diff --git a/stream_reader.go b/stream_reader.go
index 6faefe0a7..deb3dad49 100644
--- a/stream_reader.go
+++ b/stream_reader.go
@@ -3,6 +3,8 @@ package openai
 import (
 	"bufio"
 	"bytes"
+	"encoding/json"
+	"errors"
 	"fmt"
 	"io"
 	"net/http"
@@ -40,6 +42,14 @@ func (stream *streamReader[T]) Recv() (response T, err error) {
 
 	err = stream.unmarshaler.Unmarshal(rawLine, &response)
 	if err != nil {
+		// If we get a JSON parsing error, it might be because we got an error event
+		// Check if we have accumulated error data
+		var syntaxErr *json.SyntaxError
+		if errors.As(err, &syntaxErr) && len(stream.errAccumulator.Bytes()) > 0 {
+			// We have error data, return a more informative error
+			return response, fmt.Errorf("failed to parse response (error event received): %s",
+				string(stream.errAccumulator.Bytes()))
+		}
 		return
 	}
 	return response, nil
@@ -65,7 +75,18 @@ func (stream *streamReader[T]) processLines() ([]byte, error) {
 		if readErr != nil || hasErrorPrefix {
 			respErr := stream.unmarshalError()
 			if respErr != nil {
-				return nil, fmt.Errorf("error, %w", respErr.Error)
+				return nil, respErr.Error
+			}
+			// If we detected an error event but couldn't parse it, and the stream ended,
+			// return a more informative error. This handles cases where providers send
+			// error events that don't match the expected format and immediately close.
+			if hasErrorPrefix && readErr == io.EOF {
+				// Check if we have error data that failed to parse
+				errBytes := stream.errAccumulator.Bytes()
+				if len(errBytes) > 0 {
+					return nil, fmt.Errorf("failed to parse error event: %s", string(errBytes))
+				}
+				return nil, fmt.Errorf("stream ended after error event")
 			}
 			return nil, readErr
 		}
@@ -73,20 +94,24 @@ func (stream *streamReader[T]) processLines() ([]byte, error) {
 		noSpaceLine := bytes.TrimSpace(rawLine)
 		if errorPrefix.Match(noSpaceLine) {
 			hasErrorPrefix = true
-		}
-		if !headerData.Match(noSpaceLine) || hasErrorPrefix {
-			if hasErrorPrefix {
-				noSpaceLine = headerData.ReplaceAll(noSpaceLine, nil)
-			}
-			writeErr := stream.errAccumulator.Write(noSpaceLine)
+			// Extract just the JSON part after "data: " prefix
+			// This handles both OpenAI format (data: {"error": ...}) and
+			// Groq format (event: error\ndata: {"error": ...})
+			jsonData := headerData.ReplaceAll(noSpaceLine, nil)
+			writeErr := stream.errAccumulator.Write(jsonData)
 			if writeErr != nil {
 				return nil, writeErr
 			}
+			continue
+		}
+
+		// Skip non-data lines (e.g., "event: error" from Groq)
+		// This allows us to handle SSE streams that use explicit event types
+		if !headerData.Match(noSpaceLine) {
 			emptyMessagesCount++
 			if emptyMessagesCount > stream.emptyMessagesLimit {
 				return nil, ErrTooManyEmptyStreamMessages
 			}
-
 			continue
 		}
 
@@ -111,6 +136,10 @@ func (stream *streamReader[T]) unmarshalError() (errResp *ErrorResponse) {
 		errResp = nil
 	}
 
+	// Reset the error accumulator for future error events
+	// A new accumulator is created to avoid potential interface issues
+	stream.errAccumulator = utils.NewErrorAccumulator()
+
 	return
 }
 
diff --git a/stream_reader_test.go b/stream_reader_test.go
index 449a14b43..49dec7ee5 100644
--- a/stream_reader_test.go
+++ b/stream_reader_test.go
@@ -54,11 +54,12 @@ func TestStreamReaderReturnsErrTooManyEmptyStreamMessages(t *testing.T) {
 
