diff --git a/balancer/leastrequest/leastrequest.go b/balancer/leastrequest/leastrequest.go
index dd46dfa8faa4..f758f954e9f1 100644
--- a/balancer/leastrequest/leastrequest.go
+++ b/balancer/leastrequest/leastrequest.go
@@ -97,11 +97,8 @@ func (bb) Build(cc balancer.ClientConn, bOpts balancer.BuildOptions) balancer.Ba
 }
 
 type leastRequestBalancer struct {
-	// Embeds balancer.Balancer because needs to intercept UpdateClientConnState
-	// to learn about choiceCount.
-	balancer.Balancer
-	// Embeds balancer.ClientConn because needs to intercept UpdateState calls
-	// from the child balancer.
+	// Embeds balancer.ClientConn because we need to intercept UpdateState
+	// calls from the child balancer.
 	balancer.ClientConn
 	child  balancer.Balancer
 	logger *internalgrpclog.PrefixLogger
@@ -118,6 +115,21 @@ func (lrb *leastRequestBalancer) Close() {
 	lrb.endpointRPCCounts = nil
 }
 
+func (lrb *leastRequestBalancer) UpdateSubConnState(sc balancer.SubConn, state balancer.SubConnState) {
+	lrb.logger.Errorf("UpdateSubConnState(%v, %+v) called unexpectedly", sc, state)
+}
+
+func (lrb *leastRequestBalancer) ResolverError(err error) {
+	// Will cause inline picker update from endpoint sharding.
+	lrb.child.ResolverError(err)
+}
+
+func (lrb *leastRequestBalancer) ExitIdle() {
+	if ei, ok := lrb.child.(balancer.ExitIdler); ok { // Should always be ok, as child is endpoint sharding.
+		ei.ExitIdle()
+	}
+}
+
 func (lrb *leastRequestBalancer) UpdateClientConnState(ccs balancer.ClientConnState) error {
 	lrCfg, ok := ccs.BalancerConfig.(*LBConfig)
 	if !ok {
diff --git a/balancer/leastrequest/balancer_test.go b/balancer/leastrequest/leastrequest_test.go
similarity index 91%
rename from balancer/leastrequest/balancer_test.go
rename to balancer/leastrequest/leastrequest_test.go
index e0043db391c8..d8073470f79b 100644
--- a/balancer/leastrequest/balancer_test.go
+++ b/balancer/leastrequest/leastrequest_test.go
@@ -27,12 +27,13 @@ import (
 	"time"
 
 	"github.com/google/go-cmp/cmp"
-
 	"google.golang.org/grpc"
+	"google.golang.org/grpc/connectivity"
 	"google.golang.org/grpc/credentials/insecure"
 	"google.golang.org/grpc/internal"
 	"google.golang.org/grpc/internal/grpctest"
 	"google.golang.org/grpc/internal/stubserver"
+	"google.golang.org/grpc/internal/testutils"
 	testgrpc "google.golang.org/grpc/interop/grpc_testing"
 	testpb "google.golang.org/grpc/interop/grpc_testing"
 	"google.golang.org/grpc/peer"
@@ -42,7 +43,8 @@ import (
 )
 
 const (
-	defaultTestTimeout = 5 * time.Second
+	defaultTestTimeout      = 5 * time.Second
+	defaultTestShortTimeout = 10 * time.Millisecond
 )
 
 type s struct {
@@ -706,3 +708,63 @@ func (s) TestLeastRequestEndpoints_MultipleAddresses(t *testing.T) {
 		t.Fatalf("error in expected round robin: %v", err)
 	}
 }
+
+// Test tests that the least request balancer properly surfaces resolver
+// errors.
+func (s) TestLeastRequestEndpoints_ResolverError(t *testing.T) {
+	const sc = `{"loadBalancingConfig": [{"least_request_experimental": {}}]}`
+	mr := manual.NewBuilderWithScheme("lr-e2e")
+	defer mr.Close()
+
+	cc, err := grpc.NewClient(
+		mr.Scheme()+":///",
+		grpc.WithResolvers(mr),
+		grpc.WithTransportCredentials(insecure.NewCredentials()),
+		grpc.WithDefaultServiceConfig(sc),
+	)
+	if err != nil {
+		t.Fatalf("grpc.NewClient() failed: %v", err)
+	}
+	defer cc.Close()
+
+	// We need to pass an endpoint with a valid address to the resolver before
+	// reporting an error - otherwise endpointsharding does not report the
+	// error through.
+	lis, err := testutils.LocalTCPListener()
+	if err != nil {
+		t.Fatalf("net.Listen() failed: %v", err)
+	}
+	// Act like a server that closes the connection without sending a server
+	// preface.
+	go func() {
+		conn, err := lis.Accept()
+		if err != nil {
+			t.Errorf("Unexpected error when accepting a connection: %v", err)
+		}
+		conn.Close()
+	}()
+	mr.UpdateState(resolver.State{
+		Endpoints: []resolver.Endpoint{{Addresses: []resolver.Address{{Addr: lis.Addr().String()}}}},
+	})
+	cc.Connect()
+
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+	testutils.AwaitState(ctx, t, cc, connectivity.TransientFailure)
+
+	// Report an error through the resolver
+	resolverErr := fmt.Errorf("simulated resolver error")
+	mr.CC().ReportError(resolverErr)
+
+	// Ensure the client returns the expected resolver error.
+	testServiceClient := testgrpc.NewTestServiceClient(cc)
+	for ; ctx.Err() == nil; <-time.After(defaultTestShortTimeout) {
+		_, err = testServiceClient.EmptyCall(ctx, &testpb.Empty{})
+		if strings.Contains(err.Error(), resolverErr.Error()) {
+			break
+		}
+	}
+	if ctx.Err() != nil {
+		t.Fatalf("Timeout when waiting for RPCs to fail with error containing %s. Last error: %v", resolverErr, err)
+	}
+}
diff --git a/internal/resolver/delegatingresolver/delegatingresolver.go b/internal/resolver/delegatingresolver/delegatingresolver.go
index 7b93f692be01..20b8fb098ac3 100644
--- a/internal/resolver/delegatingresolver/delegatingresolver.go
+++ b/internal/resolver/delegatingresolver/delegatingresolver.go
@@ -28,6 +28,8 @@ import (
 
 	"google.golang.org/grpc/grpclog"
 	"google.golang.org/grpc/internal/proxyattributes"
+	"google.golang.org/grpc/internal/transport"
+	"google.golang.org/grpc/internal/transport/networktype"
 	"google.golang.org/grpc/resolver"
 	"google.golang.org/grpc/serviceconfig"
 )
@@ -40,7 +42,7 @@ var (
 
 // delegatingResolver manages both target URI and proxy address resolution by
 // delegating these tasks to separate child resolvers. Essentially, it acts as
-// a intermediary between the gRPC ClientConn and the child resolvers.
+// an intermediary between the gRPC ClientConn and the child resolvers.
 //
 // It implements the [resolver.Resolver] interface.
 type delegatingResolver struct {
@@ -48,6 +50,9 @@ type delegatingResolver struct {
 	cc       resolver.ClientConn // gRPC ClientConn
 	proxyURL *url.URL            // proxy URL, derived from proxy environment and target
 
