diff --git a/build/package/docker/postgres.dockerfile b/build/package/docker/postgres.dockerfile
index 9306611aa..f189c08cb 100644
--- a/build/package/docker/postgres.dockerfile
+++ b/build/package/docker/postgres.dockerfile
@@ -1,4 +1,4 @@
-FROM postgres:16.4
+FROM postgres:16.5
 
 # Inject the init script that makes the kwild superuser and a kwild database
 # owned by that kwild user, as well as a kwil_test_db database for tests.
@@ -14,4 +14,5 @@ COPY ./pginit.sql /docker-entrypoint-initdb.d/init.sql
 
 # Override the default entrypoint/command to include the additional configuration
 CMD ["postgres", "-c", "wal_level=logical", "-c", "max_wal_senders=10", "-c", "max_replication_slots=10", \
-	"-c", "track_commit_timestamp=true", "-c", "wal_sender_timeout=0", "-c", "max_prepared_transactions=2"]
+	"-c", "track_commit_timestamp=true", "-c", "wal_sender_timeout=0", "-c", "max_prepared_transactions=2", \
+	"-c", "max_locks_per_transaction=256", "-c", "max_connections=128"]
diff --git a/common/sql/sql.go b/common/sql/sql.go
index 088ea8197..8f4972d48 100644
--- a/common/sql/sql.go
+++ b/common/sql/sql.go
@@ -5,13 +5,30 @@ package sql
 import (
 	"context"
 	"errors"
+	"strings"
+
+	"github.com/jackc/pgx/v5/pgconn"
 )
 
 var (
 	ErrNoTransaction = errors.New("no transaction")
 	ErrNoRows        = errors.New("no rows in result set")
+	ErrDBFailure     = errors.New("database failure") // fatal! should kill node
 )
 
+func IsFatalDBError(err error) bool {
+	if errors.Is(err, ErrDBFailure) {
+		return true
+	}
+	// In case it wasn't already joined with ErrDBFailure, catch a fatal PgError by code.
+	var pgErr *pgconn.PgError
+	return errors.As(err, &pgErr) &&
+		(strings.HasPrefix(pgErr.Code, "53") || // Class 53 — Insufficient Resources
+			strings.HasPrefix(pgErr.Code, "58") || // Class 58 — System Error (errors external to PostgreSQL itself)
+			strings.HasPrefix(pgErr.Code, "XX")) // Class XX — Internal Error (internal_error, data_corrupted, index_corrupted)
+
+}
+
 // ResultSet is the result of a query or execution.
 // It contains the returned columns and the rows.
 type ResultSet struct {
diff --git a/common/sql/sql_test.go b/common/sql/sql_test.go
new file mode 100644
index 000000000..4b778765e
--- /dev/null
+++ b/common/sql/sql_test.go
@@ -0,0 +1,65 @@
+package sql
+
+import (
+	"errors"
+	"testing"
+
+	"github.com/jackc/pgx/v5/pgconn"
+)
+
+func TestIsFatalDBError(t *testing.T) {
+	tests := []struct {
+		name string
+		err  error
+		want bool
+	}{
+		{
+			name: "nil error",
+			err:  nil,
+			want: false,
+		},
+		{
+			name: "ErrDBFailure",
+			err:  ErrDBFailure,
+			want: true,
+		},
+		{
+			name: "wrapped ErrDBFailure",
+			err:  errors.Join(errors.New("wrapped"), ErrDBFailure),
+			want: true,
+		},
+		{
+			name: "insufficient resources error",
+			err:  &pgconn.PgError{Code: "53100"},
+			want: true,
+		},
+		{
+			name: "system error",
+			err:  &pgconn.PgError{Code: "58000"},
+			want: true,
+		},
+		{
+			name: "internal error",
+			err:  &pgconn.PgError{Code: "XX000"},
+			want: true,
+		},
+		{
+			name: "non-fatal pg error",
+			err:  &pgconn.PgError{Code: "23505"},
+			want: false,
+		},
+		{
+			name: "generic error",
+			err:  errors.New("some error"),
+			want: false,
+		},
+	}
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			if got := IsFatalDBError(tt.err); got != tt.want {
+				t.Errorf("IsFatalDBError() = %v, want %v", got, tt.want)
+			}
+		})
+	}
+}
diff --git a/internal/abci/abci.go b/internal/abci/abci.go
index 82e0e3239..bdedbacf0 100644
--- a/internal/abci/abci.go
+++ b/internal/abci/abci.go
@@ -676,6 +676,13 @@ func (a *AbciApp) FinalizeBlock(ctx context.Context, req *abciTypes.RequestFinal
 
