diff --git a/scripts/test-install.sh b/scripts/test-install.sh
index e0a05b7a8..1459624e9 100644
--- a/scripts/test-install.sh
+++ b/scripts/test-install.sh
@@ -131,5 +131,26 @@ if [ "$exitCode" -eq 0 ]; then
   exit 1
 fi
 
+# ---
+test "hook should fail if command not found"
+cat > .huskyrc << EOL
+{
+  "skipCI": false,
+  "hooks": {
+    "pre-commit": "cmdfoo"
+  }
+}
+EOL
+
+set +e
+commit fifth
+exitCode=$?
+set -e
+
+if [ "$exitCode" -eq 0 ]; then
+  echo "Fail: pre-commit hook should have failed"
+  exit 1
+fi
+
 echo
 echo "Success: all tests passed"
diff --git a/src/runner/__tests__/index.ts b/src/runner/__tests__/index.ts
index 453084101..a13abd40f 100644
--- a/src/runner/__tests__/index.ts
+++ b/src/runner/__tests__/index.ts
@@ -47,7 +47,7 @@ describe('run', (): void => {
     expect(status).toBe(0)
   })
 
-  it('should return 0 status if the command is undefined', async (): Promise<
+  it('should return 0 status if no hooks are defined', async (): Promise<
     void
   > => {
     const dir = tempy.directory()
@@ -64,6 +64,26 @@ describe('run', (): void => {
     expect(status).toBe(0)
   })
 
+  it('should return 1 status if the command is not found in PATH', async (): Promise<
+    void
+  > => {
+    const dir = tempy.directory()
+
+    fs.writeFileSync(
+      path.join(dir, 'package.json'),
+      JSON.stringify({
+        husky: {
+          hooks: {
+            'pre-commit': 'cmdfoo'
+          }
+        }
+      })
+    )
+
+    const status = await index(['', '', 'pre-commit'], { cwd: dir })
+    expect(status).toBe(1)
+  })
+
   it('should run failing command and return 1 status', async (): Promise<
     void
   > => {
diff --git a/src/runner/index.ts b/src/runner/index.ts
index d7faf9724..459219e34 100644
--- a/src/runner/index.ts
+++ b/src/runner/index.ts
@@ -58,6 +58,13 @@ function runCommand(
     console.log(`husky > ${hookName} hook failed ${noVerifyMessage}`)
   }
 
+  // If shell exits with 127 it means that some command was not found.
+  // However, if husky has been deleted from node_modules, it'll be a 127 too.
+  // To be able to distinguish between both cases, 127 is changed to 1.
+  if (status === 127) {
+    return 1
+  }
+
   return status || 0
 }