+	// We do not hold both mu and childMu in the same goroutine. Avoid holding
+	// both locks when calling into the child, as the child resolver may
+	// synchronously callback into the channel.
 	mu                  sync.Mutex         // protects all the fields below
 	targetResolverState *resolver.State    // state of the target resolver
 	proxyAddrs          []resolver.Address // resolved proxy addresses; empty if no proxy is configured
@@ -66,8 +71,8 @@ func (nopResolver) ResolveNow(resolver.ResolveNowOptions) {}
 
 func (nopResolver) Close() {}
 
-// proxyURLForTarget determines the proxy URL for the given address based on
-// the environment. It can return the following:
+// proxyURLForTarget determines the proxy URL for the given address based on the
+// environment. It can return the following:
 //   - nil URL, nil error: No proxy is configured or the address is excluded
 //     using the `NO_PROXY` environment variable or if req.URL.Host is
 //     "localhost" (with or without // a port number)
@@ -86,7 +91,8 @@ func proxyURLForTarget(address string) (*url.URL, error) {
 // resolvers:
 //   - one to resolve the proxy address specified using the supported
 //     environment variables. This uses the registered resolver for the "dns"
-//     scheme.
+//     scheme. It is lazily built when a target resolver update contains at least
+//     one TCP address.
 //   - one to resolve the target URI using the resolver specified by the scheme
 //     in the target URI or specified by the user using the WithResolvers dial
 //     option. As a special case, if the target URI's scheme is "dns" and a
@@ -95,8 +101,10 @@ func proxyURLForTarget(address string) (*url.URL, error) {
 //     resolution is enabled using the dial option.
 func New(target resolver.Target, cc resolver.ClientConn, opts resolver.BuildOptions, targetResolverBuilder resolver.Builder, targetResolutionEnabled bool) (resolver.Resolver, error) {
 	r := &delegatingResolver{
-		target: target,
-		cc:     cc,
+		target:         target,
+		cc:             cc,
+		proxyResolver:  nopResolver{},
+		targetResolver: nopResolver{},
 	}
 
 	var err error
@@ -123,37 +131,26 @@ func New(target resolver.Target, cc resolver.ClientConn, opts resolver.BuildOpti
 	// resolution should be handled by the proxy, not the client. Therefore, we
 	// bypass the target resolver and store the unresolved target address.
 	if target.URL.Scheme == "dns" && !targetResolutionEnabled {
-		state := resolver.State{
+		r.targetResolverState = &resolver.State{
 			Addresses: []resolver.Address{{Addr: target.Endpoint()}},
 			Endpoints: []resolver.Endpoint{{Addresses: []resolver.Address{{Addr: target.Endpoint()}}}},
 		}
-		r.targetResolverState = &state
-	} else {
-		wcc := &wrappingClientConn{
-			stateListener: r.updateTargetResolverState,
-			parent:        r,
-		}
-		if r.targetResolver, err = targetResolverBuilder.Build(target, wcc, opts); err != nil {
-			return nil, fmt.Errorf("delegating_resolver: unable to build the resolver for target %s: %v", target, err)
-		}
-	}
-
-	if r.proxyResolver, err = r.proxyURIResolver(opts); err != nil {
-		return nil, fmt.Errorf("delegating_resolver: failed to build resolver for proxy URL %q: %v", r.proxyURL, err)
+		r.updateTargetResolverState(*r.targetResolverState)
+		return r, nil
 	}
-
-	if r.targetResolver == nil {
-		r.targetResolver = nopResolver{}
+	wcc := &wrappingClientConn{
+		stateListener: r.updateTargetResolverState,
+		parent:        r,
 	}
-	if r.proxyResolver == nil {
-		r.proxyResolver = nopResolver{}
+	if r.targetResolver, err = targetResolverBuilder.Build(target, wcc, opts); err != nil {
+		return nil, fmt.Errorf("delegating_resolver: unable to build the resolver for target %s: %v", target, err)
 	}
 	return r, nil
 }
 
-// proxyURIResolver creates a resolver for resolving proxy URIs using the
-// "dns" scheme. It adjusts the proxyURL to conform to the "dns:///" format and
-// builds a resolver with a wrappingClientConn to capture resolved addresses.
+// proxyURIResolver creates a resolver for resolving proxy URIs using the "dns"
+// scheme. It adjusts the proxyURL to conform to the "dns:///" format and builds
+// a resolver with a wrappingClientConn to capture resolved addresses.
 func (r *delegatingResolver) proxyURIResolver(opts resolver.BuildOptions) (resolver.Resolver, error) {
 	proxyBuilder := resolver.Get("dns")
 	if proxyBuilder == nil {
@@ -189,18 +186,58 @@ func (r *delegatingResolver) Close() {
 	r.proxyResolver = nil
 }
 
-// updateClientConnStateLocked creates a list of combined addresses by
-// pairing each proxy address with every target address. For each pair, it
-// generates a new [resolver.Address] using the proxy address, and adding the
-// target address as the attribute along with user info. It returns nil if
-// either resolver has not sent update even once and returns the error from
-// ClientConn update once both resolvers have sent update atleast once.
+func needsProxyResolver(state *resolver.State) bool {
+	for _, addr := range state.Addresses {
+		if !skipProxy(addr) {
+			return true
+		}
+	}
+	for _, endpoint := range state.Endpoints {
+		for _, addr := range endpoint.Addresses {
+			if !skipProxy(addr) {
+				return true
+			}
+		}
+	}
+	return false
+}
+
+func skipProxy(address resolver.Address) bool {
+	// Avoid proxy when network is not tcp.
+	networkType, ok := networktype.Get(address)
+	if !ok {
+		networkType, _ = transport.ParseDialTarget(address.Addr)
+	}
+	if networkType != "tcp" {
+		return true
+	}
+
+	req := &http.Request{URL: &url.URL{
+		Scheme: "https",
+		Host:   address.Addr,
+	}}
+	// Avoid proxy when address included in `NO_PROXY` environment variable or
+	// fails to get the proxy address.
+	url, err := HTTPSProxyFromEnvironment(req)
+	if err != nil || url == nil {
+		return true
+	}
+	return false
+}
+
+// updateClientConnStateLocked constructs a combined list of addresses by
+// pairing each proxy address with every target address of type TCP. For each
+// pair, it creates a new [resolver.Address] using the proxy address and
+// attaches the corresponding target address and user info as attributes. Target
+// addresses that are not of type TCP are appended to the list as-is. The
+// function returns nil if either resolver has not yet provided an update, and
+// returns the result of ClientConn.UpdateState once both resolvers have
+// provided at least one update.
 func (r *delegatingResolver) updateClientConnStateLocked() error {
 	if r.targetResolverState == nil || r.proxyAddrs == nil {
 		return nil
 	}
 
-	curState := *r.targetResolverState
 	// If multiple resolved proxy addresses are present, we send only the
 	// unresolved proxy host and let net.Dial handle the proxy host name
 	// resolution when creating the transport. Sending all resolved addresses
@@ -218,24 +255,29 @@ func (r *delegatingResolver) updateClientConnStateLocked() error {
 	}
 	var addresses []resolver.Address
 	for _, targetAddr := range (*r.targetResolverState).Addresses {
+		if skipProxy(targetAddr) {
+			addresses = append(addresses, targetAddr)
+			continue
+		}
 		addresses = append(addresses, proxyattributes.Set(proxyAddr, proxyattributes.Options{
 			User:        r.proxyURL.User,
 			ConnectAddr: targetAddr.Addr,
 		}))
 	}
 
-	// Create a list of combined endpoints by pairing all proxy endpoints
-	// with every target endpoint. Each time, it constructs a new
-	// [resolver.Endpoint] using the all addresses from all the proxy endpoint
-	// and the target addresses from one endpoint. The target address and user
-	// information from the proxy URL are added as attributes to the proxy
-	// address.The resulting list of addresses is then grouped into endpoints,
-	// covering all combinations of proxy and target endpoints.
+	// For each target endpoint, construct a new [resolver.Endpoint] that
+	// includes all addresses from all proxy endpoints and the addresses from
+	// that target endpoint, preserving the number of target endpoints.
 	var endpoints []resolver.Endpoint
 	for _, endpt := range (*r.targetResolverState).Endpoints {
 		var addrs []resolver.Address
-		for _, proxyAddr := range r.proxyAddrs {
-			for _, targetAddr := range endpt.Addresses {
+		for _, targetAddr := range endpt.Addresses {
+			// Avoid proxy when network is not tcp.
+			if skipProxy(targetAddr) {
+				addrs = append(addrs, targetAddr)
+				continue
+			}
+			for _, proxyAddr := range r.proxyAddrs {
 				addrs = append(addrs, proxyattributes.Set(proxyAddr, proxyattributes.Options{
 					User:        r.proxyURL.User,
 					ConnectAddr: targetAddr.Addr,
@@ -246,8 +288,9 @@ func (r *delegatingResolver) updateClientConnStateLocked() error {
 	}
 	// Use the targetResolverState for its service config and attributes
 	// contents. The state update is only sent after both the target and proxy
-	// resolvers have sent their updates, and curState has been updated with
-	// the combined addresses.
+	// resolvers have sent their updates, and curState has been updated with the
+	// combined addresses.
+	curState := *r.targetResolverState
 	curState.Addresses = addresses
 	curState.Endpoints = endpoints
 	return r.cc.UpdateState(curState)
@@ -257,7 +300,8 @@ func (r *delegatingResolver) updateClientConnStateLocked() error {
 // addresses and endpoints, marking the resolver as ready, and triggering a
 // state update if both proxy and target resolvers are ready. If the ClientConn
 // returns a non-nil error, it calls `ResolveNow()` on the target resolver.  It
-// is a StateListener function of wrappingClientConn passed to the proxy resolver.
+// is a StateListener function of wrappingClientConn passed to the proxy
+// resolver.
 func (r *delegatingResolver) updateProxyResolverState(state resolver.State) error {
 	r.mu.Lock()
 	defer r.mu.Unlock()
@@ -265,8 +309,8 @@ func (r *delegatingResolver) updateProxyResolverState(state resolver.State) erro
 		logger.Infof("Addresses received from proxy resolver: %s", state.Addresses)
 	}
 	if len(state.Endpoints) > 0 {
-		// We expect exactly one address per endpoint because the proxy
-		// resolver uses "dns" resolution.
+		// We expect exactly one address per endpoint because the proxy resolver
+		// uses "dns" resolution.
 		r.proxyAddrs = make([]resolver.Address, 0, len(state.Endpoints))
 		for _, endpoint := range state.Endpoints {
 			r.proxyAddrs = append(r.proxyAddrs, endpoint.Addresses...)
@@ -294,11 +338,14 @@ func (r *delegatingResolver) updateProxyResolverState(state resolver.State) erro
 	return err
 }
 
