diff --git a/packages/runner/src/run.ts b/packages/runner/src/run.ts
index 59c1a6251..5f0cd7c7b 100644
--- a/packages/runner/src/run.ts
+++ b/packages/runner/src/run.ts
@@ -271,12 +271,14 @@ async function callAroundHooks<THook extends Function>(
     timeout: number,
     phase: 'setup' | 'teardown',
     stackTraceError: Error | undefined,
-  ): { promise: Promise<never>; clear: () => void } => {
+  ): { promise: Promise<never>; isTimedOut: () => boolean; clear: () => void } => {
     let timer: ReturnType<typeof setTimeout> | undefined
+    let timedout = false
 
     const promise = new Promise<never>((_, reject) => {
       if (timeout > 0 && timeout !== Number.POSITIVE_INFINITY) {
         timer = setTimeout(() => {
+          timedout = true
           const error = makeAroundHookTimeoutError(hookName, phase, timeout, stackTraceError)
           onTimeout?.(error)
           reject(error)
@@ -292,7 +294,7 @@ async function callAroundHooks<THook extends Function>(
       }
     }
 
-    return { promise, clear }
+    return { promise, clear, isTimedOut: () => timedout }
   }
 
   const runNextHook = async (index: number): Promise<void> => {
@@ -305,8 +307,8 @@ async function callAroundHooks<THook extends Function>(
     const stackTraceError = getAroundHookStackTrace(hook)
 
     let useCalled = false
-    let setupTimeout: { promise: Promise<never>; clear: () => void }
-    let teardownTimeout: { promise: Promise<never>; clear: () => void } | undefined
+    let setupTimeout: ReturnType<typeof createTimeoutPromise>
+    let teardownTimeout: ReturnType<typeof createTimeoutPromise> | undefined
 
     // Promise that resolves when use() is called (setup phase complete)
     let resolveUseCalled!: () => void
@@ -329,6 +331,14 @@ async function callAroundHooks<THook extends Function>(
     })
 
