diff --git a/src/libvterm/src/state.c b/src/libvterm/src/state.c
index d977eca..8b02093 100644
--- a/src/libvterm/src/state.c
+++ b/src/libvterm/src/state.c
@@ -53,6 +53,8 @@
 {
   VTermState *state = vterm_allocator_malloc(vt, sizeof(VTermState));
 
+  if (state == NULL)
+    return NULL;
   state->vt = vt;
 
   state->rows = vt->rows;
@@ -1693,6 +1695,10 @@
   on_resize /* resize */
 };
 
+/*
+ * Return the existing state or create a new one.
+ * Returns NULL when out of memory.
+ */
 VTermState *vterm_obtain_state(VTerm *vt)
 {
   VTermState *state;
@@ -1700,6 +1706,8 @@
     return vt->state;
 
   state = vterm_state_new(vt);
+  if (state == NULL)
+    return NULL;
   vt->state = state;
 
   state->combine_chars_size = 16;
diff --git a/src/libvterm/src/termscreen.c b/src/libvterm/src/termscreen.c
index cfae088..0cd31ce 100644
--- a/src/libvterm/src/termscreen.c
+++ b/src/libvterm/src/termscreen.c
@@ -1,5 +1,6 @@
 #include "vterm_internal.h"
 
+/* vim: set sw=2 : */
 #include <stdio.h>
 #include <string.h>
 
@@ -95,8 +96,7 @@
     }
   }
 
-  if(buffer)
-    vterm_allocator_free(screen->vt, buffer);
+  vterm_allocator_free(screen->vt, buffer);
 
   return new_buffer;
 }
@@ -518,8 +518,7 @@
   screen->rows = new_rows;
   screen->cols = new_cols;
 
-  if(screen->sb_buffer)
-    vterm_allocator_free(screen->vt, screen->sb_buffer);
+  vterm_allocator_free(screen->vt, screen->sb_buffer);
 
   screen->sb_buffer = vterm_allocator_malloc(screen->vt, sizeof(VTermScreenCell) * new_cols);
 
@@ -619,16 +618,21 @@
   &setlineinfo /* setlineinfo */
 };
 
+/*
+ * Allocate a new screen and return it.
+ * Return NULL when out of memory.
+ */
 static VTermScreen *screen_new(VTerm *vt)
 {
   VTermState *state = vterm_obtain_state(vt);
   VTermScreen *screen;
   int rows, cols;
 
-  if(!state)
+  if (state == NULL)
     return NULL;
-
   screen = vterm_allocator_malloc(vt, sizeof(VTermScreen));
+  if (screen == NULL)
+    return NULL;
 
   vterm_get_size(vt, &rows, &cols);
 
@@ -646,10 +650,13 @@
   screen->cbdata    = NULL;
 
   screen->buffers[0] = realloc_buffer(screen, NULL, rows, cols);
-
   screen->buffer = screen->buffers[0];
-
   screen->sb_buffer = vterm_allocator_malloc(screen->vt, sizeof(VTermScreenCell) * cols);
+  if (screen->buffer == NULL || screen->sb_buffer == NULL)
+  {
+    vterm_screen_free(screen);
+    return NULL;
+  }
 
   vterm_state_set_callbacks(screen->state, &state_cbs, screen);
 
@@ -659,11 +666,8 @@
 INTERNAL void vterm_screen_free(VTermScreen *screen)
 {
   vterm_allocator_free(screen->vt, screen->buffers[0]);
-  if(screen->buffers[1])
-    vterm_allocator_free(screen->vt, screen->buffers[1]);
-
+  vterm_allocator_free(screen->vt, screen->buffers[1]);
   vterm_allocator_free(screen->vt, screen->sb_buffer);
-
   vterm_allocator_free(screen->vt, screen);
 }
 
diff --git a/src/libvterm/src/vterm.c b/src/libvterm/src/vterm.c
index 9025da4..5e4722c 100644
--- a/src/libvterm/src/vterm.c
+++ b/src/libvterm/src/vterm.c
@@ -1,5 +1,6 @@
 #define DEFINE_INLINES
 
+/* vim: set sw=2 : */
 #include "vterm_internal.h"
 
 #include <stdio.h>
@@ -41,6 +42,8 @@
   /* Need to bootstrap using the allocator function directly */
   VTerm *vt = (*funcs->malloc)(sizeof(VTerm), allocdata);
 
+  if (vt == NULL)
+    return NULL;
   vt->allocator = funcs;
   vt->allocdata = allocdata;
 
@@ -55,10 +58,21 @@
   vt->parser.strbuffer_len = 500; /* should be able to hold an OSC string */
   vt->parser.strbuffer_cur = 0;
   vt->parser.strbuffer = vterm_allocator_malloc(vt, vt->parser.strbuffer_len);
+  if (vt->parser.strbuffer == NULL)
+  {
+    vterm_allocator_free(vt, vt);
+    return NULL;
+  }
 
   vt->outbuffer_len = 200;
   vt->outbuffer_cur = 0;
   vt->outbuffer = vterm_allocator_malloc(vt, vt->outbuffer_len);
+  if (vt->outbuffer == NULL)
+  {
+    vterm_allocator_free(vt, vt->parser.strbuffer);
+    vterm_allocator_free(vt, vt);
+    return NULL;
+  }
 
   return vt;
 }
@@ -82,9 +96,13 @@
   return (*vt->allocator->malloc)(size, vt->allocdata);
 }
 
