diff --git a/core/src/main/scala/cats/data/Kleisli.scala b/core/src/main/scala/cats/data/Kleisli.scala
index 1fbdf1e5f7..069b92fe82 100644
--- a/core/src/main/scala/cats/data/Kleisli.scala
+++ b/core/src/main/scala/cats/data/Kleisli.scala
@@ -123,6 +123,9 @@ private[data] sealed abstract class KleisliInstances extends KleisliInstances0 {
 
       def liftT[M[_], B](ma: M[B])(implicit ev: Trivial): Kleisli[M, A, B] = Kleisli[M, A, B](a => ma)
     }
+
+  implicit def kleisliApplicativeError[F[_], A, E](implicit AE: ApplicativeError[F, E]): ApplicativeError[Kleisli[F, A, ?], E]
+    = new KleisliApplicativeError[F, A, E] { implicit def AF: ApplicativeError[F, E]  = AE }
 }
 
 private[data] sealed abstract class KleisliInstances0 extends KleisliInstances1 {
@@ -145,21 +148,12 @@ private[data] sealed abstract class KleisliInstances0 extends KleisliInstances1
 
   implicit def kleisliSemigroupK[F[_]](implicit ev: FlatMap[F]): SemigroupK[Lambda[A => Kleisli[F, A, A]]] =
     new KleisliSemigroupK[F] { def F: FlatMap[F] = ev }
+
 }
 
 private[data] sealed abstract class KleisliInstances1 extends KleisliInstances2 {
-  implicit def kleisliApplicative[F[_]: Applicative, A]: Applicative[Kleisli[F, A, ?]] = new Applicative[Kleisli[F, A, ?]] {
-    def pure[B](x: B): Kleisli[F, A, B] =
-      Kleisli.pure[F, A, B](x)
-
-    def ap[B, C](f: Kleisli[F, A, B => C])(fa: Kleisli[F, A, B]): Kleisli[F, A, C] =
-      fa.ap(f)
-
-    override def map[B, C](fb: Kleisli[F, A, B])(f: B => C): Kleisli[F, A, C] =
-      fb.map(f)
-
-    override def product[B, C](fb: Kleisli[F, A, B], fc: Kleisli[F, A, C]): Kleisli[F, A, (B, C)] =
-      Kleisli(a => Applicative[F].product(fb.run(a), fc.run(a)))
+  implicit def kleisliApplicative[F[_], A](implicit A : Applicative[F]): Applicative[Kleisli[F, A, ?]] = new KleisliApplicative[F, A] {
+    implicit def F: Applicative[F] = A
   }
 }
 
@@ -269,3 +263,36 @@ private trait KleisliMonoidK[F[_]] extends MonoidK[Lambda[A => Kleisli[F, A, A]]
 
   override def empty[A]: Kleisli[F, A, A] = Kleisli(F.pure[A])
 }
+
+
+private trait KleisliApplicativeError[F[_], A, E] extends KleisliApplicative[F, A] with ApplicativeError[Kleisli[F, A, ?], E] {
+  type K[T] = Kleisli[F, A, T]
+
+  implicit def AF: ApplicativeError[F, E]
+
+  implicit def F: Applicative[F] = AF
+
+  def raiseError[B](e: E): K[B] = Kleisli(_ => AF.raiseError(e))
+
+  def handleErrorWith[B](kb: K[B])(f: E => K[B]): K[B] = Kleisli { a: A =>
+    AF.handleErrorWith(kb.run(a))((e: E) => f(e).run(a))
+  }
+
+}
+
+
+private trait KleisliApplicative[F[_], A] extends Applicative[Kleisli[F, A, ?]] {
+  implicit def F: Applicative[F]
+
+  def pure[B](x: B): Kleisli[F, A, B] =
+    Kleisli.pure[F, A, B](x)
+
+  def ap[B, C](f: Kleisli[F, A, B => C])(fa: Kleisli[F, A, B]): Kleisli[F, A, C] =
+    fa.ap(f)
+
+  override def map[B, C](fb: Kleisli[F, A, B])(f: B => C): Kleisli[F, A, C] =
+    fb.map(f)
+
+  override def product[B, C](fb: Kleisli[F, A, B], fc: Kleisli[F, A, C]): Kleisli[F, A, (B, C)] =
+    Kleisli(a => Applicative[F].product(fb.run(a), fc.run(a)))
+}
diff --git a/core/src/main/scala/cats/std/option.scala b/core/src/main/scala/cats/std/option.scala
index 96c6d76658..7ffef7c4bb 100644
--- a/core/src/main/scala/cats/std/option.scala
+++ b/core/src/main/scala/cats/std/option.scala
@@ -3,8 +3,8 @@ package std
 
