diff --git a/src/routes/policy-playground/PolicyPlayground.tsx b/src/routes/policy-playground/PolicyPlayground.tsx
index fb85403..7932fca 100644
--- a/src/routes/policy-playground/PolicyPlayground.tsx
+++ b/src/routes/policy-playground/PolicyPlayground.tsx
@@ -100,15 +100,26 @@ export default function PolicyPlayground() {
     const evaluateInput = () => {
         const { policy, entities, context, principal, action, resource, schema } = uiState;
         const start = performance.now();
-        let parsedEntities: EntityJson[] = [];
-        let parsedContext: Context = {};
+        const setParseError = (e: unknown) =>
+            setOutput({
+                status: 'error',
+                message: t('issueAuthRequest.parseError'),
+                errors: [(e as Error).message],
+                warnings: [],
+            });
+        let parsedEntities: EntityJson[];
+        let parsedContext: Context;
         try {
             parsedEntities = JSON.parse(entities) as EntityJson[];
+        } catch (e) {
+            setParseError(e);
+            return;
+        }
+        try {
             parsedContext = JSON.parse(context) as Context;
-        } catch (_e) {
-            // Fall through: let wasm produce the error if JSON is invalid.
-            parsedEntities = [];
-            parsedContext = {};
+        } catch (e) {
+            setParseError(e);
+            return;
         }
         const result = isAuthorized({
             principal,
diff --git a/tests/sandbox.test.tsx b/tests/sandbox.test.tsx
index a322912..4bf0b71 100644
--- a/tests/sandbox.test.tsx
+++ b/tests/sandbox.test.tsx
@@ -7,6 +7,11 @@ import { IntlProvider } from 'react-intl';
 import nestedMessages from '../src/translations/en.json';
 import { flattenMessages } from '../src/util/flattenMessages';
 import { getCedarVersion } from '@cedar-policy/cedar-wasm';
+import {
+    exportCedarPlaygroundDataToBase64,
+    PLAYGROUND_URL_FRAG_PREFIX,
+    CedarPlaygroundDataTransferObject,
+} from '../src/playground-helpers';
 
 const messages = flattenMessages(nestedMessages);
 
@@ -84,4 +89,60 @@ describe('playground tests', () => {
         expect(cedarVersion).toBeDefined();
         expect(cedarVersion).toEqual(expect.any(String));
     });
+
+    it('should show error when entities JSON is invalid', async () => {
+        const dto: CedarPlaygroundDataTransferObject = {
+            interfaceVersion: 1,
+            cedarVersion: getCedarVersion(),
+            playgroundData: {
+                policy: 'permit(principal, action, resource);',
+                schema: '',
+                principal: { type: 'User', id: 'alice' },
+                action: { type: 'Action', id: 'view' },
+                resource: { type: 'Photo', id: 'photo1' },
+                entities: 'not valid json [[[',
+                context: '{}',
+                isAVPFormat: false,
+            },
+        };
+        const exported = exportCedarPlaygroundDataToBase64(dto);
+        if ('error' in exported) throw new Error(exported.error);
+        window.location.hash = `#${PLAYGROUND_URL_FRAG_PREFIX}${exported.result}`;
+        const { unmount } = mountPlayground();
+        try {
+            fireEvent.click(screen.getByTestId('evaluate-button'));
+            await screen.findByText(/Invalid context or entities input/);
+        } finally {
+            unmount();
+            window.location.hash = '';
+        }
+    });
+
+    it('should show error when context JSON is invalid', async () => {
+        const dto: CedarPlaygroundDataTransferObject = {
+            interfaceVersion: 1,
+            cedarVersion: getCedarVersion(),
+            playgroundData: {
+                policy: 'permit(principal, action, resource);',
+                schema: '',
+                principal: { type: 'User', id: 'alice' },
+                action: { type: 'Action', id: 'view' },
+                resource: { type: 'Photo', id: 'photo1' },
+                entities: '[]',
+                context: '{invalid context}',
+                isAVPFormat: false,
+            },
+        };
+        const exported = exportCedarPlaygroundDataToBase64(dto);
+        if ('error' in exported) throw new Error(exported.error);
+        window.location.hash = `#${PLAYGROUND_URL_FRAG_PREFIX}${exported.result}`;
+        const { unmount } = mountPlayground();
+        try {
+            fireEvent.click(screen.getByTestId('evaluate-button'));
+            await screen.findByText(/Invalid context or entities input/);
+        } finally {
+            unmount();
+            window.location.hash = '';
+        }
+    });
 });