diff --git a/python/ray/tests/test_reconstruction_2.py b/python/ray/tests/test_reconstruction_2.py
index bc38d844991df..f1673a55fa7ae 100644
--- a/python/ray/tests/test_reconstruction_2.py
+++ b/python/ray/tests/test_reconstruction_2.py
@@ -10,10 +10,10 @@
 from ray._private.internal_api import memory_summary
 from ray._private.test_utils import Semaphore, SignalActor, wait_for_condition
 import ray.exceptions
+from ray.util.state import list_tasks
 
 # Task status.
 WAITING_FOR_DEPENDENCIES = "PENDING_ARGS_AVAIL"
-SCHEDULED = "PENDING_NODE_ASSIGNMENT"
 FINISHED = "FINISHED"
 WAITING_FOR_EXECUTION = "SUBMITTED_TO_WORKER"
 
@@ -505,6 +505,57 @@ def dependent_task(x):
             ray.get(obj)
 
 
+def test_object_reconstruction_dead_actor(config, ray_start_cluster):
+    # Test to make sure that if object reconstruction fails
+    # due to dead actor, pending_creation is set back to false.
+    # https://github.com/ray-project/ray/issues/47606
+    cluster = ray_start_cluster
+    cluster.add_node(num_cpus=0, _system_config=config)
+    ray.init(address=cluster.address)
+    node1 = cluster.add_node(resources={"node1": 1})
+    node2 = cluster.add_node(resources={"node2": 1})
+
+    @ray.remote(max_restarts=0, max_task_retries=-1, resources={"node1": 0.1})
+    class Worker:
+        def func_in(self):
+            return np.random.rand(1024000)
+
+    @ray.remote(max_retries=-1, resources={"node2": 0.1})
+    def func_out(data):
+        return np.random.rand(1024000)
+
+    worker = Worker.remote()
+
+    ref_in = worker.func_in.remote()
+    ref_out = func_out.remote(ref_in)
+
+    ray.wait([ref_in, ref_out], num_returns=2, timeout=None, fetch_local=False)
+
+    def func_out_resubmitted():
+        tasks = list_tasks(filters=[("name", "=", "func_out")])
+        assert len(tasks) == 2
+        assert (
+            tasks[0]["state"] == "PENDING_NODE_ASSIGNMENT"
+            or tasks[1]["state"] == "PENDING_NODE_ASSIGNMENT"
+        )
+        return True
+
+    cluster.remove_node(node2, allow_graceful=False)
+    # ref_out will reconstruct, wait for the lease request to reach raylet.
+    wait_for_condition(func_out_resubmitted)
+
+    cluster.remove_node(node1, allow_graceful=False)
+    # ref_in is lost and the reconstruction will
+    # fail with ActorDiedError
+
+    node1 = cluster.add_node(resources={"node1": 1})
+    node2 = cluster.add_node(resources={"node2": 1})
+
+    with pytest.raises(ray.exceptions.RayTaskError) as exc_info:
+        ray.get(ref_out)
+    assert "input arguments for this task could not be computed" in str(exc_info.value)
+
+
 def test_object_reconstruction_pending_creation(config, ray_start_cluster):
     # Test to make sure that an object being reconstructured
     # has pending_creation set to true.
diff --git a/src/ray/core_worker/object_recovery_manager.cc b/src/ray/core_worker/object_recovery_manager.cc
index 239ef51d59dd3..09b1ab7954afc 100644
--- a/src/ray/core_worker/object_recovery_manager.cc
+++ b/src/ray/core_worker/object_recovery_manager.cc
@@ -168,10 +168,15 @@ void ObjectRecoveryManager::ReconstructObject(const ObjectID &object_id) {
   // object.
   const auto task_id = object_id.TaskId();
   std::vector<ObjectID> task_deps;
+  // pending_creation needs to be set to true BEFORE calling ResubmitTask,
+  // since it might be set back to false inside ResubmitTask if the task is
+  // an actor task and the actor is dead. If we set pending_creation to true
+  // after ResubmitTask, then it will remain true forever.
+  // see https://github.com/ray-project/ray/issues/47606 for more details.
+  reference_counter_->UpdateObjectPendingCreation(object_id, true);
   auto resubmitted = task_resubmitter_->ResubmitTask(task_id, &task_deps);
 
   if (resubmitted) {
-    reference_counter_->UpdateObjectPendingCreation(object_id, true);
     // Try to recover the task's dependencies.
     for (const auto &dep : task_deps) {
       auto recovered = RecoverObject(dep);
@@ -189,6 +194,7 @@ void ObjectRecoveryManager::ReconstructObject(const ObjectID &object_id) {
   } else {
     RAY_LOG(INFO) << "Failed to reconstruct object " << object_id
                   << " because lineage has already been deleted";
+    reference_counter_->UpdateObjectPendingCreation(object_id, false);
     recovery_failure_callback_(
         object_id,
         rpc::ErrorType::OBJECT_UNRECONSTRUCTABLE_MAX_ATTEMPTS_EXCEEDED,