diff --git a/changelogs/fragments/639_fix_authorized_key.yml b/changelogs/fragments/639_fix_authorized_key.yml
new file mode 100644
index 0000000000..4477ce4354
--- /dev/null
+++ b/changelogs/fragments/639_fix_authorized_key.yml
@@ -0,0 +1,3 @@
+---
+bugfixes:
+  - ansible.posix.authorized_key - fixes error on permission denied in authorized_key module (https://github.com/ansible-collections/ansible.posix/issues/462).
diff --git a/plugins/modules/authorized_key.py b/plugins/modules/authorized_key.py
index 1d68b4e0d2..d712a105eb 100644
--- a/plugins/modules/authorized_key.py
+++ b/plugins/modules/authorized_key.py
@@ -225,6 +225,8 @@
 import tempfile
 import re
 import shlex
+import errno
+import traceback
 from operator import itemgetter
 
 from ansible.module_utils._text import to_native
@@ -475,16 +477,18 @@ def parsekey(module, raw_key, rank=None):
     return (key, key_type, options, comment, rank)
 
 
-def readfile(filename):
-
-    if not os.path.isfile(filename):
-        return ''
-
-    f = open(filename)
+def readfile(module, filename):
     try:
-        return f.read()
-    finally:
-        f.close()
+        with open(filename, 'r') as f:
+            return f.read()
+    except IOError as e:
+        if e.errno == errno.EACCES:
+            module.fail_json(msg="Permission denied on file or path for authorized keys file: %s" % filename,
+                             exception=traceback.format_exc())
+        elif e.errno == errno.ENOENT:
+            return ''
+        else:
+            raise
 
 
 def parsekeys(module, lines):
@@ -597,7 +601,7 @@ def enforce_state(module, params):
     # check current state -- just get the filename, don't create file
     do_write = False
     params["keyfile"] = keyfile(module, user, do_write, path, manage_dir)
-    existing_content = readfile(params["keyfile"])
+    existing_content = readfile(module, params["keyfile"])
     existing_keys = parsekeys(module, existing_content)
 
     # Add a place holder for keys that should exist in the state=present and
diff --git a/tests/integration/targets/authorized_key/tasks/check_permissions.yml b/tests/integration/targets/authorized_key/tasks/check_permissions.yml
new file mode 100644
index 0000000000..2d77059553
--- /dev/null
+++ b/tests/integration/targets/authorized_key/tasks/check_permissions.yml
@@ -0,0 +1,41 @@
+---
+# -------------------------------------------------------------
+# check permissions
+
+- name: Create a file that is not accessible
+  ansible.builtin.file:
+    state: touch
+    path: "{{ output_dir | expanduser }}/file_permissions"
+    owner: root
+    mode: '0000'
+
+- name: Create unprivileged user
+  ansible.builtin.user:
+    name: nopriv
+    create_home: true
+
+- name: Try to delete a key from an unreadable file
+  become: true
+  become_user: nopriv
+  ansible.posix.authorized_key:
+    user: root
+    key: "{{ dss_key_basic }}"
+    state: absent
+    path: "{{ output_dir | expanduser }}/file_permissions"
+  register: result
+  ignore_errors: true
+
+- name: Assert that the key deletion has failed
+  ansible.builtin.assert:
+    that:
+      - result is failed
+
+- name: Remove the file
+  ansible.builtin.file:
+    state: absent
+    path: "{{ output_dir | expanduser }}/file_permissions"
+
+- name: Remove the user
+  ansible.builtin.user:
+    name: nopriv
+    state: absent
diff --git a/tests/integration/targets/authorized_key/tasks/main.yml b/tests/integration/targets/authorized_key/tasks/main.yml
index d687f17b59..761b6d5681 100644
--- a/tests/integration/targets/authorized_key/tasks/main.yml
+++ b/tests/integration/targets/authorized_key/tasks/main.yml
@@ -34,3 +34,6 @@
 
 - name: Test for specifying key as a path
   ansible.builtin.import_tasks: check_path.yml
+
+- name: Test for permission denied files
+  ansible.builtin.import_tasks: check_permissions.yml