diff --git a/bookmark/api/routes.py b/bookmark/api/routes.py
index eabc9c9..2ccac81 100644
--- a/bookmark/api/routes.py
+++ b/bookmark/api/routes.py
@@ -1,5 +1,6 @@
 import cv2
 from fastapi import APIRouter, Request, Response
+from fastapi.responses import JSONResponse
 
 router = APIRouter()
 
@@ -14,7 +15,10 @@ def get_session_state(request: Request):
 def observe(request: Request):
     session = request.app.state.session
     camera = request.app.state.camera
-    frame = camera.read_frame()
+    try:
+        frame = camera.read_frame()
+    except RuntimeError as exc:
+        return JSONResponse(status_code=503, content={"error": "Camera unavailable", "detail": str(exc)})
     request.app.state.latest_frame = frame
     fired = session.observe_frame(frame)
     return {"fired": fired, "state": session.state.value, "book_id": session.current_book_id}
diff --git a/tests/test_api.py b/tests/test_api.py
index 876dec9..383ec6c 100644
--- a/tests/test_api.py
+++ b/tests/test_api.py
@@ -27,6 +27,14 @@ class FakeCamera:
         return self.frame
 
 
+class FailingCamera:
+    def __init__(self, error_message: str = "Camera not initialized") -> None:
+        self.error_message = error_message
+
+    def read_frame(self) -> np.ndarray:
+        raise RuntimeError(self.error_message)
+
+
 def make_client(tmp_path):
     catalogue = Catalogue(tmp_path / "catalogue.csv")
     strategy = ManualButtonStrategy()
@@ -81,3 +89,26 @@ def test_preview_returns_jpeg_after_observe(tmp_path):
     response = client.get("/api/preview.jpg")
     assert response.status_code == 200
     assert response.headers["content-type"] == "image/jpeg"
+
+
+def test_observe_returns_503_on_camera_failure(tmp_path):
+    catalogue = Catalogue(tmp_path / "catalogue.csv")
+    strategy = ManualButtonStrategy()
+    reference = make_reference()
+    markers = [MarkerRegion(name="small_boundary", bucket="small", x=0, y=0, width=10, height=10)]
+    session = IntakeSession(
+        catalogue=catalogue,
+        strategy=strategy,
+        reference_frame=reference,
+        markers=markers,
+        captures_dir=tmp_path / "captures",
+    )
+    camera = FailingCamera("Camera connection lost")
+    app = create_app(session, camera)
+    client = TestClient(app)
+
+    response = client.post("/api/observe")
+    assert response.status_code == 503
+    body = response.json()
+    assert body["error"] == "Camera unavailable"
+    assert "Camera connection lost" in body["detail"]