diff --git a/code/lib/core-server/src/utils/StoryIndexGenerator.test.ts b/code/lib/core-server/src/utils/StoryIndexGenerator.test.ts
index dff869df19b..ff6da280f2b 100644
--- a/code/lib/core-server/src/utils/StoryIndexGenerator.test.ts
+++ b/code/lib/core-server/src/utils/StoryIndexGenerator.test.ts
@@ -956,7 +956,8 @@ describe('StoryIndexGenerator', () => {
           [normalizeStoriesEntry('./src/docs2/MetaOf.mdx', options)],
           options
         );
-        await expect(() => generator.initialize()).rejects.toThrowError(
+        await generator.initialize();
+        await expect(() => generator.getIndex()).rejects.toThrowError(
           /Could not find "..\/A.stories" for docs file/
         );
       });
diff --git a/code/lib/core-server/src/utils/StoryIndexGenerator.ts b/code/lib/core-server/src/utils/StoryIndexGenerator.ts
index 7cefe60a208..d5dfe1baef2 100644
--- a/code/lib/core-server/src/utils/StoryIndexGenerator.ts
+++ b/code/lib/core-server/src/utils/StoryIndexGenerator.ts
@@ -35,7 +35,11 @@ type StoriesCacheEntry = {
   dependents: Path[];
   type: 'stories';
 };
-type CacheEntry = false | StoriesCacheEntry | DocsCacheEntry;
+type ErrorEntry = {
+  type: 'error';
+  err: Error;
+};
+type CacheEntry = false | StoriesCacheEntry | DocsCacheEntry | ErrorEntry;
 type SpecifierStoriesCache = Record<Path, CacheEntry>;
 
 export const AUTODOCS_TAG = 'autodocs';
@@ -165,7 +169,12 @@ export class StoryIndexGenerator {
         return Promise.all(
           Object.keys(entry).map(async (absolutePath) => {
             if (entry[absolutePath] && !overwrite) return;
-            entry[absolutePath] = await updater(specifier, absolutePath, entry[absolutePath]);
+
+            try {
+              entry[absolutePath] = await updater(specifier, absolutePath, entry[absolutePath]);
+            } catch (err) {
+              entry[absolutePath] = { type: 'error', err };
+            }
           })
         );
       })
@@ -176,7 +185,7 @@ export class StoryIndexGenerator {
     return /(?<!\.stories)\.mdx$/i.test(absolutePath);
   }
 
-  async ensureExtracted(): Promise<IndexEntry[]> {
+  async ensureExtracted(): Promise<(IndexEntry | ErrorEntry)[]> {
     // First process all the story files. Then, in a second pass,
     // process the docs files. The reason for this is that the docs
     // files may use the `<Meta of={XStories} />` syntax, which requires
@@ -193,9 +202,10 @@ export class StoryIndexGenerator {
 
     return this.specifiers.flatMap((specifier) => {
       const cache = this.specifierToCache.get(specifier);
-      return Object.values(cache).flatMap((entry): IndexEntry[] => {
+      return Object.values(cache).flatMap((entry): (IndexEntry | ErrorEntry)[] => {
         if (!entry) return [];
         if (entry.type === 'docs') return [entry];
+        if (entry.type === 'error') return [entry];
         return entry.entries;
       });
     });
@@ -481,7 +491,11 @@ export class StoryIndexGenerator {
     // Extract any entries that are currently missing
     // Pull out each file's stories into a list of stories, to be composed and sorted
     const storiesList = await this.ensureExtracted();
-    const sorted = await this.sortStories(storiesList);
+
+    const firstError = storiesList.find((entry) => entry.type === 'error');
+    if (firstError) throw (firstError as ErrorEntry).err;
+
+    const sorted = await this.sortStories(storiesList as IndexEntry[]);
 
