diff --git a/adapters/src/main/java/com/squareup/moshi/adapters/PolymorphicJsonAdapterFactory.java b/adapters/src/main/java/com/squareup/moshi/adapters/PolymorphicJsonAdapterFactory.java
index 02023b7..73e64b6 100644
--- a/adapters/src/main/java/com/squareup/moshi/adapters/PolymorphicJsonAdapterFactory.java
+++ b/adapters/src/main/java/com/squareup/moshi/adapters/PolymorphicJsonAdapterFactory.java
@@ -233,7 +233,9 @@ public final class PolymorphicJsonAdapterFactory<T> implements JsonAdapter.Facto
     }
 
     @Override public Object fromJson(JsonReader reader) throws IOException {
-      int labelIndex = labelIndex(reader.peekJson());
+      JsonReader peeked = reader.peekJson();
+      peeked.setFailOnUnknown(false);
+      int labelIndex = labelIndex(peeked);
       if (labelIndex == -1) {
         reader.skipValue();
         return defaultValue;
diff --git a/adapters/src/test/java/com/squareup/moshi/adapters/PolymorphicJsonAdapterFactoryTest.java b/adapters/src/test/java/com/squareup/moshi/adapters/PolymorphicJsonAdapterFactoryTest.java
index 816ba66..cf66e5c 100644
--- a/adapters/src/test/java/com/squareup/moshi/adapters/PolymorphicJsonAdapterFactoryTest.java
+++ b/adapters/src/test/java/com/squareup/moshi/adapters/PolymorphicJsonAdapterFactoryTest.java
@@ -215,6 +215,18 @@ public final class PolymorphicJsonAdapterFactoryTest {
     assertThat(decoded.long_value).isEqualTo(9007199254740993L);
   }
 
+  @Test public void failOnUnknownMissingTypeLabel() throws IOException {
+    Moshi moshi = new Moshi.Builder()
+        .add(PolymorphicJsonAdapterFactory.of(Message.class, "type")
+            .withSubtype(MessageWithType.class, "success"))
+        .build();
+    JsonAdapter<Message> adapter = moshi.adapter(Message.class).failOnUnknown();
+
+    MessageWithType decoded = (MessageWithType) adapter.fromJson(
+        "{\"value\":\"Okay!\",\"type\":\"success\"}");
+    assertThat(decoded.value).isEqualTo("Okay!");
+  }
+
   interface Message {
   }
 
@@ -269,4 +281,14 @@ public final class PolymorphicJsonAdapterFactoryTest {
       this.long_value = long_value;
     }
   }
+
+  static final class MessageWithType implements Message {
+    final String type;
+    final String value;
+
+    MessageWithType(String type, String value) {
+      this.type = type;
+      this.value = value;
+    }
+  }
 }