diff --git a/newsfragments/3388.feature.rst b/newsfragments/3388.feature.rst
new file mode 100644
index 0000000000..5bd70bfe1e
--- /dev/null
+++ b/newsfragments/3388.feature.rst
@@ -0,0 +1 @@
+Properly handle ``InsufficientDataBytes`` errors when processing receipts
diff --git a/tests/core/contracts/test_extracting_event_data.py b/tests/core/contracts/test_extracting_event_data.py
index 09155a6b5f..29dfe39ce4 100644
--- a/tests/core/contracts/test_extracting_event_data.py
+++ b/tests/core/contracts/test_extracting_event_data.py
@@ -1,6 +1,10 @@
+import copy
 import pytest
 import re
 
+from eth_abi.exceptions import (
+    InsufficientDataBytes,
+)
 from eth_utils import (
     is_same_address,
 )
@@ -1233,3 +1237,29 @@ def test_get_all_entries_with_nested_tuple_event_non_strict(
     assert log_entry.blockNumber == txn_receipt["blockNumber"]
     assert log_entry.transactionIndex == txn_receipt["transactionIndex"]
     assert is_same_address(log_entry.address, non_strict_emitter.address)
+
+
+def test_receipt_processing_catches_insufficientdatabytes_error_by_default(
+    w3, emitter, wait_for_transaction
+):
+    txn_hash = emitter.functions.logListArgs([b"13"], [b"54"]).transact()
+    txn_receipt = wait_for_transaction(w3, txn_hash)
+    event_instance = emitter.events.LogListArgs()
+
+    # web3 doesn't generate logs with non-standard lengths, so we have to do it manually
+    txn_receipt_dict = copy.deepcopy(txn_receipt)
+    txn_receipt_dict["logs"][0] = dict(txn_receipt_dict["logs"][0])
+    txn_receipt_dict["logs"][0]["data"] = txn_receipt_dict["logs"][0]["data"][:-8]
+
+    # WARN is default
+    assert len(event_instance.process_receipt(txn_receipt_dict)) == 0
+    assert len(event_instance.process_receipt(txn_receipt_dict, errors=WARN)) == 0
+    assert len(event_instance.process_receipt(txn_receipt_dict, errors=DISCARD)) == 0
+
+    # IGNORE includes the InsufficientDataBytes error in the log
+    assert len(event_instance.process_receipt(txn_receipt_dict, errors=IGNORE)) == 1
+
+    # STRICT raises an error to be caught
+    with pytest.raises(InsufficientDataBytes):
+        returned_log = event_instance.process_receipt(txn_receipt_dict, errors=STRICT)
+        assert len(returned_log) == 0
diff --git a/web3/contract/base_contract.py b/web3/contract/base_contract.py
index 241874d73e..32a424388f 100644
--- a/web3/contract/base_contract.py
+++ b/web3/contract/base_contract.py
@@ -16,6 +16,9 @@
 )
 import warnings
 
+from eth_abi.exceptions import (
+    InsufficientDataBytes,
+)
 from eth_typing import (
     Address,
     ChecksumAddress,
@@ -174,7 +177,13 @@ def _parse_logs(
         for log in txn_receipt["logs"]:
             try:
                 rich_log = get_event_data(self.w3.codec, self.abi, log)
-            except (MismatchedABI, LogTopicError, InvalidEventABI, TypeError) as e:
+            except (
+                MismatchedABI,
+                LogTopicError,
+                InvalidEventABI,
+                TypeError,
+                InsufficientDataBytes,
+            ) as e:
                 if errors == DISCARD:
                     continue
                 elif errors == IGNORE: