diff --git a/drivers/hv/channel.c b/drivers/hv/channel.c
index 56f7e06c673e..bb5abdcda18f 100644
--- a/drivers/hv/channel.c
+++ b/drivers/hv/channel.c
@@ -472,9 +472,18 @@ static int __vmbus_establish_gpadl(struct vmbus_channel *channel,
 		(atomic_inc_return(&vmbus_connection.next_gpadl_handle) - 1);
 
 	ret = create_gpadl_header(type, kbuffer, size, send_offset, &msginfo);
-	if (ret)
+	if (ret) {
+		gpadl->decrypted = false;
 		return ret;
+	}
 
+	/*
+	 * Set the "decrypted" flag to true for the set_memory_decrypted()
+	 * success case. In the failure case, the encryption state of the
+	 * memory is unknown. Leave "decrypted" as true to ensure the
+	 * memory will be leaked instead of going back on the free list.
+	 */
+	gpadl->decrypted = true;
 	ret = set_memory_decrypted((unsigned long)kbuffer,
 				   PFN_UP(size));
 	if (ret) {
@@ -563,9 +572,15 @@ cleanup:
 
 	kfree(msginfo);
 
-	if (ret)
-		set_memory_encrypted((unsigned long)kbuffer,
-				     PFN_UP(size));
+	if (ret) {
+		/*
+		 * If set_memory_encrypted() fails, the decrypted flag is
+		 * left as true so the memory is leaked instead of being
+		 * put back on the free list.
+		 */
+		if (!set_memory_encrypted((unsigned long)kbuffer, PFN_UP(size)))
+			gpadl->decrypted = false;
+	}
 
 	return ret;
 }
@@ -886,6 +901,8 @@ post_msg_err:
 	if (ret)
 		pr_warn("Fail to set mem host visibility in GPADL teardown %d.\n", ret);
 
+	gpadl->decrypted = ret;
+
 	return ret;
 }
 EXPORT_SYMBOL_GPL(vmbus_teardown_gpadl);
diff --git a/include/linux/hyperv.h b/include/linux/hyperv.h
index 4fbd5d841711..811d59cf891b 100644
--- a/include/linux/hyperv.h
+++ b/include/linux/hyperv.h
@@ -832,6 +832,7 @@ struct vmbus_gpadl {
 	u32 gpadl_handle;
 	u32 size;
 	void *buffer;
+	bool decrypted;
 };
 
 struct vmbus_channel {