diff --git a/nipype/pipeline/engine/nodes.py b/nipype/pipeline/engine/nodes.py
index 6391b2ac5a..025037a66c 100644
--- a/nipype/pipeline/engine/nodes.py
+++ b/nipype/pipeline/engine/nodes.py
@@ -1127,7 +1127,8 @@ def _node_runner(self, nodes, updatehash=False):
             err = None
             try:
                 node.run(updatehash=updatehash)
-            except Exception as err:
+            except Exception as this_err:
+                err = this_err # save reference
                 if str2bool(self.config['execution']['stop_on_first_crash']):
                     self._result = node.result
                     raise
diff --git a/nipype/pipeline/engine/tests/test_engine.py b/nipype/pipeline/engine/tests/test_engine.py
index 3af9c9c564..13f643afaf 100644
--- a/nipype/pipeline/engine/tests/test_engine.py
+++ b/nipype/pipeline/engine/tests/test_engine.py
@@ -13,6 +13,7 @@
 import os
 from shutil import rmtree
 from tempfile import mkdtemp
+import logging
 
 import networkx as nx
 
@@ -44,6 +45,29 @@ def _list_outputs(self):
         return outputs
 
 
+class MockLoggingHandler(logging.Handler):
+    """Mock logging handler to check for expected logs.
+
+    Credit: Gustavo @ http://stackoverflow.com/a/1049375/3903368
+    """
+
+    def __init__(self, *args, **kwargs):
+        self.reset()
+        logging.Handler.__init__(self, *args, **kwargs)
+
+    def emit(self, record):
+        self.messages[record.levelname.lower()].append(record.getMessage())
+
+    def reset(self):
+        self.messages = {
+            'debug': [],
+            'info': [],
+            'warning': [],
+            'error': [],
+            'critical': [],
+        }
+
+
 def test_init():
     yield assert_raises, Exception, pe.Workflow
     pipe = pe.Workflow(name='pipe')
@@ -750,3 +774,75 @@ def func1(in1):
 
     os.chdir(cwd)
     rmtree(wd)
+
+
+
+def test_mapnode_handles_wrapped_crash():
+    cwd = os.getcwd()
+    wd = mkdtemp()
+    os.chdir(wd)
+    from nipype import MapNode, Function, Workflow, logging
+
+    mock_handler = MockLoggingHandler()
+    logging.loggers['workflow'].addHandler(mock_handler)
+
+    def subworkflow_wrapper(arg):
+        import os
+        from nipype.pipeline.engine import Node, Workflow
+        from nipype.interfaces import Function
+        from nipype.utils.filemanip import loadpkl
+
+        crash_program = """\
+    def crash_program(arg):
+        raise Exception('Important message, {}'.format(arg))
+    """
+        sub_wf = Workflow(name='sub_wf')
+        sub_wf.base_dir = '.'
+        crash = Node(Function(function_str=crash_program,
+                              input_names=['arg'],
+                              output_names=['res']),
+                    name='crash')
+        sub_wf.add_nodes([crash])
+
+        sub_wf.inputs.crash.arg = arg
+
+        sub_wf.run()
+
+        results = loadpkl(
+            os.path.join(sub_wf.name, crash.name,
+                        'result_{}.pklz'.format(crash.name)))
+        return results.inputs['_outputs']['res']
+
+    wf = Workflow(name='wf')
+    sub_wf_each = MapNode(
+        Function(function=subworkflow_wrapper,
+                input_names=['arg'],
+                output_names=['res']),
+        iterfield=['arg'],
+        name='sub_wf_each')
+
+    wf.add_nodes((sub_wf_each, ))
+    wf.inputs.sub_wf_each.arg = ['Crash once', 'Crash twice']
+    wf.config['execution'] = {'stop_on_first_crash': 'false',
+                              'local_hash_check': 'true',
+                              'crashdump_dir': wd,
+                              'poll_sleep_duration': 2}
+
+    try:
+        wf.run()
+    except Exception as e:
+        error_string = str(e)
+        error_raised = True
+
+    yield assert_true, error_raised, "Didn't raise an error"
+    yield assert_true, 'Workflow did not execute' in error_string, \
+        'Raised wrong type of error "%s"' % error_string
+
+    # check for correct logging
+    for message in wf.inputs.sub_wf_each.arg:
+        yield assert_true, any(message in m
+                               for m in mock_handler.messages['info']), \
+            "Didn't log error correctly"
+
+    os.chdir(cwd)
+    rmtree(wd)