diff --git a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-nodemanager/src/main/java/org/apache/hadoop/yarn/server/nodemanager/containermanager/logaggregation/LogAggregationService.java b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-nodemanager/src/main/java/org/apache/hadoop/yarn/server/nodemanager/containermanager/logaggregation/LogAggregationService.java
index 2d6b9008ebb..d46f7a3291b 100644
--- a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-nodemanager/src/main/java/org/apache/hadoop/yarn/server/nodemanager/containermanager/logaggregation/LogAggregationService.java
+++ b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-nodemanager/src/main/java/org/apache/hadoop/yarn/server/nodemanager/containermanager/logaggregation/LogAggregationService.java
@@ -376,6 +376,9 @@ public class LogAggregationService extends AbstractService implements
       } else {
         appDirException = (YarnRuntimeException)e;
       }
+      appLogAggregators.remove(appId);
+      closeFileSystems(userUgi);
+      throw appDirException;
     }
 
     // TODO Get the user configuration for the list of containers that need log
@@ -393,10 +396,6 @@ public class LogAggregationService extends AbstractService implements
       }
     };
     this.threadPool.execute(aggregatorWrapper);
-
-    if (appDirException != null) {
-      throw appDirException;
-    }
   }
 
   protected void closeFileSystems(final UserGroupInformation userUgi) {
diff --git a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-nodemanager/src/test/java/org/apache/hadoop/yarn/server/nodemanager/containermanager/logaggregation/TestLogAggregationService.java b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-nodemanager/src/test/java/org/apache/hadoop/yarn/server/nodemanager/containermanager/logaggregation/TestLogAggregationService.java
index fec12ffd17e..fa9a0b50a79 100644
--- a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-nodemanager/src/test/java/org/apache/hadoop/yarn/server/nodemanager/containermanager/logaggregation/TestLogAggregationService.java
+++ b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-nodemanager/src/test/java/org/apache/hadoop/yarn/server/nodemanager/containermanager/logaggregation/TestLogAggregationService.java
@@ -777,8 +777,8 @@ public class TestLogAggregationService extends BaseContainerManagerTest {
 
     dispatcher.await();
     ApplicationEvent expectedEvents[] = new ApplicationEvent[]{
-        new ApplicationEvent(appId, 
-        		ApplicationEventType.APPLICATION_LOG_HANDLING_FAILED)
+        new ApplicationEvent(appId,
+            ApplicationEventType.APPLICATION_LOG_HANDLING_FAILED)
     };
     checkEvents(appEventHandler, expectedEvents, false,
         "getType", "getApplicationID", "getDiagnostic");
@@ -794,10 +794,15 @@ public class TestLogAggregationService extends BaseContainerManagerTest {
 
     logAggregationService.stop();
     assertEquals(0, logAggregationService.getNumAggregators());
-    verify(spyDelSrvc).delete(eq(user), any(Path.class),
+    // local log dir shouldn't be deleted given log aggregation cannot
+    // continue due to aggregated log dir creation failure on remoteFS.
+    verify(spyDelSrvc, never()).delete(eq(user), any(Path.class),
         Mockito.<Path>anyVararg());
     verify(logAggregationService).closeFileSystems(
         any(UserGroupInformation.class));
+    // make sure local log dir is not deleted in case log aggregation
+    // service cannot be initiated.
+    assertTrue(appLogDir.exists());
   }
 
   private void writeContainerLogs(File appLogDir, ContainerId containerId,