diff --git a/netty/src/main/java/io/grpc/netty/WriteBufferingAndExceptionHandler.java b/netty/src/main/java/io/grpc/netty/WriteBufferingAndExceptionHandler.java
index 2799dfccb61..56ba9fd3214 100644
--- a/netty/src/main/java/io/grpc/netty/WriteBufferingAndExceptionHandler.java
+++ b/netty/src/main/java/io/grpc/netty/WriteBufferingAndExceptionHandler.java
@@ -99,6 +99,8 @@ public void exceptionCaught(ChannelHandlerContext ctx, Throwable cause) {
     // 4c. active, prev!=null[handlerRemoved]: channel will be closed out-of-band by buffered write.
     // 4d. active, prev!=null[connect]: impossible, channel can't be active after a failed connect.
     if (ctx.channel().isActive() && previousFailure == null) {
+      ctx.fireExceptionCaught(cause);
+
       final class LogOnFailure implements ChannelFutureListener {
         @Override
         public void operationComplete(ChannelFuture future) {
diff --git a/netty/src/test/java/io/grpc/netty/WriteBufferingAndExceptionHandlerTest.java b/netty/src/test/java/io/grpc/netty/WriteBufferingAndExceptionHandlerTest.java
index b99a9386fcf..9c2022cfc14 100644
--- a/netty/src/test/java/io/grpc/netty/WriteBufferingAndExceptionHandlerTest.java
+++ b/netty/src/test/java/io/grpc/netty/WriteBufferingAndExceptionHandlerTest.java
@@ -31,8 +31,11 @@
 import io.netty.channel.Channel;
 import io.netty.channel.ChannelDuplexHandler;
 import io.netty.channel.ChannelFuture;
+import io.netty.channel.ChannelHandler;
 import io.netty.channel.ChannelHandlerAdapter;
 import io.netty.channel.ChannelHandlerContext;
+import io.netty.channel.ChannelInboundHandlerAdapter;
+import io.netty.channel.ChannelInitializer;
 import io.netty.channel.ChannelOutboundHandlerAdapter;
 import io.netty.channel.ChannelPromise;
 import io.netty.channel.DefaultEventLoop;
@@ -41,6 +44,7 @@
 import io.netty.channel.local.LocalChannel;
 import io.netty.channel.local.LocalServerChannel;
 import java.net.ConnectException;
+import java.util.concurrent.CountDownLatch;
 import java.util.concurrent.TimeUnit;
 import java.util.concurrent.atomic.AtomicBoolean;
 import java.util.concurrent.atomic.AtomicInteger;
@@ -381,4 +385,61 @@ public void uncaughtReadFails() throws Exception {
       assertThat(status.getDescription()).contains("channelRead() missed");
     }
   }
+
+  @Test
+  public void handshakeFailure_isPropagatedOnce() throws Exception {
+    AtomicInteger exceptionCount = new AtomicInteger();
+    CountDownLatch latch = new CountDownLatch(1);
+
+    ChannelHandler observer =
+        new ChannelInboundHandlerAdapter() {
+          @Override
+          public void exceptionCaught(ChannelHandlerContext ctx, Throwable cause) {
+            exceptionCount.incrementAndGet();
+            latch.countDown();
+          }
+        };
+
+    WriteBufferingAndExceptionHandler handler =
+        new WriteBufferingAndExceptionHandler(new ChannelHandlerAdapter() {});
+
+    LocalAddress addr = new LocalAddress("local");
+
+    ChannelFuture cf =
+        new Bootstrap()
+            .channel(LocalChannel.class)
+            .group(group)
+            .handler(
+                new ChannelInitializer<Channel>() {
+                  @Override
+                  protected void initChannel(Channel ch) {
+                    ch.pipeline().addLast(handler);
+                    ch.pipeline().addLast(observer);
+                  }
+                })
+            .register();
+
+    chan = cf.channel();
+    cf.sync();
+
+    ChannelFuture sf =
+        new ServerBootstrap()
+            .group(group)
+            .channel(LocalServerChannel.class)
+            .childHandler(new ChannelInboundHandlerAdapter() {})
+            .bind(addr);
+    server = sf.channel();
+    sf.sync();
+
+    chan.connect(addr).sync();
+
+    RuntimeException handshakeFailure =
+        Status.UNAVAILABLE.withDescription("handshake failed").asRuntimeException();
+
+    chan.pipeline().fireExceptionCaught(handshakeFailure);
+    chan.pipeline().fireExceptionCaught(new RuntimeException("Second"));
+
+    assertTrue(latch.await(5, TimeUnit.SECONDS));
+    assertThat(exceptionCount.get()).isEqualTo(1);
+  }
 }