diff --git a/scripts/install.ps1 b/scripts/install.ps1
index 76f5669d25..f0417982ff 100644
--- a/scripts/install.ps1
+++ b/scripts/install.ps1
@@ -37,6 +37,13 @@ $ErrorActionPreference = "Stop"
 # path/expression. The flag is checked before the entry dispatch at the bottom
 # (part 2), so dot-sourcing still loads every function definition.
 $script:IsDotSourced = $MyInvocation.InvocationName -eq '.'
+# `iex (irm .../install.ps1)` runs this text inside the caller's session,
+# where `exit` closes their PowerShell window (or ends their script). Only a
+# script file (-File, `& .\install.ps1`) owns its process and may exit with a
+# code. A scriptblock literal records the file its text was parsed from;
+# iex'd text has none. ($MyInvocation.MyCommand.Path is the CALLER's script
+# under iex, so it cannot tell the two apart.)
+$script:RunAsFile = [bool]{}.File
 # $PSBoundParameters inside a FUNCTION refers to the function's own binding,
 # so the script's binding is captured here, once, at script scope.
 $script:BoundParams = $PSBoundParameters
@@ -577,11 +584,9 @@ function Test-UvAtLeastPin([string]$Path) {
     try { return ([version]$have -ge [version]$script:UvPinVersion) } catch { return $false }
 }
 function Fail([string]$msg) {
-    Write-Host "[hermes] $msg" -ForegroundColor Red
-    # `exit` unwinds past the stage dispatcher's try/catch, so a -Json caller
-    # would otherwise get NO frame at all; emit the failure frame here.
-    if ($Json -and $Stage) { Emit-Frame $false $Stage $false $msg }
-    exit 1
+    # Throw, never exit: the entry points below own reporting and the exit
+    # code, and the stage dispatcher's catch emits the -Json failure frame.
+    throw $msg
 }
 
 function Emit-Frame([bool]$ok, [string]$name, [bool]$skipped, [string]$reason = "") {
@@ -1096,6 +1101,7 @@ if ($Stage) {
         if ($Json) { Emit-Frame $true $Stage $false }
         exit 0
     } catch {
+        Write-Host "[hermes] $_" -ForegroundColor Red
         if ($Json) { Emit-Frame $false $Stage $false "$_" }
         exit 1
     }
@@ -1103,6 +1109,13 @@ if ($Stage) {
 
 # No -Stage: run the whole ladder — the same authoritative list the
 # manifest prints, so -IncludeDesktop inserts desktop here too.
-foreach ($s in $Stages) {
-    Invoke-StageByName $s.name
+try {
+    foreach ($s in $Stages) {
+        Invoke-StageByName $s.name
+    }
+} catch {
+    Write-Host "[hermes] $_" -ForegroundColor Red
+    if ($script:RunAsFile) { exit 1 }
+    # Under iex: report failure without closing the user's window.
+    $global:LASTEXITCODE = 1
 }
diff --git a/tests/scripts/install/test_install_ps1_iex_failure.py b/tests/scripts/install/test_install_ps1_iex_failure.py
new file mode 100644
index 0000000000..d63b453e91
--- /dev/null
+++ b/tests/scripts/install/test_install_ps1_iex_failure.py
@@ -0,0 +1,52 @@
+"""A failed install run through `iex (irm ...)` must not end the caller's session.
+
+`iex` runs the installer text inside the user's PowerShell session, so an
+`exit` on failure closed their window. A script file run keeps its exit code.
+"""
+import os
+from pathlib import Path
+import shutil
+import subprocess
+
+import pytest
+
+pytestmark = pytest.mark.platforms("windows")
+INSTALLER = Path(__file__).resolve().parents[3] / "scripts" / "install.ps1"
+REFUSAL = "exists and is not a Hermes git checkout"
+
+
+def _failing_install_env(tmp_path):
+    """An occupied non-checkout makes the repository stage Fail before any
+    network or git call; a present pinned-git slot satisfies prerequisites."""
+    home = tmp_path / "home"
+    (home / "hermes-agent").mkdir(parents=True)
+    (home / "hermes-agent" / "user-file").write_text("preserve me", encoding="utf-8")
+    tools = tmp_path / "tools"
+    for arch in ("x64", "arm64"):
+        git = tools / f"git-2.53.0+3-win32-{arch}" / "cmd" / "git.exe"
+        git.parent.mkdir(parents=True)
+        git.write_bytes(b"")
+    return dict(os.environ, HERMES_HOME=str(home), HERMES_RUNTIME_DIR=str(tools))
+
+
+def _powershell():
+    powershell = shutil.which("powershell")
+    assert powershell
+    return powershell
+
+
+def test_failed_iex_install_reports_and_returns_to_the_callers_session(tmp_path):
+    command = (f"iex (Get-Content -Raw -LiteralPath '{INSTALLER}'); "
+               "Write-Output \"session alive: $LASTEXITCODE\"")
+    result = subprocess.run([_powershell(), "-NoProfile", "-ExecutionPolicy", "Bypass", "-Command", command],
+                            env=_failing_install_env(tmp_path), capture_output=True, text=True, timeout=60)
+    assert REFUSAL in result.stdout
+    assert "session alive: 1" in result.stdout, result.stdout + result.stderr
+    assert (tmp_path / "home" / "hermes-agent" / "user-file").read_text(encoding="utf-8") == "preserve me"
+
+
+def test_failed_file_install_still_exits_nonzero(tmp_path):
+    result = subprocess.run([_powershell(), "-NoProfile", "-ExecutionPolicy", "Bypass", "-File", str(INSTALLER)],
+                            env=_failing_install_env(tmp_path), capture_output=True, text=True, timeout=60)
+    assert REFUSAL in result.stdout
+    assert result.returncode == 1