diff --git a/posthog/client.py b/posthog/client.py
index 6470fd3e..64db985d 100644
--- a/posthog/client.py
+++ b/posthog/client.py
@@ -1335,6 +1335,13 @@ def _fetch_feature_flags_from_api(self):
                 self.log.error(
                     "[FEATURE FLAGS] Error loading feature flags: To use feature flags, please set a valid personal_api_key. More information: https://posthog.com/docs/api/overview"
                 )
+                self.feature_flags = []
+                self.group_type_mapping = {}
+                self.cohorts = {}
+
+                if self.flag_cache:
+                    self.flag_cache.clear()
+
                 if self.debug:
                     raise APIError(
                         status=401,
diff --git a/posthog/test/test_client.py b/posthog/test/test_client.py
index fe0eeab6..57c06867 100644
--- a/posthog/test/test_client.py
+++ b/posthog/test/test_client.py
@@ -479,6 +479,20 @@ def test_load_feature_flags_quota_limited(self, patch_get):
             self.assertEqual(client.cohorts, {})
             self.assertIn("PostHog feature flags quota limited", logs.output[0])
 
+    @mock.patch("posthog.client.get")
+    def test_load_feature_flags_unauthorized(self, patch_get):
+        patch_get.side_effect = APIError(401, "Unauthorized")
+
+        client = Client(FAKE_TEST_API_KEY, personal_api_key="test")
+        with self.assertLogs("posthog", level="ERROR") as logs:
+            client._load_feature_flags()
+
+            self.assertEqual(client.feature_flags, [])
+            self.assertEqual(client.feature_flags_by_key, {})
+            self.assertEqual(client.group_type_mapping, {})
+            self.assertEqual(client.cohorts, {})
+            self.assertIn("please set a valid personal_api_key", logs.output[0])
+
     @mock.patch("posthog.client.flags")
     def test_dont_override_capture_with_local_flags(self, patch_flags):
         patch_flags.return_value = {"featureFlags": {"beta-feature": "random-variant"}}