diff --git a/packages/playwright-core/src/client/browserContext.ts b/packages/playwright-core/src/client/browserContext.ts
index f095639de1..6ceade1fc6 100644
--- a/packages/playwright-core/src/client/browserContext.ts
+++ b/packages/playwright-core/src/client/browserContext.ts
@@ -38,6 +38,7 @@ import type { BrowserType } from './browserType';
 import { Artifact } from './artifact';
 import { APIRequestContext } from './fetch';
 import { createInstrumentation } from './clientInstrumentation';
+import { rewriteErrorMessage } from '../utils/stackTrace';
 
 export class BrowserContext extends ChannelOwner<channels.BrowserContextChannel> implements api.BrowserContext {
   _pages = new Set<Page>();
@@ -347,6 +348,17 @@ export class BrowserContext extends ChannelOwner<channels.BrowserContextChannel>
   }
 }
 
+async function prepareStorageState(options: BrowserContextOptions): Promise<channels.BrowserNewContextParams['storageState']> {
+  if (typeof options.storageState !== 'string')
+    return options.storageState;
+  try {
+    return JSON.parse(await fs.promises.readFile(options.storageState, 'utf8'));
+  } catch (e) {
+    rewriteErrorMessage(e, `Error reading storage state from ${options.storageState}:\n` + e.message);
+    throw e;
+  }
+}
+
 export async function prepareBrowserContextParams(options: BrowserContextOptions): Promise<channels.BrowserNewContextParams> {
   if (options.videoSize && !options.videosPath)
     throw new Error(`"videoSize" option requires "videosPath" to be specified`);
@@ -357,7 +369,7 @@ export async function prepareBrowserContextParams(options: BrowserContextOptions
     viewport: options.viewport === null ? undefined : options.viewport,
     noDefaultViewport: options.viewport === null,
     extraHTTPHeaders: options.extraHTTPHeaders ? headersObjectToArray(options.extraHTTPHeaders) : undefined,
-    storageState: typeof options.storageState === 'string' ? JSON.parse(await fs.promises.readFile(options.storageState, 'utf8')) : options.storageState,
+    storageState: await prepareStorageState(options),
   };
   if (!contextParams.recordVideo && options.videosPath) {
     contextParams.recordVideo = {
diff --git a/tests/browsercontext-storage-state.spec.ts b/tests/browsercontext-storage-state.spec.ts
index 59aa16a296..c6975f00bf 100644
--- a/tests/browsercontext-storage-state.spec.ts
+++ b/tests/browsercontext-storage-state.spec.ts
@@ -194,3 +194,20 @@ it('should not restore localStorage twice', async ({ contextFactory }) => {
 
   await context.close();
 });
+
+it('should handle missing file', async ({ contextFactory }, testInfo) => {
+  const file = testInfo.outputPath('does-not-exist.json');
+  const error = await contextFactory({
+    storageState: file,
+  }).catch(e => e);
+  expect(error.message).toContain(`Error reading storage state from ${file}:\nENOENT`);
+});
+
+it('should handle malformed file', async ({ contextFactory }, testInfo) => {
+  const file = testInfo.outputPath('state.json');
+  fs.writeFileSync(file, 'not-json', 'utf-8');
+  const error = await contextFactory({
+    storageState: file,
+  }).catch(e => e);
+  expect(error.message).toContain(`Error reading storage state from ${file}:\nUnexpected token o in JSON at position 1`);
+});