diff --git a/.changeset/proud-geckos-draw.md b/.changeset/proud-geckos-draw.md
new file mode 100644
index 000000000..6d0423fb5
--- /dev/null
+++ b/.changeset/proud-geckos-draw.md
@@ -0,0 +1,9 @@
+---
+'@powersync/service-module-postgres-storage': patch
+'@powersync/service-module-mongodb-storage': patch
+'@powersync/service-module-postgres': patch
+'@powersync/service-module-mongodb': patch
+'@powersync/service-core': patch
+---
+
+Keep serving current data when restarting replication due to errors.
diff --git a/modules/module-mongodb-storage/src/storage/MongoBucketStorage.ts b/modules/module-mongodb-storage/src/storage/MongoBucketStorage.ts
index 22f71dd7f..23fd90b0b 100644
--- a/modules/module-mongodb-storage/src/storage/MongoBucketStorage.ts
+++ b/modules/module-mongodb-storage/src/storage/MongoBucketStorage.ts
@@ -1,6 +1,6 @@
 import { SqlSyncRules } from '@powersync/service-sync-rules';
 
-import { storage } from '@powersync/service-core';
+import { GetIntanceOptions, storage } from '@powersync/service-core';
 
 import { BaseObserver, ErrorCode, logger, ServiceError } from '@powersync/lib-services-framework';
 import { v4 as uuid } from 'uuid';
@@ -44,13 +44,15 @@ export class MongoBucketStorage
     // No-op
   }
 
-  getInstance(options: storage.PersistedSyncRulesContent): MongoSyncBucketStorage {
-    let { id, slot_name } = options;
+  getInstance(syncRules: storage.PersistedSyncRulesContent, options?: GetIntanceOptions): MongoSyncBucketStorage {
+    let { id, slot_name } = syncRules;
     if ((typeof id as any) == 'bigint') {
       id = Number(id);
     }
-    const storage = new MongoSyncBucketStorage(this, id, options, slot_name);
-    this.iterateListeners((cb) => cb.syncStorageCreated?.(storage));
+    const storage = new MongoSyncBucketStorage(this, id, syncRules, slot_name);
+    if (!options?.skipLifecycleHooks) {
+      this.iterateListeners((cb) => cb.syncStorageCreated?.(storage));
+    }
     storage.registerListener({
       batchStarted: (batch) => {
         batch.registerListener({
@@ -95,13 +97,11 @@ export class MongoBucketStorage
     }
   }
 
-  async slotRemoved(slot_name: string) {
+  async restartReplication(sync_rules_group_id: number) {
     const next = await this.getNextSyncRulesContent();
     const active = await this.getActiveSyncRulesContent();
 
-    // In both the below cases, we create a new sync rules instance.
-    // The current one will continue erroring until the next one has finished processing.
-    if (next != null && next.slot_name == slot_name) {
+    if (next != null && next.id == sync_rules_group_id) {
       // We need to redo the "next" sync rules
       await this.updateSyncRules({
         content: next.sync_rules_content,
@@ -119,14 +119,17 @@ export class MongoBucketStorage
           }
         }
       );
-    } else if (next == null && active?.slot_name == slot_name) {
+    } else if (next == null && active?.id == sync_rules_group_id) {
       // Slot removed for "active" sync rules, while there is no "next" one.
       await this.updateSyncRules({
         content: active.sync_rules_content,
         validate: false
       });
 
