diff --git a/sycl/source/stream.cpp b/sycl/source/stream.cpp
index 6d000751e0354..db196c14c02ee 100644
--- a/sycl/source/stream.cpp
+++ b/sycl/source/stream.cpp
@@ -17,21 +17,28 @@ namespace sycl {
 static constexpr size_t MAX_STATEMENT_SIZE =
     (1 << (CHAR_BIT * detail::FLUSH_BUF_OFFSET_SIZE)) - 1;
 
-stream::stream(size_t BufferSize, size_t MaxStatementSize, handler &CGH)
-    : impl(std::make_shared<detail::stream_impl>(BufferSize, MaxStatementSize,
-                                                 CGH)),
-      GlobalBuf(impl->accessGlobalBuf(CGH)),
-      GlobalOffset(impl->accessGlobalOffset(CGH)),
-      // Allocate the flush buffer, which contains space for each work item
-      GlobalFlushBuf(impl->accessGlobalFlushBuf(CGH)),
-      FlushBufferSize(MaxStatementSize + detail::FLUSH_BUF_OFFSET_SIZE) {
+// Checks the MaxStatementSize argument of the sycl::stream class. This is
+// called on MaxStatementSize as it is passed to the constructor of the
+// underlying stream_impl to make it throw before the stream buffers are
+// allocated, avoiding memory leaks.
+static size_t CheckMaxStatementSize(const size_t &MaxStatementSize) {
   if (MaxStatementSize > MAX_STATEMENT_SIZE) {
     throw sycl::invalid_parameter_error(
         "Maximum statement size exceeds limit of " +
             std::to_string(MAX_STATEMENT_SIZE) + " bytes.",
         PI_INVALID_VALUE);
   }
+  return MaxStatementSize;
+}
 
+stream::stream(size_t BufferSize, size_t MaxStatementSize, handler &CGH)
+    : impl(std::make_shared<detail::stream_impl>(
+          BufferSize, CheckMaxStatementSize(MaxStatementSize), CGH)),
+      GlobalBuf(impl->accessGlobalBuf(CGH)),
+      GlobalOffset(impl->accessGlobalOffset(CGH)),
+      // Allocate the flush buffer, which contains space for each work item
+      GlobalFlushBuf(impl->accessGlobalFlushBuf(CGH)),
+      FlushBufferSize(MaxStatementSize + detail::FLUSH_BUF_OFFSET_SIZE) {
   // Save stream implementation in the handler so that stream will be alive
   // during kernel execution
   CGH.addStream(impl);
diff --git a/sycl/unittests/CMakeLists.txt b/sycl/unittests/CMakeLists.txt
index 4bd4e70c5afb7..3efd330c112c5 100644
--- a/sycl/unittests/CMakeLists.txt
+++ b/sycl/unittests/CMakeLists.txt
@@ -18,6 +18,7 @@ add_subdirectory(pi)
 add_subdirectory(kernel-and-program)
 add_subdirectory(queue)
 add_subdirectory(scheduler)
+add_subdirectory(stream)
 add_subdirectory(SYCL2020)
 add_subdirectory(thread_safety)
 add_subdirectory(program_manager)
diff --git a/sycl/unittests/stream/CMakeLists.txt b/sycl/unittests/stream/CMakeLists.txt
new file mode 100644
index 0000000000000..ae8a544262c87
--- /dev/null
+++ b/sycl/unittests/stream/CMakeLists.txt
@@ -0,0 +1,3 @@
+add_sycl_unittest(StreamTests OBJECT
+  stream.cpp
+)
diff --git a/sycl/unittests/stream/stream.cpp b/sycl/unittests/stream/stream.cpp
new file mode 100644
index 0000000000000..557af4f6989a1
--- /dev/null
+++ b/sycl/unittests/stream/stream.cpp
@@ -0,0 +1,121 @@
+//==---------------- stream.cpp --- SYCL stream unit test ------------------==//
+//
+// Part of the LLVM Project, under the Apache License v2.0 with LLVM Exceptions.
+// See https://llvm.org/LICENSE.txt for license information.
