diff --git a/internal/controller/appwrapper/appwrapper_controller.go b/internal/controller/appwrapper/appwrapper_controller.go
index 41f1515..6cf5b69 100644
--- a/internal/controller/appwrapper/appwrapper_controller.go
+++ b/internal/controller/appwrapper/appwrapper_controller.go
@@ -23,6 +23,7 @@ import (
 	"time"
 
 	v1 "k8s.io/api/core/v1"
+	apierrors "k8s.io/apimachinery/pkg/api/errors"
 	"k8s.io/apimachinery/pkg/api/meta"
 	metav1 "k8s.io/apimachinery/pkg/apis/meta/v1"
 	"k8s.io/apimachinery/pkg/runtime"
@@ -61,6 +62,11 @@ type podStatusSummary struct {
 	failed    int32
 }
 
+type componentStatusSummary struct {
+	expected int32
+	deployed int32
+}
+
 // permission to fully control appwrappers
 //+kubebuilder:rbac:groups=workload.codeflare.dev,resources=appwrappers,verbs=get;list;watch;create;update;patch;delete
 //+kubebuilder:rbac:groups=workload.codeflare.dev,resources=appwrappers/status,verbs=get;update;patch
@@ -202,7 +208,26 @@ func (r *AppWrapperReconciler) Reconcile(ctx context.Context, req ctrl.Request)
 		if aw.Spec.Suspend {
 			return r.updateStatus(ctx, aw, workloadv1beta2.AppWrapperSuspending) // begin undeployment
 		}
-		podStatus, err := r.workloadStatus(ctx, aw)
+
+		// First, check the Component-level status of the workload
+		compStatus, err := r.getComponentStatus(ctx, aw)
+		if err != nil {
+			return ctrl.Result{}, err
+		}
+
+		// Detect externally deleted components and transition to Failed with no GracePeriod or retry
+		if compStatus.deployed != compStatus.expected {
+			meta.SetStatusCondition(&aw.Status.Conditions, metav1.Condition{
+				Type:    string(workloadv1beta2.Unhealthy),
+				Status:  metav1.ConditionTrue,
+				Reason:  "MissingComponent",
+				Message: fmt.Sprintf("Only found %v deployed components, but was expecting %v", compStatus.deployed, compStatus.expected),
+			})
+			return r.updateStatus(ctx, aw, workloadv1beta2.AppWrapperFailed)
+		}
+
+		// Second, check the Pod-level status of the workload
+		podStatus, err := r.getPodStatus(ctx, aw)
 		if err != nil {
 			return ctrl.Result{}, err
 		}
@@ -430,7 +455,7 @@ func (r *AppWrapperReconciler) resetOrFail(ctx context.Context, aw *workloadv1be
 	}
 }
 
-func (r *AppWrapperReconciler) workloadStatus(ctx context.Context, aw *workloadv1beta2.AppWrapper) (*podStatusSummary, error) {
+func (r *AppWrapperReconciler) getPodStatus(ctx context.Context, aw *workloadv1beta2.AppWrapper) (*podStatusSummary, error) {
 	pods := &v1.PodList{}
 	if err := r.List(ctx, pods,
 		client.InNamespace(aw.Namespace),
@@ -455,6 +480,30 @@ func (r *AppWrapperReconciler) workloadStatus(ctx context.Context, aw *workloadv
 	return summary, nil
 }
 
