diff --git a/.changeset/tame-bobcats-shop.md b/.changeset/tame-bobcats-shop.md
new file mode 100644
index 000000000..bf9467591
--- /dev/null
+++ b/.changeset/tame-bobcats-shop.md
@@ -0,0 +1,7 @@
+---
+"@tokens-studio/graph-engine-nodes-design-tokens": patch
+"@tokens-studio/graph-editor": patch
+"@tokens-studio/graph-engine": patch
+---
+
+Better handling of input error for the external tokens node.
diff --git a/packages/graph-editor/src/components/portPanel/index.tsx b/packages/graph-editor/src/components/portPanel/index.tsx
index 4fcc84818..56dd4f065 100644
--- a/packages/graph-editor/src/components/portPanel/index.tsx
+++ b/packages/graph-editor/src/components/portPanel/index.tsx
@@ -2,10 +2,14 @@ import {
   DropdownMenu,
   IconButton,
   Label,
+  Message,
   Stack,
   Tooltip,
 } from '@tokens-studio/ui';
-import { Port as GraphPort } from '@tokens-studio/graph-engine';
+import {
+  Port as GraphPort,
+  annotatedInputError,
+} from '@tokens-studio/graph-engine';
 import { Input } from '@tokens-studio/graph-engine';
 import { observer } from 'mobx-react-lite';
 import { useSelector } from 'react-redux';
@@ -47,6 +51,9 @@ export const PortPanel = observer(({ ports, readOnly }: IPortPanel) => {
 export const Port = observer(({ port, readOnly: isReadOnly }: IField) => {
   const readOnly = isReadOnly || port.isConnected;
   const controlSelector = useSelector(controls);
+  const hasError = Boolean(port.annotations[annotatedInputError]);
+  const errorMessage = port.annotations[annotatedInputError]?.message;
+
   const graph = useGraph();
   const isInput = 'studio.tokens.generic.input' === port.node.factory.type;
   const isDynamicInput = Boolean(port.annotations[deletable]);
@@ -166,6 +173,7 @@ export const Port = observer(({ port, readOnly: isReadOnly }: IField) => {
         </Stack>
       </Stack>
       {inner}
+      {hasError && <Message appearance="danger">{errorMessage}</Message>}
     </Stack>
   );
 });
diff --git a/packages/graph-engine/src/annotations/index.ts b/packages/graph-engine/src/annotations/index.ts
index 81991fa96..76ffb0e37 100644
--- a/packages/graph-engine/src/annotations/index.ts
+++ b/packages/graph-engine/src/annotations/index.ts
@@ -42,3 +42,10 @@ export const annotatedNodeRunning = 'engine.nodeRunning';
  * Unique id of the entity
  */
 export const annotatedId = 'engine.id';
+
+/**
+ * Indicates that the node failed to load resources
+ */
+export const annotatedInputError = 'engine.inputError';
+
+
diff --git a/packages/nodes-design-tokens/src/nodes/externalTokens.ts b/packages/nodes-design-tokens/src/nodes/externalTokens.ts
index d7bb48141..6d1129d31 100644
--- a/packages/nodes-design-tokens/src/nodes/externalTokens.ts
+++ b/packages/nodes-design-tokens/src/nodes/externalTokens.ts
@@ -1,7 +1,8 @@
 import {
 	INodeDefinition,
 	Node,
-	StringSchema
+	StringSchema,
+	annotatedInputError
 } from '@tokens-studio/graph-engine';
 import { TokenSchema } from '../schemas/index.js';
 import { arrayOf } from '../schemas/utils.js';
@@ -22,15 +23,37 @@ export default class ExternalTokensNode extends Node {
 		});
 	}
 
-	async execute() {
+	override async execute() {
 		const { uri } = this.getAllInputs();
 
 		if (!uri) {
-			this.outputs.tokenSet.set([]);
-			return;
+			throw new Error('No uri specified');
 		}
 
 		const tokens = await this.load(uri);
-		this.outputs.tokenSet.set(tokens);
+
+		if (!tokens) {
+			// set this so we can show a red border around the node to indicate an error
+			this.error = new Error('Failed to load tokens');
+			if (this.inputs['uri']) {
+				// set this so we can show an error in the graph editor input sheet
+				this.inputs['uri'].annotations[annotatedInputError] = {
+					message:
+						'Failed to load tokens. Check if the uri is valid and the set was not deleted or renamed.'
+				};
+			}
+		} else {
+			if (this.outputs && this.outputs.tokenSet) {
+				this.outputs.tokenSet.set(tokens);
+			}
+
+			// clear the error if there is one
+			if (this.error) {
+				this.error = null;
+				if (this.inputs['uri']) {
+					delete this.inputs['uri'].annotations[annotatedInputError];
+				}
+			}
+		}
 	}
 }