diff --git a/.release-notes/5147.md b/.release-notes/5147.md
new file mode 100644
index 0000000000..23ea5c2df1
--- /dev/null
+++ b/.release-notes/5147.md
@@ -0,0 +1,6 @@
+## Fix spurious 'can't reuse name' errors when a multi-file package has a syntax error
+
+When a package contained multiple `.pony` files and one of them had a syntax error, the compiler would produce spurious `can't reuse name` errors for unrelated valid code in the other files. This was most visible when a valid file reused a loop variable name across consecutive `for` loops — a perfectly legal pattern that the compiler would incorrectly flag.
+
+The spurious errors no longer appear. You'll still see the real syntax error, but the compiler won't pile on with bogus errors from other files in the same package.
+
diff --git a/src/libponyc/pkg/package.c b/src/libponyc/pkg/package.c
index 0f68a159e5..bdff14f9eb 100644
--- a/src/libponyc/pkg/package.c
+++ b/src/libponyc/pkg/package.c
@@ -1052,7 +1052,12 @@ ast_t* package_load(ast_t* from, const char* path, pass_opt_t* opt)
         return NULL;
     } else if(magic->mapped_path != NULL) {
       if(!parse_files_in_dir(package, magic->mapped_path, opt))
+      {
+        // If source file parsing failed, don't run future passes on the
+        // partially-initialised package.
+        ast_setflag(package, AST_FLAG_PRESERVE);
         return NULL;
+      }
     } else {
       return NULL;
     }
@@ -1060,7 +1065,13 @@ ast_t* package_load(ast_t* from, const char* path, pass_opt_t* opt)
   else
   {
     if(!parse_files_in_dir(package, full_path, opt))
+    {
+      // If source file parsing failed, don't run future passes on the
+      // partially-initialised package, producing spurious errors in
+      // those files.
+      ast_setflag(package, AST_FLAG_PRESERVE);
       return NULL;
+    }
   }
 
   if(ast_child(package) == NULL)
diff --git a/test/libponyc/CMakeLists.txt b/test/libponyc/CMakeLists.txt
index c40cb65fee..e3dd428978 100644
--- a/test/libponyc/CMakeLists.txt
+++ b/test/libponyc/CMakeLists.txt
@@ -68,13 +68,16 @@ target_include_directories(libponyc.tests
 )
 
 set(PONY_PACKAGES_DIR "${CMAKE_SOURCE_DIR}/packages")
+set(PONY_TEST_LIBPONYC_DIR "${CMAKE_SOURCE_DIR}/test/libponyc")
 
 if (MSVC)
     string(REPLACE "/" "\\\\" PONY_PACKAGES_DIR ${PONY_PACKAGES_DIR})
+    string(REPLACE "/" "\\\\" PONY_TEST_LIBPONYC_DIR ${PONY_TEST_LIBPONYC_DIR})
 endif (MSVC)
 
 target_compile_definitions(libponyc.tests
     PRIVATE PONY_PACKAGES_DIR="${PONY_PACKAGES_DIR}"
+    PRIVATE PONY_TEST_LIBPONYC_DIR="${PONY_TEST_LIBPONYC_DIR}"
 )
 
 target_link_directories(libponyc.tests
diff --git a/test/libponyc/badpony.cc b/test/libponyc/badpony.cc
index f1f5b71b14..d2df672d65 100644
--- a/test/libponyc/badpony.cc
+++ b/test/libponyc/badpony.cc
@@ -1735,3 +1735,30 @@ TEST_F(BadPonyTest, MatchTuplePatternFromAliasedTupleUnsound)
     "this capture is unsound",
     "this capture is unsound");
 }
+
+TEST_F(BadPonyTest, SpuriousErrorMessageGeneration)
+{
+  // From issue #4160
+  // A parse error in one file of a package must not produce spurious
+  // "can't reuse name" errors in other files of the same package that
+  // reuse a loop variable name across consecutive for loops.
+  // The fixture package has two files: bad.pony (parse error) comes before
+  // good.pony (valid, with consecutive "for i" loops) alphabetically.
+  add_package_path("pkg", PONY_TEST_LIBPONYC_DIR "/fixtures/spurious-error-message-generation");
+  const char* src =
+    "use \"pkg\"\n"
+    "actor Main\n"
+    "  new create(env: Env) =>\n"
+    "    for i in Range(0, 3) do\n"
+    "      None\n"
+    "    end\n"
+    "    for i in Range(0, 3) do\n"
+    "      None\n"
+    "    end";
+
+  TEST_ERRORS_2(src,
+    "syntax error: unexpected token = after type, interface, trait, primitive,"
+    " class or actor definition",
+    "can't load package 'pkg'");
+}
+
diff --git a/test/libponyc/fixtures/spurious-error-message-generation/bad.pony b/test/libponyc/fixtures/spurious-error-message-generation/bad.pony
new file mode 100644
index 0000000000..a88a5c8865
--- /dev/null
+++ b/test/libponyc/fixtures/spurious-error-message-generation/bad.pony
@@ -0,0 +1,4 @@
+// Intentional syntax error: = instead of =>
+class Bad
+  new create() =
+    None
diff --git a/test/libponyc/fixtures/spurious-error-message-generation/good.pony b/test/libponyc/fixtures/spurious-error-message-generation/good.pony
new file mode 100644
index 0000000000..92581c2305
--- /dev/null
+++ b/test/libponyc/fixtures/spurious-error-message-generation/good.pony
@@ -0,0 +1,16 @@
+// Syntactically valid file in the same package as bad.pony.
+// The loop variable 'i' is reused across consecutive for loops; before the
+// fix for issue #4160, a parse error in bad.pony caused spurious
+// "can't reuse name 'i'" errors here.
+class Good
+  new create() =>
+    let a: Array[U8] = Array[U8]
+    for i in a.values() do
+      None
+    end
+    for i in a.values() do
+      None
+    end
+    for i in a.values() do
+      None
+    end
diff --git a/test/libponyc/util.cc b/test/libponyc/util.cc
index e3c12649ea..91173986b6 100644
--- a/test/libponyc/util.cc
+++ b/test/libponyc/util.cc
@@ -310,6 +310,12 @@ void PassTest::add_package(const char* path, const char* src)
 }
 
 
+void PassTest::add_package_path(const char* path, const char* real_dir)
+{
+  package_add_magic_path(path, real_dir, &opt);
+}
+
+
 void PassTest::default_package_name(const char* path)
 {
   _first_pkg_path = path;
diff --git a/test/libponyc/util.h b/test/libponyc/util.h
index 986f93c1c3..109fadda79 100644
--- a/test/libponyc/util.h
+++ b/test/libponyc/util.h
@@ -49,6 +49,9 @@ class PassTest : public testing::Test
   // Add an additional package source
   void add_package(const char* path, const char* src);
 
+  // Add an additional package backed by a real filesystem directory
+  void add_package_path(const char* path, const char* real_dir);
+
   // Override the default path of the main package (useful for package loops)
   void default_package_name(const char* path);