diff --git a/aidial_adapter_dial/utils/exceptions.py b/aidial_adapter_dial/utils/exceptions.py
index d1f5e2c..4947d4c 100644
--- a/aidial_adapter_dial/utils/exceptions.py
+++ b/aidial_adapter_dial/utils/exceptions.py
@@ -29,9 +29,20 @@ def to_dial_exception(exc: Exception) -> DialException | ResponseWrapper:
         r = exc.response
         headers = r.headers
 
+        # The original content length may have changed
+        # due to the response modification in the adapter.
         if "Content-Length" in headers:
             del headers["Content-Length"]
 
+        # httpx library (used by openai) automatically sets
+        # "Accept-Encoding:gzip,deflate" header in requests to the upstream.
+        # Therefore, we may receive from the upstream gzip-encoded
+        # response along with "Content-Encoding:gzip" header.
+        # We either need to encode the response, or
+        # remove the "Content-Encoding" header.
+        if "Content-Encoding" in headers:
+            del headers["Content-Encoding"]
+
         try:
             content = r.json()
         except Exception: