diff --git a/internal/logging/panic.go b/internal/logging/panic.go
index 960d4f685..211a1231d 100644
--- a/internal/logging/panic.go
+++ b/internal/logging/panic.go
@@ -172,11 +172,22 @@ func (l *logPanicWrapper) Debug(msg string, args ...interface{}) {
 	// output if this is the start of the traceback. An occasional false
 	// positive shouldn't be a big deal, since this is only retrieved after an
 	// error of some sort.
-	l.inPanic = l.inPanic || strings.HasPrefix(msg, "panic: ") || strings.HasPrefix(msg, "fatal error: ")
+
+	panicPrefix := strings.HasPrefix(msg, "panic: ") || strings.HasPrefix(msg, "fatal error: ")
+
+	l.inPanic = l.inPanic || panicPrefix
 
 	if l.inPanic && l.panicRecorder != nil {
 		l.panicRecorder(msg)
 	}
 
+	// If we have logging turned on, we need to prevent panicwrap from seeing
+	// this as a core panic. This can be done by obfuscating the panic error
+	// line.
+	if panicPrefix {
+		colon := strings.Index(msg, ":")
+		msg = strings.ToUpper(msg[:colon]) + msg[colon:]
+	}
+
 	l.Logger.Debug(msg, args...)
 }
diff --git a/internal/logging/panic_test.go b/internal/logging/panic_test.go
index e83a0ba5a..d2eb7a90b 100644
--- a/internal/logging/panic_test.go
+++ b/internal/logging/panic_test.go
@@ -1,9 +1,12 @@
 package logging
 
 import (
+	"bytes"
 	"fmt"
 	"strings"
 	"testing"
+
+	"github.com/hashicorp/go-hclog"
 )
 
 func TestPanicRecorder(t *testing.T) {
@@ -49,3 +52,31 @@ func TestPanicLimit(t *testing.T) {
 		}
 	}
 }
+
+func TestLogPanicWrapper(t *testing.T) {
+	var buf bytes.Buffer
+	logger := hclog.NewInterceptLogger(&hclog.LoggerOptions{
+		Name:        "test",
+		Level:       hclog.Debug,
+		Output:      &buf,
+		DisableTime: true,
+	})
+
+	wrapped := (&logPanicWrapper{
+		Logger: logger,
+	}).Named("test")
+
+	wrapped.Debug("panic: invalid foo of bar")
+	wrapped.Debug("\tstack trace")
+
+	expected := `[DEBUG] test.test: PANIC: invalid foo of bar
+[DEBUG] test.test: 	stack trace
+`
+
+	got := buf.String()
+
+	if expected != got {
+		t.Fatalf("Expected:\n%q\nGot:\n%q", expected, got)
+	}
+
+}