diff --git a/hadoop-yarn-project/CHANGES.txt b/hadoop-yarn-project/CHANGES.txt
index a40d0a461ac..4d9c5d7854f 100644
--- a/hadoop-yarn-project/CHANGES.txt
+++ b/hadoop-yarn-project/CHANGES.txt
@@ -73,6 +73,9 @@ Release 2.7.2 - UNRELEASED
 
     YARN-4153. TestAsyncDispatcher failed at branch-2.7 (Zhihai Xu via jianhe)
 
+    YARN-3697. FairScheduler: ContinuousSchedulingThread can fail to shutdown.
+    (Zhihai Xu via kasha)
+
     YARN-4158. Remove duplicate close for LogWriter in
     AppLogAggregatorImpl#uploadLogsForContainers (Zhihai Xu via jlowe)
 
diff --git a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-common/src/test/java/org/apache/hadoop/yarn/event/TestAsyncDispatcher.java b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-common/src/test/java/org/apache/hadoop/yarn/event/TestAsyncDispatcher.java
index ba0deffe4c8..018096b6621 100644
--- a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-common/src/test/java/org/apache/hadoop/yarn/event/TestAsyncDispatcher.java
+++ b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-common/src/test/java/org/apache/hadoop/yarn/event/TestAsyncDispatcher.java
@@ -50,7 +50,9 @@ public class TestAsyncDispatcher {
     disp.waitForEventThreadToWait();
     try {
       disp.getEventHandler().handle(event);
+      Assert.fail("Expected YarnRuntimeException");
     } catch (YarnRuntimeException e) {
+      Assert.assertTrue(e.getCause() instanceof InterruptedException);
     }
     // Queue should be empty and dispatcher should not hang on close
     Assert.assertTrue("Event Queue should have been empty",
diff --git a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/main/java/org/apache/hadoop/yarn/server/resourcemanager/scheduler/fair/FairScheduler.java b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/main/java/org/apache/hadoop/yarn/server/resourcemanager/scheduler/fair/FairScheduler.java
index 4f427feb4b2..5fb71ce22ab 100644
--- a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/main/java/org/apache/hadoop/yarn/server/resourcemanager/scheduler/fair/FairScheduler.java
+++ b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/main/java/org/apache/hadoop/yarn/server/resourcemanager/scheduler/fair/FairScheduler.java
@@ -1010,6 +1010,13 @@ public class FairScheduler extends
       } catch (Throwable ex) {
         LOG.error("Error while attempting scheduling for node " + node +
             ": " + ex.toString(), ex);
+        if ((ex instanceof YarnRuntimeException) &&
+            (ex.getCause() instanceof InterruptedException)) {
+          // AsyncDispatcher translates InterruptedException to
+          // YarnRuntimeException with cause InterruptedException.
+          // Need to throw InterruptedException to stop schedulingThread.
+          throw (InterruptedException)ex.getCause();
+        }
       }
     }
 
diff --git a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/test/java/org/apache/hadoop/yarn/server/resourcemanager/scheduler/fair/TestFairScheduler.java b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/test/java/org/apache/hadoop/yarn/server/resourcemanager/scheduler/fair/TestFairScheduler.java
index 5162f46b140..0989a8d62b7 100644
--- a/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/test/java/org/apache/hadoop/yarn/server/resourcemanager/scheduler/fair/TestFairScheduler.java
+++ b/hadoop-yarn-project/hadoop-yarn/hadoop-yarn-server/hadoop-yarn-server-resourcemanager/src/test/java/org/apache/hadoop/yarn/server/resourcemanager/scheduler/fair/TestFairScheduler.java
@@ -27,7 +27,10 @@ import static org.junit.Assert.assertNull;
 import static org.junit.Assert.assertSame;
 import static org.junit.Assert.assertTrue;
 import static org.junit.Assert.fail;
+import static org.mockito.Matchers.isA;
+import static org.mockito.Mockito.doThrow;
 import static org.mockito.Mockito.mock;
+import static org.mockito.Mockito.spy;
 import static org.mockito.Mockito.when;
 
 import java.io.File;
@@ -3950,6 +3953,34 @@ public class TestFairScheduler extends FairSchedulerTestBase {
     }
   }
 
+  @Test
+  public void testContinuousSchedulingInterruptedException()
+      throws Exception {
+    scheduler.init(conf);
+    scheduler.start();
+    FairScheduler spyScheduler = spy(scheduler);
+    Assert.assertTrue("Continuous scheduling should be disabled.",
+        !spyScheduler.isContinuousSchedulingEnabled());
+    // Add one nodes
+    RMNode node1 =
+        MockNodes.newNodeInfo(1, Resources.createResource(8 * 1024, 8), 1,
+            "127.0.0.1");
+    NodeAddedSchedulerEvent nodeEvent1 = new NodeAddedSchedulerEvent(node1);
+    spyScheduler.handle(nodeEvent1);
+    Assert.assertEquals("We should have one alive node.",
+        1, spyScheduler.getNumClusterNodes());
+    InterruptedException ie = new InterruptedException();
+    doThrow(new YarnRuntimeException(ie)).when(spyScheduler).
+        attemptScheduling(isA(FSSchedulerNode.class));
+    // Invoke the continuous scheduling once
+    try {
+      spyScheduler.continuousSchedulingAttempt();
+      fail("Expected InterruptedException to stop schedulingThread");
+    } catch (InterruptedException e) {
+      Assert.assertEquals(ie, e);
+    }
+  }
+
   @Test
   public void testDontAllowUndeclaredPools() throws Exception {
     conf.setBoolean(FairSchedulerConfiguration.ALLOW_UNDECLARED_POOLS, false);