diff --git a/litellm/proxy/hooks/proxy_track_cost_callback.py b/litellm/proxy/hooks/proxy_track_cost_callback.py
index 9ea6c65eeb5..c1e039aff51 100644
--- a/litellm/proxy/hooks/proxy_track_cost_callback.py
+++ b/litellm/proxy/hooks/proxy_track_cost_callback.py
@@ -443,6 +443,14 @@ async def _update_database_and_spend_counters(
                 verbose_proxy_logger.exception(
                     "Failed to release budget reservation after database update failed"
                 )
+                try:
+                    await _invalidate_budget_reservation_counters(
+                        budget_reservation=budget_reservation
+                    )
+                except Exception:
+                    verbose_proxy_logger.exception(
+                        "Failed to invalidate budget reservation counters after release failed"
+                    )
         raise
 
     try:
diff --git a/tests/test_litellm/proxy/hooks/test_proxy_track_cost_callback.py b/tests/test_litellm/proxy/hooks/test_proxy_track_cost_callback.py
index c0ae488d47b..614697a489f 100644
--- a/tests/test_litellm/proxy/hooks/test_proxy_track_cost_callback.py
+++ b/tests/test_litellm/proxy/hooks/test_proxy_track_cost_callback.py
@@ -338,6 +338,11 @@ async def test_update_database_and_spend_counters_preserves_db_exception_when_re
         patch(
             "litellm.proxy.hooks.proxy_track_cost_callback.verbose_proxy_logger.exception",
         ) as mock_log_exception,
+        patch(
+            "litellm.proxy.hooks.proxy_track_cost_callback._invalidate_budget_reservation_counters",
+            new_callable=AsyncMock,
+            side_effect=RuntimeError("invalidate unavailable"),
+        ) as mock_invalidate_budget_reservation_counters,
     ):
         with pytest.raises(RuntimeError) as exc_info:
             await _update_database_and_spend_counters(
@@ -360,9 +365,16 @@ async def test_update_database_and_spend_counters_preserves_db_exception_when_re
         mock_release_budget_reservation.assert_awaited_once_with(
             budget_reservation=budget_reservation,
         )
-        mock_log_exception.assert_called_once_with(
+        mock_invalidate_budget_reservation_counters.assert_awaited_once_with(
+            budget_reservation=budget_reservation,
+        )
+        assert mock_log_exception.call_count == 2
+        mock_log_exception.assert_any_call(
             "Failed to release budget reservation after database update failed"
         )
+        mock_log_exception.assert_any_call(
+            "Failed to invalidate budget reservation counters after release failed"
+        )
 
     increment_spend_counters.assert_not_awaited()