-// updateTargetResolverState updates the target resolver state by storing target
-// addresses, endpoints, and service config, marking the resolver as ready, and
-// triggering a state update if both resolvers are ready. If the ClientConn
-// returns a non-nil error, it calls `ResolveNow()` on the proxy resolver. It
-// is a StateListener function of wrappingClientConn passed to the target resolver.
+// updateTargetResolverState is the StateListener function provided to the
+// target resolver via wrappingClientConn. It updates the resolver state and
+// marks the target resolver as ready. If the update includes at least one TCP
+// address and the proxy resolver has not yet been constructed, it initializes
+// the proxy resolver. A combined state update is triggered once both resolvers
+// are ready. If all addresses are non-TCP, it proceeds without waiting for the
+// proxy resolver. If ClientConn.UpdateState returns a non-nil error,
+// ResolveNow() is called on the proxy resolver.
 func (r *delegatingResolver) updateTargetResolverState(state resolver.State) error {
 	r.mu.Lock()
 	defer r.mu.Unlock()
@@ -307,6 +354,32 @@ func (r *delegatingResolver) updateTargetResolverState(state resolver.State) err
 		logger.Infof("Addresses received from target resolver: %v", state.Addresses)
 	}
 	r.targetResolverState = &state
+	// If all addresses returned by the target resolver have a non-TCP network
+	// type, or are listed in the `NO_PROXY` environment variable, do not wait
+	// for proxy update.
+	if !needsProxyResolver(r.targetResolverState) {
+		return r.cc.UpdateState(*r.targetResolverState)
+	}
+
+	// The proxy resolver may be rebuilt multiple times, specifically each time
+	// the target resolver sends an update, even if the target resolver is built
+	// successfully but building the proxy resolver fails.
+	if len(r.proxyAddrs) == 0 {
+		go func() {
+			r.childMu.Lock()
+			defer r.childMu.Unlock()
+			if _, ok := r.proxyResolver.(nopResolver); !ok {
+				return
+			}
+			proxyResolver, err := r.proxyURIResolver(resolver.BuildOptions{})
+			if err != nil {
+				r.cc.ReportError(fmt.Errorf("delegating_resolver: unable to build the proxy resolver: %v", err))
+				return
+			}
+			r.proxyResolver = proxyResolver
+		}()
+	}
+
 	err := r.updateClientConnStateLocked()
 	if err != nil {
 		go func() {
@@ -335,7 +408,8 @@ func (wcc *wrappingClientConn) UpdateState(state resolver.State) error {
 	return wcc.stateListener(state)
 }
 
-// ReportError intercepts errors from the child resolvers and passes them to ClientConn.
+// ReportError intercepts errors from the child resolvers and passes them to
+// ClientConn.
 func (wcc *wrappingClientConn) ReportError(err error) {
 	wcc.parent.cc.ReportError(err)
 }
@@ -346,8 +420,8 @@ func (wcc *wrappingClientConn) NewAddress(addrs []resolver.Address) {
 	wcc.UpdateState(resolver.State{Addresses: addrs})
 }
 
-// ParseServiceConfig parses the provided service config and returns an
-// object that provides the parsed config.
+// ParseServiceConfig parses the provided service config and returns an object
+// that provides the parsed config.
 func (wcc *wrappingClientConn) ParseServiceConfig(serviceConfigJSON string) *serviceconfig.ParseResult {
 	return wcc.parent.cc.ParseServiceConfig(serviceConfigJSON)
 }
diff --git a/internal/resolver/delegatingresolver/delegatingresolver_ext_test.go b/internal/resolver/delegatingresolver/delegatingresolver_ext_test.go
index 148b44816614..c14d420940d9 100644
--- a/internal/resolver/delegatingresolver/delegatingresolver_ext_test.go
+++ b/internal/resolver/delegatingresolver/delegatingresolver_ext_test.go
@@ -31,6 +31,7 @@ import (
 	"google.golang.org/grpc/internal/proxyattributes"
 	"google.golang.org/grpc/internal/resolver/delegatingresolver"
 	"google.golang.org/grpc/internal/testutils"
+	"google.golang.org/grpc/internal/transport/networktype"
 	"google.golang.org/grpc/resolver"
 	"google.golang.org/grpc/resolver/manual"
 	"google.golang.org/grpc/serviceconfig"
@@ -130,15 +131,29 @@ func (s) TestDelegatingResolverNoProxyEnvVarsSet(t *testing.T) {
 // overwriting the previously registered DNS resolver. This allows the test to
 // mock the DNS resolution for the proxy resolver. It also registers the
 // original DNS resolver after the test is done.
-func setupDNS(t *testing.T) *manual.Resolver {
+func setupDNS(t *testing.T) (*manual.Resolver, chan struct{}) {
 	t.Helper()
 	mr := manual.NewBuilderWithScheme("dns")
 
 	dnsResolverBuilder := resolver.Get("dns")
 	resolver.Register(mr)
 
+	resolverBuilt := make(chan struct{})
+	mr.BuildCallback = func(resolver.Target, resolver.ClientConn, resolver.BuildOptions) {
+		close(resolverBuilt)
+	}
+
 	t.Cleanup(func() { resolver.Register(dnsResolverBuilder) })
-	return mr
+	return mr, resolverBuilt
+}
+
+func mustBuildResolver(ctx context.Context, t *testing.T, buildCh chan struct{}) {
+	t.Helper()
+	select {
+	case <-buildCh:
+	case <-ctx.Done():
+		t.Fatalf("Context timed out waiting for resolver to be built.")
+	}
 }
 
 // proxyAddressWithTargetAttribute creates a resolver.Address for the proxy,
@@ -149,6 +164,19 @@ func proxyAddressWithTargetAttribute(proxyAddr string, targetAddr string) resolv
 	return addr
 }
 
+func overrideTestHTTPSProxy(t *testing.T, proxyAddr string) {
+	t.Helper()
+	hpfe := func(req *http.Request) (*url.URL, error) {
+		return &url.URL{
+			Scheme: "https",
+			Host:   proxyAddr,
+		}, nil
+	}
+	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
+	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
+	t.Cleanup(func() { delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe })
+}
+
 // Tests the scenario where proxy is configured and the target URI contains the
 // "dns" scheme and target resolution is enabled. The test verifies that the
 // addresses returned by the delegating resolver combines the addresses
@@ -161,34 +189,24 @@ func (s) TestDelegatingResolverwithDNSAndProxyWithTargetResolution(t *testing.T)
 		envProxyAddr            = "proxytest.com"
 		resolvedProxyTestAddr1  = "11.11.11.11:7687"
 	)
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == targetTestAddr {
-			return &url.URL{
-				Scheme: "https",
-				Host:   envProxyAddr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, targetTestAddr)
-		return nil, nil
-	}
-	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() {
-		delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe
-	}()
+	overrideTestHTTPSProxy(t, envProxyAddr)
+
 	// Manual resolver to control the target resolution.
 	targetResolver := manual.NewBuilderWithScheme("dns")
 	target := targetResolver.Scheme() + ":///" + targetTestAddr
 	// Set up a manual DNS resolver to control the proxy address resolution.
-	proxyResolver := setupDNS(t)
+	proxyResolver, proxyResolverBuilt := setupDNS(t)
 
 	tcc, stateCh, _ := createTestResolverClientConn(t)
 	if _, err := delegatingresolver.New(resolver.Target{URL: *testutils.MustParseURL(target)}, tcc, resolver.BuildOptions{}, targetResolver, true); err != nil {
 		t.Fatalf("Failed to create delegating resolver: %v", err)
 	}
 
