diff --git a/nats.go b/nats.go
index 83638a565..3f12d61e2 100644
--- a/nats.go
+++ b/nats.go
@@ -86,6 +86,9 @@ const (
 
 	// MAX_CONNECTIONS_ERR is for when nats server denies the connection due to server max_connections limit
 	MAX_CONNECTIONS_ERR = "maximum connections exceeded"
+
+	// MAX_SUBSCRIPTIONS_ERR is for when nats server denies the connection due to server subscriptions limit
+	MAX_SUBSCRIPTIONS_ERR = "maximum subscriptions exceeded"
 )
 
 // Errors
@@ -141,6 +144,7 @@ var (
 	ErrNoResponders                = errors.New("nats: no responders available for request")
 	ErrMaxConnectionsExceeded      = errors.New("nats: server maximum connections exceeded")
 	ErrConnectionNotTLS            = errors.New("nats: connection is not tls")
+	ErrMaxSubscriptionsExceeded    = errors.New("nats: server maximum subscriptions exceeded")
 )
 
 // GetDefaultOptions returns default configuration options for the client.
@@ -2973,11 +2977,11 @@ func (nc *Conn) doReconnect(err error, forceReconnect bool) {
 
 // processOpErr handles errors from reading or parsing the protocol.
 // The lock should not be held entering this function.
-func (nc *Conn) processOpErr(err error) {
+func (nc *Conn) processOpErr(err error) bool {
 	nc.mu.Lock()
+	defer nc.mu.Unlock()
 	if nc.isConnecting() || nc.isClosed() || nc.isReconnecting() {
-		nc.mu.Unlock()
-		return
+		return false
 	}
 
 	if nc.Opts.AllowReconnect && nc.status == CONNECTED {
@@ -2997,14 +3001,12 @@ func (nc *Conn) processOpErr(err error) {
 		nc.clearPendingFlushCalls()
 
 		go nc.doReconnect(err, false)
-		nc.mu.Unlock()
-		return
+		return false
 	}
 
 	nc.changeConnStatus(DISCONNECTED)
 	nc.err = err
-	nc.mu.Unlock()
-	nc.close(CLOSED, true, nil)
+	return true
 }
 
 // dispatch is responsible for calling any async callbacks
@@ -3101,7 +3103,9 @@ func (nc *Conn) readLoop() {
 			err = nc.parse(buf)
 		}
 		if err != nil {
-			nc.processOpErr(err)
+			if shouldClose := nc.processOpErr(err); shouldClose {
+				nc.close(CLOSED, true, nil)
+			}
 			break
 		}
 	}
@@ -3431,15 +3435,17 @@ slowConsumer:
 	}
 }
 
-// processPermissionsViolation is called when the server signals a subject
-// permissions violation on either publish or subscribe.
-func (nc *Conn) processPermissionsViolation(err string) {
+// processTransientError is called when the server signals a non terminal error
+// which does not close the connection or trigger a reconnect.
+// This will trigger the async error callback if set.
+// These errors include the following:
+// - permissions violation on publish or subscribe
+// - maximum subscriptions exceeded
+func (nc *Conn) processTransientError(err error) {
 	nc.mu.Lock()
-	// create error here so we can pass it as a closure to the async cb dispatcher.
-	e := errors.New("nats: " + err)
-	nc.err = e
+	nc.err = err
 	if nc.Opts.AsyncErrorCB != nil {
-		nc.ach.push(func() { nc.Opts.AsyncErrorCB(nc, nil, e) })
+		nc.ach.push(func() { nc.Opts.AsyncErrorCB(nc, nil, err) })
 	}
 	nc.mu.Unlock()
 }
@@ -3671,15 +3677,17 @@ func (nc *Conn) processErr(ie string) {
 	// convert to lower case.
 	e := strings.ToLower(ne)
 
-	close := false
+	var close bool
 
 	// FIXME(dlc) - process Slow Consumer signals special.
 	if e == STALE_CONNECTION {
-		nc.processOpErr(ErrStaleConnection)
+		close = nc.processOpErr(ErrStaleConnection)
 	} else if e == MAX_CONNECTIONS_ERR {
-		nc.processOpErr(ErrMaxConnectionsExceeded)
+		close = nc.processOpErr(ErrMaxConnectionsExceeded)
 	} else if strings.HasPrefix(e, PERMISSIONS_ERR) {
-		nc.processPermissionsViolation(ne)
+		nc.processTransientError(fmt.Errorf("nats: %s", ne))
+	} else if strings.HasPrefix(e, MAX_SUBSCRIPTIONS_ERR) {
+		nc.processTransientError(ErrMaxSubscriptionsExceeded)
 	} else if authErr := checkAuthError(e); authErr != nil {
 		nc.mu.Lock()
 		close = nc.processAuthError(authErr)
@@ -5128,7 +5136,9 @@ func (nc *Conn) processPingTimer() {
 	nc.pout++
 	if nc.pout > nc.Opts.MaxPingsOut {
 		nc.mu.Unlock()
-		nc.processOpErr(ErrStaleConnection)
+		if shouldClose := nc.processOpErr(ErrStaleConnection); shouldClose {
+			nc.close(CLOSED, true, nil)
+		}
 		return
 	}
 
diff --git a/test/sub_test.go b/test/sub_test.go
index a27e14256..559efc50c 100644
--- a/test/sub_test.go
+++ b/test/sub_test.go
@@ -16,6 +16,7 @@ package test
 import (
 	"errors"
 	"fmt"
+	"os"
 	"sync"
 	"sync/atomic"
 	"testing"
@@ -1737,3 +1738,35 @@ func TestSubscriptionEvents(t *testing.T) {
 		close(blockChan)
 	})
 }
+
+func TestMaxSubscriptionsExceeded(t *testing.T) {
+	conf := createConfFile(t, []byte(`
+	listen: 127.0.0.1:-1
+	max_subscriptions: 5
+	`))
+	defer os.Remove(conf)
+	s, _ := RunServerWithConfig(conf)
+	defer s.Shutdown()
+
+	ch := make(chan error)
+	nc, err := nats.Connect(s.ClientURL(), nats.ErrorHandler(func(c *nats.Conn, s *nats.Subscription, err error) {
+		ch <- err
+	}))
+	if err != nil {
+		t.Fatalf("Error on connect: %v", err)
+	}
+	defer nc.Close()
+
+	for i := 0; i < 6; i++ {
+		s, err := nc.Subscribe("foo", func(_ *nats.Msg) {})
+		if err != nil {
+			t.Fatalf("Error subscribing: %v", err)
+		}
+		defer s.Unsubscribe()
+	}
+
+	WaitOnChannel(t, ch, nats.ErrMaxSubscriptionsExceeded)
+
+	// wait for the server to process the SUBs
+	time.Sleep(100 * time.Millisecond)
+}