+/*
+ * Free "ptr" unless it is NULL.
+ */
 INTERNAL void vterm_allocator_free(VTerm *vt, void *ptr)
 {
-  (*vt->allocator->free)(ptr, vt->allocdata);
+  if (ptr)
+    (*vt->allocator->free)(ptr, vt->allocdata);
 }
 
 void vterm_get_size(const VTerm *vt, int *rowsp, int *colsp)
diff --git a/src/terminal.c b/src/terminal.c
index 06d470c..1875cc3 100644
--- a/src/terminal.c
+++ b/src/terminal.c
@@ -3430,6 +3430,7 @@
 {
     int		index = 0;
     VTermState	*state = vterm_obtain_state(vterm);
+
     for (; index < 16; index++)
     {
 	VTermColor	color;
@@ -3703,8 +3704,9 @@
 
 /*
  * Create a new vterm and initialize it.
+ * Return FAIL when out of memory.
  */
-    static void
+    static int
 create_vterm(term_T *term, int rows, int cols)
 {
     VTerm	    *vterm;
@@ -3714,7 +3716,18 @@
 
     vterm = vterm_new_with_allocator(rows, cols, &vterm_allocator, NULL);
     term->tl_vterm = vterm;
+    if (vterm == NULL)
+	return FAIL;
+
+    // Allocate screen and state here, so we can bail out if that fails.
+    state = vterm_obtain_state(vterm);
     screen = vterm_obtain_screen(vterm);
+    if (state == NULL || screen == NULL)
+    {
+	vterm_free(vterm);
+	return FAIL;
+    }
+
     vterm_screen_set_callbacks(screen, &screen_callbacks, term);
     /* TODO: depends on 'encoding'. */
     vterm_set_utf8(vterm, 1);
@@ -3722,7 +3735,7 @@
     init_default_colors(term);
 
     vterm_state_set_default_colors(
-	    vterm_obtain_state(vterm),
+	    state,
 	    &term->tl_default_color.fg,
 	    &term->tl_default_color.bg);
 
@@ -3746,9 +3759,10 @@
 #else
     value.boolean = 0;
 #endif
-    state = vterm_obtain_state(vterm);
     vterm_state_set_termprop(state, VTERM_PROP_CURSORBLINK, &value);
     vterm_state_set_unrecognised_fallbacks(state, &parser_fallbacks, term);
+
+    return OK;
 }
 
 /*
@@ -5629,7 +5643,8 @@
     vim_free(cwd_wchar);
     vim_free(env_wchar);
 
-    create_vterm(term, term->tl_rows, term->tl_cols);
+    if (create_vterm(term, term->tl_rows, term->tl_cols) == FAIL)
+	goto failed;
 
 #if defined(FEAT_GUI) || defined(FEAT_TERMGUICOLORS)
     if (opt->jo_set2 & JO2_ANSI_COLORS)
@@ -5710,7 +5725,8 @@
     char	    in_name[80], out_name[80];
     channel_T	    *channel = NULL;
 
-    create_vterm(term, term->tl_rows, term->tl_cols);
+    if (create_vterm(term, term->tl_rows, term->tl_cols) == FAIL)
+	return FAIL;
 
     vim_snprintf(in_name, sizeof(in_name), "\\\\.\\pipe\\vim-%d-in-%d",
 	    GetCurrentProcessId(),
@@ -5822,7 +5838,8 @@
 	jobopt_T    *opt,
 	jobopt_T    *orig_opt UNUSED)
 {
-    create_vterm(term, term->tl_rows, term->tl_cols);
+    if (create_vterm(term, term->tl_rows, term->tl_cols) == FAIL)
+	return FAIL;
 
 #if defined(FEAT_GUI) || defined(FEAT_TERMGUICOLORS)
     if (opt->jo_set2 & JO2_ANSI_COLORS)
@@ -5844,7 +5861,8 @@
     static int
 create_pty_only(term_T *term, jobopt_T *opt)
 {
-    create_vterm(term, term->tl_rows, term->tl_cols);
+    if (create_vterm(term, term->tl_rows, term->tl_cols) == FAIL)
+	return FAIL;
 
     term->tl_job = job_alloc();
     if (term->tl_job == NULL)
diff --git a/src/version.c b/src/version.c
index 2452ae0..6956225 100644
--- a/src/version.c
+++ b/src/version.c
@@ -800,6 +800,8 @@
 static int included_patches[] =
 {   /* Add new patch number below this line */
 /**/
+    633,
+/**/
     632,
 /**/
     631,