     const use = async () => {
+      // shouldn't continue to next (runTest/Suite or inner aroundEach/All) when aroundEach/All setup timed out.
+      if (setupTimeout.isTimedOut()) {
+        // we can throw any error to bail out.
+        // this error is not seen by end users since `runNextHook` already rejected with timeout error
+        // and this error is caught by `rejectHookComplete`.
+        throw new Error('__VITEST_INTERNAL_AROUND_HOOK_ABORT__')
+      }
+
       if (useCalled) {
         throw new AroundHookMultipleCallsError(
           `The \`${callbackName}\` callback was called multiple times in the \`${hookName}\` hook. `
diff --git a/test/cli/test/around-each.test.ts b/test/cli/test/around-each.test.ts
index ad6c695ec..0c52e77e4 100644
--- a/test/cli/test/around-each.test.ts
+++ b/test/cli/test/around-each.test.ts
@@ -2022,3 +2022,141 @@ test('aroundAll teardown timeout works when runTest error is caught', async () =
     }
   `)
 })
+
+test('aroundEach aborts late runTest after setup timeout', async () => {
+  const { stdout, stderr, errorTree } = await runInlineTests({
+    'late-run-test-after-timeout.test.ts': `
+      import { afterAll, aroundEach, test } from 'vitest'
+
+      afterAll(async () => {
+        console.log('>> afterAll 0ms')
+        await new Promise(r => setTimeout(r, 200))
+        console.log('>> afterAll 200ms')
+      })
+
+      aroundEach(async (runTest) => {
+        console.log(">> outer aroundEach setup 0ms")
+        await new Promise(r => setTimeout(r, 100))
+        // this is still executed after timeout error
+        console.log(">> outer aroundEach setup 100ms")
+        // but this shouldn't continue to inner aroundEach or test
+        await runTest()
+        console.log(">> outer aroundEach teardown")
+      }, 10)
+
+      aroundEach(async (runTest) => {
+        console.log('>> inner aroundEach setup')
+        await runTest()
+        console.log('>> inner aroundEach teardown')
+      })
+
+      test('basic', () => {
+        console.log('>> test')
+      })
+    `,
+  })
+
+  expect(stderr).toMatchInlineSnapshot(`
+    "
+    ⎯⎯⎯⎯⎯⎯⎯ Failed Tests 1 ⎯⎯⎯⎯⎯⎯⎯
+
+     FAIL  late-run-test-after-timeout.test.ts > basic
+    AroundHookSetupError: The setup phase of "aroundEach" hook timed out after 10ms.
+     ❯ late-run-test-after-timeout.test.ts:10:7
+          8|       })
+          9|
+         10|       aroundEach(async (runTest) => {
+           |       ^
+         11|         console.log(">> outer aroundEach setup 0ms")
+         12|         await new Promise(r => setTimeout(r, 100))
+
+    ⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯[1/1]⎯
+
+    "
+  `)
+  expect(extractLogs(stdout)).toMatchInlineSnapshot(`
+    ">> outer aroundEach setup 0ms
+    >> afterAll 0ms
+    >> outer aroundEach setup 100ms
+    >> afterAll 200ms"
+  `)
+  expect(errorTree()).toMatchInlineSnapshot(`
+    {
+      "late-run-test-after-timeout.test.ts": {
+        "basic": [
+          "The setup phase of "aroundEach" hook timed out after 10ms.",
+        ],
+      },
+    }
+  `)
+})
+
+test('aroundAll aborts late runSuite after setup timeout', async () => {
+  const { stdout, stderr, errorTree } = await runInlineTests({
+    'late-run-suite-after-timeout.test.ts': `
+      import { afterAll, aroundAll, describe, test } from 'vitest'
+
+      afterAll(async () => {
+        console.log('>> afterAll 0ms')
+        await new Promise(r => setTimeout(r, 200))
+        console.log('>> afterAll 200ms')
+      })
+
+      describe('timed out suite', () => {
+        aroundAll(async (runSuite) => {
+          console.log('>> outer aroundAll setup 0ms')
+          await new Promise(r => setTimeout(r, 100))
+          // this is still executed after timeout error
+          console.log('>> outer aroundAll setup 100ms')
+          // but this should not continue to inner aroundAll or tests
+          await runSuite()
+          console.log('>> outer aroundAll teardown')
+        }, 10)
+
+        aroundAll(async (runSuite) => {
+          console.log('>> inner aroundAll setup')
+          await runSuite()
+          console.log('>> inner aroundAll teardown')
+        })
+
+        test('basic', () => {
+          console.log('>> test')
+        })
+      })
+    `,
+  })
+
+  expect(stderr).toMatchInlineSnapshot(`
+    "
+    ⎯⎯⎯⎯⎯⎯ Failed Suites 1 ⎯⎯⎯⎯⎯⎯⎯
+
+     FAIL  late-run-suite-after-timeout.test.ts > timed out suite
+    AroundHookSetupError: The setup phase of "aroundAll" hook timed out after 10ms.
+     ❯ late-run-suite-after-timeout.test.ts:11:9
+          9|
+         10|       describe('timed out suite', () => {
+         11|         aroundAll(async (runSuite) => {
+           |         ^
+         12|           console.log('>> outer aroundAll setup 0ms')
+         13|           await new Promise(r => setTimeout(r, 100))
+
+    ⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯[1/1]⎯
+
+    "
+  `)
+  expect(extractLogs(stdout)).toMatchInlineSnapshot(`
+    ">> outer aroundAll setup 0ms
+    >> afterAll 0ms
+    >> outer aroundAll setup 100ms
+    >> afterAll 200ms"
+  `)
+  expect(errorTree()).toMatchInlineSnapshot(`
+    {
+      "late-run-suite-after-timeout.test.ts": {
+        "timed out suite": {
+          "basic": "skipped",
+        },
+      },
+    }
+  `)
+})