diff --git a/tests/v1/engine/test_engine_core_client.py b/tests/v1/engine/test_engine_core_client.py
index c82285639aee4..37eb869fe69a3 100644
--- a/tests/v1/engine/test_engine_core_client.py
+++ b/tests/v1/engine/test_engine_core_client.py
@@ -121,8 +121,13 @@ async def loop_until_fully_done_async(client: EngineCoreClient, outputs: dict):
 
 
 # Dummy utility function to monkey-patch into engine core.
-def echo(self, msg: str, err_msg: Optional[str] = None) -> str:
+def echo(self,
+         msg: str,
+         err_msg: Optional[str] = None,
+         sleep: Optional[float] = None) -> str:
     print(f"echo util function called: {msg}, {err_msg}")
+    if sleep is not None:
+        time.sleep(sleep)
     if err_msg is not None:
         raise ValueError(err_msg)
     return msg
@@ -289,6 +294,23 @@ async def test_engine_core_client_asyncio(monkeypatch: pytest.MonkeyPatch):
                 await core_client.call_utility_async("echo", None, "help!")
 
             assert str(e_info.value) == "Call to echo method failed: help!"
+
+            # Test that cancelling the utility call doesn't destabilize the
+            # engine.
+            util_task = asyncio.create_task(
+                core_client.call_utility_async("echo", "testarg2", None,
+                                               0.5))  # sleep for 0.5 sec
+            await asyncio.sleep(0.05)
+            cancelled = util_task.cancel()
+            assert cancelled
+
+            # Ensure client is still functional. The engine runs utility
+            # methods in a single thread so this request won't be processed
+            # until the cancelled sleeping one is complete.
+            result = await asyncio.wait_for(core_client.call_utility_async(
+                "echo", "testarg3"),
+                                            timeout=1.0)
+            assert result == "testarg3"
         finally:
             client.shutdown()
 
diff --git a/vllm/v1/engine/core_client.py b/vllm/v1/engine/core_client.py
index 29ee0a9dfb1e2..079dd9a7d38d1 100644
--- a/vllm/v1/engine/core_client.py
+++ b/vllm/v1/engine/core_client.py
@@ -574,13 +574,22 @@ class MPClient(EngineCoreClient):
 
 def _process_utility_output(output: UtilityOutput,
                             utility_results: dict[int, AnyFuture]):
-    """Set the result from a utility method in the waiting future"""
+    """Set the result from a utility method in the waiting future."""
     future = utility_results.pop(output.call_id)
-    if output.failure_message is not None:
-        future.set_exception(Exception(output.failure_message))
-    else:
-        assert output.result is not None
-        future.set_result(output.result.result)
+    failure_message = output.failure_message
+    try:
+        if failure_message is not None:
+            future.set_exception(Exception(failure_message))
+        else:
+            assert output.result is not None
+            future.set_result(output.result.result)
+    except asyncio.InvalidStateError:
+        # This can happen if the future is cancelled due to the
+        # original calling task being cancelled.
+        if failure_message is not None:
+            logger.error(
+                "Cancelled call to utility method failed "
+                "with error: %s", failure_message)
 
 
 class SyncMPClient(MPClient):