diff --git a/src/server/identity.rs b/src/server/identity.rs
index cbd22d0..c1825c3 100644
--- a/src/server/identity.rs
+++ b/src/server/identity.rs
@@ -48,6 +48,13 @@ pub(crate) async fn resolve_handle(
             })
         })
         .ok_or_else(|| {
-            xrpc::Error::invalid_request("Unable to resolve handle").named("HandleNotFound")
+            let unresolved = xrpc::Error::invalid_request("Unable to resolve handle");
+            // Only a name this server answers for is one it can say does not
+            // exist. For anyone else's, not knowing is all this means.
+            if accounts.rules().is_local(&handle) {
+                unresolved.named("HandleNotFound")
+            } else {
+                unresolved
+            }
         })
 }
diff --git a/tests/signup.rs b/tests/signup.rs
index dc38359..571dbb9 100644
--- a/tests/signup.rs
+++ b/tests/signup.rs
@@ -197,9 +197,11 @@ async fn a_handle_nothing_here_holds_is_not_resolved_for_a_client() {
     let (router, _data, _seen) = server(false).await;
 
     for (query, error) in [
+        // A name this server hands out, so its absence is an answer.
         ("handle=nobody.pds.test", "HandleNotFound"),
-        // Somebody else's domain, which this server has no way to ask about.
-        ("handle=alice.example.com", "HandleNotFound"),
+        // Somebody else's domain, which this server has no way to ask about
+        // and therefore cannot say does not exist.
+        ("handle=alice.example.com", "InvalidRequest"),
         ("handle=not%20a%20handle", "InvalidHandle"),
     ] {
         let (status, body) = call(