+// SPDX-License-Identifier: Apache-2.0 WITH LLVM-exception
+//
+//===----------------------------------------------------------------------===//
+
+#include <CL/sycl.hpp>
+
+#include <helpers/CommonRedefinitions.hpp>
+#include <helpers/PiImage.hpp>
+#include <helpers/PiMock.hpp>
+
+#include <gtest/gtest.h>
+
+#include <limits>
+
+class TestKernel;
+
+__SYCL_INLINE_NAMESPACE(cl) {
+namespace sycl {
+namespace detail {
+template <> struct KernelInfo<TestKernel> {
+  static constexpr unsigned getNumParams() { return 0; }
+  static const kernel_param_desc_t &getParamDesc(int) {
+    static kernel_param_desc_t Dummy;
+    return Dummy;
+  }
+  static constexpr const char *getName() { return "Stream_TestKernel"; }
+  static constexpr bool isESIMD() { return false; }
+  static constexpr bool callsThisItem() { return false; }
+  static constexpr bool callsAnyThisFreeFunction() { return false; }
+};
+} // namespace detail
+} // namespace sycl
+} // __SYCL_INLINE_NAMESPACE(cl)
+
+static sycl::unittest::PiImage generateDefaultImage() {
+  using namespace sycl::unittest;
+
+  PiPropertySet PropSet;
+
+  std::vector<unsigned char> Bin{0, 1, 2, 3, 4, 5}; // Random data
+
+  PiArray<PiOffloadEntry> Entries = makeEmptyKernels({"Stream_TestKernel"});
+
+  PiImage Img{PI_DEVICE_BINARY_TYPE_SPIRV,            // Format
+              __SYCL_PI_DEVICE_BINARY_TARGET_SPIRV64, // DeviceTargetSpec
+              "",                                     // Compile options
+              "",                                     // Link options
+              std::move(Bin),
+              std::move(Entries),
+              std::move(PropSet)};
+
+  return Img;
+}
+
+static sycl::unittest::PiImage Img = generateDefaultImage();
+static sycl::unittest::PiImageArray<1> ImgArray{&Img};
+
+size_t GBufferCreateCounter = 0;
+
+static pi_result
+redefinedMemBufferCreate(pi_context context, pi_mem_flags flags, size_t size,
+                         void *host_ptr, pi_mem *ret_mem,
+                         const pi_mem_properties *properties = nullptr) {
+  ++GBufferCreateCounter;
+  *ret_mem = nullptr;
+  return PI_SUCCESS;
+}
+
+TEST(Stream, TestStreamConstructorExceptionNoAllocation) {
+  sycl::platform Plt{sycl::default_selector()};
+  if (Plt.is_host()) {
+    std::cout << "Not run on host - no PI buffers created in that case"
+              << std::endl;
+    return;
+  }
+
+  if (Plt.get_backend() == sycl::backend::cuda) {
+    std::cout << "Test is not supported on CUDA platform, skipping\n";
+    return;
+  }
+
+  if (Plt.get_backend() == sycl::backend::hip) {
+    std::cout << "Test is not supported on HIP platform, skipping\n";
+    return;
+  }
+
+  sycl::unittest::PiMock Mock{Plt};
+  setupDefaultMockAPIs(Mock);
+  Mock.redefine<sycl::detail::PiApiKind::piMemBufferCreate>(
+      redefinedMemBufferCreate);
+
+  const sycl::device Dev = Plt.get_devices()[0];
+  sycl::queue Queue{Dev};
+  const sycl::context Ctx = Queue.get_context();
+
+  sycl::kernel_bundle KernelBundle =
+      sycl::get_kernel_bundle<sycl::bundle_state::input>(Ctx, {Dev});
+  auto ExecBundle = sycl::build(KernelBundle);
+
+  Queue.submit([&](sycl::handler &CGH) {
+    CGH.use_kernel_bundle(ExecBundle);
+
+    try {
+      // Try to create stream with invalid workItemBufferSize parameter.
+      sycl::stream InvalidStream{256, std::numeric_limits<size_t>::max(), CGH};
+      FAIL() << "No exception was thrown.";
+    } catch (const sycl::invalid_parameter_error &) {
+      // Expected exception
+    } catch (...) {
+      FAIL() << "Unexpected exception was thrown.";
+    }
+
+    CGH.single_task<TestKernel>([=]() {});
+  });
+
+  ASSERT_EQ(GBufferCreateCounter, 0u) << "Buffers were unexpectedly created.";
+}