diff --git a/workers/dockerfilebuild.py b/workers/dockerfilebuild.py
index 6e0c53694..76b6ff9e7 100644
--- a/workers/dockerfilebuild.py
+++ b/workers/dockerfilebuild.py
@@ -20,6 +20,7 @@ from datetime import datetime, timedelta
 from threading import Event
 from uuid import uuid4
 from collections import defaultdict
+from requests.exceptions import ConnectionError
 
 from data import model
 from workers.worker import Worker, WorkerUnhealthyException, JobException
@@ -35,6 +36,19 @@ CACHE_EXPIRATION_PERIOD_HOURS = 24
 NO_TAGS = ['<none>:<none>']
 RESERVATION_TIME = (TIMEOUT_PERIOD_MINUTES + 5) * 60
 
+def matches_system_error(status_str):
+  """ Returns true if the given status string matches a known system error in the
+      Docker builder.
+  """
+  KNOWN_MATCHES = ['lxc-start: invalid', 'lxc-start: failed to', 'lxc-start: Permission denied']
+
+  for match in KNOWN_MATCHES:
+    # 4 because we might have a Unix control code at the start.
+    if status_str.find(match[0:len(match) + 4]) <= 4: 
+      return True
+
+  return False
+
 
 class StatusWrapper(object):
   def __init__(self, build_uuid):
@@ -141,13 +155,20 @@ class DockerfileBuildContext(object):
       message = 'Docker installation is no longer healthy.'
       logger.exception(message)
       raise WorkerUnhealthyException(message)
+
     return self
 
   def __exit__(self, exc_type, value, traceback):
-    self.__cleanup_containers()
-
     shutil.rmtree(self._build_dir)
 
+    try:
+      self.__cleanup_containers()
+    except APIError:
+      sentry.client.captureException()
+      message = 'Docker installation is no longer healthy.'
+      logger.exception(message)
+      raise WorkerUnhealthyException(message)
+
   @staticmethod
   def __inject_quay_repo_env(parsed_dockerfile, quay_reponame):
     env_command = {
@@ -247,6 +268,11 @@ class DockerfileBuildContext(object):
         fully_unwrapped = status
 
       status_str = str(fully_unwrapped.encode('utf-8'))
+
+      # Check for system errors when building.
+      if matches_system_error(status_str):
+        raise WorkerUnhealthyException(status_str)        
+
       logger.debug('Status: %s', status_str)
       step_increment = re.search(r'Step ([0-9]+) :', status_str)
       if step_increment:
@@ -437,17 +463,20 @@ class DockerfileBuildWorker(Worker):
   def watchdog(self):
     logger.debug('Running build watchdog code.')
 
-    docker_cl = Client()
+    try:
+      docker_cl = Client()
     
-    # Iterate the running containers and kill ones that have been running more than 20 minutes
-    for container in docker_cl.containers():
-      start_time = datetime.fromtimestamp(container['Created'])
-      running_time = datetime.now() - start_time
-      if running_time > timedelta(minutes=TIMEOUT_PERIOD_MINUTES):
-        logger.warning('Container has been running too long: %s with command: %s',
-                       container['Id'], container['Command'])
-        docker_cl.kill(container['Id'])
-        self._timeout.set()
+      # Iterate the running containers and kill ones that have been running more than 20 minutes
+      for container in docker_cl.containers():
+        start_time = datetime.fromtimestamp(container['Created'])
+        running_time = datetime.now() - start_time
+        if running_time > timedelta(minutes=TIMEOUT_PERIOD_MINUTES):
+          logger.warning('Container has been running too long: %s with command: %s',
+                         container['Id'], container['Command'])
+          docker_cl.kill(container['Id'])
+          self._timeout.set()
+    except ConnectionError as exc:
+      raise WorkerUnhealthyException(exc.message)
 
   def process_queue_item(self, job_details):
     self._timeout.clear()
@@ -548,6 +577,12 @@ class DockerfileBuildWorker(Worker):
       # Need a separate handler for this so it doesn't get caught by catch all below
       raise exc
 
+    except ConnectionError as exc:
+      # A connection exception means the worker has become unhealthy (Docker is down)
+      # so we re-raise as that exception.
+      log_appender('Docker daemon has gone away. Will retry shortly.', build_logs.ERROR)
+      raise WorkerUnhealthyException(exc.message)
+
     except Exception as exc:
       sentry.client.captureException()
       log_appender('error', build_logs.PHASE)
diff --git a/workers/worker.py b/workers/worker.py
index 5e04c1d5e..f13f29fc0 100644
--- a/workers/worker.py
+++ b/workers/worker.py
@@ -96,6 +96,14 @@ class Worker(object):
     if self.current_queue_item is not None:
       self._queue.extend_processing(self.current_queue_item, seconds_from_now)
 
+  def run_watchdog(self):
+    logger.debug('Running watchdog.')
+    try:
+      self.watchdog()
+    except WorkerUnhealthyException:
+      logger.error('The worker has encountered an error and will not take new jobs.')
+      self._stop.set()
+
   def poll_queue(self):
     logger.debug('Getting work item from queue.')
 
@@ -112,7 +120,7 @@ class Worker(object):
         logger.warning('An error occurred processing request: %s', self.current_queue_item.body)
         self._queue.incomplete(self.current_queue_item)
       except WorkerUnhealthyException:
-        logger.error('The worker has encountered an error and will not take new jobs.')
+        logger.error('The worker has encountered an error and will not take new jobs. Job is being requeued.')
         self._stop.set()
         self._queue.incomplete(self.current_queue_item, restore_retry=True)
       finally:
@@ -147,7 +155,7 @@ class Worker(object):
     self._sched.add_interval_job(self.poll_queue, seconds=self._poll_period_seconds,
                                  start_date=soon)
     self._sched.add_interval_job(self.update_queue_metrics, seconds=60, start_date=soon)
-    self._sched.add_interval_job(self.watchdog, seconds=self._watchdog_period_seconds)
+    self._sched.add_interval_job(self.run_watchdog, seconds=self._watchdog_period_seconds)
 
     signal.signal(signal.SIGTERM, self.terminate)
     signal.signal(signal.SIGINT, self.terminate)