-      // Pro-actively stop replicating
+      // In this case we keep the old one as active for clients, so that that existing clients
+      // can still get the latest data while we replicate the new ones.
+      // It will however not replicate anymore.
+
       await this.db.sync_rules.updateOne(
         {
           _id: active.id,
@@ -134,7 +137,21 @@ export class MongoBucketStorage
         },
         {
           $set: {
-            state: storage.SyncRuleState.STOP
+            state: storage.SyncRuleState.ERRORED
+          }
+        }
+      );
+    } else if (next != null && active?.id == sync_rules_group_id) {
+      // Already have next sync rules, but need to stop replicating the active one.
+
+      await this.db.sync_rules.updateOne(
+        {
+          _id: active.id,
+          state: storage.SyncRuleState.ACTIVE
+        },
+        {
+          $set: {
+            state: storage.SyncRuleState.ERRORED
           }
         }
       );
@@ -211,7 +228,7 @@ export class MongoBucketStorage
   async getActiveSyncRulesContent(): Promise<MongoPersistedSyncRulesContent | null> {
     const doc = await this.db.sync_rules.findOne(
       {
-        state: storage.SyncRuleState.ACTIVE
+        state: { $in: [storage.SyncRuleState.ACTIVE, storage.SyncRuleState.ERRORED] }
       },
       { sort: { _id: -1 }, limit: 1 }
     );
@@ -249,7 +266,7 @@ export class MongoBucketStorage
   async getReplicatingSyncRules(): Promise<storage.PersistedSyncRulesContent[]> {
     const docs = await this.db.sync_rules
       .find({
-        $or: [{ state: storage.SyncRuleState.ACTIVE }, { state: storage.SyncRuleState.PROCESSING }]
+        state: { $in: [storage.SyncRuleState.PROCESSING, storage.SyncRuleState.ACTIVE] }
       })
       .toArray();
 
diff --git a/modules/module-mongodb-storage/src/storage/implementation/MongoSyncBucketStorage.ts b/modules/module-mongodb-storage/src/storage/implementation/MongoSyncBucketStorage.ts
index 0d0187ef8..2a7873653 100644
--- a/modules/module-mongodb-storage/src/storage/implementation/MongoSyncBucketStorage.ts
+++ b/modules/module-mongodb-storage/src/storage/implementation/MongoSyncBucketStorage.ts
@@ -604,7 +604,7 @@ export class MongoSyncBucketStorage
           await this.db.sync_rules.updateMany(
             {
               _id: { $ne: this.group_id },
-              state: storage.SyncRuleState.ACTIVE
+              state: { $in: [storage.SyncRuleState.ACTIVE, storage.SyncRuleState.ERRORED] }
             },
             {
               $set: {
@@ -657,7 +657,7 @@ export class MongoSyncBucketStorage
       doc = await this.db.sync_rules.findOne(
         {
           _id: syncRulesId,
-          state: storage.SyncRuleState.ACTIVE
+          state: { $in: [storage.SyncRuleState.ACTIVE, storage.SyncRuleState.ERRORED] }
         },
         {
           session,
@@ -728,7 +728,7 @@ export class MongoSyncBucketStorage
         // Irrelevant update
         continue;
       }
-      if (doc.state != storage.SyncRuleState.ACTIVE) {
+      if (doc.state != storage.SyncRuleState.ACTIVE && doc.state != storage.SyncRuleState.ERRORED) {
         // Sync rules have changed - abort and restart.
         // Should this error instead?
         break;
diff --git a/modules/module-mongodb/src/replication/ChangeStreamReplicationJob.ts b/modules/module-mongodb/src/replication/ChangeStreamReplicationJob.ts
index e2ba6a24a..a9b2fb6dd 100644
--- a/modules/module-mongodb/src/replication/ChangeStreamReplicationJob.ts
+++ b/modules/module-mongodb/src/replication/ChangeStreamReplicationJob.ts
@@ -40,8 +40,8 @@ export class ChangeStreamReplicationJob extends replication.AbstractReplicationJ
       this.logger.error(`Replication failed`, e);
 
       if (e instanceof ChangeStreamInvalidatedError) {
-        // This stops replication on this slot, and creates a new slot
-        await this.options.storage.factory.slotRemoved(this.slotName);
+        // This stops replication and restarts with a new instance
+        await this.options.storage.factory.restartReplication(this.storage.group_id);
       }
     } finally {
       this.abortController.abort();
diff --git a/modules/module-postgres-storage/src/storage/PostgresBucketStorageFactory.ts b/modules/module-postgres-storage/src/storage/PostgresBucketStorageFactory.ts
index 2ef50a697..cec373475 100644
--- a/modules/module-postgres-storage/src/storage/PostgresBucketStorageFactory.ts
+++ b/modules/module-postgres-storage/src/storage/PostgresBucketStorageFactory.ts
@@ -1,5 +1,5 @@
 import * as framework from '@powersync/lib-services-framework';
-import { storage, SyncRulesBucketStorage, UpdateSyncRulesOptions } from '@powersync/service-core';
+import { GetIntanceOptions, storage, SyncRulesBucketStorage, UpdateSyncRulesOptions } from '@powersync/service-core';
 import * as pg_wire from '@powersync/service-jpgwire';
 import * as sync_rules from '@powersync/service-sync-rules';
 import crypto from 'crypto';
@@ -50,14 +50,19 @@ export class PostgresBucketStorageFactory
     // This has not been implemented yet.
   }
 
