diff --git a/CHANGELOG.rst b/CHANGELOG.rst
index f539b99..ea8ebdf 100644
--- a/CHANGELOG.rst
+++ b/CHANGELOG.rst
@@ -12,6 +12,9 @@ Release Notes
 
 - ``align_wcs`` now will raise a custom exception of type ``NotEnoughCatalogs``
   when there are not enough input catalogs to perform alignment. [#203]
+ 
+- ``XYXYMatch`` now will raise a custom exception of type ``MatchSourceConfusionError``
+  when multipe reference sources match a single input source. [#204]
 
 
 0.8.7 (29-March-2024)
diff --git a/tweakwcs/matchutils.py b/tweakwcs/matchutils.py
index d846494..367fd40 100644
--- a/tweakwcs/matchutils.py
+++ b/tweakwcs/matchutils.py
@@ -22,12 +22,19 @@
 
 __author__ = 'Mihai Cara'
 
-__all__ = ['MatchCatalogs', 'XYXYMatch']
+__all__ = ['MatchCatalogs', 'XYXYMatch', 'MatchSourceConfusionError']
 
 log = logging.getLogger(__name__)
 log.setLevel(logging.DEBUG)
 
 
+class MatchSourceConfusionError(RuntimeError):
+    """
+    Error indicating that multiple sources matched to a single reference
+    source. Try different values for ``tolerance`` and ``separation`` to fix this error.
+    """
+
+
 class MatchCatalogs(ABC):
     """ A class that provides common interface for matching catalogs. """
 
@@ -180,6 +187,11 @@ def __call__(self, refcat, imcat, tp_pscale=1.0, tp_units=None, **kwargs):
             A tuple of two 1D `numpy.ndarray` containing indices of matched
             sources in the ``refcat`` and ``imcat`` catalogs accordingly.
 
+        Raises
+        ------
+        MatchSourceConfusionError
+            Multiple sources matched a single reference source. Try different
+            values for ``tolerance`` and ``separation`` to fix this error.
         """
         # Check catalogs:
         if not isinstance(refcat, astropy.table.Table):
@@ -266,13 +278,19 @@ def __call__(self, refcat, imcat, tp_pscale=1.0, tp_units=None, **kwargs):
         else:
             xyoff = (self._xoffset, self._yoffset)
 
-        matches = xyxymatch(
-            imxy,
-            refxy,
-            origin=xyoff,
-            tolerance=self._tolerance,
-            separation=self._separation
-        )
+        try:
+            matches = xyxymatch(
+                imxy,
+                refxy,
+                origin=xyoff,
+                tolerance=self._tolerance,
+                separation=self._separation
+            )
+        except RuntimeError as e:
+            msg = e.args[0]
+            if msg.startswith("Number of output coordinates exceeded allocation"):
+                raise MatchSourceConfusionError(msg)
+            raise e
 
         return matches['ref_idx'], matches['input_idx']
 
diff --git a/tweakwcs/tests/test_matchutils.py b/tweakwcs/tests/test_matchutils.py
index 2a3216d..04b4bda 100644
--- a/tweakwcs/tests/test_matchutils.py
+++ b/tweakwcs/tests/test_matchutils.py
@@ -17,7 +17,8 @@
 
 import tweakwcs
 from tweakwcs.matchutils import (_xy_2dhist, _estimate_2dhist_shift,
-                                 _find_peak, XYXYMatch, MatchCatalogs)
+                                 _find_peak, XYXYMatch, MatchCatalogs,
+                                 MatchSourceConfusionError)
 from .helper_correctors import DummyWCSCorrector
 
 
@@ -293,6 +294,14 @@ def test_tpmatch(tp_wcs, use2dhist):
     )
 
 
+def test_multi_match_error():
+    tpmatch = XYXYMatch(tolerance=1.0, separation=0.01)
+    refcat = Table([[0.0, 0.1], [0.1, 0.0]], names=('TPx', 'TPy'), meta={'name': None})
+    imcat = Table([[0.0], [0.0]], names=('TPx', 'TPy'), meta={'name': None})
+    with pytest.raises(MatchSourceConfusionError):
+        tpmatch(refcat, imcat)
+
+
 def test_match_catalogs_abc():
     class DummyMatchCatalogs(MatchCatalogs):
         def __call__(self, refcat, imcat):