diff --git a/federationapi/routing/send.go b/federationapi/routing/send.go
index 99022074..e62855ab 100644
--- a/federationapi/routing/send.go
+++ b/federationapi/routing/send.go
@@ -74,28 +74,17 @@ func Send(
 	util.GetLogger(httpReq.Context()).Infof("Received transaction %q containing %d PDUs, %d EDUs", txnID, len(t.PDUs), len(t.EDUs))
 
 	resp, err := t.processTransaction()
-	switch err.(type) {
-	// No error? Great! Send back a 200.
-	case nil:
-		return util.JSONResponse{
-			Code: http.StatusOK,
-			JSON: resp,
-		}
-	// Handle known error cases as we will return a 400 error for these.
-	case roomNotFoundError:
-	case unmarshalError:
-	case verifySigError:
-	// Handle unknown error cases. Sending 500 errors back should be a last
-	// resort as this can make other homeservers back off sending federation
-	// events.
-	default:
+	if err != nil {
 		util.GetLogger(httpReq.Context()).WithError(err).Error("t.processTransaction failed")
-		return jsonerror.InternalServerError()
 	}
-	// Return a 400 error for bad requests as fallen through from above.
+
+	// https://matrix.org/docs/spec/server_server/r0.1.3#put-matrix-federation-v1-send-txnid
+	// Status code 200:
+	// The result of processing the transaction. The server is to use this response
+	// even in the event of one or more PDUs failing to be processed.
 	return util.JSONResponse{
-		Code: http.StatusBadRequest,
-		JSON: jsonerror.BadJSON(err.Error()),
+		Code: http.StatusOK,
+		JSON: resp,
 	}
 }
 
@@ -135,30 +124,39 @@ func (t *txnReq) processTransaction() (*gomatrixserverlib.RespSend, error) {
 		}
 		if err := json.Unmarshal(pdu, &header); err != nil {
 			util.GetLogger(t.context).WithError(err).Warn("Transaction: Failed to extract room ID from event")
-			return nil, unmarshalError{err}
+			// We don't know the event ID at this point so we can't return the
+			// failure in the PDU results
+			continue
 		}
 		verReq := api.QueryRoomVersionForRoomRequest{RoomID: header.RoomID}
 		verRes := api.QueryRoomVersionForRoomResponse{}
 		if err := t.rsAPI.QueryRoomVersionForRoom(t.context, &verReq, &verRes); err != nil {
 			util.GetLogger(t.context).WithError(err).Warn("Transaction: Failed to query room version for room", verReq.RoomID)
-			return nil, roomNotFoundError{verReq.RoomID}
+			// We don't know the event ID at this point so we can't return the
+			// failure in the PDU results
+			continue
 		}
 		event, err := gomatrixserverlib.NewEventFromUntrustedJSON(pdu, verRes.RoomVersion)
 		if err != nil {
 			util.GetLogger(t.context).WithError(err).Warnf("Transaction: Failed to parse event JSON of event %q", event.EventID())
-			return nil, unmarshalError{err}
+			results[event.EventID()] = gomatrixserverlib.PDUResult{
+				Error: err.Error(),
+			}
+			continue
 		}
-		if err := gomatrixserverlib.VerifyAllEventSignatures(t.context, []gomatrixserverlib.Event{event}, t.keys); err != nil {
+		if err = gomatrixserverlib.VerifyAllEventSignatures(t.context, []gomatrixserverlib.Event{event}, t.keys); err != nil {
 			util.GetLogger(t.context).WithError(err).Warnf("Transaction: Couldn't validate signature of event %q", event.EventID())
-			return nil, verifySigError{event.EventID(), err}
+			results[event.EventID()] = gomatrixserverlib.PDUResult{
+				Error: err.Error(),
+			}
+			continue
 		}
 		pdus = append(pdus, event.Headered(verRes.RoomVersion))
 	}
 
 	// Process the events.
 	for _, e := range pdus {
-		err := t.processEvent(e.Unwrap(), true)
-		if err != nil {
+		if err := t.processEvent(e.Unwrap(), true); err != nil {
 			// If the error is due to the event itself being bad then we skip
 			// it and move onto the next event. We report an error so that the
 			// sender knows that we have skipped processing it.
@@ -174,20 +172,17 @@ func (t *txnReq) processTransaction() (*gomatrixserverlib.RespSend, error) {
 			// receive another event referencing it.
 			// If we bail and stop processing then we risk wedging incoming
 			// transactions from that server forever.
-			switch err.(type) {
-			case roomNotFoundError:
-			case *gomatrixserverlib.NotAllowed:
-			case missingPrevEventsError:
-			default:
-				util.GetLogger(t.context).Warnf("Processing %s failed: %s", e.EventID(), err)
+			if isProcessingErrorFatal(err) {
 				// Any other error should be the result of a temporary error in
 				// our server so we should bail processing the transaction entirely.
+				util.GetLogger(t.context).Warnf("Processing %s failed fatally: %s", e.EventID(), err)
 				return nil, err
+			} else {
+				util.GetLogger(t.context).WithError(err).WithField("event_id", e.EventID()).Warn("Failed to process incoming federation event, skipping")
+				results[e.EventID()] = gomatrixserverlib.PDUResult{
+					Error: err.Error(),
+				}
 			}
-			results[e.EventID()] = gomatrixserverlib.PDUResult{
-				Error: err.Error(),
-			}
-			util.GetLogger(t.context).WithError(err).WithField("event_id", e.EventID()).Warn("Failed to process incoming federation event, skipping it.")
 		} else {
 			results[e.EventID()] = gomatrixserverlib.PDUResult{}
 		}
@@ -198,6 +193,25 @@ func (t *txnReq) processTransaction() (*gomatrixserverlib.RespSend, error) {
 	return &gomatrixserverlib.RespSend{PDUs: results}, nil
 }
 
+// isProcessingErrorFatal returns true if the error is really bad and
+// we should stop processing the transaction, and returns false if it
+// is just some less serious error about a specific event.
+func isProcessingErrorFatal(err error) bool {
+	switch err.(type) {
+	case roomNotFoundError:
+	case *gomatrixserverlib.NotAllowed:
+	case missingPrevEventsError:
+	default:
+		switch err {
+		case context.Canceled:
+		case context.DeadlineExceeded:
+		default:
+			return true
+		}
+	}
+	return false
+}
+
 type roomNotFoundError struct {
 	roomID string
 }