diff --git a/release-notes/VERSION b/release-notes/VERSION
index 0cbf81570c..ef4af70e2e 100644
--- a/release-notes/VERSION
+++ b/release-notes/VERSION
@@ -17,6 +17,8 @@ Project: jackson-databind
 #728: TypeFactory#_fromVariable returns unknownType() even though it has enough information
   to provide a more specific type
  (reported by jkochaniak@github)
+#733: MappingIterator should move past errors or not return hasNext() == true
+ (reported by Lorrin N, lorrin@github)
 - Improvement to handling of custom `ValueInstantiator` for delegating mode; no more NPE
   if `getDelegateCreator()` returns null
 
diff --git a/src/main/java/com/fasterxml/jackson/databind/MappingIterator.java b/src/main/java/com/fasterxml/jackson/databind/MappingIterator.java
index ade5a02df6..c97901562a 100644
--- a/src/main/java/com/fasterxml/jackson/databind/MappingIterator.java
+++ b/src/main/java/com/fasterxml/jackson/databind/MappingIterator.java
@@ -182,17 +182,22 @@ public T nextValue() throws IOException
             return _throwNoSuchElement();
         }
         _hasNextChecked = false;
-        T result;
-        
-        if (_updatedValue == null) {
-            result = _deserializer.deserialize(_parser, _context);
-        } else{
-            _deserializer.deserialize(_parser, _context, _updatedValue);
-            result = _updatedValue;
+
+        try {
+            if (_updatedValue == null) {
+                return _deserializer.deserialize(_parser, _context);
+            } else{
+                _deserializer.deserialize(_parser, _context, _updatedValue);
+                return _updatedValue;
+            }
+        } finally {
+            /* 24-Mar-2015, tatu: As per [#733], need to mark token consumed no
+             *   matter what, to avoid infinite loop for certain failure cases.
+             *   For 2.6 need to improve further.
+             */
+            // Need to consume the token too
+            _parser.clearCurrentToken();
         }
-        // Need to consume the token too
-        _parser.clearCurrentToken();
-        return result;
     }
 
     /**
diff --git a/src/test/java/com/fasterxml/jackson/databind/seq/ReadRecoveryTest.java b/src/test/java/com/fasterxml/jackson/databind/seq/ReadRecoveryTest.java
new file mode 100644
index 0000000000..873b0dc03e
--- /dev/null
+++ b/src/test/java/com/fasterxml/jackson/databind/seq/ReadRecoveryTest.java
@@ -0,0 +1,50 @@
+package com.fasterxml.jackson.databind.seq;
+
+import com.fasterxml.jackson.databind.*;
+import com.fasterxml.jackson.databind.seq.ReadValuesTest.Bean;
+
+/**
+ * Tests to verify aspects of error recover for reading using
+ * iterator.
+ */
+public class ReadRecoveryTest extends BaseMapTest
+{
+    static class Bean {
+        public int a;
+
+        @Override public String toString() { return "{Bean, a="+a+"}"; }
+    }
+
+    /*
+    /**********************************************************
+    /* Unit tests; root-level value sequences via Mapper
+    /**********************************************************
+     */
+
+    private final ObjectMapper MAPPER = new ObjectMapper();
+
+    public void testRootBeans() throws Exception
+    {
+        final String JSON = aposToQuotes("{'a':3} {'b':5}");
+        MappingIterator<Bean> it = MAPPER.reader(Bean.class).readValues(JSON);
+        // First one should be fine
+        assertTrue(it.hasNextValue());
+        Bean bean = it.nextValue();
+        assertEquals(3, bean.a);
+        // but second one not
+        try {
+            bean = it.nextValue();
+            fail("Should not have succeeded");
+        } catch (JsonMappingException e) {
+            verifyException(e, "Unrecognized field");
+        }
+        // 24-Mar-2015, tatu: With 2.5, best we can do is to avoid infinite loop;
+        //    also, since the next token is END_OBJECT, will produce empty Object
+        assertTrue(it.hasNextValue());
+        bean = it.nextValue();
+        assertEquals(0, bean.a);
+        // and we should be done now
+        assertFalse(it.hasNextValue());
+        it.close();
+    }
+}