diff --git a/hadoop-hdfs-project/hadoop-hdfs/CHANGES.txt b/hadoop-hdfs-project/hadoop-hdfs/CHANGES.txt
index 749a3cebcf..a93a2149fd 100644
--- a/hadoop-hdfs-project/hadoop-hdfs/CHANGES.txt
+++ b/hadoop-hdfs-project/hadoop-hdfs/CHANGES.txt
@@ -1064,6 +1064,9 @@ Release 2.7.1 - UNRELEASED
     HDFS-8633. Fix setting of dfs.datanode.readahead.bytes in hdfs-default.xml
     to match DFSConfigKeys. (Ray Chiang via Yongjun Zhang)
 
+    HDFS-8626. Reserved RBW space is not released if creation of RBW File
+    fails. (kanaka kumar avvaru via Arpit Agarwal)
+
 Release 2.7.0 - 2015-04-20
 
   INCOMPATIBLE CHANGES
diff --git a/hadoop-hdfs-project/hadoop-hdfs/src/main/java/org/apache/hadoop/hdfs/server/datanode/fsdataset/impl/FsVolumeImpl.java b/hadoop-hdfs-project/hadoop-hdfs/src/main/java/org/apache/hadoop/hdfs/server/datanode/fsdataset/impl/FsVolumeImpl.java
index 49a56bb9a0..e90f5d2aff 100644
--- a/hadoop-hdfs-project/hadoop-hdfs/src/main/java/org/apache/hadoop/hdfs/server/datanode/fsdataset/impl/FsVolumeImpl.java
+++ b/hadoop-hdfs-project/hadoop-hdfs/src/main/java/org/apache/hadoop/hdfs/server/datanode/fsdataset/impl/FsVolumeImpl.java
@@ -780,7 +780,12 @@ public FsDatasetSpi getDataset() {
   File createRbwFile(String bpid, Block b) throws IOException {
     checkReference();
     reserveSpaceForRbw(b.getNumBytes());
-    return getBlockPoolSlice(bpid).createRbwFile(b);
+    try {
+      return getBlockPoolSlice(bpid).createRbwFile(b);
+    } catch (IOException exception) {
+      releaseReservedSpace(b.getNumBytes());
+      throw exception;
+    }
   }
 
   /**
diff --git a/hadoop-hdfs-project/hadoop-hdfs/src/test/java/org/apache/hadoop/hdfs/server/datanode/fsdataset/impl/TestRbwSpaceReservation.java b/hadoop-hdfs-project/hadoop-hdfs/src/test/java/org/apache/hadoop/hdfs/server/datanode/fsdataset/impl/TestRbwSpaceReservation.java
index 9b83b39917..44bf81b43e 100644
--- a/hadoop-hdfs-project/hadoop-hdfs/src/test/java/org/apache/hadoop/hdfs/server/datanode/fsdataset/impl/TestRbwSpaceReservation.java
+++ b/hadoop-hdfs-project/hadoop-hdfs/src/test/java/org/apache/hadoop/hdfs/server/datanode/fsdataset/impl/TestRbwSpaceReservation.java
@@ -27,10 +27,13 @@
 import static org.apache.hadoop.hdfs.DFSConfigKeys.*;
 import static org.hamcrest.core.Is.is;
 import static org.junit.Assert.assertThat;
+import static org.junit.Assert.assertTrue;
+import static org.junit.Assert.fail;
 
 import org.apache.hadoop.fs.FSDataOutputStream;
 import org.apache.hadoop.fs.Path;
 import org.apache.hadoop.hdfs.*;
+import org.apache.hadoop.hdfs.protocol.Block;
 import org.apache.hadoop.hdfs.server.datanode.DataNode;
 import org.apache.hadoop.hdfs.server.datanode.fsdataset.FsDatasetSpi;
 import org.apache.hadoop.hdfs.server.datanode.fsdataset.FsVolumeReference;
@@ -42,9 +45,12 @@
 import org.junit.Rule;
 import org.junit.Test;
 import org.junit.rules.ExpectedException;
+import org.mockito.Mockito;
 
 import java.io.IOException;
 import java.io.OutputStream;
+import java.lang.reflect.Field;
+import java.util.Map;
 import java.util.Random;
 import java.util.concurrent.TimeoutException;
 
@@ -279,6 +285,45 @@ public Boolean get() {
     }
   }
 
+  @SuppressWarnings("unchecked")
+  @Test(timeout = 30000)
+  public void testRBWFileCreationError() throws Exception {
+
+    final short replication = 1;
+    startCluster(BLOCK_SIZE, replication, -1);
+
+    final FsVolumeImpl fsVolumeImpl = (FsVolumeImpl) cluster.getDataNodes()
+        .get(0).getFSDataset().getFsVolumeReferences().get(0);
+    final String methodName = GenericTestUtils.getMethodName();
+    final Path file = new Path("/" + methodName + ".01.dat");
+
+    // Mock BlockPoolSlice so that RBW file creation gives IOExcception
+    BlockPoolSlice blockPoolSlice = Mockito.mock(BlockPoolSlice.class);
+    Mockito.when(blockPoolSlice.createRbwFile((Block) Mockito.any()))
+        .thenThrow(new IOException("Synthetic IO Exception Throgh MOCK"));
+
+    Field field = FsVolumeImpl.class.getDeclaredField("bpSlices");
+    field.setAccessible(true);
+    Map<String, BlockPoolSlice> bpSlices = (Map<String, BlockPoolSlice>) field
+        .get(fsVolumeImpl);
+    bpSlices.put(fsVolumeImpl.getBlockPoolList()[0], blockPoolSlice);
+
+    try {
+      // Write 1 byte to the file
+      FSDataOutputStream os = fs.create(file, replication);
+      os.write(new byte[1]);
+      os.hsync();
+      os.close();
+      fail("Expecting IOException file creation failure");
+    } catch (IOException e) {
+      // Exception can be ignored (expected)
+    }
+
+    // Ensure RBW space reserved is released
+    assertTrue("Expected ZERO but got " + fsVolumeImpl.getReservedForRbw(),
+        fsVolumeImpl.getReservedForRbw() == 0);
+  }
+
   /**
    * Stress test to ensure we are not leaking reserved space.
    * @throws IOException