Index: oak-segment-tar/src/main/java/org/apache/jackrabbit/oak/segment/SegmentBufferWriter.java
===================================================================
--- oak-segment-tar/src/main/java/org/apache/jackrabbit/oak/segment/SegmentBufferWriter.java	(revision 1839649)
+++ oak-segment-tar/src/main/java/org/apache/jackrabbit/oak/segment/SegmentBufferWriter.java	(working copy)
@@ -405,16 +405,25 @@
         }
 
         if (segmentSize > buffer.length) {
-            LOG.debug("Flushing full segment {} (headerSize={}, recordSize={}, length={}, segmentSize={})",
+            if (dirty) {
+                LOG.debug("Flushing full segment {} (headerSize={}, recordSize={}, length={}, segmentSize={})",
                     segment.getSegmentId(), headerSize, recordSize, length, segmentSize);
-            flush(store);
+                flush(store);
+                return prepare(type, size, ids, store);
+            }
+            throw new IllegalArgumentException(String.format(
+                "Record too big: type=%s, size=%s, recordIds=%s, total=%s",
+                type,
+                size,
+                ids.size(),
+                recordSize
+            ));
         }
 
         statistics.recordCount++;
 
         length += recordSize;
         position = buffer.length - length;
-        checkState(position >= 0);
 
         int recordNumber = recordNumbers.addRecord(type, position);
         return new RecordId(segment.getSegmentId(), recordNumber);
Index: oak-segment-tar/src/test/java/org/apache/jackrabbit/oak/segment/SegmentBufferWriterTest.java
===================================================================
--- oak-segment-tar/src/test/java/org/apache/jackrabbit/oak/segment/SegmentBufferWriterTest.java	(revision 1839649)
+++ oak-segment-tar/src/test/java/org/apache/jackrabbit/oak/segment/SegmentBufferWriterTest.java	(working copy)
@@ -24,6 +24,7 @@
 import static org.junit.Assert.assertNotEquals;
 
 import java.io.File;
+import java.util.Collections;
 import java.util.List;
 
 import org.apache.jackrabbit.oak.plugins.memory.EmptyNodeState;
@@ -96,4 +97,40 @@
         assertNotEquals(before, after);
     }
 
+    @Test
+    public void tooBigRecord() throws Exception {
+
+        // See OAK-7721 to understand why this test exists.
+
+        try (FileStore store = openFileStore()) {
+
+            // Please don't change anything from the following statement yet.
+            // Read the next comment to understand why.
+
+            SegmentBufferWriter writer = new SegmentBufferWriter(
+                store.getSegmentIdProvider(),
+                store.getReader(),
+                "t",
+                store.getRevisions().getHead().getSegment().getGcGeneration()
+            );
+
+            // The size of the record is chosen with the precise intention to
+            // fool `writer` into having enough space to write the record. In
+            // particular, at the end of `prepare()`, `writer` will have
+            // `this.length = 262144`, which is `MAX_SEGMENT_SIZE`, and
+            // `this.position = 0`. This result is particularly sensitive to the
+            // initial content of the segment, which in turn is influenced by
+            // the segment info. Try to change the writer ID in the constructor
+            // of `SegmentBufferWriter` to a longer string, and you will have
+            // `prepare()` throw ISEs because the writer ID is embedded in the
+            // segment info.
+
+            try {
+                writer.prepare(RecordType.BLOCK, 262101, Collections.emptyList(), store);
+            } catch (IllegalArgumentException e) {
+                assertEquals("Record too big: type=BLOCK, size=262101, recordIds=0, total=262104", e.getMessage());
+            }
+        }
+    }
+
 }