diff --git a/llvm/utils/lit/lit/TestRunner.py b/llvm/utils/lit/lit/TestRunner.py
index 00432b8d31778..5d8c8b5ed16d5 100644
--- a/llvm/utils/lit/lit/TestRunner.py
+++ b/llvm/utils/lit/lit/TestRunner.py
@@ -201,7 +201,14 @@ def executeShCmd(cmd, shenv, results, timeout=0):
     timeoutHelper = TimeoutHelper(timeout)
     if timeout > 0:
         timeoutHelper.startTimer()
-    finalExitCode = _executeShCmd(cmd, shenv, results, timeoutHelper)
+    try:
+        finalExitCode = _executeShCmd(cmd, shenv, results, timeoutHelper)
+    except InternalShellError:
+        e = sys.exc_info()[1]
+        finalExitCode = 127
+        results.append(
+            ShellCommandResult(e.command, "", e.message, finalExitCode, False)
+        )
     timeoutHelper.cancel()
     timeoutInfo = None
     if timeoutHelper.timeoutReached():
@@ -1105,15 +1112,10 @@ def executeScriptInternal(
 
     results = []
     timeoutInfo = None
-    try:
-        shenv = ShellEnvironment(cwd, test.config.environment)
-        exitCode, timeoutInfo = executeShCmd(
-            cmd, shenv, results, timeout=litConfig.maxIndividualTestTime
-        )
-    except InternalShellError:
-        e = sys.exc_info()[1]
-        exitCode = 127
-        results.append(ShellCommandResult(e.command, "", e.message, exitCode, False))
+    shenv = ShellEnvironment(cwd, test.config.environment)
+    exitCode, timeoutInfo = executeShCmd(
+        cmd, shenv, results, timeout=litConfig.maxIndividualTestTime
+    )
 
     out = err = ""
     for i, result in enumerate(results):
diff --git a/llvm/utils/lit/tests/Inputs/timeout-hang/lit.cfg b/llvm/utils/lit/tests/Inputs/timeout-hang/lit.cfg
new file mode 100644
index 0000000000000..1019d94898b6d
--- /dev/null
+++ b/llvm/utils/lit/tests/Inputs/timeout-hang/lit.cfg
@@ -0,0 +1,7 @@
+import lit.formats
+
+config.name = "timeout-hang"
+config.suffixes = [".txt"]
+config.test_format = lit.formats.ShTest()
+config.test_source_root = None
+config.test_exec_root = None
diff --git a/llvm/utils/lit/tests/Inputs/timeout-hang/run-nonexistent.txt b/llvm/utils/lit/tests/Inputs/timeout-hang/run-nonexistent.txt
new file mode 100644
index 0000000000000..fd7ed210baee0
--- /dev/null
+++ b/llvm/utils/lit/tests/Inputs/timeout-hang/run-nonexistent.txt
@@ -0,0 +1 @@
+RUN: nonexistent
diff --git a/llvm/utils/lit/tests/timeout-hang.py b/llvm/utils/lit/tests/timeout-hang.py
new file mode 100644
index 0000000000000..486f07983708f
--- /dev/null
+++ b/llvm/utils/lit/tests/timeout-hang.py
@@ -0,0 +1,27 @@
+# REQUIRES: lit-max-individual-test-time
+
+# Python has some issues dealing with exceptions when multiprocessing,
+# which can cause hangs. Previously this could occur when we encountered
+# an internal shell exception, and had a timeout set.
+
+# This test runs a lit test that tries to launch a non-existent file,
+# throwing an exception. We expect this to fail immediately, rather than
+# timeout.
+
+# DEFINE: %{timeout}=1
+
+# RUN: not %{lit} %{inputs}/timeout-hang/run-nonexistent.txt \
+# RUN: --timeout=%{timeout} --param external=0 | %{python} %s %{timeout}
+
+import sys
+import re
+
+timeout_time = float(sys.argv[1])
+testing_time = float(re.search(r"Testing Time: (.*)s", sys.stdin.read()).group(1))
+
+if testing_time < timeout_time:
+    print("Testing took less than timeout")
+    sys.exit(0)
+else:
+    print("Testing took as long or longer than timeout")
+    sys.exit(1)
diff --git a/sycl/test-e2e/format.py b/sycl/test-e2e/format.py
index de08ca4f6bff6..116579c21f825 100644
--- a/sycl/test-e2e/format.py
+++ b/sycl/test-e2e/format.py
@@ -374,15 +374,10 @@ def get_extra_env(sycl_devices):
             recursion_limit=test.config.recursiveExpansionLimit,
         )
 
-        # TODO: workaround for lit hanging when executing non-existent binary
-        # inside our containers
         if len(script) == 0:
             return lit.Test.Result(lit.Test.UNSUPPORTED, "Lit script is empty")
-        useExternalSh = test.config.test_mode == "run-only"
 
-        result = lit.TestRunner._runShTest(
-            test, litConfig, useExternalSh, script, tmpBase
-        )
+        result = lit.TestRunner._runShTest(test, litConfig, False, script, tmpBase)
 
         # Single triple/device - might be an XFAIL.
         def map_result(features, code):