diff --git a/.changeset/fix-room-connect-failure-state.md b/.changeset/fix-room-connect-failure-state.md
new file mode 100644
index 00000000..57cf6b12
--- /dev/null
+++ b/.changeset/fix-room-connect-failure-state.md
@@ -0,0 +1,5 @@
+---
+"client-sdk-android": patch
+---
+
+Fixed Room getting stuck in CONNECTING state after failed connect attempts.
diff --git a/livekit-android-sdk/src/main/java/io/livekit/android/room/Room.kt b/livekit-android-sdk/src/main/java/io/livekit/android/room/Room.kt
index 658d910b..700643c2 100644
--- a/livekit-android-sdk/src/main/java/io/livekit/android/room/Room.kt
+++ b/livekit-android-sdk/src/main/java/io/livekit/android/room/Room.kt
@@ -566,7 +566,12 @@ constructor(
         }
         connectJob.join()
 
-        error?.let { throw it }
+        error?.let {
+            if (it !is CancellationException) {
+                handleDisconnect(DisconnectReason.JOIN_FAILURE)
+            }
+            throw it
+        }
     }
 
     /**
diff --git a/livekit-android-test/src/test/java/io/livekit/android/room/RoomTest.kt b/livekit-android-test/src/test/java/io/livekit/android/room/RoomTest.kt
index 37296965..a6ffc0d4 100644
--- a/livekit-android-test/src/test/java/io/livekit/android/room/RoomTest.kt
+++ b/livekit-android-test/src/test/java/io/livekit/android/room/RoomTest.kt
@@ -269,4 +269,90 @@ class RoomTest {
 
         assertEquals(update.sid, sid.sid)
     }
+
+    @Test
+    fun connectFailureResetsStateToDisconnected() = runTest {
+        val connectException = RuntimeException("Connection failed")
+        rtcEngine.stub {
+            onBlocking { rtcEngine.join(any(), any(), anyOrNull(), anyOrNull()) }
+                .doSuspendableAnswer {
+                    throw connectException
+                }
+        }
+        rtcEngine.stub {
+            onBlocking { rtcEngine.client }
+                .doReturn(Mockito.mock(SignalClient::class.java))
+        }
+
+        val eventCollector = EventCollector(room.events, coroutineRule.scope)
+
+        var caughtException: Throwable? = null
+        try {
+            room.connect(
+                url = TestData.EXAMPLE_URL,
+                token = "",
+            )
+        } catch (e: Throwable) {
+            caughtException = e
+        }
+
+        val events = eventCollector.stopCollecting()
+
+        // Verify exception was thrown (check message since coroutines may wrap exceptions)
+        assertEquals("Connection failed", caughtException?.message)
+
+        // Verify room state is reset to DISCONNECTED
+        assertEquals(Room.State.DISCONNECTED, room.state)
+
+        // Verify Disconnected event was posted with JOIN_FAILURE reason
+        val disconnectedEvents = events.filterIsInstance<RoomEvent.Disconnected>()
+        assertEquals(1, disconnectedEvents.size)
+        assertEquals(DisconnectReason.JOIN_FAILURE, disconnectedEvents[0].reason)
+    }
+
+    @Test
+    fun connectRetryAfterFailureSucceeds() = runTest {
+        val connectException = RuntimeException("Connection failed")
+        var shouldFail = true
+
+        rtcEngine.stub {
+            onBlocking { rtcEngine.join(any(), any(), anyOrNull(), anyOrNull()) }
+                .doSuspendableAnswer {
+                    if (shouldFail) {
+                        throw connectException
+                    }
+                    room.onJoinResponse(TestData.JOIN.join)
+                    TestData.JOIN.join
+                }
+        }
+        rtcEngine.stub {
+            onBlocking { rtcEngine.client }
+                .doReturn(Mockito.mock(SignalClient::class.java))
+        }
+
+        // First connect attempt fails
+        try {
+            room.connect(
+                url = TestData.EXAMPLE_URL,
+                token = "",
+            )
+        } catch (e: Throwable) {
+            // Expected
+        }
+
+        // Verify room is in DISCONNECTED state after failure
+        assertEquals(Room.State.DISCONNECTED, room.state)
+
+        // Second connect attempt should succeed
+        shouldFail = false
+        room.connect(
+            url = TestData.EXAMPLE_URL,
+            token = "",
+        )
+
+        // Verify room connected successfully
+        val roomInfo = TestData.JOIN.join.room
+        assertEquals(roomInfo.name, room.name)
+        assertEquals(Room.Sid(roomInfo.sid), room.sid)
+    }
 }