A method, system and computer program product are provided for implementing enhanced error handling for a hardware I/O adapter, such as a Single Root Input/Output Virtualization (SRIOV) adapter, in a virtualized system. The hardware I/O adapter is partitioned into multiple endpoints, with each Partitionable Endpoint (PE) corresponding to a function, and there is an adapter PE associated with the entire adapter. The endpoints are managed both independently for actions limited in scope to a single function, and as a group for actions with the scope of the adapter. An error or failure of the adapter PE freezes the adapter PE and propagates to the VF PEs associated with the adapter, causing the VF PEs to be frozen. An adapter driver and VF device drivers are informed of the error, and start recovery. The hypervisor locks out the VF device drivers at key points enabling adapter recovery to successfully complete.