diff --git a/internal/controllers/clusterextension_controller.go b/internal/controllers/clusterextension_controller.go
index af6c67b65..20bfd8837 100644
--- a/internal/controllers/clusterextension_controller.go
+++ b/internal/controllers/clusterextension_controller.go
@@ -291,6 +291,10 @@ func (r *ClusterExtensionReconciler) reconcile(ctx context.Context, ext *ocv1alp
 	// to ensure exponential backoff can occur:
 	//   - Permission errors (it is not possible to watch changes to permissions.
 	//     The only way to eventually recover from permission errors is to keep retrying).
+	installedBundle = &InstalledBundle{
+		BundleMetadata: resolvedBundleMetadata,
+		Image:          resolvedBundle.Image,
+	}
 	managedObjs, _, err := r.Applier.Apply(ctx, unpackResult.Bundle, ext, objLbls, storeLbls)
 	if err != nil {
 		setStatusProgressing(ext, wrapErrorWithResolutionInfo(resolvedBundleMetadata, err))
@@ -299,10 +303,6 @@ func (r *ClusterExtensionReconciler) reconcile(ctx context.Context, ext *ocv1alp
 		return ctrl.Result{}, err
 	}
 
-	installedBundle = &InstalledBundle{
-		BundleMetadata: resolvedBundleMetadata,
-		Image:          resolvedBundle.Image,
-	}
 	// Successful install
 	setInstalledStatusFromBundle(ext, installedBundle, nil)
 
diff --git a/internal/controllers/clusterextension_controller_test.go b/internal/controllers/clusterextension_controller_test.go
index a8ea2192b..e4cfa4444 100644
--- a/internal/controllers/clusterextension_controller_test.go
+++ b/internal/controllers/clusterextension_controller_test.go
@@ -322,7 +322,7 @@ func TestClusterExtensionResolutionAndUnpackSuccessfulApplierFails(t *testing.T)
 
 	t.Log("By checking the status fields")
 	expectedBundleMetadata := ocv1alpha1.BundleMetadata{Name: "prometheus.v1.0.0", Version: "1.0.0"}
-	require.Empty(t, clusterExtension.Status.Install)
+	require.NotEmpty(t, clusterExtension.Status.Install)
 
 	t.Log("By checking the expected installed conditions")
 	installedCond := apimeta.FindStatusCondition(clusterExtension.Status.Conditions, ocv1alpha1.TypeInstalled)
@@ -428,8 +428,8 @@ func TestClusterExtensionApplierFailsWithBundleInstalled(t *testing.T) {
 	t.Log("By checking the expected installed conditions")
 	installedCond := apimeta.FindStatusCondition(clusterExtension.Status.Conditions, ocv1alpha1.TypeInstalled)
 	require.NotNil(t, installedCond)
-	require.Equal(t, metav1.ConditionTrue, installedCond.Status)
-	require.Equal(t, ocv1alpha1.ReasonSucceeded, installedCond.Reason)
+	require.Equal(t, metav1.ConditionFalse, installedCond.Status)
+	require.Equal(t, ocv1alpha1.ReasonFailed, installedCond.Reason)
 
 	t.Log("By checking the expected progressing conditions")
 	progressingCond := apimeta.FindStatusCondition(clusterExtension.Status.Conditions, ocv1alpha1.TypeProgressing)
diff --git a/internal/controllers/common_controller.go b/internal/controllers/common_controller.go
index 2509266ae..a2f529171 100644
--- a/internal/controllers/common_controller.go
+++ b/internal/controllers/common_controller.go
@@ -35,7 +35,12 @@ func setInstalledStatusFromBundle(ext *ocv1alpha1.ClusterExtension, installedBun
 			Bundle: installedBundle.BundleMetadata,
 		}
 		setInstallStatus(ext, installStatus)
-		setInstalledStatusConditionSuccess(ext, fmt.Sprintf("Installed bundle %s successfully", installedBundle.Image))
+		// If both conditions occur, this is a failed Apply when a bundle was already installed
+		if err != nil {
+			setInstalledStatusConditionFailed(ext, err.Error())
+		} else {
+			setInstalledStatusConditionSuccess(ext, fmt.Sprintf("Installed bundle %s successfully", installedBundle.Image))
+		}
 		return
 	}
 	// Nothing is installed, if there's no error, it means no installed bundle was found