diff --git a/mysql-test/suite/encryption/r/second_plugin-12863.result b/mysql-test/suite/encryption/r/second_plugin-12863.result
new file mode 100644
index 00000000000..8775b1b8fb3
--- /dev/null
+++ b/mysql-test/suite/encryption/r/second_plugin-12863.result
@@ -0,0 +1,7 @@
+call mtr.add_suppression('debug.key.management');
+install soname 'debug_key_management';
+ERROR HY000: Can't initialize function 'debug_key_management'; Plugin initialization function failed.
+create table t1 (a varchar(255)) engine=innodb encrypted=yes;
+create table t2 (a varchar(255)) engine=innodb;
+create table t3 (a varchar(255)) engine=innodb encrypted=no;
+drop table t1, t2, t3;
diff --git a/mysql-test/suite/encryption/t/second_plugin-12863.test b/mysql-test/suite/encryption/t/second_plugin-12863.test
new file mode 100644
index 00000000000..c04fccf9716
--- /dev/null
+++ b/mysql-test/suite/encryption/t/second_plugin-12863.test
@@ -0,0 +1,16 @@
+#
+# MDEV-12863 No table can be created after second encryption plugin attempted to load
+#
+--source include/have_innodb.inc
+--source include/have_file_key_management_plugin.inc
+
+call mtr.add_suppression('debug.key.management');
+
+--error 1123
+install soname 'debug_key_management';
+
+create table t1 (a varchar(255)) engine=innodb encrypted=yes;
+create table t2 (a varchar(255)) engine=innodb;
+create table t3 (a varchar(255)) engine=innodb encrypted=no;
+
+drop table t1, t2, t3;
diff --git a/sql/encryption.cc b/sql/encryption.cc
index a92296e8b66..52eab262570 100644
--- a/sql/encryption.cc
+++ b/sql/encryption.cc
@@ -98,19 +98,27 @@ int initialize_encryption_plugin(st_plugin_int *plugin)
 
 int finalize_encryption_plugin(st_plugin_int *plugin)
 {
-  encryption_handler.encryption_key_get_func=
-      (uint (*)(uint, uint, uchar*, uint*))no_key;
-  encryption_handler.encryption_key_get_latest_version_func= no_key;
-  encryption_handler.encryption_ctx_size_func= zero_size;
+  bool used= plugin_ref_to_int(encryption_manager) == plugin;
+
+  if (used)
+  {
+    encryption_handler.encryption_key_get_func=
+        (uint (*)(uint, uint, uchar*, uint*))no_key;
+    encryption_handler.encryption_key_get_latest_version_func= no_key;
+    encryption_handler.encryption_ctx_size_func= zero_size;
+  }
 
   if (plugin && plugin->plugin->deinit && plugin->plugin->deinit(NULL))
   {
     DBUG_PRINT("warning", ("Plugin '%s' deinit function returned error.",
                            plugin->name.str));
   }
-  if (encryption_manager)
+
+  if (used)
+  {
     plugin_unlock(NULL, encryption_manager);
-  encryption_manager= 0;
+    encryption_manager= 0;
+  }
   return 0;
 }