+func (r *AppWrapperReconciler) getComponentStatus(ctx context.Context, aw *workloadv1beta2.AppWrapper) (*componentStatusSummary, error) {
+	summary := &componentStatusSummary{expected: int32(len(aw.Status.ComponentStatus))}
+
+	for componentIdx := range aw.Status.ComponentStatus {
+		cs := &aw.Status.ComponentStatus[componentIdx]
+		obj := &metav1.PartialObjectMetadata{TypeMeta: metav1.TypeMeta{Kind: cs.Kind, APIVersion: cs.APIVersion}}
+		if err := r.Get(ctx, types.NamespacedName{Name: cs.Name, Namespace: aw.Namespace}, obj); err == nil {
+			summary.deployed += 1
+		} else {
+			if apierrors.IsNotFound(err) {
+				meta.SetStatusCondition(&aw.Status.ComponentStatus[componentIdx].Conditions, metav1.Condition{
+					Type:   string(workloadv1beta2.Unhealthy),
+					Status: metav1.ConditionTrue,
+					Reason: "ComponentNotFound",
+				})
+			} else {
+				return nil, err
+			}
+		}
+	}
+
+	return summary, nil
+}
+
 func (r *AppWrapperReconciler) limitDuration(desired time.Duration) time.Duration {
 	if desired < 0 {
 		return 0 * time.Second
diff --git a/internal/controller/appwrapper/appwrapper_controller_test.go b/internal/controller/appwrapper/appwrapper_controller_test.go
index e206cb1..7755cb3 100644
--- a/internal/controller/appwrapper/appwrapper_controller_test.go
+++ b/internal/controller/appwrapper/appwrapper_controller_test.go
@@ -104,7 +104,7 @@ var _ = Describe("AppWrapper Controller", func() {
 		Expect(meta.IsStatusConditionTrue(aw.Status.Conditions, string(workloadv1beta2.PodsReady))).Should(BeFalse())
 		Expect((*workload.AppWrapper)(aw).IsActive()).Should(BeTrue())
 		Expect((*workload.AppWrapper)(aw).IsSuspended()).Should(BeFalse())
-		podStatus, err := awReconciler.workloadStatus(ctx, aw)
+		podStatus, err := awReconciler.getPodStatus(ctx, aw)
 		Expect(err).NotTo(HaveOccurred())
 		Expect(podStatus.pending).Should(Equal(utils.ExpectedPodCount(aw)))
 
@@ -121,7 +121,7 @@ var _ = Describe("AppWrapper Controller", func() {
 		Expect(meta.IsStatusConditionTrue(aw.Status.Conditions, string(workloadv1beta2.PodsReady))).Should(BeFalse())
 		Expect((*workload.AppWrapper)(aw).IsActive()).Should(BeTrue())
 		Expect((*workload.AppWrapper)(aw).IsSuspended()).Should(BeFalse())
-		podStatus, err = awReconciler.workloadStatus(ctx, aw)
+		podStatus, err = awReconciler.getPodStatus(ctx, aw)
 		Expect(err).NotTo(HaveOccurred())
 		Expect(podStatus.pending).Should(Equal(utils.ExpectedPodCount(aw) - 1))
 	}
@@ -142,7 +142,7 @@ var _ = Describe("AppWrapper Controller", func() {
 		Expect((*workload.AppWrapper)(aw).IsActive()).Should(BeTrue())
 		Expect((*workload.AppWrapper)(aw).IsSuspended()).Should(BeFalse())
 		Expect((*workload.AppWrapper)(aw).PodsReady()).Should(BeTrue())
-		podStatus, err := awReconciler.workloadStatus(ctx, aw)
+		podStatus, err := awReconciler.getPodStatus(ctx, aw)
 		Expect(err).NotTo(HaveOccurred())
 		Expect(podStatus.running).Should(Equal(utils.ExpectedPodCount(aw)))
 		_, finished := (*workload.AppWrapper)(aw).Finished()
@@ -161,7 +161,7 @@ var _ = Describe("AppWrapper Controller", func() {
 		_, err = awReconciler.Reconcile(ctx, reconcile.Request{NamespacedName: awName}) // see deletion has completed
 		Expect(err).NotTo(HaveOccurred())
 