     let compat = sorted;
     if (this.options.storiesV2Compatibility) {
diff --git a/code/lib/core-server/src/utils/doTelemetry.ts b/code/lib/core-server/src/utils/doTelemetry.ts
index 4b262f20aff..1a5b62d6ce9 100644
--- a/code/lib/core-server/src/utils/doTelemetry.ts
+++ b/code/lib/core-server/src/utils/doTelemetry.ts
@@ -1,10 +1,11 @@
-import type { CoreConfig, Options } from '@storybook/types';
+import type { CoreConfig, Options, StoryIndex } from '@storybook/types';
 import { telemetry, getPrecedingUpgrade } from '@storybook/telemetry';
 import { useStorybookMetadata } from './metadata';
 import type { StoryIndexGenerator } from './StoryIndexGenerator';
 import { summarizeIndex } from './summarizeIndex';
 import { router } from './router';
 import { versionStatus } from './versionStatus';
+import { sendTelemetryError } from '../withTelemetry';
 
 export async function doTelemetry(
   core: CoreConfig,
@@ -13,7 +14,18 @@ export async function doTelemetry(
 ) {
   if (!core?.disableTelemetry) {
     initializedStoryIndexGenerator.then(async (generator) => {
-      const storyIndex = await generator?.getIndex();
+      let storyIndex: StoryIndex;
+      try {
+        storyIndex = await generator?.getIndex();
+      } catch (err) {
+        // If we fail to get the index, treat it as a recoverable error, but send it up to telemetry
+        // as if we crashed. In the future we will revisit this to send a distinct error
+        sendTelemetryError(err, 'dev', {
+          cliOptions: options,
+          presetOptions: { ...options, corePresets: [], overridePresets: [] },
+        });
+        return;
+      }
       const { versionCheck, versionUpdates } = options;
       const payload = {
         precedingUpgrade: await getPrecedingUpgrade(),
diff --git a/code/lib/core-server/src/withTelemetry.ts b/code/lib/core-server/src/withTelemetry.ts
index 8efcf050b8f..bc43ca68118 100644
--- a/code/lib/core-server/src/withTelemetry.ts
+++ b/code/lib/core-server/src/withTelemetry.ts
@@ -58,6 +58,36 @@ async function getErrorLevel({ cliOptions, presetOptions }: TelemetryOptions): P
   return 'full';
 }
 
+export async function sendTelemetryError(
+  error: Error,
+  eventType: EventType,
+  options: TelemetryOptions
+) {
+  try {
+    const errorLevel = await getErrorLevel(options);
+    if (errorLevel !== 'none') {
+      const precedingUpgrade = await getPrecedingUpgrade();
+
+      await telemetry(
+        'error',
+        {
+          eventType,
+          precedingUpgrade,
+          error: errorLevel === 'full' ? error : undefined,
+          errorHash: oneWayHash(error.message),
+        },
+        {
+          immediate: true,
+          configDir: options.cliOptions.configDir || options.presetOptions?.configDir,
+          enableCrashReports: errorLevel === 'full',
+        }
+      );
+    }
+  } catch (err) {
+    // if this throws an error, we just move on
+  }
+}
+
 export async function withTelemetry(
   eventType: EventType,
   options: TelemetryOptions,
@@ -69,30 +99,7 @@ export async function withTelemetry(
   try {
     await run();
   } catch (error) {
-    try {
-      const errorLevel = await getErrorLevel(options);
-      if (errorLevel !== 'none') {
-        const precedingUpgrade = await getPrecedingUpgrade();
-
-        await telemetry(
-          'error',
-          {
-            eventType,
-            precedingUpgrade,
-            error: errorLevel === 'full' ? error : undefined,
-            errorHash: oneWayHash(error.message),
-          },
-          {
-            immediate: true,
-            configDir: options.cliOptions.configDir || options.presetOptions?.configDir,
-            enableCrashReports: errorLevel === 'full',
-          }
-        );
-      }
-    } catch (err) {
-      // if this throws an error, we just move on
-    }
-
+    await sendTelemetryError(error, eventType, options);
     throw error;
   }
 }