diff --git a/.changelog/unreleased/bug-fixes/496-error-on-applyblock-should-panic.md b/.changelog/unreleased/bug-fixes/496-error-on-applyblock-should-panic.md
new file mode 100644
index 0000000000..55e9c874f8
--- /dev/null
+++ b/.changelog/unreleased/bug-fixes/496-error-on-applyblock-should-panic.md
@@ -0,0 +1,2 @@
+- `[consensus]` Unexpected error conditions in `ApplyBlock` are non-recoverable, so ignoring the error and carrying on is a bug. We replaced a `return` that disregarded the error by a `panic`.
+  ([\#496](https://github.com/cometbft/cometbft/pull/496))
\ No newline at end of file
diff --git a/consensus/state.go b/consensus/state.go
index 144ea7d65d..941ea1d5e6 100644
--- a/consensus/state.go
+++ b/consensus/state.go
@@ -1667,8 +1667,7 @@ func (cs *State) finalizeCommit(height int64) {
 		block,
 	)
 	if err != nil {
-		logger.Error("failed to apply block", "err", err)
-		return
+		panic(fmt.Sprintf("failed to apply block; error %v", err))
 	}
 
 	fail.Fail() // XXX