diff --git a/packages/playwright-test/src/worker/fixtureRunner.ts b/packages/playwright-test/src/worker/fixtureRunner.ts
index 42b3203674..240768adda 100644
--- a/packages/playwright-test/src/worker/fixtureRunner.ts
+++ b/packages/playwright-test/src/worker/fixtureRunner.ts
@@ -40,7 +40,8 @@ class Fixture {
     this.value = null;
     const title = this.registration.customTitle || this.registration.name;
     this._runnableDescription = {
-      title: this.registration.timeout !== undefined ? `Fixture "${title}"` : `setting up "${title}"`,
+      title,
+      phase: 'setup',
       location: registration.location,
       slot: this.registration.timeout === undefined ? undefined : {
         timeout: this.registration.timeout,
@@ -113,8 +114,7 @@ class Fixture {
   }
 
   private _setTeardownDescription(timeoutManager: TimeoutManager) {
-    const title = this.registration.customTitle || this.registration.name;
-    this._runnableDescription.title = this.registration.timeout !== undefined ? `Fixture "${title}"` : `tearing down "${title}"`;
+    this._runnableDescription.phase = 'teardown';
     timeoutManager.setCurrentFixture(this._runnableDescription);
   }
 
diff --git a/packages/playwright-test/src/worker/timeoutManager.ts b/packages/playwright-test/src/worker/timeoutManager.ts
index 66e8dbcc2e..8ec290857c 100644
--- a/packages/playwright-test/src/worker/timeoutManager.ts
+++ b/packages/playwright-test/src/worker/timeoutManager.ts
@@ -31,6 +31,7 @@ type RunnableDescription = {
 
 export type FixtureDescription = {
   title: string;
+  phase: 'setup' | 'teardown';
   location?: Location;
   slot?: TimeSlot;  // Falls back to current runnable slot.
 };
@@ -113,8 +114,18 @@ export class TimeoutManager {
     const timeout = this._currentSlot().timeout;
     switch (this._runnable.type) {
       case 'test': {
-        const fixtureSuffix = this._fixture ? ` while ${this._fixture.title}` : '';
-        message = `Test timeout of ${timeout}ms exceeded${fixtureSuffix}.`;
+        if (this._fixture) {
+          if (this._fixture.phase === 'setup') {
+            message = `Test timeout of ${timeout}ms exceeded while setting up "${this._fixture.title}".`;
+          } else {
+            message = [
+              `Test finished within timeout of ${timeout}ms, but tearing down "${this._fixture.title}" ran out of time.`,
+              `Please allow more time for the test, since teardown is attributed towards the test timeout budget.`,
+            ].join('\n');
+          }
+        } else {
+          message = `Test timeout of ${timeout}ms exceeded.`;
+        }
         break;
       }
       case 'afterEach':
@@ -126,8 +137,10 @@ export class TimeoutManager {
         message = `"${this._runnable.type}" hook timeout of ${timeout}ms exceeded.`;
         break;
       case 'teardown': {
-        const fixtureSuffix = this._fixture ? ` while ${this._fixture.title}` : '';
-        message = `Worker teardown timeout of ${timeout}ms exceeded${fixtureSuffix}.`;
+        if (this._fixture)
+          message = `Worker teardown timeout of ${timeout}ms exceeded while ${this._fixture.phase === 'setup' ? 'setting up' : 'tearing down'} "${this._fixture.title}".`;
+        else
+          message = `Worker teardown timeout of ${timeout}ms exceeded.`;
         break;
       }
       case 'skip':
@@ -139,7 +152,7 @@ export class TimeoutManager {
     }
     const fixtureWithSlot = this._fixture?.slot ? this._fixture : undefined;
     if (fixtureWithSlot)
-      message = `${fixtureWithSlot.title} timeout of ${timeout}ms exceeded.`;
+      message = `Fixture "${fixtureWithSlot.title}" timeout of ${timeout}ms exceeded during ${fixtureWithSlot.phase}.`;
     message = colors.red(message);
     const location = (fixtureWithSlot || this._runnable).location;
     return {
diff --git a/tests/playwright-test/fixture-errors.spec.ts b/tests/playwright-test/fixture-errors.spec.ts
index b29e952bb2..9dd7c11b1d 100644
--- a/tests/playwright-test/fixture-errors.spec.ts
+++ b/tests/playwright-test/fixture-errors.spec.ts
@@ -37,7 +37,7 @@ test('should handle fixture timeout', async ({ runInlineTest }) => {
     `
   }, { timeout: 500 });
   expect(result.exitCode).toBe(1);
-  expect(result.output).toContain('Test timeout of 500ms exceeded while tearing down "timeout".');
+  expect(result.output).toContain('Test finished within timeout of 500ms, but tearing down "timeout" ran out of time.');
   expect(result.failed).toBe(2);
 });
 
