diff --git a/docs/CHANGELOG.md b/docs/CHANGELOG.md
index b862ab0ddd..75a7140bcc 100644
--- a/docs/CHANGELOG.md
+++ b/docs/CHANGELOG.md
@@ -11,6 +11,10 @@ The format is based on [Keep a Changelog][kac] and this project adheres to
 
 ## [Unreleased]
 
+### Added 
+
+* `bats::on_failure` hook that gets called when a test or `setup*` function fails (#1031)
+
 ## [1.11.1] - 2024-11-29
 
 ### Added
diff --git a/lib/bats-core/tracing.bash b/lib/bats-core/tracing.bash
index c7cb07319f..0fc12102f8 100644
--- a/lib/bats-core/tracing.bash
+++ b/lib/bats-core/tracing.bash
@@ -386,8 +386,14 @@ bats_setup_tracing() {
   trap 'bats_error_trap' ERR
 }
 
+# predefine to avoid problems when the user does not declare one
+bats::on_failure() {
+  :
+}
+
 bats_error_trap() {
   bats_check_status_from_trap
+  bats::on_failure "$BATS_ERROR_STATUS"
 
   # If necessary, undo the most recent stack trace captured by bats_debug_trap.
   # See bats_debug_trap for details.
diff --git a/test/bats.bats b/test/bats.bats
index 1cd1887b17..b2957bc340 100755
--- a/test/bats.bats
+++ b/test/bats.bats
@@ -1500,4 +1500,50 @@ END_OF_ERR_MSG
   bats_require_minimum_version 1.5.0
 
   reentrant_run -0 bats --print-output-on-failure "$FIXTURE_ROOT/preserve_IFS" --filter-tags ''
+}
+
+@test "failure callback in test" {
+  bats_require_minimum_version 1.5.0
+
+  reentrant_run -1 bats --show-output-of-passing-tests --print-output-on-failure "$FIXTURE_ROOT/failure_callback.bats"
+
+  [ "${lines[0]}" = 1..3 ]
+  [ "${lines[1]}" = 'not ok 1 failure callback is called on failure' ]
+  [ "${lines[2]}" = "# (in test file $RELATIVE_FIXTURE_ROOT/failure_callback.bats, line 6)" ]
+  [ "${lines[3]}" = "#   \`false' failed" ]
+  [ "${lines[4]}" = "# called failure callback" ]
+  [ "${lines[5]}" = 'ok 2 failure callback is not called on success' ]
+  [ "${lines[6]}" = '# passed' ]
+  # this test should not contain: called failure callback
+  [ "${lines[7]}" = 'not ok 3 failure callback can be overridden locally' ]
+  [ "${lines[8]}" = "# (in test file $RELATIVE_FIXTURE_ROOT/failure_callback.bats, line 17)" ]
+  [ "${lines[9]}" = "#   \`false' failed" ]
+  [ "${lines[10]}" = "# override failure callback" ]
+  [ ${#lines[@]} -eq 11 ]
+}
+
+@test "failure callback in setup_file" {
+  bats_require_minimum_version 1.5.0
+
+  reentrant_run -1 bats --print-output-on-failure "$FIXTURE_ROOT/failure_callback_setup_file.bats"
+
+  [ "${lines[0]}" = 1..1 ]
+  [ "${lines[1]}" = 'not ok 1 setup_file failed' ]
+  [ "${lines[2]}" = "# (from function \`setup_file' in test file $RELATIVE_FIXTURE_ROOT/failure_callback_setup_file.bats, line 6)" ]
+  [ "${lines[3]}" = "#   \`false' failed" ] 
+  [ "${lines[4]}" = '# failure callback' ]
+  [ ${#lines[@]} -eq 5 ]
+}
+
+@test "failure callback in setup_suite" {
+  bats_require_minimum_version 1.5.0
+
+  reentrant_run -1 bats --print-output-on-failure "$FIXTURE_ROOT/failure_callback_setup_suite"
+
+  [ "${lines[0]}" = 1..1 ]
+  [ "${lines[1]}" = 'not ok 1 setup_suite' ]
+  [ "${lines[2]}" = "# (from function \`setup_suite' in test file $RELATIVE_FIXTURE_ROOT/failure_callback_setup_suite/setup_suite.bash, line 6)" ]
+  [ "${lines[3]}" = "#   \`false' failed" ]
+  [ "${lines[4]}" = '# failure callback' ]
+  [ ${#lines[@]} -eq 5 ]
 }
\ No newline at end of file
diff --git a/test/fixtures/bats/failure_callback.bats b/test/fixtures/bats/failure_callback.bats
new file mode 100644
index 0000000000..1934b05a9d
--- /dev/null
+++ b/test/fixtures/bats/failure_callback.bats
@@ -0,0 +1,19 @@
+bats::on_failure() {
+    # shellcheck disable=SC2317
+    echo "called failure callback"
+}
+
+@test failure callback is called on failure {
+    false
+}
+
+@test failure callback is not called on success {
+    echo passed
+}
+
+@test failure callback can be overridden locally {
+    bats::on_failure() {
+        echo "override failure callback"
+    }
+    false
+}
\ No newline at end of file
diff --git a/test/fixtures/bats/failure_callback_setup_file.bats b/test/fixtures/bats/failure_callback_setup_file.bats
new file mode 100644
index 0000000000..5454108d70
--- /dev/null
+++ b/test/fixtures/bats/failure_callback_setup_file.bats
@@ -0,0 +1,11 @@
+bats::on_failure() {
+    echo "failure callback"
+}
+
+setup_file() {
+    false
+}
+
+@test dummy {
+    true
+}
\ No newline at end of file
diff --git a/test/fixtures/bats/failure_callback_setup_suite/dummy.bats b/test/fixtures/bats/failure_callback_setup_suite/dummy.bats
new file mode 100644
index 0000000000..5cccbef218
--- /dev/null
+++ b/test/fixtures/bats/failure_callback_setup_suite/dummy.bats
@@ -0,0 +1,3 @@
+@test dummy {
+    true
+}
\ No newline at end of file
diff --git a/test/fixtures/bats/failure_callback_setup_suite/setup_suite.bash b/test/fixtures/bats/failure_callback_setup_suite/setup_suite.bash
new file mode 100644
index 0000000000..14b1ecde6d
--- /dev/null
+++ b/test/fixtures/bats/failure_callback_setup_suite/setup_suite.bash
@@ -0,0 +1,7 @@
+bats::on_failure() {
+    echo "failure callback"
+}
+
+setup_suite() {
+    false
+}
\ No newline at end of file