 func TestStreamReaderReturnsErrTestErrorAccumulatorWriteFailed(t *testing.T) {
 	stream := &streamReader[ChatCompletionStreamResponse]{
-		reader: bufio.NewReader(bytes.NewReader([]byte("\n"))),
+		reader: bufio.NewReader(bytes.NewReader([]byte("data: {\"error\": {\"message\": \"test error\"}}\n"))),
 		errAccumulator: &utils.DefaultErrorAccumulator{
 			Buffer: &test.FailingErrorBuffer{},
 		},
-		unmarshaler: &utils.JSONUnmarshaler{},
+		unmarshaler:        &utils.JSONUnmarshaler{},
+		emptyMessagesLimit: 5,
 	}
 	_, err := stream.Recv()
 	checks.ErrorIs(t, err, test.ErrTestErrorAccumulatorWriteFailed, "Did not return error when write failed", err.Error())
@@ -76,3 +77,126 @@ func TestStreamReaderRecvRaw(t *testing.T) {
 		t.Fatalf("Did not return raw line: %v", string(rawLine))
 	}
 }
+
+func TestStreamReaderParsesErrorEvents(t *testing.T) {
+	// Test case simulating Groq's error event format
+	errorEvent := `event: error
+data: {"error":{"message":"Invalid tool_call: tool \"name_unknown\" does not exist.",` +
+		`"type":"invalid_request_error","code":"invalid_tool_call"}}
+
+`
+	stream := &streamReader[ChatCompletionStreamResponse]{
+		reader:             bufio.NewReader(bytes.NewReader([]byte(errorEvent))),
+		errAccumulator:     utils.NewErrorAccumulator(),
+		unmarshaler:        &utils.JSONUnmarshaler{},
+		emptyMessagesLimit: 5,
+	}
+
+	// Process the error event
+	_, err := stream.Recv()
+	if err == nil {
+		t.Fatal("Expected error but got nil")
+	}
+
+	// Verify it's an APIError
+	var apiErr *APIError
+	if !errors.As(err, &apiErr) {
+		t.Fatalf("Expected APIError type but got %T: %v", err, err)
+	}
+
+	// Verify the error fields are correctly parsed
+	if apiErr.Message != "Invalid tool_call: tool \"name_unknown\" does not exist." {
+		t.Errorf("Unexpected error message: %s", apiErr.Message)
+	}
+	if apiErr.Type != "invalid_request_error" {
+		t.Errorf("Unexpected error type: %s", apiErr.Type)
+	}
+	if apiErr.Code != "invalid_tool_call" {
+		t.Errorf("Unexpected error code: %v", apiErr.Code)
+	}
+}
+
+func TestStreamReaderHandlesErrorEventWithExtraData(t *testing.T) {
+	// Test case with error event followed by more data
+	errorEvent := `data: {"id":"chatcmpl-123","choices":[{"delta":{"content":"Hello"}}]}
+event: error
+data: {"error":{"message":"Stream interrupted","type":"server_error"}}
+data: [DONE]
+`
+	stream := &streamReader[ChatCompletionStreamResponse]{
+		reader:             bufio.NewReader(bytes.NewReader([]byte(errorEvent))),
+		errAccumulator:     utils.NewErrorAccumulator(),
+		unmarshaler:        &utils.JSONUnmarshaler{},
+		emptyMessagesLimit: 5,
+	}
+
+	// First recv should return the chat completion
+	resp, err := stream.Recv()
+	if err != nil {
+		t.Fatalf("First recv failed: %v", err)
+	}
+	if resp.ID != "chatcmpl-123" {
+		t.Errorf("Unexpected response ID: %s", resp.ID)
+	}
+
+	// Second recv should return the error
+	_, err = stream.Recv()
+	if err == nil {
+		t.Fatal("Expected error but got nil")
+	}
+
+	// Verify it's an APIError
+	var apiErr *APIError
+	if !errors.As(err, &apiErr) {
+		t.Fatalf("Expected APIError type but got %T: %v", err, err)
+	}
+
+	if apiErr.Message != "Stream interrupted" {
+		t.Errorf("Unexpected error message: %s", apiErr.Message)
+	}
+}
+
+func TestStreamReaderResetsErrorAccumulator(t *testing.T) {
+	// Test that error accumulator is reset after processing an error
+	multipleErrors := `event: error
+data: {"error":{"message":"First error","type":"error_type_1"}}
+
+event: error  
+data: {"error":{"message":"Second error","type":"error_type_2"}}
+`
+	stream := &streamReader[ChatCompletionStreamResponse]{
+		reader:             bufio.NewReader(bytes.NewReader([]byte(multipleErrors))),
+		errAccumulator:     utils.NewErrorAccumulator(),
+		unmarshaler:        &utils.JSONUnmarshaler{},
+		emptyMessagesLimit: 5,
+	}
+
+	// First recv should return the first error
+	_, err1 := stream.Recv()
+	if err1 == nil {
+		t.Fatal("Expected first error but got nil")
+	}
+	var apiErr1 *APIError
+	if !errors.As(err1, &apiErr1) {
+		t.Fatalf("Expected APIError type but got %T: %v", err1, err1)
+	}
+	if apiErr1.Message != "First error" {
+		t.Errorf("Unexpected first error message: %s", apiErr1.Message)
+	}
+
+	// Second recv should return the second error (not a concatenation)
+	_, err2 := stream.Recv()
+	if err2 == nil {
+		t.Fatal("Expected second error but got nil")
+	}
+	var apiErr2 *APIError
+	if !errors.As(err2, &apiErr2) {
+		t.Fatalf("Expected APIError type but got %T: %v", err2, err2)
+	}
+	if apiErr2.Message != "Second error" {
+		t.Errorf("Unexpected second error message: %s", apiErr2.Message)
+	}
+	if apiErr2.Type != "error_type_2" {
+		t.Errorf("Unexpected second error type: %s", apiErr2.Type)
+	}
+}