diff --git a/packages/server/src/services/Cashflow/CategorizeCashflowTransaction.ts b/packages/server/src/services/Cashflow/CategorizeCashflowTransaction.ts
index 9ec711881..ba8f7c078 100644
--- a/packages/server/src/services/Cashflow/CategorizeCashflowTransaction.ts
+++ b/packages/server/src/services/Cashflow/CategorizeCashflowTransaction.ts
@@ -12,6 +12,8 @@ import { Knex } from 'knex';
 import { transformCategorizeTransToCashflow } from './utils';
 import { CommandCashflowValidator } from './CommandCasflowValidator';
 import NewCashflowTransactionService from './NewCashflowTransactionService';
+import { ServiceError } from '@/exceptions';
+import { ERRORS } from './constants';
 
 @Service()
 export class CategorizeCashflowTransaction {
@@ -47,6 +49,10 @@ export class CategorizeCashflowTransaction {
       .findById(uncategorizedTransactionId)
       .throwIfNotFound();
 
+    // Validate cannot categorize excluded transaction.
+    if (transaction.excluded) {
+      throw new ServiceError(ERRORS.CANNOT_CATEGORIZE_EXCLUDED_TRANSACTION);
+    }
     // Validates the transaction shouldn't be categorized before.
     this.commandValidators.validateTransactionShouldNotCategorized(transaction);
 
diff --git a/packages/server/src/services/Cashflow/constants.ts b/packages/server/src/services/Cashflow/constants.ts
index a0d52f817..28768c85f 100644
--- a/packages/server/src/services/Cashflow/constants.ts
+++ b/packages/server/src/services/Cashflow/constants.ts
@@ -15,6 +15,8 @@ export const ERRORS = {
     'UNCATEGORIZED_TRANSACTION_TYPE_INVALID',
   CANNOT_DELETE_TRANSACTION_CONVERTED_FROM_UNCATEGORIZED:
     'CANNOT_DELETE_TRANSACTION_CONVERTED_FROM_UNCATEGORIZED',
+
+  CANNOT_CATEGORIZE_EXCLUDED_TRANSACTION: 'CANNOT_CATEGORIZE_EXCLUDED_TRANSACTION'
 };
 
 export enum CASHFLOW_DIRECTION {