diff --git a/driver.go b/driver.go
index 3f8fba51..aae2501c 100644
--- a/driver.go
+++ b/driver.go
@@ -689,7 +689,7 @@ func runTransactionWithOptions(ctx context.Context, db *sql.DB, opts *sql.TxOpti
 		return err
 	}
 	for {
-		err = f(ctx, tx)
+		err = protected(ctx, tx, f)
 		errDuringCommit := false
 		if err == nil {
 			err = tx.Commit()
@@ -742,6 +742,15 @@ func runTransactionWithOptions(ctx context.Context, db *sql.DB, opts *sql.TxOpti
 			}
 		}
 	}
+
+}
+func protected(ctx context.Context, tx *sql.Tx, f func(ctx context.Context, tx *sql.Tx) error) (err error) {
+	defer func() {
+		if x := recover(); x != nil {
+			err = spanner.ToSpannerError(status.Errorf(codes.Unknown, "transaction function panic: %v", x))
+		}
+	}()
+	return f(ctx, tx)
 }
 
 func resetTransactionForRetry(ctx context.Context, conn *sql.Conn, errDuringCommit bool) error {
diff --git a/driver_with_mockserver_test.go b/driver_with_mockserver_test.go
index 54219b83..af66e19e 100644
--- a/driver_with_mockserver_test.go
+++ b/driver_with_mockserver_test.go
@@ -4227,6 +4227,21 @@ func TestRunTransactionCommitError(t *testing.T) {
 	}
 }
 
+func TestRunTransactionPanics(t *testing.T) {
+	t.Parallel()
+
+	ctx := context.Background()
+	db, _, teardown := setupTestDBConnection(t)
+	defer teardown()
+
+	err := RunTransaction(ctx, db, nil, func(ctx context.Context, tx *sql.Tx) error {
+		panic(nil)
+	})
+	if err == nil {
+		t.Fatal("missing error from transaction runner")
+	}
+}
+
 func TestTransactionWithLevelDisableRetryAborts(t *testing.T) {
 	t.Parallel()