-	proxyResolver.UpdateState(resolver.State{
-		Addresses:     []resolver.Address{{Addr: resolvedProxyTestAddr1}},
+	targetResolver.UpdateState(resolver.State{
+		Addresses: []resolver.Address{
+			{Addr: resolvedTargetTestAddr1},
+			{Addr: resolvedTargetTestAddr2},
+		},
 		ServiceConfig: &serviceconfig.ParseResult{},
 	})
 
@@ -198,11 +216,13 @@ func (s) TestDelegatingResolverwithDNSAndProxyWithTargetResolution(t *testing.T)
 	case <-time.After(defaultTestShortTimeout):
 	}
 
-	targetResolver.UpdateState(resolver.State{
-		Addresses: []resolver.Address{
-			{Addr: resolvedTargetTestAddr1},
-			{Addr: resolvedTargetTestAddr2},
-		},
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+
+	// Wait for the proxy resolver to be built before calling UpdateState.
+	mustBuildResolver(ctx, t, proxyResolverBuilt)
+	proxyResolver.UpdateState(resolver.State{
+		Addresses:     []resolver.Address{{Addr: resolvedProxyTestAddr1}},
 		ServiceConfig: &serviceconfig.ParseResult{},
 	})
 
@@ -217,8 +237,8 @@ func (s) TestDelegatingResolverwithDNSAndProxyWithTargetResolution(t *testing.T)
 	var gotState resolver.State
 	select {
 	case gotState = <-stateCh:
-	case <-time.After(defaultTestTimeout):
-		t.Fatal("Timeout when waiting for a state update from the delegating resolver")
+	case <-ctx.Done():
+		t.Fatal("Context timeed out when waiting for a state update from the delegating resolver")
 	}
 
 	if diff := cmp.Diff(gotState, wantState); diff != "" {
@@ -237,32 +257,23 @@ func (s) TestDelegatingResolverwithDNSAndProxyWithNoTargetResolution(t *testing.
 		envProxyAddr           = "proxytest.com"
 		resolvedProxyTestAddr1 = "11.11.11.11:7687"
 	)
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == targetTestAddr {
-			return &url.URL{
-				Scheme: "https",
-				Host:   envProxyAddr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, targetTestAddr)
-		return nil, nil
-	}
-	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() {
-		delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe
-	}()
+	overrideTestHTTPSProxy(t, envProxyAddr)
 
 	targetResolver := manual.NewBuilderWithScheme("dns")
 	target := targetResolver.Scheme() + ":///" + targetTestAddr
 	// Set up a manual DNS resolver to control the proxy address resolution.
-	proxyResolver := setupDNS(t)
+	proxyResolver, proxyResolverBuilt := setupDNS(t)
 
 	tcc, stateCh, _ := createTestResolverClientConn(t)
 	if _, err := delegatingresolver.New(resolver.Target{URL: *testutils.MustParseURL(target)}, tcc, resolver.BuildOptions{}, targetResolver, false); err != nil {
 		t.Fatalf("Failed to create delegating resolver: %v", err)
 	}
 
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+
+	// Wait for the proxy resolver to be built before calling UpdateState.
+	mustBuildResolver(ctx, t, proxyResolverBuilt)
 	proxyResolver.UpdateState(resolver.State{
 		Addresses: []resolver.Address{
 			{Addr: resolvedProxyTestAddr1},
@@ -277,8 +288,8 @@ func (s) TestDelegatingResolverwithDNSAndProxyWithNoTargetResolution(t *testing.
 	var gotState resolver.State
 	select {
 	case gotState = <-stateCh:
-	case <-time.After(defaultTestTimeout):
-		t.Fatal("Timeout when waiting for a state update from the delegating resolver")
+	case <-ctx.Done():
+		t.Fatal("Context timed out when waiting for a state update from the delegating resolver")
 	}
 
 	if diff := cmp.Diff(gotState, wantState); diff != "" {
@@ -298,35 +309,24 @@ func (s) TestDelegatingResolverwithCustomResolverAndProxy(t *testing.T) {
 		envProxyAddr            = "proxytest.com"
 		resolvedProxyTestAddr1  = "11.11.11.11:7687"
 	)
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == targetTestAddr {
-			return &url.URL{
-				Scheme: "https",
-				Host:   envProxyAddr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, targetTestAddr)
-		return nil, nil
-	}
-	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() {
-		delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe
-	}()
+	overrideTestHTTPSProxy(t, envProxyAddr)
 
 	// Manual resolver to control the target resolution.
 	targetResolver := manual.NewBuilderWithScheme("test")
 	target := targetResolver.Scheme() + ":///" + targetTestAddr
 	// Set up a manual DNS resolver to control the proxy address resolution.
-	proxyResolver := setupDNS(t)
+	proxyResolver, proxyResolverBuilt := setupDNS(t)
 
 	tcc, stateCh, _ := createTestResolverClientConn(t)
 	if _, err := delegatingresolver.New(resolver.Target{URL: *testutils.MustParseURL(target)}, tcc, resolver.BuildOptions{}, targetResolver, false); err != nil {
 		t.Fatalf("Failed to create delegating resolver: %v", err)
 	}
 
-	proxyResolver.UpdateState(resolver.State{
-		Addresses:     []resolver.Address{{Addr: resolvedProxyTestAddr1}},
+	targetResolver.UpdateState(resolver.State{
+		Addresses: []resolver.Address{
+			{Addr: resolvedTargetTestAddr1},
+			{Addr: resolvedTargetTestAddr2},
+		},
 		ServiceConfig: &serviceconfig.ParseResult{},
 	})
 
@@ -336,11 +336,13 @@ func (s) TestDelegatingResolverwithCustomResolverAndProxy(t *testing.T) {
 	case <-time.After(defaultTestShortTimeout):
 	}
 
-	targetResolver.UpdateState(resolver.State{
-		Addresses: []resolver.Address{
-			{Addr: resolvedTargetTestAddr1},
-			{Addr: resolvedTargetTestAddr2},
-		},
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+
+	// Wait for the proxy resolver to be built before calling UpdateState.
+	mustBuildResolver(ctx, t, proxyResolverBuilt)
+	proxyResolver.UpdateState(resolver.State{
+		Addresses:     []resolver.Address{{Addr: resolvedProxyTestAddr1}},
 		ServiceConfig: &serviceconfig.ParseResult{},
 	})
 
@@ -354,8 +356,8 @@ func (s) TestDelegatingResolverwithCustomResolverAndProxy(t *testing.T) {
 	var gotState resolver.State
 	select {
 	case gotState = <-stateCh:
-	case <-time.After(defaultTestTimeout):
-		t.Fatal("Timeout when waiting for a state update from the delegating resolver")
+	case <-ctx.Done():
+		t.Fatal("Context timed out when waiting for a state update from the delegating resolver")
 	}
 
 	if diff := cmp.Diff(gotState, wantState); diff != "" {
@@ -380,46 +382,19 @@ func (s) TestDelegatingResolverForEndpointsWithProxy(t *testing.T) {
 		resolvedProxyTestAddr1  = "11.11.11.11:7687"
 		resolvedProxyTestAddr2  = "22.22.22.22:7687"
 	)
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == targetTestAddr {
-			return &url.URL{
-				Scheme: "https",
-				Host:   envProxyAddr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, targetTestAddr)
-		return nil, nil
-	}
-	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() {
-		delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe
-	}()
+	overrideTestHTTPSProxy(t, envProxyAddr)
 
 	// Manual resolver to control the target resolution.
 	targetResolver := manual.NewBuilderWithScheme("test")
 	target := targetResolver.Scheme() + ":///" + targetTestAddr
 	// Set up a manual DNS resolver to control the proxy address resolution.
-	proxyResolver := setupDNS(t)
+	proxyResolver, proxyResolverBuilt := setupDNS(t)
 
 	tcc, stateCh, _ := createTestResolverClientConn(t)
 	if _, err := delegatingresolver.New(resolver.Target{URL: *testutils.MustParseURL(target)}, tcc, resolver.BuildOptions{}, targetResolver, false); err != nil {
 		t.Fatalf("Failed to create delegating resolver: %v", err)
 	}
 
