diff --git a/src/display/api.js b/src/display/api.js
index 415ca9e2d..5c48b6a8e 100644
--- a/src/display/api.js
+++ b/src/display/api.js
@@ -2644,9 +2644,11 @@ class WorkerTransport {
 
       if (loadingTask.onPassword) {
         const updatePassword = password => {
-          this._passwordCapability.resolve({
-            password,
-          });
+          if (password instanceof Error) {
+            this._passwordCapability.reject(password);
+          } else {
+            this._passwordCapability.resolve({ password });
+          }
         };
         try {
           loadingTask.onPassword(updatePassword, exception.code);
diff --git a/test/unit/api_spec.js b/test/unit/api_spec.js
index 24ca5fea3..fc56ae9a2 100644
--- a/test/unit/api_spec.js
+++ b/test/unit/api_spec.js
@@ -239,7 +239,7 @@ describe("api", function () {
       const passwordNeededCapability = createPromiseCapability();
       const passwordIncorrectCapability = createPromiseCapability();
       // Attach the callback that is used to request a password;
-      // similarly to how viewer.js handles passwords.
+      // similarly to how the default viewer handles passwords.
       loadingTask.onPassword = function (updatePassword, reason) {
         if (
           reason === PasswordResponses.NEED_PASSWORD &&
@@ -405,6 +405,38 @@ describe("api", function () {
       }
     );
 
+    it(
+      "creates pdf doc from password protected PDF file and passes an Error " +
+        "(asynchronously) to the onPassword callback (bug 1754421)",
+      async function () {
+        const loadingTask = getDocument(
+          buildGetDocumentParams("issue3371.pdf")
+        );
+        expect(loadingTask instanceof PDFDocumentLoadingTask).toEqual(true);
+
+        // Attach the callback that is used to request a password;
+        // similarly to how the default viewer handles passwords.
+        loadingTask.onPassword = function (updatePassword, reason) {
+          waitSome(() => {
+            updatePassword(new Error("Should reject the loadingTask."));
+          });
+        };
+
+        await loadingTask.promise.then(
+          function () {
+            // Shouldn't get here.
+            expect(false).toEqual(true);
+          },
+          function (reason) {
+            expect(reason instanceof PasswordException).toEqual(true);
+            expect(reason.code).toEqual(PasswordResponses.NEED_PASSWORD);
+          }
+        );
+
+        await loadingTask.destroy();
+      }
+    );
+
     it("creates pdf doc from empty typed array", async function () {
       const loadingTask = getDocument(new Uint8Array(0));
       expect(loadingTask instanceof PDFDocumentLoadingTask).toEqual(true);
diff --git a/web/password_prompt.js b/web/password_prompt.js
index 583a13a68..442cdb809 100644
--- a/web/password_prompt.js
+++ b/web/password_prompt.js
@@ -51,18 +51,18 @@ class PasswordPrompt {
     this.reason = null;
 
     // Attach the event listeners.
-    this.submitButton.addEventListener("click", this.verify.bind(this));
-    this.cancelButton.addEventListener("click", this.close.bind(this));
+    this.submitButton.addEventListener("click", this.#verify.bind(this));
+    this.cancelButton.addEventListener("click", this.#cancel.bind(this));
     this.input.addEventListener("keydown", e => {
       if (e.keyCode === /* Enter = */ 13) {
-        this.verify();
+        this.#verify();
       }
     });
 
     this.overlayManager.register(
       this.overlayName,
       this.container,
-      this.close.bind(this),
+      this.#cancel.bind(this),
       true
     );
   }
@@ -87,7 +87,7 @@ class PasswordPrompt {
     });
   }
 
-  verify() {
+  #verify() {
     const password = this.input.value;
     if (password?.length > 0) {
       this.close();
@@ -95,6 +95,11 @@ class PasswordPrompt {
     }
   }
 
+  #cancel() {
+    this.close();
+    this.updateCallback(new Error("PasswordPrompt cancelled."));
+  }
+
   setUpdateCallback(updateCallback, reason) {
     this.updateCallback = updateCallback;
     this.reason = reason;