diff --git a/lib/BuildSystem/BuildSystem.cpp b/lib/BuildSystem/BuildSystem.cpp
index 1ef4c49..2a4dfd7 100644
--- a/lib/BuildSystem/BuildSystem.cpp
+++ b/lib/BuildSystem/BuildSystem.cpp
@@ -1293,6 +1293,22 @@
     // Nothing needs to be done for phony commands.
     return CommandResult::Succeeded;
   }
+
+  virtual BuildValue getResultForOutput(Node* node, const BuildValue& value) override {
+    // If the node is virtual, the output is always a virtual input value,
+    // regardless of the actual build value.
+    //
+    // This is a special case for phony commands, to avoid them incorrectly
+    // propagating failed/cancelled states onwards to downstream commands when
+    // they are being used only for ordering purposes.
+    auto buildNode = static_cast<BuildNode*>(node);
+    if (buildNode->isVirtual() && !buildNode->isCommandTimestamp()) {
+      return BuildValue::makeVirtualInput();
+    }
+
+    // Otherwise, delegate to the inherited implementation.
+    return ExternalCommand::getResultForOutput(node, value);
+  }
 };
 
 class PhonyTool : public Tool {
diff --git a/tests/BuildSystem/Build/downstream-errors.llbuild b/tests/BuildSystem/Build/downstream-errors.llbuild
new file mode 100644
index 0000000..8eb7c51
--- /dev/null
+++ b/tests/BuildSystem/Build/downstream-errors.llbuild
@@ -0,0 +1,59 @@
+# Verify that downstream commands separated by from an error by a phony edge
+# don't trigger an unnecessary rebuild.
+
+# RUN: rm -rf %t.build
+# RUN: mkdir -p %t.build
+# RUN: cp %s %t.build/build.llbuild
+
+# Perform the initial build.
+#
+# RUN: echo true > %t.build/script
+# RUN: chmod +x %t.build/script
+# RUN: %{llbuild} buildsystem build --serial --chdir %t.build &> %t.out
+# RUN: %{FileCheck} --check-prefix CHECK-INITIAL --input-file %t.out %s
+#
+# CHECK-INITIAL: TEST COMMAND
+# CHECK-INITIAL-NEXT: DOWNSTREAM COMMAND
+
+# Run the build with a failure.
+#
+# RUN: echo false > %t.build/script
+# RUN: %{llbuild} buildsystem build --serial --chdir %t.build > %t2.out || true
+# RUN: %{FileCheck} --check-prefix CHECK-FAILURE --input-file %t2.out %s
+#
+# CHECK-FAILURE: TEST COMMAND
+# CHECK-FAILURE-NOT: DOWNSTREAM
+
+# Fix the failure and rebuild. The downstream command shouldn't run.
+#
+# RUN: echo true > %t.build/script
+# RUN: %{llbuild} buildsystem build --serial --chdir %t.build > %t3.out
+# RUN: %{FileCheck} --check-prefix CHECK-REBUILD --input-file %t3.out %s
+#
+# CHECK-REBUILD: TEST COMMAND
+# CHECK-REBUILD-NOT: DOWNSTREAM
+
+
+client:
+  name: basic
+
+targets:
+  "": ["<output>"]
+
+commands:
+  C.1:
+    tool: shell
+    inputs: ["./script"]
+    outputs: ["<n0>"]
+    args: ./script
+    description: TEST COMMAND
+  C.2:
+    tool: phony
+    inputs: ["<n0>"]
+    outputs: ["<n1>"]
+  C.3:
+    tool: shell
+    inputs: ["<n1>"]
+    outputs: ["<output>"]
+    args: true
+    description: DOWNSTREAM COMMAND