-	proxyResolver.UpdateState(resolver.State{
-		Endpoints: []resolver.Endpoint{
-			{Addresses: []resolver.Address{{Addr: resolvedProxyTestAddr1}}},
-			{Addresses: []resolver.Address{{Addr: resolvedProxyTestAddr2}}},
-		},
-		ServiceConfig: &serviceconfig.ParseResult{},
-	})
-
-	select {
-	case <-stateCh:
-		t.Fatalf("Delegating resolver invoked UpdateState before both the proxy and target resolvers had updated their states.")
-	case <-time.After(defaultTestShortTimeout):
-	}
 	targetResolver.UpdateState(resolver.State{
 		Endpoints: []resolver.Endpoint{
 			{
@@ -435,22 +410,39 @@ func (s) TestDelegatingResolverForEndpointsWithProxy(t *testing.T) {
 		},
 		ServiceConfig: &serviceconfig.ParseResult{},
 	})
+	select {
+	case <-stateCh:
+		t.Fatalf("Delegating resolver invoked UpdateState before both the proxy and target resolvers had updated their states.")
+	case <-time.After(defaultTestShortTimeout):
+	}
+
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
 
+	// Wait for the proxy resolver to be built before calling UpdateState.
+	mustBuildResolver(ctx, t, proxyResolverBuilt)
+	proxyResolver.UpdateState(resolver.State{
+		Endpoints: []resolver.Endpoint{
+			{Addresses: []resolver.Address{{Addr: resolvedProxyTestAddr1}}},
+			{Addresses: []resolver.Address{{Addr: resolvedProxyTestAddr2}}},
+		},
+		ServiceConfig: &serviceconfig.ParseResult{},
+	})
 	wantState := resolver.State{
 		Endpoints: []resolver.Endpoint{
 			{
 				Addresses: []resolver.Address{
 					proxyAddressWithTargetAttribute(resolvedProxyTestAddr1, resolvedTargetTestAddr1),
-					proxyAddressWithTargetAttribute(resolvedProxyTestAddr1, resolvedTargetTestAddr2),
 					proxyAddressWithTargetAttribute(resolvedProxyTestAddr2, resolvedTargetTestAddr1),
+					proxyAddressWithTargetAttribute(resolvedProxyTestAddr1, resolvedTargetTestAddr2),
 					proxyAddressWithTargetAttribute(resolvedProxyTestAddr2, resolvedTargetTestAddr2),
 				},
 			},
 			{
 				Addresses: []resolver.Address{
 					proxyAddressWithTargetAttribute(resolvedProxyTestAddr1, resolvedTargetTestAddr3),
-					proxyAddressWithTargetAttribute(resolvedProxyTestAddr1, resolvedTargetTestAddr4),
 					proxyAddressWithTargetAttribute(resolvedProxyTestAddr2, resolvedTargetTestAddr3),
+					proxyAddressWithTargetAttribute(resolvedProxyTestAddr1, resolvedTargetTestAddr4),
 					proxyAddressWithTargetAttribute(resolvedProxyTestAddr2, resolvedTargetTestAddr4),
 				},
 			},
@@ -460,8 +452,8 @@ func (s) TestDelegatingResolverForEndpointsWithProxy(t *testing.T) {
 	var gotState resolver.State
 	select {
 	case gotState = <-stateCh:
-	case <-time.After(defaultTestTimeout):
-		t.Fatal("Timeout when waiting for a state update from the delegating resolver")
+	case <-ctx.Done():
+		t.Fatal("Contex timed out when waiting for a state update from the delegating resolver")
 	}
 
 	if diff := cmp.Diff(gotState, wantState); diff != "" {
@@ -474,7 +466,7 @@ func (s) TestDelegatingResolverForEndpointsWithProxy(t *testing.T) {
 // The test verifies that the delegating resolver combines unresolved proxy
 // host and target addresses correctly, returning addresses with the proxy host
 // populated and the target address included as an attribute.
-func (s) TestDelegatingResolverForMutipleProxyAddress(t *testing.T) {
+func (s) TestDelegatingResolverForMultipleProxyAddress(t *testing.T) {
 	const (
 		targetTestAddr          = "test.com"
 		resolvedTargetTestAddr1 = "1.1.1.1:8080"
@@ -483,37 +475,22 @@ func (s) TestDelegatingResolverForMutipleProxyAddress(t *testing.T) {
 		resolvedProxyTestAddr1  = "11.11.11.11:7687"
 		resolvedProxyTestAddr2  = "22.22.22.22:7687"
 	)
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == targetTestAddr {
-			return &url.URL{
-				Scheme: "https",
-				Host:   envProxyAddr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, targetTestAddr)
-		return nil, nil
-	}
-	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() {
-		delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe
-	}()
+	overrideTestHTTPSProxy(t, envProxyAddr)
 
 	// Manual resolver to control the target resolution.
 	targetResolver := manual.NewBuilderWithScheme("test")
 	target := targetResolver.Scheme() + ":///" + targetTestAddr
 	// Set up a manual DNS resolver to control the proxy address resolution.
-	proxyResolver := setupDNS(t)
-
+	proxyResolver, proxyResolverBuilt := setupDNS(t)
 	tcc, stateCh, _ := createTestResolverClientConn(t)
 	if _, err := delegatingresolver.New(resolver.Target{URL: *testutils.MustParseURL(target)}, tcc, resolver.BuildOptions{}, targetResolver, false); err != nil {
 		t.Fatalf("Failed to create delegating resolver: %v", err)
 	}
 
-	proxyResolver.UpdateState(resolver.State{
+	targetResolver.UpdateState(resolver.State{
 		Addresses: []resolver.Address{
-			{Addr: resolvedProxyTestAddr1},
-			{Addr: resolvedProxyTestAddr2},
+			{Addr: resolvedTargetTestAddr1},
+			{Addr: resolvedTargetTestAddr2},
 		},
 		ServiceConfig: &serviceconfig.ParseResult{},
 	})
@@ -524,10 +501,15 @@ func (s) TestDelegatingResolverForMutipleProxyAddress(t *testing.T) {
 	case <-time.After(defaultTestShortTimeout):
 	}
 
-	targetResolver.UpdateState(resolver.State{
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+
+	// Wait for the proxy resolver to be built before calling UpdateState.
+	mustBuildResolver(ctx, t, proxyResolverBuilt)
+	proxyResolver.UpdateState(resolver.State{
 		Addresses: []resolver.Address{
-			{Addr: resolvedTargetTestAddr1},
-			{Addr: resolvedTargetTestAddr2},
+			{Addr: resolvedProxyTestAddr1},
+			{Addr: resolvedProxyTestAddr2},
 		},
 		ServiceConfig: &serviceconfig.ParseResult{},
 	})
@@ -542,8 +524,8 @@ func (s) TestDelegatingResolverForMutipleProxyAddress(t *testing.T) {
 	var gotState resolver.State
 	select {
 	case gotState = <-stateCh:
-	case <-time.After(defaultTestTimeout):
-		t.Fatal("Timeout when waiting for a state update from the delegating resolver")
+	case <-ctx.Done():
+		t.Fatal("Context timed out when waiting for a state update from the delegating resolver")
 	}
 
 	if diff := cmp.Diff(gotState, wantState); diff != "" {
@@ -560,17 +542,7 @@ func (s) TestDelegatingResolverForMutipleProxyAddress(t *testing.T) {
 func (s) TestDelegatingResolverUpdateStateDuringClose(t *testing.T) {
 	const envProxyAddr = "proxytest.com"
 
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		return &url.URL{
-			Scheme: "https",
-			Host:   envProxyAddr,
-		}, nil
-	}
-	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() {
-		delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe
-	}()
+	overrideTestHTTPSProxy(t, envProxyAddr)
 
 	// Manual resolver to control the target resolution.
 	targetResolver := manual.NewBuilderWithScheme("test")
@@ -586,9 +558,9 @@ func (s) TestDelegatingResolverUpdateStateDuringClose(t *testing.T) {
 
 	target := targetResolver.Scheme() + ":///" + "ignored"
 	// Set up a manual DNS resolver to control the proxy address resolution.
-	proxyResolver := setupDNS(t)
+	proxyResolver, proxyResolverBuilt := setupDNS(t)
 
