diff --git a/azure/durable_functions/models/entities/ResponseMessage.py b/azure/durable_functions/models/entities/ResponseMessage.py
index 0b8b35dc..17fce6b5 100644
--- a/azure/durable_functions/models/entities/ResponseMessage.py
+++ b/azure/durable_functions/models/entities/ResponseMessage.py
@@ -1,4 +1,5 @@
 from typing import Dict, Any
+import json
 
 
 class ResponseMessage:
@@ -17,6 +18,13 @@ def __init__(self, result: str, is_exception: bool = False):
         result: str
             The result provided by the entity
         """
+        # The time-out case seems to be handled by the Functions-Host, so
+        # its result is not doubly-serialized. In this branch, we compensate
+        # for this by re-serializing the payload.
+        if result.strip().startswith("Timeout value of"):
+            is_exception = True
+            result = json.dumps(result)
+
         self.result = result
         self.is_exception = is_exception
         # TODO: JS has an additional exceptionType field, but does not use it
diff --git a/tests/orchestrator/test_entity.py b/tests/orchestrator/test_entity.py
index 83a7d25a..428a8da9 100644
--- a/tests/orchestrator/test_entity.py
+++ b/tests/orchestrator/test_entity.py
@@ -192,11 +192,11 @@ def add_signal_entity_action(state: OrchestratorState, id_: df.EntityId, op: str
     state.actions.append([action])
 
 def add_call_entity_completed_events(
-        context_builder: ContextBuilder, op: str, instance_id=str, input_=None, event_id=0, is_error=False):
+        context_builder: ContextBuilder, op: str, instance_id=str, input_=None, event_id=0, is_error=False, literal_input=False):
     context_builder.add_event_sent_event(instance_id, event_id)
     context_builder.add_orchestrator_completed_event()
     context_builder.add_orchestrator_started_event()
-    context_builder.add_event_raised_event(name="0000", id_=0, input_=input_, is_entity=True, is_error=is_error)
+    context_builder.add_event_raised_event(name="0000", id_=0, input_=input_, is_entity=True, is_error=is_error, literal_input=literal_input)
 
 def test_call_entity_sent():
     context_builder = ContextBuilder('test_simple_function')
@@ -289,4 +289,30 @@ def test_call_entity_catch_exception():
     expected_state._is_done = True
     expected = expected_state.to_json()
 
+    assert_orchestration_state_equals(expected, result)
+
+def test_timeout_entity_catch_exception():
+    entityId = df.EntityId("Counter", "myCounter")
+    context_builder = ContextBuilder('catch timeout exceptions')
+    add_call_entity_completed_events(
+        context_builder,
+        "add",
+        df.EntityId.get_scheduler_id(entityId),
+        input_="Timeout value of 00:02:00 was exceeded by function: Functions.SlowEntity.",
+        event_id=0,
+        is_error=False,
+        literal_input=True
+    )
+
+    result = get_orchestration_state_result(
+        context_builder, generator_function_catch_entity_exception)
+
+    expected_state = base_expected_state(
+        "Exception thrown"
+    )
+
+    add_call_entity_action(expected_state, entityId, "add", 3)
+    expected_state._is_done = True
+    expected = expected_state.to_json()
+
     assert_orchestration_state_equals(expected, result)
\ No newline at end of file
diff --git a/tests/test_utils/ContextBuilder.py b/tests/test_utils/ContextBuilder.py
index a70f2808..4c4fae00 100644
--- a/tests/test_utils/ContextBuilder.py
+++ b/tests/test_utils/ContextBuilder.py
@@ -125,14 +125,17 @@ def add_execution_started_event(
         event.Input = input_
         self.history_events.append(event)
 
-    def add_event_raised_event(self, name:str, id_: int, input_=None, timestamp=None, is_entity=False, is_error = False):
+    def add_event_raised_event(self, name:str, id_: int, input_=None, timestamp=None, is_entity=False, is_error = False, literal_input=False):
         event = self.get_base_event(HistoryEventType.EVENT_RAISED, id_=id_, timestamp=timestamp)
         event.Name = name
         if is_entity:
             if is_error:
                 event.Input = json.dumps({ "result": json.dumps(input_), "exceptionType": "True" })
             else:
-                event.Input = json.dumps({ "result": json.dumps(input_) })
+                if literal_input:
+                    event.Input = json.dumps({ "result": input_ })
+                else:
+                    event.Input = json.dumps({ "result": json.dumps(input_) })
         else:
             event.Input = input_
         # event.timestamp = timestamp