diff --git a/clients/horizonclient/internal.go b/clients/horizonclient/internal.go
index 9dc6052263..bde8f2bd76 100644
--- a/clients/horizonclient/internal.go
+++ b/clients/horizonclient/internal.go
@@ -1,13 +1,16 @@
 package horizonclient
 
 import (
+	"bytes"
 	"encoding/json"
+	"io"
 	"net/http"
 	"net/url"
 	"strconv"
 	"strings"
 	"time"
 
+	"github.com/stellar/go/protocols/horizon"
 	"github.com/stellar/go/support/clock"
 	"github.com/stellar/go/support/errors"
 )
@@ -27,10 +30,11 @@ func decodeResponse(resp *http.Response, object interface{}, horizonUrl string,
 	}
 	setCurrentServerTime(u.Hostname(), resp.Header["Date"], clock)
 
-	// While this part of code assumes that any error < 200 or error >= 300 is a Horizon problem, it is not
-	// true for the response from /transactions_async endpoint which does give these codes for certain responses
-	// from core.
-	if !(resp.StatusCode >= 200 && resp.StatusCode < 300) && (resp.Request == nil || resp.Request.URL == nil || resp.Request.URL.Path != "/transactions_async") {
+	if isStatusCodeAnError(resp.StatusCode) {
+		if isAsyncTxSubRequest(resp) {
+			return decodeAsyncTxSubResponse(resp, object)
+		}
+
 		horizonError := &Error{
 			Response: resp,
 		}
@@ -47,6 +51,44 @@ func decodeResponse(resp *http.Response, object interface{}, horizonUrl string,
 	return
 }
 
+func isStatusCodeAnError(statusCode int) bool {
+	return !(statusCode >= 200 && statusCode < 300)
+}
+
+func isAsyncTxSubRequest(resp *http.Response) bool {
+	return resp.Request != nil && resp.Request.URL != nil && resp.Request.URL.Path == "/transactions_async"
+}
+
+func decodeAsyncTxSubResponse(resp *http.Response, object interface{}) error {
+	// We need to read the entire body in order to create 2 decoders later.
+	bodyBytes, err := io.ReadAll(resp.Body)
+	if err != nil {
+		return errors.Wrap(err, "error reading response body")
+	}
+
+	// The first decoder converts the response to AsyncTransactionSubmissionResponse and checks
+	// the hash of the transaction. If the response was not a valid one, the hash will be empty.
+	decoder1 := json.NewDecoder(bytes.NewReader(bodyBytes))
+	err = decoder1.Decode(&object)
+	if err != nil {
+		return errors.Wrap(err, "error decoding response")
+	}
+	if asyncResp, ok := object.(*horizon.AsyncTransactionSubmissionResponse); ok && asyncResp.Hash != "" {
+		return nil
+	}
+
+	// Create a new reader for the second decoding. The second decoder decodes to Horizon.Problem object.
+	decoder2 := json.NewDecoder(bytes.NewReader(bodyBytes))
+	horizonErr := Error{
+		Response: resp,
+	}
+	err = decoder2.Decode(&horizonErr.Problem)
+	if err != nil {
+		return errors.Wrap(err, "error decoding horizon error")
+	}
+	return horizonErr
+}
+
 // countParams counts the number of parameters provided
 func countParams(params ...interface{}) int {
 	counter := 0
diff --git a/services/horizon/internal/integration/txsub_async_test.go b/services/horizon/internal/integration/txsub_async_test.go
index 2d16e4d4ea..4d9ff8e906 100644
--- a/services/horizon/internal/integration/txsub_async_test.go
+++ b/services/horizon/internal/integration/txsub_async_test.go
@@ -7,6 +7,7 @@ import (
 	"time"
 
 	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
 
 	"github.com/stellar/go/clients/horizonclient"
 	"github.com/stellar/go/protocols/horizon"
@@ -131,6 +132,31 @@ func TestAsyncTxSub_SubmissionTryAgainLater(t *testing.T) {
 	})
 }
 
+func TestAsyncTxSub_TransactionMalformed(t *testing.T) {
+	itest := integration.NewTest(t, integration.Config{
+		EnableSorobanRPC: true,
+		HorizonEnvironment: map[string]string{
+			"MAX_HTTP_REQUEST_SIZE": "1800",
+		},
+	})
+	master := itest.Master()
+
+	// establish which account will be contract owner, and load it's current seq
+	sourceAccount, err := itest.Client().AccountDetail(horizonclient.AccountRequest{
+		AccountID: itest.Master().Address(),
+	})
+	require.NoError(t, err)
+
+	installContractOp := assembleInstallContractCodeOp(t, master.Address(), "soroban_sac_test.wasm")
+	preFlightOp, minFee := itest.PreflightHostFunctions(&sourceAccount, *installContractOp)
+	txParams := integration.GetBaseTransactionParamsWithFee(&sourceAccount, minFee+txnbuild.MinBaseFee, &preFlightOp)
+	_, err = itest.AsyncSubmitTransaction(master, txParams)
+	assert.EqualError(
+		t, err,
+		"horizon error: \"Transaction Malformed\" - check horizon.Error.Problem for more information",
+	)
+}
+
 func TestAsyncTxSub_GetOpenAPISpecResponse(t *testing.T) {
 	itest := integration.NewTest(t, integration.Config{})
 	res, err := http.Get(itest.AsyncTxSubOpenAPISpecURL())