diff --git a/spec/observables/dom/ajax-spec.ts b/spec/observables/dom/ajax-spec.ts
index 8ef53dc638d..143e90227e7 100644
--- a/spec/observables/dom/ajax-spec.ts
+++ b/spec/observables/dom/ajax-spec.ts
@@ -229,6 +229,34 @@ describe('Observable.ajax', () => {
     expect(complete).to.be.true;
   });
 
+  it('should fail if fails to parse response', () => {
+    let error;
+    const obj = {
+      url: '/flibbertyJibbet',
+      responseType: 'json',
+      method: ''
+    };
+
+    Rx.Observable.ajax(obj)
+      .subscribe((x: any) => {
+        throw 'should not next';
+      }, (err: any) => {
+        error = err;
+      }, () => {
+        throw 'should not complete';
+      });
+
+    MockXMLHttpRequest.mostRecent.respondWith({
+      'status': 207,
+      'contentType': '',
+      'responseType': '',
+      'responseText': 'Wee! I am text, but should be valid JSON!'
+    });
+
+    expect(error instanceof SyntaxError).to.be.true;
+    expect(error.message).to.equal('Unexpected token W in JSON at position 0');
+  });
+
   it('should fail on 404', () => {
     let error;
     const obj = {
@@ -294,6 +322,36 @@ describe('Observable.ajax', () => {
     expect(error.status).to.equal(300);
   });
 
+  it('should fail if fails to parse error response', () => {
+    let error;
+    const obj = {
+      url: '/flibbertyJibbet',
+      normalizeError: (e: any, xhr: any, type: any) => {
+        return xhr.response || xhr.responseText;
+      },
+      responseType: 'json',
+      method: ''
+    };
+
+    Rx.Observable.ajax(obj).subscribe(x => {
+      throw 'should not next';
+    }, (err: any) => {
+      error = err;
+    }, () => {
+      throw 'should not complete';
+    });
+
+    MockXMLHttpRequest.mostRecent.respondWith({
+      'status': 404,
+      'contentType': '',
+      'responseType': '',
+      'responseText': 'Wee! I am text, but should be valid JSON!'
+    });
+
+    expect(error instanceof SyntaxError).to.be.true;
+    expect(error.message).to.equal('Unexpected token W in JSON at position 0');
+  });
+
   it('should succeed no settings', () => {
     const expected = JSON.stringify({ foo: 'bar' });
 
@@ -1037,8 +1095,6 @@ class MockXMLHttpRequest {
   protected defaultResponseValue() {
     if (this.async === false) {
       this.response = this.responseText;
-    } else {
-      throw new Error('unhandled type "' + this.responseType + '"');
     }
   }
 
@@ -1054,8 +1110,9 @@ class MockXMLHttpRequest {
     };
     this.status = response.status || 200;
     this.responseText = response.responseText;
+    const responseType = response.responseType !== undefined ? response.responseType : this.responseType;
     if (!('response' in response)) {
-      switch (this.responseType) {
+      switch (responseType) {
       case 'json':
         this.jsonResponseValue(response);
         break;
diff --git a/src/observable/dom/AjaxObservable.ts b/src/observable/dom/AjaxObservable.ts
index 427d1f1eee0..8f6b1d9e3d5 100644
--- a/src/observable/dom/AjaxObservable.ts
+++ b/src/observable/dom/AjaxObservable.ts
@@ -217,8 +217,11 @@ export class AjaxSubscriber<T> extends Subscriber<Event> {
     this.done = true;
     const { xhr, request, destination } = this;
     const response = new AjaxResponse(e, xhr, request);
-
-    destination.next(response);
+    if (response.response === errorObject) {
+      destination.error(errorObject.e);
+    } else {
+      destination.next(response);
+    }
   }
 
   private send(): XMLHttpRequest {
@@ -316,7 +319,12 @@ export class AjaxSubscriber<T> extends Subscriber<Event> {
       if (progressSubscriber) {
         progressSubscriber.error(e);
       }
-      subscriber.error(new AjaxTimeoutError(this, request)); //TODO: Make betterer.
+      const ajaxTimeoutError = new AjaxTimeoutError(this, request); //TODO: Make betterer.
+      if (ajaxTimeoutError.response === errorObject) {
+        subscriber.error(errorObject.e);
+      } else {
+        subscriber.error(ajaxTimeoutError);
+      }
     };
     xhr.ontimeout = xhrTimeout;
     (<any>xhrTimeout).request = request;
@@ -342,7 +350,12 @@ export class AjaxSubscriber<T> extends Subscriber<Event> {
         if (progressSubscriber) {
           progressSubscriber.error(e);
         }
-        subscriber.error(new AjaxError('ajax error', this, request));
+        const ajaxError = new AjaxError('ajax error', this, request);
+        if (ajaxError.response === errorObject) {
+          subscriber.error(errorObject.e);
+        } else {
+          subscriber.error(ajaxError);
+        }
       };
       xhr.onerror = xhrError;
       (<any>xhrError).request = request;
@@ -375,7 +388,12 @@ export class AjaxSubscriber<T> extends Subscriber<Event> {
           if (progressSubscriber) {
             progressSubscriber.error(e);
           }
-          subscriber.error(new AjaxError('ajax error ' + status, this, request));
+          const ajaxError = new AjaxError('ajax error ' + status, this, request);
+          if (ajaxError.response === errorObject) {
+            subscriber.error(errorObject.e);
+          } else {
+            subscriber.error(ajaxError);
+          }
         }
       }
     };
@@ -458,15 +476,19 @@ export class AjaxError extends Error {
   }
 }
 
+function parseJson(xhr: XMLHttpRequest) {
+  if ('response' in xhr) {
+    //IE does not support json as responseType, parse it internally
+    return xhr.responseType ? xhr.response : JSON.parse(xhr.response || xhr.responseText || 'null');
+  } else {
+    return JSON.parse(xhr.responseText || 'null');
+  }
+}
+
 function parseXhrResponse(responseType: string, xhr: XMLHttpRequest) {
   switch (responseType) {
     case 'json':
-        if ('response' in xhr) {
-          //IE does not support json as responseType, parse it internally
-          return xhr.responseType ? xhr.response : JSON.parse(xhr.response || xhr.responseText || 'null');
-        } else {
-          return JSON.parse(xhr.responseText || 'null');
-        }
+        return tryCatch(parseJson)(xhr);
       case 'xml':
         return xhr.responseXML;
       case 'text':