diff --git a/CHANGES b/CHANGES
index 47041d4269..097e8296a1 100644
--- a/CHANGES
+++ b/CHANGES
@@ -1,4 +1,16 @@
 
+3.2.0-dev.783 | 2020-06-11 23:21:41 -0700
+
+  * Compare pcap_next_ex() result to PCAP_ERROR/PCAP_ERROR_BREAK (Jon Siwek, Corelight)
+
+  * GH-977: Improve pcap error handling (Jon Siwek, Corelight)
+
+    Switches from pcap_next() to pcap_next_ex() to better handle all error
+    conditions.  This allows, for example, to have a non-zero exit code for
+    a Zeek process that fails to fully process all packets in a pcap file.
+
+  * Remove not-useful code in iosource::Manager::OpenPktSrc (Jon Siwek, Corelight)
+
 3.2.0-dev.779 | 2020-06-11 23:17:46 -0700
 
   * Rename BroType to zeek::Type (Tim Wojtulewicz, Corelight)
diff --git a/VERSION b/VERSION
index 8563353333..aa1082ff75 100644
--- a/VERSION
+++ b/VERSION
@@ -1 +1 @@
-3.2.0-dev.779
+3.2.0-dev.783
diff --git a/src/iosource/Manager.cc b/src/iosource/Manager.cc
index d97b585894..ec13f32871 100644
--- a/src/iosource/Manager.cc
+++ b/src/iosource/Manager.cc
@@ -371,10 +371,6 @@ PktSrc* Manager::OpenPktSrc(const std::string& path, bool is_live)
 	PktSrc* ps = (*component->Factory())(npath, is_live);
 	assert(ps);
 
-	if ( ! ps->IsOpen() && ps->IsError() )
-		// Set an error message if it didn't open successfully.
-		ps->Error("could not open");
-
 	DBG_LOG(DBG_PKTIO, "Created packet source of type %s for %s", component->Name().c_str(), npath.c_str());
 
 	Register(ps);
diff --git a/src/iosource/pcap/Source.cc b/src/iosource/pcap/Source.cc
index 8df5111da0..897cea0f25 100644
--- a/src/iosource/pcap/Source.cc
+++ b/src/iosource/pcap/Source.cc
@@ -26,7 +26,6 @@ PcapSource::PcapSource(const std::string& path, bool is_live)
 	props.path = path;
 	props.is_live = is_live;
 	pd = nullptr;
-	memset(&current_hdr, 0, sizeof(current_hdr));
 	}
 
 void PcapSource::Open()
@@ -197,29 +196,47 @@ bool PcapSource::ExtractNextPacket(Packet* pkt)
 	if ( ! pd )
 		return false;
 
-	const u_char* data = pcap_next(pd, &current_hdr);
+	const u_char* data;
+	pcap_pkthdr* header;
 
-	if ( ! data )
-		{
-		// Source has gone dry.  If it's a network interface, this just means
-		// it's timed out. If it's a file, though, then the file has been
-		// exhausted.
-		if ( ! props.is_live )
-			Close();
+	int res = pcap_next_ex(pd, &header, &data);
 
+	switch ( res ) {
+	case PCAP_ERROR_BREAK: // -2
+		// Exhausted pcap file, no more packets to read.
+		assert(! props.is_live);
+		Close();
 		return false;
-		}
+	case PCAP_ERROR: // -1
+		// Error occurred while reading the packet.
+		if ( props.is_live )
+			reporter->Error("failed to read a packet from %s: %s",
+			                props.path.data(), pcap_geterr(pd));
+		else
+			reporter->FatalError("failed to read a packet from %s: %s",
+			                     props.path.data(), pcap_geterr(pd));
+		return false;
+	case 0:
+		// Read from live interface timed out (ok).
+		return false;
+	case 1:
+		// Read a packet without problem.
+		break;
+	default:
+		reporter->InternalError("unhandled pcap_next_ex return value: %d", res);
+		return false;
+	}
 
-	pkt->Init(props.link_type, &current_hdr.ts, current_hdr.caplen, current_hdr.len, data);
+	pkt->Init(props.link_type, &header->ts, header->caplen, header->len, data);
 
-	if ( current_hdr.len == 0 || current_hdr.caplen == 0 )
+	if ( header->len == 0 || header->caplen == 0 )
 		{
 		Weird("empty_pcap_header", pkt);
 		return false;
 		}
 
 	++stats.received;
-	stats.bytes_received += current_hdr.len;
+	stats.bytes_received += header->len;
 
 	return true;
 	}
diff --git a/src/iosource/pcap/Source.h b/src/iosource/pcap/Source.h
index 24271b6613..8ad53b6731 100644
--- a/src/iosource/pcap/Source.h
+++ b/src/iosource/pcap/Source.h
@@ -39,8 +39,6 @@ private:
 	Stats stats;
 
 	pcap_t *pd;
-
-	struct pcap_pkthdr current_hdr;
 };
 
 }
diff --git a/testing/btest/Traces/http/no-uri.pcap b/testing/btest/Traces/http/no-uri.pcap
index 86c42097a1..47a81fb225 100644
Binary files a/testing/btest/Traces/http/no-uri.pcap and b/testing/btest/Traces/http/no-uri.pcap differ
diff --git a/testing/btest/Traces/trunc/trunc-hdr.pcap b/testing/btest/Traces/trunc/trunc-hdr.pcap
index 689128f2bb..c7820a3685 100644
Binary files a/testing/btest/Traces/trunc/trunc-hdr.pcap and b/testing/btest/Traces/trunc/trunc-hdr.pcap differ