diff --git a/src/llama_stack/core/utils/context.py b/src/llama_stack/core/utils/context.py
index af5a625e5..89fdf0d6f 100644
--- a/src/llama_stack/core/utils/context.py
+++ b/src/llama_stack/core/utils/context.py
@@ -8,6 +8,9 @@ from collections.abc import AsyncGenerator
 from contextvars import ContextVar
 
 
+_MISSING = object()
+
+
 def preserve_contexts_async_generator[T](
     gen: AsyncGenerator[T, None], context_vars: list[ContextVar]
 ) -> AsyncGenerator[T, None]:
@@ -21,17 +24,43 @@ def preserve_contexts_async_generator[T](
 
     async def wrapper() -> AsyncGenerator[T, None]:
         while True:
-            # Restore context values before any await
+            previous_values: dict[ContextVar, object] = {}
+            tokens: dict[ContextVar, object] = {}
+
+            # Restore context values before any await and capture previous state
             for context_var in context_vars:
-                context_var.set(initial_context_values[context_var.name])
+                try:
+                    previous_values[context_var] = context_var.get()
+                except LookupError:
+                    previous_values[context_var] = _MISSING
+                tokens[context_var] = context_var.set(initial_context_values[context_var.name])
+
+            def _restore_context_var(context_var: ContextVar) -> None:
+                token = tokens.get(context_var)
+                previous_value = previous_values.get(context_var, _MISSING)
+                if token is not None:
+                    try:
+                        context_var.reset(token)
+                        return
+                    except (RuntimeError, ValueError):
+                        pass
+
+                if previous_value is _MISSING:
+                    context_var.set(None)
+                else:
+                    context_var.set(previous_value)
 
             try:
                 item = await gen.__anext__()
             except StopAsyncIteration:
-                # Clear context vars before exiting to prevent leaks
+                # Restore context vars before exiting to prevent leaks
                 for context_var in context_vars:
-                    context_var.set(None)
+                    _restore_context_var(context_var)
                 break
+            except Exception:
+                for context_var in context_vars:
+                    _restore_context_var(context_var)
+                raise
 
             try:
                 yield item
@@ -39,8 +68,8 @@ def preserve_contexts_async_generator[T](
                 for context_var in context_vars:
                     initial_context_values[context_var.name] = context_var.get()
             finally:
-                # Clear context vars after each yield to prevent leaks between requests
+                # Restore context vars after each yield to prevent leaks between requests
                 for context_var in context_vars:
-                    context_var.set(None)
+                    _restore_context_var(context_var)
 
     return wrapper()