diff --git a/proxy/server/target.go b/proxy/server/target.go
index b85e2f8a..712b07fb 100644
--- a/proxy/server/target.go
+++ b/proxy/server/target.go
@@ -176,14 +176,14 @@ func (s *TargetStream) CloseWith(err error) {
 }
 
 // Send the supplied request to the target stream, returning
-// an error if the context has already been cancelled.
+// an error if the stream's context has already been cancelled
+// (e.g. due to a dial failure to the target).
 func (s *TargetStream) Send(req proto.Message) error {
-	ctx := s.getStream().Context()
 	select {
 	case s.reqChan <- req:
 		return nil
-	case <-ctx.Done():
-		return ctx.Err()
+	case <-s.ctx.Done():
+		return s.ctx.Err()
 	}
 }
 
@@ -219,8 +219,10 @@ func (s *TargetStream) Run(nonce uint32, replyChan chan *pb.ProxyReply) {
 		s.grpcConn = grpcConn
 		grpcStream, err := s.grpcConn.NewStream(ctx, s.serviceMethod.StreamDesc(), s.serviceMethod.FullName())
 		if err != nil {
-			// We cannot create a new stream to the target. So we need to cancel this stream.
+			// We cannot create a new stream to the target. Cancel the
+			// stream context so that any in-flight Send() calls unblock.
 			s.logger.Info("unable to create stream", "status", err)
+			s.cancelFunc()
 			return fmt.Errorf("could not connect to target from the proxy: %w", err)
 		}
 
diff --git a/proxy/server/target_test.go b/proxy/server/target_test.go
index 61cc7805..eed68690 100644
--- a/proxy/server/target_test.go
+++ b/proxy/server/target_test.go
@@ -29,7 +29,7 @@ import (
 	"google.golang.org/protobuf/types/known/anypb"
 
 	pb "github.com/Snowflake-Labs/sansshell/proxy"
-	_ "github.com/Snowflake-Labs/sansshell/proxy/testdata"
+	td "github.com/Snowflake-Labs/sansshell/proxy/testdata"
 	"github.com/Snowflake-Labs/sansshell/testing/testutil"
 )
 
@@ -188,6 +188,97 @@ func TestTargetStreamAddNonBlocking(t *testing.T) {
 	}
 }
 
+// TestSendUnblocksWhenTargetUnreachable verifies that TargetStream.Send does
+// not hang when the target is unreachable and the reqChan buffer is full.
+// Before the fix, Send selected on the gRPC stream's context (which stayed
+// alive because the stream hadn't been established yet). After the fix, Send
+// selects on the TargetStream's own context, which is cancelled when the dial
+// or NewStream fails.
+func TestSendUnblocksWhenTargetUnreachable(t *testing.T) {
+	ctx, cancel := context.WithCancel(context.Background())
+	defer cancel()
+
+	serviceMap := LoadGlobalServiceMap()
+	ss := NewTargetStreamSet(serviceMap, blockingClientDialer{}, nil)
+
+	replyChan := make(chan *pb.ProxyReply, 100)
+	doneChan := make(chan uint64, 1)
+
+	req := &pb.StartStream{
+		Target:     "unreachable:9500",
+		Nonce:      42,
+		MethodName: "/Testdata.TestService/TestClientStream",
+	}
+	if err := ss.Add(ctx, req, replyChan, doneChan); err != nil {
+		t.Fatalf("Add: %v", err)
+	}
+
+	// The reply should contain a stream ID (not an error) because dial
+	// is non-blocking; the actual connection is attempted in Run().
+	var streamID uint64
+	select {
+	case msg := <-replyChan:
+		sid := msg.GetStartStreamReply().GetStreamId()
+		if sid == 0 {
+			t.Fatalf("expected stream ID, got: %+v", msg)
+		}
+		streamID = sid
+	case <-time.After(2 * time.Second):
+		t.Fatal("no reply from Add")
+	}
+
+	payload, err := anypb.New(&td.TestRequest{Input: "chunk"})
+	if err != nil {
+		t.Fatal(err)
+	}
+	data := &pb.StreamData{
+		StreamIds: []uint64{streamID},
+		Payload:   payload,
+	}
+
+	// Fill the reqChan buffer.
+	for i := 0; i < ReqBufferSize; i++ {
+		if err := ss.Send(ctx, data); err != nil {
+			t.Fatalf("Send[%d]: %v", i, err)
+		}
+	}
+
+	// The next Send would block forever with the old code because:
+	// - reqChan is full
+	// - blockingClientConn.NewStream blocks, so Run hasn't started
+	//   consuming reqChan yet
+	// - the old Send checked the gRPC stream context (unconnectedClientStream),
+	//   which is still alive
+	//
+	// After the fix, Send checks s.ctx. When we cancel the parent context,
+	// s.ctx (derived from it) is also cancelled, and Send unblocks.
+	sendDone := make(chan error, 1)
+	go func() {
+		sendDone <- ss.Send(ctx, data)
+	}()
+
+	// Give it a moment to confirm it's actually blocked.
+	select {
+	case err := <-sendDone:
+		t.Fatalf("Send returned immediately (want block): %v", err)
+	case <-time.After(100 * time.Millisecond):
+		// expected: Send is blocked on full buffer
+	}
+
+	// Cancel the context — this should unblock Send promptly.
+	cancel()
+
+	select {
+	case err := <-sendDone:
+		if err == nil {
+			t.Fatal("Send returned nil after cancel, want context error")
+		}
+		t.Logf("Send unblocked with: %v (good)", err)
+	case <-time.After(2 * time.Second):
+		t.Fatal("Send still blocked 2s after context cancel — BUG: stall not fixed")
+	}
+}
+
 func TestIsCardinalityViolation(t *testing.T) {
 	for _, tc := range []struct {
 		name string