-	unblockProxyResolverClose := make(chan struct{})
+	unblockProxyResolverClose := make(chan struct{}, 1)
 	proxyResolver.CloseCallback = func() {
 		<-unblockProxyResolverClose
 		t.Log("Proxy resolver is closed.")
@@ -607,11 +579,13 @@ func (s) TestDelegatingResolverUpdateStateDuringClose(t *testing.T) {
 		Endpoints: []resolver.Endpoint{{Addresses: []resolver.Address{{Addr: "1.1.1.1"}}}},
 	})
 
+	// Wait for the proxy resolver to be built before calling Close.
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+	mustBuildResolver(ctx, t, proxyResolverBuilt)
 	// Closing the delegating resolver will block until the test writes to the
 	// unblockProxyResolverClose channel.
 	go dr.Close()
-	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
-	defer cancel()
 	select {
 	case <-targetResolverCloseCalled:
 	case <-ctx.Done():
@@ -621,9 +595,13 @@ func (s) TestDelegatingResolverUpdateStateDuringClose(t *testing.T) {
 	// Updating the channel will result in an error being returned. Since the
 	// target resolver's Close method is already called, the delegating resolver
 	// must not call "ResolveNow" on it.
-	go proxyResolver.UpdateState(resolver.State{
-		Endpoints: []resolver.Endpoint{{Addresses: []resolver.Address{{Addr: "1.1.1.1"}}}},
-	})
+	proxyUpdateCh := make(chan struct{})
+	go func() {
+		proxyResolver.UpdateState(resolver.State{
+			Endpoints: []resolver.Endpoint{{Addresses: []resolver.Address{{Addr: "1.1.1.1"}}}},
+		})
+		close(proxyUpdateCh)
+	}()
 	unblockProxyResolverClose <- struct{}{}
 
 	select {
@@ -631,6 +609,15 @@ func (s) TestDelegatingResolverUpdateStateDuringClose(t *testing.T) {
 		t.Fatalf("targetResolver.ResolveNow() called unexpectedly.")
 	case <-time.After(defaultTestShortTimeout):
 	}
+	// Wait for the proxy update to complete before returning from the test and
+	// before the deferred reassignment of
+	// delegatingresolver.HTTPSProxyFromEnvironment. This ensures that we read
+	// from the function before it is reassigned, preventing a race condition.
+	select {
+	case <-proxyUpdateCh:
+	case <-ctx.Done():
+		t.Fatalf("Context timed out waiting for proxyResolver.UpdateState() to be called.")
+	}
 }
 
 // Tests that calling cc.UpdateState in a blocking manner from a child resolver
@@ -642,17 +629,7 @@ func (s) TestDelegatingResolverUpdateStateDuringClose(t *testing.T) {
 func (s) TestDelegatingResolverUpdateStateFromResolveNow(t *testing.T) {
 	const envProxyAddr = "proxytest.com"
 
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		return &url.URL{
-			Scheme: "https",
-			Host:   envProxyAddr,
-		}, nil
-	}
-	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() {
-		delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe
-	}()
+	overrideTestHTTPSProxy(t, envProxyAddr)
 
 	// Manual resolver to control the target resolution.
 	targetResolver := manual.NewBuilderWithScheme("test")
@@ -667,7 +644,7 @@ func (s) TestDelegatingResolverUpdateStateFromResolveNow(t *testing.T) {
 
 	target := targetResolver.Scheme() + ":///" + "ignored"
 	// Set up a manual DNS resolver to control the proxy address resolution.
-	proxyResolver := setupDNS(t)
+	proxyResolver, proxyResolverBuilt := setupDNS(t)
 
 	tcc, _, _ := createTestResolverClientConn(t)
 	tcc.UpdateStateF = func(resolver.State) error {
@@ -682,14 +659,18 @@ func (s) TestDelegatingResolverUpdateStateFromResolveNow(t *testing.T) {
 		Endpoints: []resolver.Endpoint{{Addresses: []resolver.Address{{Addr: "1.1.1.1"}}}},
 	})
 
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+
+	// Wait for the proxy resolver to be built before calling UpdateState.
+	mustBuildResolver(ctx, t, proxyResolverBuilt)
+
 	// Updating the channel will result in an error being returned. The
 	// delegating resolver should call call "ResolveNow" on the target resolver.
 	proxyResolver.UpdateState(resolver.State{
 		Endpoints: []resolver.Endpoint{{Addresses: []resolver.Address{{Addr: "1.1.1.1"}}}},
 	})
 
-	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
-	defer cancel()
 	select {
 	case <-targetResolverCalled:
 	case <-ctx.Done():
@@ -702,32 +683,23 @@ func (s) TestDelegatingResolverUpdateStateFromResolveNow(t *testing.T) {
 func (s) TestDelegatingResolverResolveNow(t *testing.T) {
 	const envProxyAddr = "proxytest.com"
 
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		return &url.URL{
-			Scheme: "https",
-			Host:   envProxyAddr,
-		}, nil
-	}
-	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() {
-		delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe
-	}()
+	overrideTestHTTPSProxy(t, envProxyAddr)
 
 	// Manual resolver to control the target resolution.
 	targetResolver := manual.NewBuilderWithScheme("test")
-	targetResolverCalled := make(chan struct{})
+	targetResolverCalled := make(chan struct{}, 1)
 	targetResolver.ResolveNowCallback = func(resolver.ResolveNowOptions) {
 		// Updating the resolver state should not deadlock.
 		targetResolver.CC().UpdateState(resolver.State{
 			Endpoints: []resolver.Endpoint{{Addresses: []resolver.Address{{Addr: "1.1.1.1"}}}},
 		})
-		close(targetResolverCalled)
+		targetResolverCalled <- struct{}{}
 	}
 
 	target := targetResolver.Scheme() + ":///" + "ignored"
 	// Set up a manual DNS resolver to control the proxy address resolution.
-	proxyResolver := setupDNS(t)
+	proxyResolver, proxyResolverBuilt := setupDNS(t)
+
 	proxyResolverCalled := make(chan struct{})
 	proxyResolver.ResolveNowCallback = func(resolver.ResolveNowOptions) {
 		// Updating the resolver state should not deadlock.
@@ -743,12 +715,23 @@ func (s) TestDelegatingResolverResolveNow(t *testing.T) {
 		t.Fatalf("Failed to create delegating resolver: %v", err)
 	}
 