-  getInstance(syncRules: storage.PersistedSyncRulesContent): storage.SyncRulesBucketStorage {
+  getInstance(
+    syncRules: storage.PersistedSyncRulesContent,
+    options?: GetIntanceOptions
+  ): storage.SyncRulesBucketStorage {
     const storage = new PostgresSyncRulesStorage({
       factory: this,
       db: this.db,
       sync_rules: syncRules,
       batchLimits: this.options.config.batch_limits
     });
-    this.iterateListeners((cb) => cb.syncStorageCreated?.(storage));
+    if (!options?.skipLifecycleHooks) {
+      this.iterateListeners((cb) => cb.syncStorageCreated?.(storage));
+    }
     storage.registerListener({
       batchStarted: (batch) => {
         batch.registerListener({
@@ -225,13 +230,13 @@ export class PostgresBucketStorageFactory
     });
   }
 
-  async slotRemoved(slot_name: string): Promise<void> {
+  async restartReplication(sync_rules_group_id: number): Promise<void> {
     const next = await this.getNextSyncRulesContent();
     const active = await this.getActiveSyncRulesContent();
 
     // In both the below cases, we create a new sync rules instance.
-    // The current one will continue erroring until the next one has finished processing.
-    if (next != null && next.slot_name == slot_name) {
+    // The current one will continue serving sync requests until the next one has finished processing.
+    if (next != null && next.id == sync_rules_group_id) {
       // We need to redo the "next" sync rules
       await this.updateSyncRules({
         content: next.sync_rules_content,
@@ -246,18 +251,30 @@ export class PostgresBucketStorageFactory
           id = ${{ value: next.id, type: 'int4' }}
           AND state = ${{ value: storage.SyncRuleState.PROCESSING, type: 'varchar' }}
       `.execute();
-    } else if (next == null && active?.slot_name == slot_name) {
+    } else if (next == null && active?.id == sync_rules_group_id) {
       // Slot removed for "active" sync rules, while there is no "next" one.
       await this.updateSyncRules({
         content: active.sync_rules_content,
         validate: false
       });
 
