diff --git a/apps/studio/components/interfaces/Auth/EmailTemplates/ResetTemplateDialog.tsx b/apps/studio/components/interfaces/Auth/EmailTemplates/ResetTemplateDialog.tsx
index 6c54b1dd732..233e993f042 100644
--- a/apps/studio/components/interfaces/Auth/EmailTemplates/ResetTemplateDialog.tsx
+++ b/apps/studio/components/interfaces/Auth/EmailTemplates/ResetTemplateDialog.tsx
@@ -5,6 +5,7 @@ import { toast } from 'sonner'
 import {
   AlertDialog,
   AlertDialogAction,
+  AlertDialogBody,
   AlertDialogCancel,
   AlertDialogContent,
   AlertDialogDescription,
@@ -14,6 +15,7 @@ import {
   AlertDialogTrigger,
   Button,
 } from 'ui'
+import { Admonition } from 'ui-patterns/admonition'
 
 import { type AuthTemplate } from './EmailTemplates.types'
 import { getAuthTemplateType } from './EmailTemplates.utils'
@@ -32,6 +34,7 @@ export const ResetTemplateDialog = ({
 }) => {
   const { ref: projectRef } = useParams()
   const [open, setOpen] = useState(false)
+  const [error, setError] = useState<string | null>(null)
   const { can: canUpdateConfig } = useAsyncCheckPermissions(
     PermissionAction.UPDATE,
     'custom_config_gotrue'
@@ -40,25 +43,40 @@ export const ResetTemplateDialog = ({
   const { id } = template
   const templateType = getAuthTemplateType(id)
 
-  const { mutate: resetAuthTemplate, isPending: isResetting } = useAuthTemplateResetMutation()
+  const { mutateAsync: resetAuthTemplate, isPending: isResetting } = useAuthTemplateResetMutation({
+    onSuccess: (config) => {
+      toast.success('Email template reset to default')
+      onResetSuccess(config)
+    },
+    onError: () => {},
+  })
 
   const resetTemplateToDefault = async () => {
     if (!projectRef) throw new Error('Project ref is required')
     if (!templateType) throw new Error('Template type is required')
 
-    resetAuthTemplate(
-      { projectRef, template: templateType },
-      {
-        onSuccess: (config) => {
-          toast.success('Email template reset to default')
-          onResetSuccess(config)
-        },
-      }
-    )
+    setError(null)
+
+    try {
+      await resetAuthTemplate({ projectRef, template: templateType })
+    } catch (error) {
+      setError(
+        error instanceof Error
+          ? error.message
+          : 'An unknown error occurred while resetting the template'
+      )
+      throw error
+    }
   }
 
   return (
-    <AlertDialog open={open} onOpenChange={setOpen}>
+    <AlertDialog
+      open={open}
+      onOpenChange={(next) => {
+        setOpen(next)
+        if (!next) setError(null)
+      }}
+    >
       <AlertDialogTrigger asChild>
         <Button variant="default" type="button" disabled={!canUpdateConfig}>
           Reset template
@@ -73,15 +91,21 @@ export const ResetTemplateDialog = ({
               : 'This will remove your custom subject line and email body content. The default values will be used instead.'}
           </AlertDialogDescription>
         </AlertDialogHeader>
+        {error && (
+          <AlertDialogBody>
+            <Admonition
+              type="destructive"
+              title="Unable to reset email template"
+              description={error}
+            />
+          </AlertDialogBody>
+        )}
         <AlertDialogFooter>
-          <AlertDialogCancel>Cancel</AlertDialogCancel>
+          <AlertDialogCancel disabled={isResetting}>Cancel</AlertDialogCancel>
           <AlertDialogAction
             variant="warning"
             loading={isResetting}
-            onClick={(e) => {
-              e.preventDefault()
-              resetTemplateToDefault()
-            }}
+            onClick={resetTemplateToDefault}
           >
             Reset
           </AlertDialogAction>
diff --git a/apps/studio/components/interfaces/Auth/EmailTemplates/TemplateEditor.test.tsx b/apps/studio/components/interfaces/Auth/EmailTemplates/TemplateEditor.test.tsx
index 933268de677..eff4d0e4d77 100644
--- a/apps/studio/components/interfaces/Auth/EmailTemplates/TemplateEditor.test.tsx
+++ b/apps/studio/components/interfaces/Auth/EmailTemplates/TemplateEditor.test.tsx
@@ -124,7 +124,10 @@ const renderTemplateEditor = ({
   })
   useAsyncCheckPermissionsMock.mockReturnValue({ can: canUpdateConfig })
   useAuthConfigUpdateMutationMock.mockReturnValue({ mutate: updateAuthConfigMock })
-  useAuthTemplateResetMutationMock.mockReturnValue({ mutate: resetTemplateMock, isPending: false })
+  useAuthTemplateResetMutationMock.mockImplementation((options = {}) => ({
+    mutateAsync: (vars: unknown) => resetTemplateMock(vars, options),
+    isPending: false,
+  }))
 
   return render(<TemplateEditor template={confirmationTemplate} />)
 }
@@ -253,4 +256,22 @@ describe('TemplateEditor reset to default', () => {
 
     expect(screen.getByRole('button', { name: 'Reset template' })).toBeDisabled()
   })
+
+  it('keeps the dialog open and shows an inline error when reset fails', async () => {
+    const user = userEvent.setup()
+    resetTemplateMock.mockImplementation(async () => {
+      throw new Error('Reset endpoint unavailable')
+    })
+
+    renderTemplateEditor({ hasCustomBody: true })
+
+    await user.click(screen.getByRole('button', { name: 'Reset template' }))
+    const dialog = await screen.findByRole('alertdialog')
+    await user.click(within(dialog).getByRole('button', { name: 'Reset' }))
+
+    expect(await within(dialog).findByText('Reset endpoint unavailable')).toBeInTheDocument()
+    expect(within(dialog).getByText('Unable to reset email template')).toBeInTheDocument()
+    expect(within(dialog).getByRole('button', { name: 'Reset' })).toBeInTheDocument()
+    expect(toast.error).not.toHaveBeenCalled()
+  })
 })