diff --git a/mobius-rx2/build.gradle b/mobius-rx2/build.gradle
index 90488c96..0bda939f 100644
--- a/mobius-rx2/build.gradle
+++ b/mobius-rx2/build.gradle
@@ -14,6 +14,7 @@ dependencies {
     testImplementation "org.hamcrest:hamcrest-library:${versions.hamcrestLibrary}"
     testImplementation "ch.qos.logback:logback-classic:${versions.logback}"
     testImplementation "org.awaitility:awaitility:${versions.awaitility}"
+    testImplementation "org.assertj:assertj-core:${versions.assertjcore}"
     testImplementation "com.google.auto.value:auto-value-annotations:${versions.autoValue}"
 }
 
diff --git a/mobius-rx2/src/main/java/com/spotify/mobius/rx2/EffectHandlerException.java b/mobius-rx2/src/main/java/com/spotify/mobius/rx2/EffectHandlerException.java
new file mode 100644
index 00000000..3aca6e1c
--- /dev/null
+++ b/mobius-rx2/src/main/java/com/spotify/mobius/rx2/EffectHandlerException.java
@@ -0,0 +1,47 @@
+/*
+ * -\-\-
+ * Mobius
+ * --
+ * Copyright (c) 2017-2018 Spotify AB
+ * --
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *      http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ * -/-/-
+ */
+package com.spotify.mobius.rx2;
+
+import com.spotify.mobius.ConnectionException;
+
+/**
+ * Helper exception type that enables capturing the correct class and method for exceptions
+ * happening in {@link io.reactivex.ObservableTransformer}s.
+ */
+class EffectHandlerException extends ConnectionException {
+
+  private EffectHandlerException(Throwable throwable) {
+    super("Error in effect handler", throwable);
+  }
+
+  public static EffectHandlerException in(Object effectHandler, Throwable cause) {
+    EffectHandlerException e = new EffectHandlerException(cause);
+
+    final StackTraceElement[] stackTrace = e.getStackTrace();
+
+    // add a synthetic StackTraceElement so that the effect handler class name will be reported in
+    // the exception. This helps troubleshooting where the issue originated from.
+    stackTrace[0] = new StackTraceElement(effectHandler.getClass().getName(), "apply", null, -1);
+
+    e.setStackTrace(stackTrace);
+
+    return e;
+  }
+}
diff --git a/mobius-rx2/src/main/java/com/spotify/mobius/rx2/RxMobius.java b/mobius-rx2/src/main/java/com/spotify/mobius/rx2/RxMobius.java
index ea7d235d..0e2ed63d 100644
--- a/mobius-rx2/src/main/java/com/spotify/mobius/rx2/RxMobius.java
+++ b/mobius-rx2/src/main/java/com/spotify/mobius/rx2/RxMobius.java
@@ -21,7 +21,6 @@
 
 import static com.spotify.mobius.internal_util.Preconditions.checkNotNull;
 
-import com.spotify.mobius.ConnectionException;
 import com.spotify.mobius.Mobius;
 import com.spotify.mobius.MobiusLoop;
 import com.spotify.mobius.Update;
@@ -481,9 +480,7 @@ public ObservableTransformer<F, E> build() {
     private static <F, E> Consumer<Throwable> defaultOnError(
         final ObservableTransformer<? extends F, E> effectHandler) {
       return throwable ->
-          RxJavaPlugins.onError(
-              new ConnectionException(
-                  "in effect handler: " + effectHandler.getClass().toString(), throwable));
+          RxJavaPlugins.onError(EffectHandlerException.in(effectHandler, throwable));
     }
 
     private interface OnErrorFunction<T, R> extends Function<T, R> {
diff --git a/mobius-rx2/src/test/java/com/spotify/mobius/rx2/EffectHandlerExceptionTest.java b/mobius-rx2/src/test/java/com/spotify/mobius/rx2/EffectHandlerExceptionTest.java
new file mode 100644
index 00000000..33503903
--- /dev/null
+++ b/mobius-rx2/src/test/java/com/spotify/mobius/rx2/EffectHandlerExceptionTest.java
@@ -0,0 +1,41 @@
+/*
+ * -\-\-
+ * Mobius
+ * --
+ * Copyright (c) 2017-2018 Spotify AB
+ * --
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *      http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ * -/-/-
+ */
+package com.spotify.mobius.rx2;
+
+import static org.assertj.core.api.Assertions.assertThatThrownBy;
+
+import org.junit.Test;
+
+public class EffectHandlerExceptionTest {
+
+  private static class PretendEffectHandler {}
+
+  @Test
+  public void shouldProvideAGoodStackTrace() throws Exception {
+    final RuntimeException cause = new RuntimeException("hey");
+
+    assertThatThrownBy(
+            () -> {
+              throw EffectHandlerException.in(new PretendEffectHandler(), cause);
+            })
+        .hasStackTraceContaining(PretendEffectHandler.class.getName())
+        .hasCause(cause);
+  }
+}