diff --git a/.changes/next-release/bugfix-f31946b6-3709-44a5-b23f-9fa202bd5cb5.json b/.changes/next-release/bugfix-f31946b6-3709-44a5-b23f-9fa202bd5cb5.json
new file mode 100644
index 00000000000..f537fa0c825
--- /dev/null
+++ b/.changes/next-release/bugfix-f31946b6-3709-44a5-b23f-9fa202bd5cb5.json
@@ -0,0 +1,4 @@
+{
+  "type" : "bugfix",
+  "description" : "Fix infinite loop when workspace indexing server fails to initialize"
+}
\ No newline at end of file
diff --git a/plugins/amazonq/shared/jetbrains-community/src/software/aws/toolkits/jetbrains/services/amazonq/project/ProjectContextProvider.kt b/plugins/amazonq/shared/jetbrains-community/src/software/aws/toolkits/jetbrains/services/amazonq/project/ProjectContextProvider.kt
index 77163a694ac..75ab0df4f46 100644
--- a/plugins/amazonq/shared/jetbrains-community/src/software/aws/toolkits/jetbrains/services/amazonq/project/ProjectContextProvider.kt
+++ b/plugins/amazonq/shared/jetbrains-community/src/software/aws/toolkits/jetbrains/services/amazonq/project/ProjectContextProvider.kt
@@ -116,10 +116,14 @@ class ProjectContextProvider(val project: Project, private val encoderServer: En
                     logger.info { "project context index starting" }
                     delay(300)
                     val isIndexSuccess = index()
-                    if (isIndexSuccess) isIndexComplete.set(true)
+                    if (isIndexSuccess) {
+                        isIndexComplete.set(true)
+                    }
                     return
                 }
+                retryCount.incrementAndGet()
             } catch (e: Exception) {
+                logger.warn(e) { "failed to init project context" }
                 if (e.stackTraceToString().contains("Connection refused")) {
                     retryCount.incrementAndGet()
                     delay(10000)
@@ -133,6 +137,7 @@ class ProjectContextProvider(val project: Project, private val encoderServer: En
     private suspend fun initEncryption(): Boolean {
         val request = encoderServer.getEncryptionRequest()
         val response = sendMsgToLsp(LspMessage.Initialize, request)
+        logger.info { "received response to init encryption: $response" }
         return response?.responseCode == 200
     }