-      // Pro-actively stop replicating
+      // Pro-actively stop replicating, but still serve clients with existing data
       await this.db.sql`
         UPDATE sync_rules
         SET
-          state = ${{ value: storage.SyncRuleState.STOP, type: 'varchar' }}
+          state = ${{ value: storage.SyncRuleState.ERRORED, type: 'varchar' }}
+        WHERE
+          id = ${{ value: active.id, type: 'int4' }}
+          AND state = ${{ value: storage.SyncRuleState.ACTIVE, type: 'varchar' }}
+      `.execute();
+    } else if (next != null && active?.id == sync_rules_group_id) {
+      // Already have "next" sync rules - don't update any.
+
+      // Pro-actively stop replicating, but still serve clients with existing data
+      await this.db.sql`
+        UPDATE sync_rules
+        SET
+          state = ${{ value: storage.SyncRuleState.ERRORED, type: 'varchar' }}
         WHERE
           id = ${{ value: active.id, type: 'int4' }}
           AND state = ${{ value: storage.SyncRuleState.ACTIVE, type: 'varchar' }}
@@ -279,6 +296,7 @@ export class PostgresBucketStorageFactory
         sync_rules
       WHERE
         state = ${{ value: storage.SyncRuleState.ACTIVE, type: 'varchar' }}
+        OR state = ${{ value: storage.SyncRuleState.ERRORED, type: 'varchar' }}
       ORDER BY
         id DESC
       LIMIT
diff --git a/modules/module-postgres-storage/src/storage/PostgresSyncRulesStorage.ts b/modules/module-postgres-storage/src/storage/PostgresSyncRulesStorage.ts
index 24a85f803..0a18c17bb 100644
--- a/modules/module-postgres-storage/src/storage/PostgresSyncRulesStorage.ts
+++ b/modules/module-postgres-storage/src/storage/PostgresSyncRulesStorage.ts
@@ -657,7 +657,10 @@ export class PostgresSyncRulesStorage
         SET
           state = ${{ type: 'varchar', value: storage.SyncRuleState.STOP }}
         WHERE
-          state = ${{ type: 'varchar', value: storage.SyncRuleState.ACTIVE }}
+          (
+            state = ${{ value: storage.SyncRuleState.ACTIVE, type: 'varchar' }}
+            OR state = ${{ value: storage.SyncRuleState.ERRORED, type: 'varchar' }}
+          )
           AND id != ${{ type: 'int4', value: this.group_id }}
       `.execute();
     });
@@ -729,6 +732,7 @@ export class PostgresSyncRulesStorage
         sync_rules
       WHERE
         state = ${{ value: storage.SyncRuleState.ACTIVE, type: 'varchar' }}
+        OR state = ${{ value: storage.SyncRuleState.ERRORED, type: 'varchar' }}
       ORDER BY
         id DESC
       LIMIT
@@ -791,7 +795,8 @@ export class PostgresSyncRulesStorage
       FROM
         sync_rules
       WHERE
-        state = ${{ type: 'varchar', value: storage.SyncRuleState.ACTIVE }}
+        state = ${{ value: storage.SyncRuleState.ACTIVE, type: 'varchar' }}
+        OR state = ${{ value: storage.SyncRuleState.ERRORED, type: 'varchar' }}
       LIMIT
         1
     `
diff --git a/modules/module-postgres/src/replication/WalStream.ts b/modules/module-postgres/src/replication/WalStream.ts
index 0950efa3c..83c83baf4 100644
--- a/modules/module-postgres/src/replication/WalStream.ts
+++ b/modules/module-postgres/src/replication/WalStream.ts
@@ -239,6 +239,11 @@ export class WalStream {
         needsNewSlot: r.needsNewSlot
       };
     } else {
+      if (snapshotDone) {
+        // This will create a new slot, while keeping the current sync rules active
+        throw new MissingReplicationSlotError(`Replication slot ${slotName} is missing`);
+      }
+      // This will clear data and re-create the same slot
       return { needsInitialSync: true, needsNewSlot: true };
     }
   }
diff --git a/modules/module-postgres/src/replication/WalStreamReplicationJob.ts b/modules/module-postgres/src/replication/WalStreamReplicationJob.ts
index c487c5757..c7d54785e 100644
--- a/modules/module-postgres/src/replication/WalStreamReplicationJob.ts
+++ b/modules/module-postgres/src/replication/WalStreamReplicationJob.ts
@@ -60,8 +60,8 @@ export class WalStreamReplicationJob extends replication.AbstractReplicationJob
       this.logger.error(`Replication failed on ${this.slotName}`, e);
 
       if (e instanceof MissingReplicationSlotError) {
-        // This stops replication on this slot, and creates a new slot
-        await this.options.storage.factory.slotRemoved(this.slotName);
+        // This stops replication on this slot and restarts with a new slot
+        await this.options.storage.factory.restartReplication(this.storage.group_id);
       }
     } finally {
       this.abortController.abort();
diff --git a/packages/service-core/src/replication/AbstractReplicator.ts b/packages/service-core/src/replication/AbstractReplicator.ts
index b219a3265..ee2822263 100644
--- a/packages/service-core/src/replication/AbstractReplicator.ts
+++ b/packages/service-core/src/replication/AbstractReplicator.ts
@@ -193,15 +193,15 @@ export abstract class AbstractReplicator<T extends AbstractReplicationJob = Abst
 
     this.replicationJobs = newJobs;
 
-    // Terminate any orphaned jobs that no longer have sync rules
+    // Stop any orphaned jobs that no longer have sync rules.
+    // Termination happens below
     for (let job of existingJobs.values()) {
       // Old - stop and clean up
       try {
         await job.stop();
-        await this.terminateSyncRules(job.storage);
       } catch (e) {
         // This will be retried
-        this.logger.warn('Failed to terminate old replication job}', e);
+        this.logger.warn('Failed to stop old replication job}', e);
       }
     }
 
