diff --git a/plugins/com.google.cloud.tools.eclipse.appengine.localserver/src/com/google/cloud/tools/eclipse/appengine/localserver/server/LocalAppEngineServerBehaviour.java b/plugins/com.google.cloud.tools.eclipse.appengine.localserver/src/com/google/cloud/tools/eclipse/appengine/localserver/server/LocalAppEngineServerBehaviour.java
index 0709ba1fd8..9390415cc9 100644
--- a/plugins/com.google.cloud.tools.eclipse.appengine.localserver/src/com/google/cloud/tools/eclipse/appengine/localserver/server/LocalAppEngineServerBehaviour.java
+++ b/plugins/com.google.cloud.tools.eclipse.appengine.localserver/src/com/google/cloud/tools/eclipse/appengine/localserver/server/LocalAppEngineServerBehaviour.java
@@ -392,8 +392,11 @@ public void onOutputLine(String line) {
       } else if (line.equals("Traceback (most recent call last):")) { //$NON-NLS-1$
         // An error occurred
         setServerState(IServer.STATE_STOPPED);
-
-      } else if (line.contains("Starting module") && line.contains("running at: http://")) { //$NON-NLS-1$ //$NON-NLS-2$
+      } else if (line.contains("Error: A fatal exception has occurred. Program will exit")) { //$NON-NLS-1$
+        // terminate the Python process
+        stop(false);
+      } else if (line.contains("Starting module")  //$NON-NLS-1$
+          && line.contains("running at: http://")) { //$NON-NLS-1$
         if (serverPortCandidate == 0 || line.contains("Starting module \"default\"")) { //$NON-NLS-1$
           serverPortCandidate = extractPortFromServerUrlOutput(line);
         }