diff --git a/src/core/net/dnssd_server.cpp b/src/core/net/dnssd_server.cpp
index 0623eaff0..1266d2c9c 100644
--- a/src/core/net/dnssd_server.cpp
+++ b/src/core/net/dnssd_server.cpp
@@ -366,11 +366,6 @@ Server::ResponseCode Server::Response::AddQuestionsFrom(const Request &aRequest)
 
     SuccessOrExit(Name(*aRequest.mMessage, kQueryNameOffset).AppendTo(*mMessage));
 
-    // Check the name to include the correct domain name and determine
-    // the domain name offset (for DNS name compression).
-
-    VerifyOrExit(ParseQueryName() == kErrorNone, rcode = Header::kResponseNameError);
-
     mHeader.SetQuestionCount(aRequest.mHeader.GetQuestionCount());
 
     offset = sizeof(Header);
@@ -394,9 +389,22 @@ Server::ResponseCode Server::Response::AddQuestionsFrom(const Request &aRequest)
         SuccessOrExit(mMessage->Append(question));
     }
 
-    rcode = Header::kResponseSuccess;
+    // Check the name to include the correct domain name and determine
+    // the domain name offset (for DNS name compression).
+
+    rcode = (ParseQueryName() == kErrorNone) ? Header::kResponseSuccess : Header::kResponseNameError;
 
 exit:
+    if (rcode == Header::kResponseServerFailure)
+    {
+        // If we fail to add questions to the response message
+        // (no buffer), we clear the question count in the header and
+        // just include the header in the message.
+
+        mHeader.SetQuestionCount(0);
+        IgnoreError(mMessage->SetLength(sizeof(Header)));
+    }
+
     return rcode;
 }
 
diff --git a/tests/unit/test_dns_client.cpp b/tests/unit/test_dns_client.cpp
index 63e790a48..28a7eb5b3 100644
--- a/tests/unit/test_dns_client.cpp
+++ b/tests/unit/test_dns_client.cpp
@@ -238,8 +238,9 @@ void FinalizeTest(void)
 
 //---------------------------------------------------------------------------------------------------------------------
 
-static const char kHostName[]     = "elden";
-static const char kHostFullName[] = "elden.default.service.arpa.";
+static const char kHostName[]        = "elden";
+static const char kHostFullName[]    = "elden.default.service.arpa.";
+static const char kNonExistingName[] = "noname.nodomain.";
 
 static const char kService1Name[]      = "_srv._udp";
 static const char kService1FullName[]  = "_srv._udp.default.service.arpa.";
@@ -804,6 +805,16 @@ void TestDnsClient(void)
         VerifyOrQuit(addresses.Contains(sAddressInfo.mHostAddresses[index]));
     }
 
+    //- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
+    // Validate DNS Client `ResolveAddress()` for an invalid (non-existing) name
+
+    sAddressInfo.Reset();
+    Log("ResolveAddress(%s)", kNonExistingName);
+    SuccessOrQuit(dnsClient->ResolveAddress(kNonExistingName, AddressCallback, sInstance));
+    AdvanceTime(100);
+    VerifyOrQuit(sAddressInfo.mCallbackCount == 1);
+    VerifyOrQuit(sAddressInfo.mError == kErrorNotFound);
+
     //- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
     // Validate DNS Client `ResolveIp4Address()`