@@ -209,7 +209,7 @@ export abstract class AbstractReplicator<T extends AbstractReplicationJob = Abst
     const stopped = await this.storage.getStoppedSyncRules();
     for (let syncRules of stopped) {
       try {
-        const syncRuleStorage = this.storage.getInstance(syncRules);
+        const syncRuleStorage = this.storage.getInstance(syncRules, { skipLifecycleHooks: true });
         await this.terminateSyncRules(syncRuleStorage);
       } catch (e) {
         this.logger.warn(`Failed clean up replication config for sync rule: ${syncRules.id}`, e);
@@ -223,13 +223,9 @@ export abstract class AbstractReplicator<T extends AbstractReplicationJob = Abst
 
   protected async terminateSyncRules(syncRuleStorage: storage.SyncRulesBucketStorage) {
     this.logger.info(`Terminating sync rules: ${syncRuleStorage.group_id}...`);
-    try {
-      await this.cleanUp(syncRuleStorage);
-      await syncRuleStorage.terminate();
-      this.logger.info(`Successfully terminated sync rules: ${syncRuleStorage.group_id}`);
-    } catch (e) {
-      this.logger.warn(`Failed clean up replication config for sync rules: ${syncRuleStorage.group_id}`, e);
-    }
+    await this.cleanUp(syncRuleStorage);
+    await syncRuleStorage.terminate();
+    this.logger.info(`Successfully terminated sync rules: ${syncRuleStorage.group_id}`);
   }
 
   abstract testConnection(): Promise<ConnectionTestResult>;
diff --git a/packages/service-core/src/storage/BucketStorage.ts b/packages/service-core/src/storage/BucketStorage.ts
index 2a2787fa0..7f749c8f9 100644
--- a/packages/service-core/src/storage/BucketStorage.ts
+++ b/packages/service-core/src/storage/BucketStorage.ts
@@ -12,7 +12,7 @@ export enum SyncRuleState {
   /**
    * Sync rule processing is done, and can be used for sync.
    *
-   * Only one set of sync rules should be in ACTIVE state.
+   * Only one set of sync rules should be in ACTIVE or ERRORED state.
    */
   ACTIVE = 'ACTIVE',
   /**
@@ -24,7 +24,16 @@ export enum SyncRuleState {
    * After sync rules have been stopped, the data needs to be
    * deleted. Once deleted, the state is TERMINATED.
    */
-  TERMINATED = 'TERMINATED'
+  TERMINATED = 'TERMINATED',
+
+  /**
+   * Sync rules has run into a permanent replication error. It
+   * is still the "active" sync rules for syncing to users,
+   * but should not replicate anymore.
+   *
+   * It will transition to STOP when a new sync rules is activated.
+   */
+  ERRORED = 'ERRORED'
 }
 
 export const DEFAULT_DOCUMENT_BATCH_LIMIT = 1000;
diff --git a/packages/service-core/src/storage/BucketStorageFactory.ts b/packages/service-core/src/storage/BucketStorageFactory.ts
index 3512b1cb3..faf02e4b7 100644
--- a/packages/service-core/src/storage/BucketStorageFactory.ts
+++ b/packages/service-core/src/storage/BucketStorageFactory.ts
@@ -23,7 +23,7 @@ export interface BucketStorageFactory extends ObserverClient<BucketStorageFactor
   /**
    * Get a storage instance to query sync data for specific sync rules.
    */
-  getInstance(options: PersistedSyncRulesContent): SyncRulesBucketStorage;
+  getInstance(syncRules: PersistedSyncRulesContent, options?: GetIntanceOptions): SyncRulesBucketStorage;
 
   /**
    * Deploy new sync rules.
@@ -39,10 +39,8 @@ export interface BucketStorageFactory extends ObserverClient<BucketStorageFactor
    * the latest ones.
    *
    * Replication should be restarted after this.
-   *
-   * @param slot_name The removed slot
    */
-  slotRemoved(slot_name: string): Promise<void>;
+  restartReplication(sync_rules_group_id: number): Promise<void>;
 
   /**
    * Get the sync rules used for querying.
@@ -125,6 +123,18 @@ export interface UpdateSyncRulesOptions {
   validate?: boolean;
 }
 
+export interface GetIntanceOptions {
+  /**
+   * Set to true to skip trigger any events for creating the instance.
+   *
+   * This is used when creating the instance only for clearing data.
+   *
+   * When this is used, note that some functionality such as write checkpoint mode
+   * may not be configured correctly.
+   */
+  skipLifecycleHooks?: boolean;
+}
+
 export interface BucketStorageSystemIdentifier {
   /**
    * A unique identifier for the system used for storage.