A virtual machine monitor (VMM) in a data processing system handles errors involving virtual machines (VMs) in the processing system. For instance, an error manager in the VMM may detect an uncorrectable error in involving a component associated with a first VM in the processing system. In response to detection of that error, the error manager may terminate the first VM, while allowing a second VM in the processing system to continue operating. In one embodiment, the error manager automatically determines which VM is affected by the uncorrectable error, in response to detecting the uncorrectable error. The error manager may also automatically spawn a new VM to replace the first VM, if the processing system has sufficient resources to support the new VM. Other embodiments are described and claimed.