diff --git a/share-api/src/Share/BackgroundJobs/Diffs/CausalDiffs.hs b/share-api/src/Share/BackgroundJobs/Diffs/CausalDiffs.hs
index 25439b2d..54cd7e39 100644
--- a/share-api/src/Share/BackgroundJobs/Diffs/CausalDiffs.hs
+++ b/share-api/src/Share/BackgroundJobs/Diffs/CausalDiffs.hs
@@ -25,6 +25,7 @@ import Share.Web.Authorization qualified as AuthZ
 import Share.Web.Errors (EntityMissing (..))
 import Share.Web.Share.Diffs.Impl qualified as Diffs
 import System.Clock qualified as Clock
+import UnliftIO qualified
 
 -- | Check every 10 minutes if we haven't heard on the notifications channel.
 -- Just in case we missed a notification.
@@ -50,19 +51,32 @@ processDiffs authZReceipt unisonRuntime = do
 
 -- | Process a diff, then return whether or not we did any work.
 processDiff :: AuthZ.AuthZReceipt -> CR.UnisonRuntime -> Background Bool
-processDiff authZReceipt unisonRuntime = do
-  result <- Trace.withSpan "background:causal-diffs:process-diff" mempty $
-    PG.runTransactionMode PG.RepeatableRead PG.ReadWrite do
-      DQ.claimCausalDiff >>= \case
-        Nothing -> pure Nothing
-        Just causalDiffInfo -> withTags (causalDiffTags causalDiffInfo) do
-          startTime <- PG.transactionUnsafeIO (Clock.getTime Clock.Monotonic)
-          result <- PG.catchTransaction (maybeComputeAndStoreCausalDiff authZReceipt unisonRuntime causalDiffInfo)
-          DQ.deleteClaimedCausalDiff causalDiffInfo
-          pure (Just (causalDiffInfo, startTime, result))
+processDiff authZReceipt unisonRuntime = Trace.withSpan "background:causal-diffs:process-diff" mempty $ do
+  pendingCausalDiffVar <- liftIO $ UnliftIO.newEmptyMVar
+  result <- UnliftIO.tryAny $ PG.runTransactionMode PG.RepeatableRead PG.ReadWrite do
+    DQ.claimCausalDiff >>= \case
+      Nothing -> pure Nothing
+      Just causalDiffInfo -> withTags (causalDiffTags causalDiffInfo) do
+        PG.transactionUnsafeIO $ UnliftIO.tryPutMVar pendingCausalDiffVar causalDiffInfo
+        startTime <- PG.transactionUnsafeIO (Clock.getTime Clock.Monotonic)
+        result <- PG.catchTransaction (maybeComputeAndStoreCausalDiff authZReceipt unisonRuntime causalDiffInfo)
+        DQ.deleteClaimedCausalDiff causalDiffInfo
+        pure (Just (causalDiffInfo, startTime, result))
   case result of
-    Nothing -> pure False
-    Just (cdi, startTime, result) -> do
+    -- The transaction failed with an exception.
+    -- One possible cause is an unknown builtin.
+    -- We should report it and mark it as invalid so we don't keep retrying it.
+    Left err -> do
+      mCausalDiffInfo <- liftIO $ UnliftIO.tryTakeMVar pendingCausalDiffVar
+      case mCausalDiffInfo of
+        Nothing -> pure ()
+        Just cdi -> withTags (causalDiffTags cdi) do
+          reportError err
+          PG.runTransaction $ DQ.markCausalDiffInvalid (tShow err) cdi
+      -- Continue processing other diffs.
+      pure True
+    Right Nothing -> pure False
+    Right (Just (cdi, startTime, result)) -> do
       let tags = causalDiffTags cdi
       withTags tags do
         case result of
diff --git a/share-api/src/Share/BackgroundJobs/Diffs/Queries.hs b/share-api/src/Share/BackgroundJobs/Diffs/Queries.hs
index be30dc35..0ffbb325 100644
--- a/share-api/src/Share/BackgroundJobs/Diffs/Queries.hs
+++ b/share-api/src/Share/BackgroundJobs/Diffs/Queries.hs
@@ -3,6 +3,7 @@ module Share.BackgroundJobs.Diffs.Queries
     submitCausalsToBeDiffed,
     claimCausalDiff,
     deleteClaimedCausalDiff,
+    markCausalDiffInvalid,
   )
 where
 
@@ -84,12 +85,25 @@ claimCausalDiff = do
     [sql|
       SELECT from_causal_id, to_causal_id, from_codebase_owner, to_codebase_owner
       FROM causal_diff_queue
+        WHERE error IS NULL
       ORDER BY created_at ASC
       LIMIT 1
       -- Skip any that are being synced by other workers.
       FOR UPDATE SKIP LOCKED
     |]
 
+markCausalDiffInvalid :: Text -> CausalDiffInfo -> Transaction e ()
+markCausalDiffInvalid err CausalDiffInfo {fromCausalId, toCausalId, fromCodebaseOwner, toCodebaseOwner} =
+  execute_
+    [sql|
+      UPDATE causal_diff_queue
+      SET error = #{err}
+      WHERE causal_diff_queue.from_causal_id = #{fromCausalId}
+        AND causal_diff_queue.to_causal_id = #{toCausalId}
+        AND causal_diff_queue.from_codebase_owner = #{fromCodebaseOwner}
+        AND causal_diff_queue.to_codebase_owner = #{toCodebaseOwner}
+    |]
+
 deleteClaimedCausalDiff :: CausalDiffInfo -> Transaction e ()
 deleteClaimedCausalDiff CausalDiffInfo {fromCausalId, toCausalId, fromCodebaseOwner, toCodebaseOwner} =
   execute_
diff --git a/sql/2026-01-09_causal-diff-queue-deadletter.sql b/sql/2026-01-09_causal-diff-queue-deadletter.sql
new file mode 100644
index 00000000..6d357d52
--- /dev/null
+++ b/sql/2026-01-09_causal-diff-queue-deadletter.sql
@@ -0,0 +1,7 @@
+-- Add nullable error column to causal_diff_queue table
+ALTER TABLE causal_diff_queue
+  ADD COLUMN error TEXT;
+
+CREATE INDEX IF NOT EXISTS idx_causal_diff_queue_processing_order
+  ON causal_diff_queue (created_at ASC)
+  WHERE error IS NULL;