 		abciRes := &abciTypes.ExecTxResult{}
 		if txRes.Error != nil {
+			// Ensure the node halt if a fatal DB error occurs (e.g. out of memory/disk,
+			// corruption, etc.), rather than allowing non-determinism with a failed txn.
+			if sql.IsFatalDBError(txRes.Error) {
+				return nil, txRes.Error
+			}
+
+			// If the transaction failed for user reasons, we still want to include it in the block.
 			abciRes.Log = txRes.Error.Error()
 			a.log.Debug("failed to execute transaction", zap.Error(txRes.Error))
 		} else {
diff --git a/internal/sql/pg/query.go b/internal/sql/pg/query.go
index d9d7a9505..b79685990 100644
--- a/internal/sql/pg/query.go
+++ b/internal/sql/pg/query.go
@@ -171,6 +171,9 @@ func query(ctx context.Context, oidToDataType map[uint32]*datatype, cq connQuery
 
 	rows, err := q(ctx, stmt, args...)
 	if err != nil {
+		if sql.IsFatalDBError(err) {
+			return nil, errors.Join(err, sql.ErrDBFailure)
+		}
 		if errors.Is(err, pgx.ErrNoRows) {
 			return nil, sql.ErrNoRows
 		}
@@ -199,6 +202,9 @@ func query(ctx context.Context, oidToDataType map[uint32]*datatype, cq connQuery
 		}
 		return decodeFromPG(pgxVals, oids, oidToDataType)
 	})
+	if sql.IsFatalDBError(err) { // would probably happen above when executing, but maybe here too
+		return nil, errors.Join(err, sql.ErrDBFailure)
+	}
 	if errors.Is(err, pgx.ErrNoRows) {
 		return nil, sql.ErrNoRows
 	}
@@ -236,10 +242,13 @@ func queryTx(ctx context.Context, oidToDataType map[uint32]*datatype, dbTx txBeg
 	return resSet, err
 }
 
-func queryRowFunc(ctx context.Context, conn *pgx.Conn, sql string,
+func queryRowFunc(ctx context.Context, conn *pgx.Conn, stmt string,
 	scans []any, fn func() error, args ...any) error {
-	rows, _ := conn.Query(ctx, sql, args...)
+	rows, _ := conn.Query(ctx, stmt, args...)
 	_, err := pgx.ForEachRow(rows, scans, fn)
+	if sql.IsFatalDBError(err) {
+		err = errors.Join(err, sql.ErrDBFailure)
+	}
 	return err
 }
 
diff --git a/internal/sql/pg/tx.go b/internal/sql/pg/tx.go
index 906f11cdd..44ee5c5e9 100644
--- a/internal/sql/pg/tx.go
+++ b/internal/sql/pg/tx.go
@@ -4,6 +4,7 @@ package pg
 
 import (
 	"context"
+	"errors"
 
 	"github.com/jackc/pgx/v5"
 	common "github.com/kwilteam/kwil-db/common/sql"
@@ -44,13 +45,21 @@ func (tx *nestedTx) BeginTx(ctx context.Context) (common.Tx, error) {
 }
 
 func (tx *nestedTx) Query(ctx context.Context, stmt string, args ...any) (*common.ResultSet, error) {
-	return query(ctx, tx.oidTypes, tx.Tx, stmt, args...)
+	resSet, err := query(ctx, tx.oidTypes, tx.Tx, stmt, args...)
+	if errors.Is(err, common.ErrDBFailure) {
+		tx.Tx.Conn().Close(ctx) // do not allow the outer txn to commit!
+	}
+	return resSet, err
 }
 
 // Execute is now literally identical to Query in both semantics and syntax. We
 // might remove one or the other in this context (transaction methods).
 func (tx *nestedTx) Execute(ctx context.Context, stmt string, args ...any) (*common.ResultSet, error) {
-	return query(ctx, tx.oidTypes, tx.Tx, stmt, args...)
+	resSet, err := query(ctx, tx.oidTypes, tx.Tx, stmt, args...)
+	if errors.Is(err, common.ErrDBFailure) {
+		tx.Tx.Conn().Close(ctx) // do not allow the outer txn to commit!
+	}
+	return resSet, err
 }
 
 // QueryScanFn satisfies sql.QueryScanner.
@@ -58,7 +67,11 @@ func (tx *nestedTx) QueryScanFn(ctx context.Context, sql string,
 	scans []any, fn func() error, args ...any) error {
 
 	conn := tx.Conn()
-	return queryRowFunc(ctx, conn, sql, scans, fn, args...)
+	err := queryRowFunc(ctx, conn, sql, scans, fn, args...)
+	if errors.Is(err, common.ErrDBFailure) {
+		tx.Tx.Conn().Close(ctx) // do not allow the outer txn to commit!
+	}
+	return err
 }
 
 // AccessMode returns the access mode of the transaction.