diff --git a/driver.go b/driver.go
index 574624217..2202e6bb0 100644
--- a/driver.go
+++ b/driver.go
@@ -455,6 +455,10 @@ func (d *Driver) connect(ctx context.Context) error {
 	if d.metaBalancer.balancer == nil {
 		b, err := balancer.New(ctx, d.config, d.pool, d.discoveryOptions...)
 		if err != nil {
+			// Don't wrap context errors with stack trace - let higher levels handle them
+			if xerrors.IsContextError(err) {
+				return err
+			}
 			return xerrors.WithStackTrace(err)
 		}
 		d.metaBalancer.balancer = b
diff --git a/driver_test.go b/driver_test.go
new file mode 100644
index 000000000..e5d207e6d
--- /dev/null
+++ b/driver_test.go
@@ -0,0 +1,37 @@
+package ydb
+
+import (
+	"context"
+	"testing"
+	"time"
+
+	"github.com/stretchr/testify/require"
+)
+
+func TestOpenWithExpiredContext(t *testing.T) {
+	ctx, cancel := context.WithTimeout(context.Background(), 1*time.Nanosecond)
+	defer cancel()
+
+	time.Sleep(10 * time.Nanosecond)
+
+	_, err := Open(ctx, "grpc://localhost:2136/local")
+	require.Error(t, err)
+	require.ErrorIs(t, err, context.DeadlineExceeded)
+	require.Contains(t, err.Error(), "context deadline exceeded")
+	require.Contains(t, err.Error(), "Open(driver.go:")
+	// Verify that the error doesn't have multiple stack traces (no "retry failed on attempt")
+	require.NotContains(t, err.Error(), "retry failed")
+}
+
+func TestOpenWithCanceledContext(t *testing.T) {
+	ctx, cancel := context.WithCancel(context.Background())
+	cancel() // Cancel immediately
+
+	_, err := Open(ctx, "grpc://localhost:2136/local")
+	require.Error(t, err)
+	require.ErrorIs(t, err, context.Canceled)
+	require.Contains(t, err.Error(), "context canceled")
+	require.Contains(t, err.Error(), "Open(driver.go:")
+	// Verify that the error doesn't have multiple stack traces (no "retry failed on attempt")
+	require.NotContains(t, err.Error(), "retry failed")
+}
diff --git a/internal/balancer/balancer.go b/internal/balancer/balancer.go
index 1e3414389..ac81a654e 100644
--- a/internal/balancer/balancer.go
+++ b/internal/balancer/balancer.go
@@ -319,6 +319,10 @@ func New(ctx context.Context, driverConfig *config.Config, pool *conn.Pool, opts
 	} else {
 		// initialization of balancer state
 		if err := b.clusterDiscovery(ctx); err != nil {
+			// Don't wrap context errors with stack trace - let higher levels handle them
+			if xerrors.IsContextError(err) {
+				return nil, err
+			}
 			return nil, xerrors.WithStackTrace(err)
 		}
 		// run background discovering
diff --git a/retry/retry.go b/retry/retry.go
index 48f15dd41..807529eb2 100644
--- a/retry/retry.go
+++ b/retry/retry.go
@@ -267,6 +267,10 @@ func Retry(ctx context.Context, op retryOperation, opts ...Option) (finalErr err
 		return nil, nil //nolint:nilnil
 	}, opts...)
 	if err != nil {
+		// Don't wrap context errors with stack trace - let higher levels handle them
+		if xerrors.IsContextError(err) {
+			return err
+		}
 		return xerrors.WithStackTrace(err)
 	}
 
@@ -329,6 +333,12 @@ func RetryWithResult[T any](ctx context.Context, //nolint:revive,funlen
 	defer func() {
 		onDone(attempts, finalErr)
 	}()
+	// Check if context is already done before entering retry loop
+	select {
+	case <-ctx.Done():
+		return zeroValue, ctx.Err()
+	default:
+	}
 	for {
 		i++
 		attempts++