-	// Call ResolveNow on the delegatingResolver and verify both children
-	// receive the ResolveNow call.
+	// ResolveNow of manual proxy resolver will not be called. Proxy resolver is
+	// only built when we get the first update from target resolver. Therefore
+	// in the first ResolveNow, proxy resolver will be a no-op resolver and only
+	// target resolver's ResolveNow will be called.
 	dr.ResolveNow(resolver.ResolveNowOptions{})
-
 	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
 	defer cancel()
+	select {
+	case <-targetResolverCalled:
+	case <-ctx.Done():
+		t.Fatalf("context timed out waiting for targetResolver.ResolveNow() to be called.")
+	}
+
+	mustBuildResolver(ctx, t, proxyResolverBuilt)
+
+	dr.ResolveNow(resolver.ResolveNowOptions{})
+
 	select {
 	case <-targetResolverCalled:
 	case <-ctx.Done():
@@ -760,3 +743,205 @@ func (s) TestDelegatingResolverResolveNow(t *testing.T) {
 		t.Fatalf("context timed out waiting for proxyResolver.ResolveNow() to be called.")
 	}
 }
+
+// Tests the scenario where a proxy is configured, and the resolver returns a
+// network type other than tcp for all addresses. The test verifies that the
+// delegating resolver avoids the proxy build and directly sends the update
+// from target resolver to clientconn.
+func (s) TestDelegatingResolverForNonTCPTarget(t *testing.T) {
+	const (
+		targetTestAddr          = "test.target"
+		resolvedTargetTestAddr1 = "1.1.1.1:8080"
+		envProxyAddr            = "proxytest.com"
+	)
+	overrideTestHTTPSProxy(t, envProxyAddr)
+
+	// Manual resolver to control the target resolution.
+	targetResolver := manual.NewBuilderWithScheme("test")
+	target := targetResolver.Scheme() + ":///" + targetTestAddr
+	// Set up a manual DNS resolver to control the proxy address resolution.
+	_, proxyResolverBuilt := setupDNS(t)
+
+	tcc, stateCh, _ := createTestResolverClientConn(t)
+	if _, err := delegatingresolver.New(resolver.Target{URL: *testutils.MustParseURL(target)}, tcc, resolver.BuildOptions{}, targetResolver, false); err != nil {
+		t.Fatalf("Failed to create delegating resolver: %v", err)
+	}
+
+	// Set network to anything other than tcp.
+	nonTCPAddr := networktype.Set(resolver.Address{Addr: resolvedTargetTestAddr1}, "unix")
+	targetResolver.UpdateState(resolver.State{
+		Addresses:     []resolver.Address{nonTCPAddr},
+		Endpoints:     []resolver.Endpoint{{Addresses: []resolver.Address{nonTCPAddr}}},
+		ServiceConfig: &serviceconfig.ParseResult{},
+	})
+
+	var gotState resolver.State
+	select {
+	case gotState = <-stateCh:
+	case <-time.After(defaultTestTimeout):
+		t.Fatal("Timeout when waiting for a state update from the delegating resolver")
+	}
+
+	// Verify that the delegating resolver doesn't call proxy resolver's
+	// UpdateState since we have no tcp address
+	select {
+	case <-proxyResolverBuilt:
+		t.Fatal("Unexpected call to proxy resolver update state")
+	case <-time.After(defaultTestShortTimeout):
+	}
+
+	wantState := resolver.State{
+		Addresses:     []resolver.Address{nonTCPAddr},
+		Endpoints:     []resolver.Endpoint{{Addresses: []resolver.Address{nonTCPAddr}}},
+		ServiceConfig: &serviceconfig.ParseResult{},
+	}
+
+	// Verify that the state clientconn receives is same as updated by target
+	// resolver, since we want to avoid proxy for any network type apart from
+	// tcp.
+	if diff := cmp.Diff(gotState, wantState); diff != "" {
+		t.Fatalf("Unexpected state from delegating resolver. Diff (-got +want):\n%s", diff)
+	}
+}
+
+// Tests the scenario where a proxy is configured, and the resolver returns tcp
+// and non-tcp addresses. The test verifies that the delegating resolver doesn't
+// add proxyatrribute to adresses with network type other than tcp, but adds
+// the proxyattribute to addresses with network type tcp.
+func (s) TestDelegatingResolverForMixNetworkType(t *testing.T) {
+	const (
+		targetTestAddr          = "test.target"
+		resolvedTargetTestAddr1 = "1.1.1.1:8080"
+		resolvedTargetTestAddr2 = "2.2.2.2:8080"
+		envProxyAddr            = "proxytest.com"
+	)
+	overrideTestHTTPSProxy(t, envProxyAddr)
+
+	// Manual resolver to control the target resolution.
+	targetResolver := manual.NewBuilderWithScheme("test")
+	target := targetResolver.Scheme() + ":///" + targetTestAddr
+	// Set up a manual DNS resolver to control the proxy address resolution.
+	proxyResolver, proxyResolverBuilt := setupDNS(t)
+
+	tcc, stateCh, _ := createTestResolverClientConn(t)
+	if _, err := delegatingresolver.New(resolver.Target{URL: *testutils.MustParseURL(target)}, tcc, resolver.BuildOptions{}, targetResolver, false); err != nil {
+		t.Fatalf("Failed to create delegating resolver: %v", err)
+	}
+	// Set network to anything other than tcp.
+	nonTCPAddr := networktype.Set(resolver.Address{Addr: resolvedTargetTestAddr1}, "unix")
+	targetResolver.UpdateState(resolver.State{
+		Addresses:     []resolver.Address{nonTCPAddr, {Addr: resolvedTargetTestAddr2}},
+		Endpoints:     []resolver.Endpoint{{Addresses: []resolver.Address{nonTCPAddr, {Addr: resolvedTargetTestAddr2}}}},
+		ServiceConfig: &serviceconfig.ParseResult{},
+	})
+
+	select {
+	case <-stateCh:
+		t.Fatalf("Delegating resolver invoked UpdateState before both the proxy and target resolvers had updated their states.")
+	case <-time.After(defaultTestShortTimeout):
+	}
+
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+
+	// Wait for the proxy resolver to be built before calling UpdateState.
+	mustBuildResolver(ctx, t, proxyResolverBuilt)
+	proxyResolver.UpdateState(resolver.State{
+		Addresses:     []resolver.Address{{Addr: envProxyAddr}},
+		ServiceConfig: &serviceconfig.ParseResult{},
+	})
+
+	var gotState resolver.State
+	select {
+	case gotState = <-stateCh:
+	case <-ctx.Done():
+		t.Fatal("Context timed out when waiting for a state update from the delegating resolver")
+	}
+	wantState := resolver.State{
+		Addresses:     []resolver.Address{nonTCPAddr, proxyAddressWithTargetAttribute(envProxyAddr, resolvedTargetTestAddr2)},
+		Endpoints:     []resolver.Endpoint{{Addresses: []resolver.Address{nonTCPAddr, proxyAddressWithTargetAttribute(envProxyAddr, resolvedTargetTestAddr2)}}},
+		ServiceConfig: &serviceconfig.ParseResult{},
+	}
+
+	if diff := cmp.Diff(gotState, wantState); diff != "" {
+		t.Fatalf("Unexpected state from delegating resolver. Diff (-got +want):\n%v", diff)
+	}
+}
+
+// Tests the scenario where a proxy is configured but some addresses are
+// excluded (by using the NO_PROXY environment variable). The test verifies that
+// the delegating resolver doesn't add proxyatrribute to adresses excluded, but
+// adds the proxyattribute to all other addresses.
+func (s) TestDelegatingResolverWithNoProxyEnvUsed(t *testing.T) {
+	const (
+		targetTestAddr            = "test.target"
+		noproxyresolvedTargetAddr = "1.1.1.1:8080"
+		resolvedTargetTestAddr    = "2.2.2.2:8080"
+		envProxyAddr              = "proxytest.com"
+	)
+	hpfe := func(req *http.Request) (*url.URL, error) {
+		// return nil to mimick the scenario where the address is excluded using
+		// `NO_PROXY` env variable.
+		if req.URL.Host == noproxyresolvedTargetAddr {
+			return nil, nil
+		}
+		return &url.URL{
+			Scheme: "https",
+			Host:   envProxyAddr,
+		}, nil
+	}
+	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
+	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
+	defer func() {
+		delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe
+	}()
+
+	// Manual resolver to control the target resolution.
+	targetResolver := manual.NewBuilderWithScheme("test")
+	target := targetResolver.Scheme() + ":///" + targetTestAddr
+	// Set up a manual DNS resolver to control the proxy address resolution.
+	proxyResolver, proxyResolverBuilt := setupDNS(t)
+
+	tcc, stateCh, _ := createTestResolverClientConn(t)
+	if _, err := delegatingresolver.New(resolver.Target{URL: *testutils.MustParseURL(target)}, tcc, resolver.BuildOptions{}, targetResolver, false); err != nil {
+		t.Fatalf("Failed to create delegating resolver: %v", err)
+	}
+
+	targetResolver.UpdateState(resolver.State{
+		Addresses:     []resolver.Address{{Addr: noproxyresolvedTargetAddr}, {Addr: resolvedTargetTestAddr}},
+		Endpoints:     []resolver.Endpoint{{Addresses: []resolver.Address{{Addr: noproxyresolvedTargetAddr}, {Addr: resolvedTargetTestAddr}}}},
+		ServiceConfig: &serviceconfig.ParseResult{},
+	})
+
+	select {
+	case <-stateCh:
+		t.Fatalf("Delegating resolver invoked UpdateState before both the proxy and target resolvers had updated their states.")
+	case <-time.After(defaultTestShortTimeout):
+	}
+
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+
+	// Wait for the proxy resolver to be built before calling UpdateState.
+	mustBuildResolver(ctx, t, proxyResolverBuilt)
+	proxyResolver.UpdateState(resolver.State{
+		Addresses:     []resolver.Address{{Addr: envProxyAddr}},
+		ServiceConfig: &serviceconfig.ParseResult{},
+	})
+
+	var gotState resolver.State
+	select {
+	case gotState = <-stateCh:
+	case <-ctx.Done():
+		t.Fatal("Context timed out when waiting for a state update from the delegating resolver")
+	}
+	wantState := resolver.State{
+		Addresses:     []resolver.Address{{Addr: noproxyresolvedTargetAddr}, proxyAddressWithTargetAttribute(envProxyAddr, resolvedTargetTestAddr)},
+		Endpoints:     []resolver.Endpoint{{Addresses: []resolver.Address{{Addr: noproxyresolvedTargetAddr}, proxyAddressWithTargetAttribute(envProxyAddr, resolvedTargetTestAddr)}}},
+		ServiceConfig: &serviceconfig.ParseResult{},
+	}
+
+	if diff := cmp.Diff(gotState, wantState); diff != "" {
+		t.Fatalf("Unexpected state from delegating resolver. Diff (-got +want):\n%v", diff)
+	}
+}
diff --git a/internal/transport/http2_client.go b/internal/transport/http2_client.go
index ae9316662e9a..171e690a3f22 100644
--- a/internal/transport/http2_client.go
+++ b/internal/transport/http2_client.go
@@ -176,7 +176,7 @@ func dial(ctx context.Context, fn func(context.Context, string) (net.Conn, error
 		return fn(ctx, address)
 	}
 	if !ok {
-		networkType, address = parseDialTarget(address)
+		networkType, address = ParseDialTarget(address)
 	}
 	if opts, present := proxyattributes.Get(addr); present {
 		return proxyDial(ctx, addr, grpcUA, opts)
@@ -1242,7 +1242,8 @@ func (t *http2Client) handleRSTStream(f *http2.RSTStreamFrame) {
 			statusCode = codes.DeadlineExceeded
 		}
 	}
-	t.closeStream(s, io.EOF, false, http2.ErrCodeNo, status.Newf(statusCode, "stream terminated by RST_STREAM with error code: %v", f.ErrCode), nil, false)
+	st := status.Newf(statusCode, "stream terminated by RST_STREAM with error code: %v", f.ErrCode)
+	t.closeStream(s, st.Err(), false, http2.ErrCodeNo, st, nil, false)
 }
 
