diff --git a/NEWS b/NEWS
index 1cec854b092..90e051c2c92 100644
--- a/NEWS
+++ b/NEWS
@@ -13,6 +13,8 @@ PHP                                                                        NEWS
     fault). (Christoph M. Becker)
   . Fixed bug #69781 (phpinfo() reports Professional Editions of Windows
     7/8/8.1/10 as "Business"). (Christian Wenz)
+  . Fixed bug #69740 (finally in generator (yield) swallows exception in
+    iteration). (Nikita)
 
 - PDO_pgsql:
   . Fixed bug #69752 (PDOStatement::execute() leaks memory with DML
diff --git a/Zend/tests/bug69740.phpt b/Zend/tests/bug69740.phpt
new file mode 100644
index 00000000000..30a2a490990
--- /dev/null
+++ b/Zend/tests/bug69740.phpt
@@ -0,0 +1,28 @@
+--TEST--
+Bug #69740: finally in generator (yield) swallows exception in iteration
+--FILE--
+<?php
+
+function generate() {
+    try {
+        yield 1;
+        yield 2;
+    } finally {
+        echo "finally\n";
+    }
+}
+
+foreach (generate() as $i) {
+    echo $i, "\n";
+    throw new Exception();
+}
+
+?>
+--EXPECTF--
+1
+finally
+
+Fatal error: Uncaught exception 'Exception' in %s:%d
+Stack trace:
+#0 {main}
+  thrown in %s on line %d
diff --git a/Zend/zend_generators.c b/Zend/zend_generators.c
index 4b18f4221dc..1cf9566ea55 100644
--- a/Zend/zend_generators.c
+++ b/Zend/zend_generators.c
@@ -198,6 +198,9 @@ static void zend_generator_dtor_storage(zend_generator *generator, zend_object_h
 	if (finally_op_num) {
 		ex->opline = &ex->op_array->opcodes[finally_op_num];
 		ex->fast_ret = NULL;
+		ex->delayed_exception = EG(exception);
+		EG(exception) = NULL;
+
 		generator->flags |= ZEND_GENERATOR_FORCED_CLOSE;
 		zend_generator_resume(generator TSRMLS_CC);
 	}