
-                logger.exception("Failed to handle edu %r", edu_type)
+            await self._send_edu(
+                instance_name=route_to,
+                edu_type=edu_type,
+                origin=origin,
+                content=content,
+            )
             return
 
         # Oh well, let's just log and move on.
diff --git a/synapse/handlers/devicemessage.py b/synapse/handlers/devicemessage.py
index 2b034dcbb..79be7c97c 100644
--- a/synapse/handlers/devicemessage.py
+++ b/synapse/handlers/devicemessage.py
@@ -104,6 +104,9 @@ class DeviceMessageHandler:
         """
         Handle receiving to-device messages from remote homeservers.
 
+        Note that any errors thrown from this method will cause the federation /send
+        request to receive an error response.
+
         Args:
             origin: The remote homeserver.
             content: The JSON dictionary containing the to-device messages.
diff --git a/tests/federation/test_federation_server.py b/tests/federation/test_federation_server.py
index 36684c2c9..88261450b 100644
--- a/tests/federation/test_federation_server.py
+++ b/tests/federation/test_federation_server.py
@@ -67,6 +67,23 @@ class FederationServerTests(unittest.FederatingHomeserverTestCase):
         self.assertEqual(HTTPStatus.BAD_REQUEST, channel.code, channel.result)
         self.assertEqual(channel.json_body["errcode"], "M_NOT_JSON")
 
+    def test_failed_edu_causes_500(self) -> None:
+        """If the EDU handler fails, /send should return a 500."""
+
+        async def failing_handler(_origin: str, _content: JsonDict) -> None:
+            raise Exception("bleh")
+
+        self.hs.get_federation_registry().register_edu_handler(
+            "FAIL_EDU_TYPE", failing_handler
+        )
+
+        channel = self.make_signed_federation_request(
+            "PUT",
+            "/_matrix/federation/v1/send/txn",
+            {"edus": [{"edu_type": "FAIL_EDU_TYPE", "content": {}}]},
+        )
+        self.assertEqual(500, channel.code, channel.result)
+
 
 class ServerACLsTestCase(unittest.TestCase):
     def test_blocked_server(self) -> None:
diff --git a/tests/federation/transport/test_server.py b/tests/federation/transport/test_server.py
index 190b79bf2..023736999 100644
--- a/tests/federation/transport/test_server.py
+++ b/tests/federation/transport/test_server.py
@@ -59,7 +59,14 @@ class RoomDirectoryFederationTests(unittest.FederatingHomeserverTestCase):
             "/_matrix/federation/v1/send/txn_id_1234/",
             content={
                 "edus": [
-                    {"edu_type": EduTypes.DEVICE_LIST_UPDATE, "content": {"foo": "bar"}}
+                    {
+                        "edu_type": EduTypes.DEVICE_LIST_UPDATE,
+                        "content": {
+                            "device_id": "QBUAZIFURK",
+                            "stream_id": 0,
+                            "user_id": "@user:id",
+                        },
+                    },
                 ],
                 "pdus": [],
             },