diff --git a/etc/lime-elements.api.md b/etc/lime-elements.api.md
index a36df2b77a..f29c2c26b2 100644
--- a/etc/lime-elements.api.md
+++ b/etc/lime-elements.api.md
@@ -83,6 +83,7 @@ export interface Chip<T = any> {
     iconTitle?: string;
     id: number | string;
     image?: Image_2;
+    invalid?: boolean;
     loading?: boolean;
     menuItems?: Array<MenuItem | ListSeparator>;
     removable?: boolean;
@@ -4179,6 +4180,7 @@ export interface ListItem<T = any> {
     // @deprecated
     iconColor?: Color;
     image?: Image_2;
+    invalid?: boolean;
     primaryComponent?: ListComponent;
     secondaryText?: string;
     selected?: boolean;
diff --git a/src/components/chip-set/chip-set.tsx b/src/components/chip-set/chip-set.tsx
index 45738c0b98..d461a7816b 100644
--- a/src/components/chip-set/chip-set.tsx
+++ b/src/components/chip-set/chip-set.tsx
@@ -56,6 +56,7 @@ import { createRandomString } from '../../util/random-string';
  * @exampleComponent limel-example-chip-set-filter
  * @exampleComponent limel-example-chip-set-filter-badge
  * @exampleComponent limel-example-chip-set-input
+ * @exampleComponent limel-example-chip-set-invalid-chips
  * @exampleComponent limel-example-chip-set-input-type-with-menu-items
  * @exampleComponent limel-example-chip-set-input-type-text
  * @exampleComponent limel-example-chip-set-input-type-search
@@ -618,6 +619,7 @@ export class ChipSet {
             selected: chip.selected,
             disabled: this.disabled,
             loading: chip.loading,
+            invalid: chip.invalid,
             readonly: readonly,
             type: chipType,
             removable: removable,
diff --git a/src/components/chip-set/chip.types.ts b/src/components/chip-set/chip.types.ts
index 6e6c301c31..3497aa3e1b 100644
--- a/src/components/chip-set/chip.types.ts
+++ b/src/components/chip-set/chip.types.ts
@@ -108,6 +108,11 @@ export interface Chip<T = any> {
      * indeterminate progress indicator inside the chip.
      */
     loading?: boolean;
+
+    /**
+     * Set to `true` to visualize the chip in an "invalid" or "error" state.
+     */
+    invalid?: boolean;
 }
 
 /**
diff --git a/src/components/chip-set/examples/chip-set-invalid-chips.tsx b/src/components/chip-set/examples/chip-set-invalid-chips.tsx
new file mode 100644
index 0000000000..ad0aa5f486
--- /dev/null
+++ b/src/components/chip-set/examples/chip-set-invalid-chips.tsx
@@ -0,0 +1,98 @@
+import { Chip, LimelChipSetCustomEvent } from '@limetech/lime-elements';
+import { Component, h, State } from '@stencil/core';
+import { ENTER } from '../../../util/keycodes';
+
+/**
+ * Per-chip invalid state
+ *
+ * Set `invalid: true` on any chip in the `value` array to mark that
+ * specific chip as invalid. This is independent of the chip-set-level
+ * `invalid` prop, which is intended for signalling that the whole field
+ * is invalid. Per-chip `invalid` lets the consumer flag individual
+ * entries, for example an address that fails validation in a list of
+ * recipients.
+ *
+ * In this example, each entry is checked with a simple email regex when
+ * added. Invalid entries are rendered with `invalid: true` and an error
+ * icon.
+ */
+@Component({
+    tag: 'limel-example-chip-set-invalid-chips',
+    shadow: true,
+})
+export class ChipSetInvalidChipsExample {
+    @State()
+    private value: Chip[];
+
+    @State()
+    private textValue = '';
+
+    constructor() {
+        this.value = [
+            this.createChip('alice@example.com'),
+            this.createChip('not-an-email'),
+            this.createChip('bob@example.com'),
+        ];
+    }
+
+    public render() {
+        return [
+            <limel-chip-set
+                type="input"
+                label="Recipients"
+                helperText="Type an email address and press Enter. Invalid entries are flagged on the chip."
