diff --git a/lib/ruby_lsp/setup_bundler.rb b/lib/ruby_lsp/setup_bundler.rb
index d358d01c9a..811dea1774 100644
--- a/lib/ruby_lsp/setup_bundler.rb
+++ b/lib/ruby_lsp/setup_bundler.rb
@@ -234,13 +234,14 @@ def run_bundle_install(bundle_gemfile = @gemfile)
         # If no error occurred, then clear previous errors
         @error_path.delete if @error_path.exist?
         $stderr.puts("Ruby LSP> Composed bundle installation complete")
-      rescue Errno::EPIPE
-        # If the $stderr pipe was closed by the client, for example when closing the editor during running bundle
-        # install, we don't want to write the error to a file or else we will report to telemetry on the next launch and
-        # it does not represent an actual error.
+      rescue Errno::EPIPE, Bundler::Fetcher::NetworkDownError
+        # There are cases where we expect certain errors to happen occasionally, and we don't want to write them to
+        # a file, which would report to telemetry on the next launch.
         #
-        # This situation may happen because while running bundle install, the server is not yet ready to receive
-        # shutdown requests and we may continue doing work until the process is killed.
+        # - The $stderr pipe might be closed by the client, for example when closing the editor during running bundle
+        # install. This situation may happen because, while running bundle install, the server is not yet ready to
+        # receive shutdown requests and we may continue doing work until the process is killed.
+        # - Bundler might also encounter a network error.
         @error_path.delete if @error_path.exist?
       rescue => e
         # Write the error object to a file so that we can read it from the parent process
diff --git a/test/setup_bundler_test.rb b/test/setup_bundler_test.rb
index 12c8d6a82c..94fc0d82dc 100644
--- a/test/setup_bundler_test.rb
+++ b/test/setup_bundler_test.rb
@@ -914,6 +914,27 @@ def test_ignores_bundle_package
     end
   end
 
+  def test_handles_network_down_error_during_bundle_install
+    Dir.mktmpdir do |dir|
+      Dir.chdir(dir) do
+        File.write(File.join(dir, "gems.rb"), <<~GEMFILE)
+          source "https://rubygems.org"
+          gem "irb"
+        GEMFILE
+
+        Bundler.with_unbundled_env do
+          system("bundle install")
+
+          compose = RubyLsp::SetupBundler.new(dir, launcher: true)
+          compose.expects(:bundle_check).raises(Bundler::Fetcher::NetworkDownError)
+          compose.setup!
+
+          refute_path_exists(File.join(dir, ".ruby-lsp", "install_error"))
+        end
+      end
+    end
+  end
+
   def test_is_resilient_to_pipe_being_closed_by_client_during_compose
     Dir.mktmpdir do |dir|
       Dir.chdir(dir) do