diff --git a/fixtures/config-errors/errors.st.css b/fixtures/config-errors/errors.st.css
new file mode 100644
index 00000000..fef5a9eb
--- /dev/null
+++ b/fixtures/config-errors/errors.st.css
@@ -0,0 +1 @@
+.root::unknownPseudoElement {}
diff --git a/fixtures/config-errors/package.json b/fixtures/config-errors/package.json
new file mode 100644
index 00000000..79d21ea0
--- /dev/null
+++ b/fixtures/config-errors/package.json
@@ -0,0 +1,4 @@
+{
+  "name": "test-project-with-config-errors",
+  "version": "1.0.0"
+}
diff --git a/fixtures/config-errors/stylable.config.js b/fixtures/config-errors/stylable.config.js
new file mode 100644
index 00000000..ec6f6d3c
--- /dev/null
+++ b/fixtures/config-errors/stylable.config.js
@@ -0,0 +1,11 @@
+//@ts-check
+
+module.exports = {
+    defaultConfig() {
+        return {
+            resolveNamespace(namespace) {
+                throw new Error('resolveNamespace test error for namespace: ' + namespace);
+            },
+        };
+    },
+};
diff --git a/run-e2e-tests.js b/run-e2e-tests.js
index f340fbe3..a405fa1f 100644
--- a/run-e2e-tests.js
+++ b/run-e2e-tests.js
@@ -31,6 +31,7 @@ async function runAllSuites() {
     await runSuite('latest');
     await runSuite('v5-with-no-config');
     await runSuite('v5-with-config');
+    await runSuite('config-errors');
 }
 
 runAllSuites();
diff --git a/src/lib/server.ts b/src/lib/server.ts
index 44ab596f..9b02c48a 100644
--- a/src/lib/server.ts
+++ b/src/lib/server.ts
@@ -44,6 +44,18 @@ connection.onInitialize(async (params) => {
             fileSystem: wrappedFs,
             requireModule: require,
             cssParser: safeParse,
+            resolveNamespace(namespace, origin, source) {
+                try {
+                    if (config.resolveNamespace) {
+                        return config.resolveNamespace(namespace, origin, source);
+                    }
+                } catch (e: unknown) {
+                    // can be used to log project level errors
+                    // console.warn('resolveNamespace failed', e);
+                }
+                // fallback to initial namespace
+                return namespace;
+            },
         })
     );
 
diff --git a/test/e2e/config-errors/config.test.ts b/test/e2e/config-errors/config.test.ts
new file mode 100644
index 00000000..0b93013b
--- /dev/null
+++ b/test/e2e/config-errors/config.test.ts
@@ -0,0 +1,54 @@
+import fs from '@file-services/node';
+import vscode from 'vscode';
+import { expect } from 'chai';
+import path from 'path';
+
+suite('configuration with errors', function () {
+    this.timeout(60000);
+
+    let rootDir: string | null;
+
+    suiteSetup(() => {
+        rootDir = fs.dirname(fs.findClosestFileSync(__dirname, 'package.json')!);
+    });
+
+    async function getWorkingDocument(...testSubPath: string[]) {
+        const casesPath = path.join(rootDir!, 'fixtures', 'config-errors', ...testSubPath);
+        const ext = vscode.extensions.getExtension('wix.stylable-intelligence');
+
+        if (ext) {
+            const doc = await vscode.workspace.openTextDocument(casesPath);
+            await ext.activate();
+            return doc;
+        } else {
+            throw new Error('Where is my extension?!!');
+        }
+    }
+    function collectDiagnostics(source: 'stylable' | 'css', file: string) {
+        const diags = vscode.languages.getDiagnostics();
+        const res = [];
+
+        for (const [pathObj, fileDiags] of diags) {
+            for (const diag of fileDiags) {
+                if (diag.source === source && file === pathObj.fsPath) {
+                    res.push({
+                        message: diag.message,
+                        range: diag.range,
+                        severity: diag.severity,
+                        filePath: fs.realpathSync.native(pathObj.fsPath),
+                    });
+                }
+            }
+        }
+
+        return res;
+    }
+
+    test('should handle errors in resolve namespace config', async () => {
+        const testDoc = await getWorkingDocument('errors.st.css');
+        await vscode.window.showTextDocument(testDoc);
+        const diags = collectDiagnostics('stylable', testDoc.uri.fsPath);
+        // make sure extension functions correctly
+        expect(diags.length).to.not.eql(0);
+    });
+});
diff --git a/test/e2e/config-errors/index.ts b/test/e2e/config-errors/index.ts
new file mode 100644
index 00000000..2e1feaba
--- /dev/null
+++ b/test/e2e/config-errors/index.ts
@@ -0,0 +1,5 @@
+import { collectAndRunTests } from '../../lsp-testkit/collect-and-run-tests';
+
+export function run() {
+    return collectAndRunTests({ testsRoot: __dirname, suiteName: 'config errors' });
+}