diff --git a/src/link/assign.cpp b/src/link/assign.cpp
index b7bd1b5c..b40c43da 100644
--- a/src/link/assign.cpp
+++ b/src/link/assign.cpp
@@ -143,15 +143,22 @@ static std::optional<size_t> getPlacement(Section const &section, MemoryLocation
 				}
 				location.address = section.org;
 			} else if (section.isAlignFixed) {
-				// Move to next aligned location
-				// We have previously ensured alignment to 15 or fewer bits, so this will progress
+				// If the alignment is fixed, move to the next aligned location.
+				// We have previously ensured alignment to 15 or fewer bits.
 				assume(section.alignMask < (1 << 16) - 1);
-				// Move back to alignment boundary
+				uint16_t prevAddress = location.address;
+				// Move back to the alignment boundary.
+				// Subtracting the alignment offset may underflow on the first check from address
+				// $0000, so applying the alignment mask ensures we have a valid address.
 				location.address -= section.alignOfs;
-				// Ensure we're there (e.g. on first check)
 				location.address &= ~section.alignMask;
-				// Go to next align boundary and add offset
+				// Go to the next align boundary and add the alignment offset.
 				location.address += section.alignMask + 1 + section.alignOfs;
+				// If the aligned address wrapped around past the end of the address space,
+				// no further aligned location can fit in this bank.
+				if (location.address <= prevAddress) {
+					break;
+				}
 			} else if (++spaceIdx < bankMem.size()) {
 				// Any location is fine, so, next free block
 				location.address = bankMem[spaceIdx].address;
diff --git a/test/link/align-overflow.asm b/test/link/align-overflow.asm
new file mode 100644
index 00000000..59a7f228
--- /dev/null
+++ b/test/link/align-overflow.asm
@@ -0,0 +1,8 @@
+; This used to fail as moving to the next "alignment
+; boundary" would wrap across 16 bits.
+
+SECTION "A", HRAM[$FF80]
+ds 96 ; fills $FF80..$FFDF, leaving 31 bytes free
+
+SECTION "B", HRAM, ALIGN[7] ; 128-byte alignment
+ds 32
diff --git a/test/link/align-overflow.out b/test/link/align-overflow.out
new file mode 100644
index 00000000..3630517e
--- /dev/null
+++ b/test/link/align-overflow.out
@@ -0,0 +1,2 @@
+FATAL: Unable to place "B" (HRAM section) with align mask $ff80 and offset $0
+Linking aborted with 1 error