diff --git a/internal/wasm/sdk/internal/wasm/bindings.go b/internal/wasm/sdk/internal/wasm/bindings.go
index 6e0b3d6f0f..79a55ab94d 100644
--- a/internal/wasm/sdk/internal/wasm/bindings.go
+++ b/internal/wasm/sdk/internal/wasm/bindings.go
@@ -153,8 +153,10 @@ func (d *builtinDispatcher) Call(caller *wasmtime.Caller, args []wasmtime.Val) (
 			if e, ok := e.Err.(*topdown.Error); ok && e.Code == topdown.CancelErr {
 				panic(cancelledError{message: e.Message})
 			}
+			panic(builtinError{err: err})
 		}
-		panic(builtinError{err: err})
+		// non-halt errors are treated as undefined ("non-strict eval" is the only
+		// mode in wasm), the `output == nil` case below will return NULL
 	}
 
 	// if output is undefined, return NULL
diff --git a/rego/rego_wasmtarget_test.go b/rego/rego_wasmtarget_test.go
index 8853d5cb78..dd70ae44c6 100644
--- a/rego/rego_wasmtarget_test.go
+++ b/rego/rego_wasmtarget_test.go
@@ -197,7 +197,7 @@ allow {
 			target: "wasm",
 			policy: httpSend,
 			errorCheck: func(err error) bool {
-				return err == nil
+				return errors.Is(err, sdk_errors.ErrCancelled)
 			},
 		},
 		{
diff --git a/test/cases/testdata/functionerrors/test-functionerrors-undefined-builtin-result.yaml b/test/cases/testdata/functionerrors/test-functionerrors-undefined-builtin-result.yaml
new file mode 100644
index 0000000000..d75b1b313e
--- /dev/null
+++ b/test/cases/testdata/functionerrors/test-functionerrors-undefined-builtin-result.yaml
@@ -0,0 +1,12 @@
+cases:
+- data:
+  modules:
+  - |
+    package test
+    foo = units.parse_bytes("1KB")
+    bar = units.parse_bytes("foo") # undefined
+  note: functionerrors/undefined builtin result
+  query: data.test = x
+  want_result:
+  - x:
+      foo: 1000
\ No newline at end of file