-		podStatus, err := awReconciler.workloadStatus(ctx, aw)
+		podStatus, err := awReconciler.getPodStatus(ctx, aw)
 		Expect(err).NotTo(HaveOccurred())
 		Expect(podStatus.failed + podStatus.succeeded + podStatus.running + podStatus.pending).Should(Equal(int32(0)))
 	})
@@ -184,7 +184,7 @@ var _ = Describe("AppWrapper Controller", func() {
 		Expect(meta.IsStatusConditionTrue(aw.Status.Conditions, string(workloadv1beta2.QuotaReserved))).Should(BeTrue())
 		Expect((*workload.AppWrapper)(aw).IsActive()).Should(BeTrue())
 		Expect((*workload.AppWrapper)(aw).IsSuspended()).Should(BeFalse())
-		podStatus, err := awReconciler.workloadStatus(ctx, aw)
+		podStatus, err := awReconciler.getPodStatus(ctx, aw)
 		Expect(err).NotTo(HaveOccurred())
 		Expect(podStatus.running).Should(Equal(utils.ExpectedPodCount(aw) - 1))
 		Expect(podStatus.succeeded).Should(Equal(int32(1)))
@@ -239,7 +239,7 @@ var _ = Describe("AppWrapper Controller", func() {
 		Expect(meta.IsStatusConditionTrue(aw.Status.Conditions, string(workloadv1beta2.QuotaReserved))).Should(BeFalse())
 		Expect((*workload.AppWrapper)(aw).IsActive()).Should(BeFalse())
 		Expect((*workload.AppWrapper)(aw).IsSuspended()).Should(BeTrue())
-		podStatus, err := awReconciler.workloadStatus(ctx, aw)
+		podStatus, err := awReconciler.getPodStatus(ctx, aw)
 		Expect(err).NotTo(HaveOccurred())
 		Expect(podStatus.failed + podStatus.succeeded + podStatus.running + podStatus.pending).Should(Equal(int32(0)))
 	})
@@ -296,7 +296,7 @@ var _ = Describe("AppWrapper Controller", func() {
 		Expect(meta.IsStatusConditionTrue(aw.Status.Conditions, string(workloadv1beta2.PodsReady))).Should(BeFalse())
 		Expect((*workload.AppWrapper)(aw).IsActive()).Should(BeTrue())
 		Expect((*workload.AppWrapper)(aw).IsSuspended()).Should(BeFalse())
-		podStatus, err := awReconciler.workloadStatus(ctx, aw)
+		podStatus, err := awReconciler.getPodStatus(ctx, aw)
 		Expect(err).NotTo(HaveOccurred())
 		Expect(podStatus.pending).Should(Equal(int32(1)))
 	})
diff --git a/test/e2e/appwrapper_test.go b/test/e2e/appwrapper_test.go
index 536363d..e21a0ec 100644
--- a/test/e2e/appwrapper_test.go
+++ b/test/e2e/appwrapper_test.go
@@ -24,6 +24,7 @@ import (
 
 	. "github.com/onsi/ginkgo/v2"
 	. "github.com/onsi/gomega"
+	metav1 "k8s.io/apimachinery/pkg/apis/meta/v1"
 	"k8s.io/apimachinery/pkg/runtime"
 	"k8s.io/apimachinery/pkg/types"
 	"k8s.io/apimachinery/pkg/util/wait"
@@ -276,6 +277,19 @@ var _ = Describe("AppWrapper E2E Test", func() {
 			Expect(waitAWPodsReady(ctx, aw)).Should(Succeed())
 			Eventually(AppWrapperPhase(ctx, aw), 90*time.Second).Should(Equal(workloadv1beta2.AppWrapperFailed))
 		})
+
+		It("Deleting a Running Component yields a failed AppWrapper", func() {
+			aw := createAppWrapper(ctx, pytorchjob(2, 500))
+			appwrappers = append(appwrappers, aw)
+			Eventually(AppWrapperPhase(ctx, aw), 60*time.Second).Should(Equal(workloadv1beta2.AppWrapperRunning))
+			aw = getAppWrapper(ctx, types.NamespacedName{Name: aw.Name, Namespace: aw.Namespace})
+			toDelete := &metav1.PartialObjectMetadata{
+				TypeMeta:   metav1.TypeMeta{Kind: aw.Status.ComponentStatus[0].Kind, APIVersion: aw.Status.ComponentStatus[0].APIVersion},
+				ObjectMeta: metav1.ObjectMeta{Name: aw.Status.ComponentStatus[0].Name, Namespace: aw.Namespace},
+			}
+			Expect(getClient(ctx).Delete(ctx, toDelete)).Should(Succeed())
+			Eventually(AppWrapperPhase(ctx, aw), 60*time.Second).Should(Equal(workloadv1beta2.AppWrapperFailed))
+		})
 	})
 
 	Describe("Load Testing", Label("slow"), Label("Kueue", "Standalone"), func() {