+                searchLabel="Type an email address"
+                value={this.value}
+                onChange={this.handleChange}
+                onInput={this.handleInput}
+                onKeyUp={this.onKeyUp}
+            />,
+            <limel-example-value value={this.value} />,
+        ];
+    }
+
+    private handleInput = (
+        event: LimelChipSetCustomEvent<string> | InputEvent
+    ) => {
+        if (event instanceof CustomEvent) {
+            this.textValue = event.detail;
+        }
+    };
+
+    private onKeyUp = (event: KeyboardEvent) => {
+        if (event.key === ENTER && this.textValue.trim()) {
+            this.value = [
+                ...this.value,
+                this.createChip(this.textValue.trim()),
+            ];
+            this.textValue = '';
+        }
+    };
+
+    private handleChange = (event: LimelChipSetCustomEvent<Chip[]>) => {
+        this.value = event.detail;
+    };
+
+    private createChip = (text: string): Chip => {
+        const isValid = this.looksLikeEmail(text);
+
+        return {
+            id: text,
+            text: text,
+            removable: true,
+            invalid: !isValid,
+            ...(!isValid && { icon: 'error' }),
+        };
+    };
+
+    private looksLikeEmail = (text: string): boolean => {
+        const atIndex = text.indexOf('@');
+        if (atIndex <= 0 || atIndex === text.length - 1) {
+            return false;
+        }
+
+        const domain = text.slice(atIndex + 1);
+
+        return domain.includes('.') && !/\s/.test(text);
+    };
+}
diff --git a/src/components/list-item/list-item.types.ts b/src/components/list-item/list-item.types.ts
index ff5d738a8c..e715048e58 100644
--- a/src/components/list-item/list-item.types.ts
+++ b/src/components/list-item/list-item.types.ts
@@ -49,6 +49,18 @@ export interface ListItem<T = any> {
      */
     selected?: boolean;
 
+    /**
+     * Set to `true` to visualize the item in an "invalid" or "error" state.
+     *
+     * :::note
+     * This flag is currently only honoured when the item is rendered as a
+     * chip by `limel-picker`. It has no visual effect in plain lists or
+     * menus today; see the `limel-list` / `limel-menu` roadmap for when
+     * that support is added.
+     * :::
+     */
+    invalid?: boolean;
+
     /**
      * Value of the list item.
      */
diff --git a/src/components/picker/examples/picker-invalid-items.tsx b/src/components/picker/examples/picker-invalid-items.tsx
new file mode 100644
index 0000000000..d392bec904
--- /dev/null
+++ b/src/components/picker/examples/picker-invalid-items.tsx
@@ -0,0 +1,64 @@
+import { LimelPickerCustomEvent, ListItem } from '@limetech/lime-elements';
+import { Component, h, State } from '@stencil/core';
+
+/**
+ * Per-item invalid state
+ *
+ * Set `invalid: true` on any `ListItem` passed to the picker's `value` to
+ * render that specific selection as an invalid chip. This is useful when
+ * a previously-valid selection is no longer valid (for example, a
+ * deactivated user or an archived tag) while other selections remain
+ * valid.
+ *
+ * This is independent of the picker-level `invalid` prop, which marks
+ * the whole field as invalid.
+ */
+@Component({
+    tag: 'limel-example-picker-invalid-items',
+    shadow: true,
+})
+export class PickerInvalidItemsExample {
+    private allItems: Array<ListItem<number>> = [
+        { text: 'Admiral Swiggins', value: 1 },
+        { text: 'Ayla', value: 2 },
+        { text: 'Clunk', value: 3, invalid: true },
+        { text: 'Coco', value: 4 },
+        { text: 'Derpl', value: 5, invalid: true },
+        { text: 'Froggy G', value: 6 },
+    ];
+
+    @State()
+    private selectedItems: Array<ListItem<number>> = [
+        this.allItems[0],
+        this.allItems[2],
+        this.allItems[3],
+    ];
+
+    public render() {
+        return [
+            <limel-picker
+                label="Team members"
+                value={this.selectedItems}
+                multiple={true}
+                allItems={this.availableItems()}
+                emptyResultMessage="No matching members found"
+                onChange={this.onChange}
+            />,
+            <limel-example-value value={this.selectedItems} />,
+        ];
+    }
+
+    private availableItems = (): Array<ListItem<number>> => {
+        return this.allItems.filter((item) => {
+            return !this.selectedItems.some((selected) => {
+                return selected.value === item.value;
+            });
+        });
+    };
+
+    private onChange = (
+        event: LimelPickerCustomEvent<Array<ListItem<number>>>
+    ) => {
+        this.selectedItems = [...event.detail];
+    };
+}
diff --git a/src/components/picker/picker.tsx b/src/components/picker/picker.tsx
index 1efed84817..09d02e74a8 100644
--- a/src/components/picker/picker.tsx
+++ b/src/components/picker/picker.tsx
@@ -31,6 +31,7 @@ const DEFAULT_SEARCHER_MAX_RESULTS = 20;
 /**
  * @exampleComponent limel-example-picker-basic
  * @exampleComponent limel-example-picker-multiple
+ * @exampleComponent limel-example-picker-invalid-items
  * @exampleComponent limel-example-picker-icons
  * @exampleComponent limel-example-picker-pictures
  * @exampleComponent limel-example-picker-value-as-object
@@ -356,6 +357,7 @@ export class Picker {
             image: listItem.image,
             value: listItem,
             menuItems: listItem.actions,
+            invalid: listItem.invalid,
         };
     };