 trait OptionInstances extends cats.kernel.std.OptionInstances {
 
-  implicit val optionInstance: Traverse[Option] with MonadCombine[Option] with CoflatMap[Option] with Alternative[Option] =
-    new Traverse[Option] with MonadCombine[Option] with CoflatMap[Option] with Alternative[Option] {
+  implicit val optionInstance: Traverse[Option] with MonadError[Option, Unit] with MonadCombine[Option] with CoflatMap[Option] with Alternative[Option] =
+    new Traverse[Option] with MonadError[Option, Unit]  with MonadCombine[Option] with CoflatMap[Option] with Alternative[Option] {
 
       def empty[A]: Option[A] = None
 
@@ -48,6 +48,10 @@ trait OptionInstances extends cats.kernel.std.OptionInstances {
           case Some(a) => Applicative[G].map(f(a))(Some(_))
         }
 
+      def raiseError[A](e: Unit): Option[A] = None
+
+      def handleErrorWith[A](fa: Option[A])(f: (Unit) => Option[A]): Option[A] = fa orElse f(())
+
       override def exists[A](fa: Option[A])(p: A => Boolean): Boolean =
         fa.exists(p)
 
diff --git a/tests/src/test/scala/cats/tests/KleisliTests.scala b/tests/src/test/scala/cats/tests/KleisliTests.scala
index 27350621db..c8f83db8fc 100644
--- a/tests/src/test/scala/cats/tests/KleisliTests.scala
+++ b/tests/src/test/scala/cats/tests/KleisliTests.scala
@@ -2,7 +2,7 @@ package cats
 package tests
 
 import cats.arrow.{Arrow, Choice, Split}
-import cats.data.{Kleisli, Reader}
+import cats.data.{XorT, Kleisli, Reader}
 import cats.functor.{Contravariant, Strong}
 import cats.laws.discipline._
 import cats.laws.discipline.arbitrary._
@@ -15,8 +15,13 @@ class KleisliTests extends CatsSuite {
   implicit def kleisliEq[F[_], A, B](implicit A: Arbitrary[A], FB: Eq[F[B]]): Eq[Kleisli[F, A, B]] =
     Eq.by[Kleisli[F, A, B], A => F[B]](_.run)
 
+  implicit val xorTEq = XorT.xorTEq[Kleisli[Option, Int, ?], Unit, Int]
+
   implicit val iso = CartesianTests.Isomorphisms.invariant[Kleisli[Option, Int, ?]]
 
+  checkAll("Klesili[Option, Int, Int] with Unit", ApplicativeErrorTests[Kleisli[Option, Int, ?], Unit].applicativeError[Int, Int, Int])
+  checkAll("ApplicativeError[Klesili[Option, Int, Int], Unit]", SerializableTests.serializable(ApplicativeError[Kleisli[Option, Int, ?], Unit]))
+
   checkAll("Kleisli[Option, Int, Int]", CartesianTests[Kleisli[Option, Int, ?]].cartesian[Int, Int, Int])
   checkAll("Cartesian[Kleisli[Option, Int, ?]]", SerializableTests.serializable(Cartesian[Kleisli[Option, Int, ?]]))
 
diff --git a/tests/src/test/scala/cats/tests/OptionTests.scala b/tests/src/test/scala/cats/tests/OptionTests.scala
index 01ab65b3c7..8c6ef464b9 100644
--- a/tests/src/test/scala/cats/tests/OptionTests.scala
+++ b/tests/src/test/scala/cats/tests/OptionTests.scala
@@ -2,7 +2,7 @@ package cats
 package tests
 
 import cats.laws.{ApplicativeLaws, CoflatMapLaws, FlatMapLaws, MonadLaws}
-import cats.laws.discipline.{TraverseTests, CoflatMapTests, MonadCombineTests, SerializableTests, CartesianTests}
+import cats.laws.discipline._
 
 class OptionTests extends CatsSuite {
   checkAll("Option[Int]", CartesianTests[Option].cartesian[Int, Int, Int])
@@ -17,6 +17,9 @@ class OptionTests extends CatsSuite {
   checkAll("Option[Int] with Option", TraverseTests[Option].traverse[Int, Int, Int, Int, Option, Option])
   checkAll("Traverse[Option]", SerializableTests.serializable(Traverse[Option]))
 
+  checkAll("Option with Unit", MonadErrorTests[Option, Unit].monadError[Int, Int, Int])
+  checkAll("MonadError[Option, Unit]", SerializableTests.serializable(MonadError[Option, Unit]))
+
   test("show") {
     none[Int].show should === ("None")
     1.some.show should === ("Some(1)")