diff --git a/src/util/system.cpp b/src/util/system.cpp
--- a/src/util/system.cpp
+++ b/src/util/system.cpp
@@ -445,12 +445,11 @@
     if (it != m_override_args.end()) {
         if (it->second.size() > 0) {
             for (const auto &ic : it->second) {
-                fprintf(stderr,
-                        "warning: -includeconf cannot be used from "
-                        "commandline; ignoring -includeconf=%s\n",
-                        ic.c_str());
+                error += "-includeconf cannot be used from commandline; "
+                         "-includeconf=" +
+                         ic + "\n";
             }
-            m_override_args.erase(it);
+            return false;
         }
     }
     return true;
@@ -933,13 +932,14 @@
             emptyIncludeConf = m_override_args.count("-includeconf") == 0;
         }
         if (emptyIncludeConf) {
+            std::string chain_id = GetChainName();
             std::vector<std::string> includeconf(GetArgs("-includeconf"));
             {
                 // We haven't set m_network yet (that happens in
                 // SelectParams()), so manually check for network.includeconf
                 // args.
-                std::vector<std::string> includeconf_net(GetArgs(
-                    std::string("-") + GetChainName() + ".includeconf"));
+                std::vector<std::string> includeconf_net(
+                    GetArgs(std::string("-") + chain_id + ".includeconf"));
                 includeconf.insert(includeconf.end(), includeconf_net.begin(),
                                    includeconf_net.end());
             }
@@ -949,7 +949,7 @@
             {
                 LOCK(cs_args);
                 m_config_args.erase("-includeconf");
-                m_config_args.erase(std::string("-") + GetChainName() +
+                m_config_args.erase(std::string("-") + chain_id +
                                     ".includeconf");
             }
 
@@ -963,18 +963,29 @@
                     LogPrintf("Included configuration file %s\n",
                               to_include.c_str());
                 } else {
-                    fprintf(stderr, "Failed to include configuration file %s\n",
-                            to_include.c_str());
+                    error =
+                        "Failed to include configuration file " + to_include;
+                    return false;
                 }
             }
 
             // Warn about recursive -includeconf
             includeconf = GetArgs("-includeconf");
             {
-                std::vector<std::string> includeconf_net(GetArgs(
-                    std::string("-") + GetChainName() + ".includeconf"));
+                std::vector<std::string> includeconf_net(
+                    GetArgs(std::string("-") + chain_id + ".includeconf"));
                 includeconf.insert(includeconf.end(), includeconf_net.begin(),
                                    includeconf_net.end());
+                std::string chain_id_final = GetChainName();
+                if (chain_id_final != chain_id) {
+                    // Also warn about recursive includeconf for the chain that
+                    // was specified in one of the includeconfs
+                    includeconf_net = GetArgs(std::string("-") +
+                                              chain_id_final + ".includeconf");
+                    includeconf.insert(includeconf.end(),
+                                       includeconf_net.begin(),
+                                       includeconf_net.end());
+                }
             }
             for (const std::string &to_include : includeconf) {
                 fprintf(stderr,
diff --git a/test/functional/feature_includeconf.py b/test/functional/feature_includeconf.py
--- a/test/functional/feature_includeconf.py
+++ b/test/functional/feature_includeconf.py
@@ -43,16 +43,10 @@
         subversion = self.nodes[0].getnetworkinfo()["subversion"]
         assert subversion.endswith("main; relative)/")
 
-        self.log.info(
-            "-includeconf cannot be used as command-line arg. subversion should still end with 'main; relative)/'")
+        self.log.info("-includeconf cannot be used as command-line arg")
         self.stop_node(0)
-
-        self.start_node(0, extra_args=["-includeconf=relative2.conf"])
-
-        subversion = self.nodes[0].getnetworkinfo()["subversion"]
-        assert subversion.endswith("main; relative)/")
-        self.stop_node(
-            0, expected_stderr="warning: -includeconf cannot be used from commandline; ignoring -includeconf=relative2.conf")
+        self.nodes[0].assert_start_raises_init_error(extra_args=["-includeconf=relative2.conf"],
+                                                     expected_msg="Error parsing command line arguments: -includeconf cannot be used from commandline; -includeconf=relative2.conf")
 
         self.log.info(
             "-includeconf cannot be used recursively. subversion should end with 'main; relative)/'")
@@ -65,9 +59,21 @@
         self.stop_node(
             0, expected_stderr="warning: -includeconf cannot be used from included files; ignoring -includeconf=relative2.conf")
 
+        self.log.info("-includeconf cannot contain invalid arg")
+        with open(os.path.join(self.options.tmpdir, "node0", "relative.conf"), "w", encoding="utf8") as f:
+            f.write("foo=bar\n")
+        self.nodes[0].assert_start_raises_init_error(
+            expected_msg="Error reading configuration file: Invalid configuration value foo")
+
+        self.log.info("-includeconf cannot be invalid path")
+        os.remove(os.path.join(self.options.tmpdir, "node0", "relative.conf"))
+        self.nodes[0].assert_start_raises_init_error(
+            expected_msg="Error reading configuration file: Failed to include configuration file relative.conf")
+
         self.log.info(
             "multiple -includeconf args can be used from the base config file. subversion should end with 'main; relative; relative2)/'")
         with open(os.path.join(self.options.tmpdir, "node0", "relative.conf"), "w", encoding="utf8") as f:
+            # Restore initial file contents
             f.write("uacomment=relative\n")
 
         with open(os.path.join(self.options.tmpdir, "node0", "bitcoin.conf"), "a", encoding='utf8') as f: