diff --git a/app/services/ci/create_pipeline_service.rb b/app/services/ci/create_pipeline_service.rb
index 884b681ff81c9f07554f37f80b11e72a45d8c7eb..d0ba9f894603b2be51d058100ddcfea1b0e4a5f5 100644
--- a/app/services/ci/create_pipeline_service.rb
+++ b/app/services/ci/create_pipeline_service.rb
@@ -176,9 +176,14 @@ module Ci
     end
 
     def error(message, save: false)
-      pipeline.errors.add(:base, message)
-      pipeline.drop if save
-      pipeline
+      pipeline.tap do
+        pipeline.errors.add(:base, message)
+
+        if save
+          pipeline.drop
+          update_merge_requests_head_pipeline
+        end
+      end
     end
 
     def pipeline_created_counter
diff --git a/spec/services/ci/create_pipeline_service_spec.rb b/spec/services/ci/create_pipeline_service_spec.rb
index bf68ee0e64dc7112528e366447e9545f28220cd2..8465a6f99bd2a45d5fd218d477748e2f69d9da91 100644
--- a/spec/services/ci/create_pipeline_service_spec.rb
+++ b/spec/services/ci/create_pipeline_service_spec.rb
@@ -110,11 +110,29 @@ describe Ci::CreatePipelineService do
             allow_any_instance_of(Ci::Pipeline)
               .to receive(:latest?).and_return(false)
 
-            pipeline
+            execute_service
 
             expect(merge_request.reload.head_pipeline).to be_nil
           end
         end
+
+        context 'when pipeline has errors' do
+          before do
+            stub_ci_pipeline_yaml_file('some invalid syntax')
+          end
+
+          it 'updates merge request head pipeline reference' do
+            merge_request = create(:merge_request, source_branch: 'master',
+                                                   target_branch: 'feature',
+                                                   source_project: project)
+
+            head_pipeline = execute_service
+
+            expect(head_pipeline).to be_persisted
+            expect(head_pipeline.yaml_errors).to be_present
+            expect(merge_request.reload.head_pipeline).to eq head_pipeline
+          end
+        end
       end
 
       context 'auto-cancel enabled' do