@@ -427,7 +427,7 @@ test('should give enough time for fixture teardown', async ({ runInlineTest }) =
   });
   expect(result.exitCode).toBe(1);
   expect(result.failed).toBe(1);
-  expect(result.output).toContain('Test timeout of 1000ms exceeded while tearing down "fixture".');
+  expect(result.output).toContain('Test finished within timeout of 1000ms, but tearing down "fixture" ran out of time.');
   expect(result.outputLines).toEqual([
     'teardown start',
     'teardown finished',
@@ -493,7 +493,7 @@ test('should not report fixture teardown timeout twice', async ({ runInlineTest
   }, { reporter: 'list', timeout: 1000 });
   expect(result.exitCode).toBe(1);
   expect(result.failed).toBe(1);
-  expect(result.output).toContain('Test timeout of 1000ms exceeded while tearing down "fixture".');
+  expect(result.output).toContain('Test finished within timeout of 1000ms, but tearing down "fixture" ran out of time.');
   expect(result.output).not.toContain('base.extend'); // Should not point to the location.
   // TODO: this should be "not.toContain" actually.
   expect(result.output).toContain('Worker teardown timeout of 1000ms exceeded while tearing down "fixture".');
diff --git a/tests/playwright-test/timeout.spec.ts b/tests/playwright-test/timeout.spec.ts
index 9628cfe90b..74659bbb0c 100644
--- a/tests/playwright-test/timeout.spec.ts
+++ b/tests/playwright-test/timeout.spec.ts
@@ -200,8 +200,8 @@ test('should respect fixture timeout', async ({ runInlineTest }) => {
   expect(result.exitCode).toBe(1);
   expect(result.passed).toBe(1);
   expect(result.failed).toBe(2);
-  expect(result.output).toContain('Fixture "custom title" timeout of 500ms exceeded.');
-  expect(result.output).toContain('Fixture "slowTeardown" timeout of 400ms exceeded.');
+  expect(result.output).toContain('Fixture "custom title" timeout of 500ms exceeded during setup.');
+  expect(result.output).toContain('Fixture "slowTeardown" timeout of 400ms exceeded during teardown.');
   expect(result.output).toContain('> 3 |       const test = base.extend({');
 });
 
@@ -241,8 +241,8 @@ test('should respect test.setTimeout in the worker fixture', async ({ runInlineT
   expect(result.exitCode).toBe(1);
   expect(result.passed).toBe(2);
   expect(result.failed).toBe(1);
-  expect(result.output).toContain('Fixture "slowSetup" timeout of 500ms exceeded.');
-  expect(result.output).toContain('Fixture "custom title" timeout of 400ms exceeded.');
+  expect(result.output).toContain('Fixture "slowSetup" timeout of 500ms exceeded during setup.');
+  expect(result.output).toContain('Fixture "custom title" timeout of 400ms exceeded during teardown.');
 });
 
 test('fixture time in beforeAll hook should not affect test', async ({ runInlineTest }) => {