 func (t *http2Client) handleSettings(f *http2.SettingsFrame, isFirst bool) {
diff --git a/internal/transport/http_util.go b/internal/transport/http_util.go
index 3613d7b64817..f997f9fdb5d0 100644
--- a/internal/transport/http_util.go
+++ b/internal/transport/http_util.go
@@ -439,8 +439,8 @@ func getWriteBufferPool(size int) *sync.Pool {
 	return pool
 }
 
-// parseDialTarget returns the network and address to pass to dialer.
-func parseDialTarget(target string) (string, string) {
+// ParseDialTarget returns the network and address to pass to dialer.
+func ParseDialTarget(target string) (string, string) {
 	net := "tcp"
 	m1 := strings.Index(target, ":")
 	m2 := strings.Index(target, ":/")
diff --git a/internal/transport/http_util_test.go b/internal/transport/http_util_test.go
index 5a259d43cdc2..5eb466f38561 100644
--- a/internal/transport/http_util_test.go
+++ b/internal/transport/http_util_test.go
@@ -211,9 +211,9 @@ func (s) TestParseDialTarget(t *testing.T) {
 		{"dns:///google.com", "tcp", "dns:///google.com"},
 		{"/unix/socket/address", "tcp", "/unix/socket/address"},
 	} {
-		gotNet, gotAddr := parseDialTarget(test.target)
+		gotNet, gotAddr := ParseDialTarget(test.target)
 		if gotNet != test.wantNet || gotAddr != test.wantAddr {
-			t.Errorf("parseDialTarget(%q) = %s, %s want %s, %s", test.target, gotNet, gotAddr, test.wantNet, test.wantAddr)
+			t.Errorf("ParseDialTarget(%q) = %s, %s want %s, %s", test.target, gotNet, gotAddr, test.wantNet, test.wantAddr)
 		}
 	}
 }
diff --git a/internal/transport/proxy_ext_test.go b/internal/transport/proxy_ext_test.go
index 4f5ece1e81a2..6359796ffb12 100644
--- a/internal/transport/proxy_ext_test.go
+++ b/internal/transport/proxy_ext_test.go
@@ -71,6 +71,19 @@ func isIPAddr(addr string) bool {
 	return err == nil
 }
 
+func overrideTestHTTPSProxy(t *testing.T, proxyAddr string) {
+	t.Helper()
+	hpfe := func(req *http.Request) (*url.URL, error) {
+		return &url.URL{
+			Scheme: "https",
+			Host:   proxyAddr,
+		}, nil
+	}
+	originalhpfe := delegatingresolver.HTTPSProxyFromEnvironment
+	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
+	t.Cleanup(func() { delegatingresolver.HTTPSProxyFromEnvironment = originalhpfe })
+}
+
 // Tests the scenario where grpc.Dial is performed using a proxy with the
 // default resolver in the target URI. The test verifies that the connection is
 // established to the proxy server, sends the unresolved target URI in the HTTP
@@ -86,7 +99,7 @@ func (s) TestGRPCDialWithProxy(t *testing.T) {
 			t.Error(err)
 		}
 		if got, want := host, "localhost"; got != want {
-			t.Errorf(" Unexpected request host: %s , want = %s ", got, want)
+			t.Errorf(" Unexpected request host: %s, want = %s ", got, want)
 		}
 	}
 	pServer := proxyserver.New(t, reqCheck, false)
@@ -95,20 +108,7 @@ func (s) TestGRPCDialWithProxy(t *testing.T) {
 	// correctly even when unresolved.
 	pAddr := fmt.Sprintf("localhost:%d", testutils.ParsePort(t, pServer.Addr))
 
-	// Overwrite the function in the test and restore them in defer.
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == unresolvedTargetURI {
-			return &url.URL{
-				Scheme: "https",
-				Host:   pAddr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, unresolvedTargetURI)
-		return nil, nil
-	}
-	orighpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() { delegatingresolver.HTTPSProxyFromEnvironment = orighpfe }()
+	overrideTestHTTPSProxy(t, pAddr)
 
 	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
 	defer cancel()
@@ -152,20 +152,7 @@ func (s) TestGRPCDialWithDNSAndProxy(t *testing.T) {
 	}
 	pServer := proxyserver.New(t, reqCheck, false)
 
-	// Overwrite the function in the test and restore them in defer.
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == unresolvedTargetURI {
-			return &url.URL{
-				Scheme: "https",
-				Host:   pServer.Addr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, unresolvedTargetURI)
-		return nil, nil
-	}
-	orighpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() { delegatingresolver.HTTPSProxyFromEnvironment = orighpfe }()
+	overrideTestHTTPSProxy(t, pServer.Addr)
 
 	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
 	defer cancel()
@@ -202,7 +189,7 @@ func (s) TestNewClientWithProxy(t *testing.T) {
 			t.Error(err)
 		}
 		if got, want := host, "localhost"; got != want {
-			t.Errorf(" Unexpected request host: %s , want = %s ", got, want)
+			t.Errorf(" Unexpected request host: %s, want = %s ", got, want)
 		}
 	}
 	pServer := proxyserver.New(t, reqCheck, false)
@@ -211,20 +198,7 @@ func (s) TestNewClientWithProxy(t *testing.T) {
 	// correctly even when unresolved.
 	pAddr := fmt.Sprintf("localhost:%d", testutils.ParsePort(t, pServer.Addr))
 
-	// Overwrite the function in the test and restore them in defer.
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == unresolvedTargetURI {
-			return &url.URL{
-				Scheme: "https",
-				Host:   pAddr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, unresolvedTargetURI)
-		return nil, nil
-	}
-	orighpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() { delegatingresolver.HTTPSProxyFromEnvironment = orighpfe }()
+	overrideTestHTTPSProxy(t, pAddr)
 
 	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
 	defer cancel()
@@ -265,20 +239,7 @@ func (s) TestNewClientWithProxyAndCustomResolver(t *testing.T) {
 	}
 	pServer := proxyserver.New(t, reqCheck, false)
 
-	// Overwrite the function in the test and restore them in defer.
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == unresolvedTargetURI {
-			return &url.URL{
-				Scheme: "https",
-				Host:   pServer.Addr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, unresolvedTargetURI)
-		return nil, nil
-	}
-	orighpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() { delegatingresolver.HTTPSProxyFromEnvironment = orighpfe }()
+	overrideTestHTTPSProxy(t, pServer.Addr)
 
 	// Create and update a custom resolver for target URI.
 	targetResolver := manual.NewBuilderWithScheme("test")
@@ -327,20 +288,7 @@ func (s) TestNewClientWithProxyAndTargetResolutionEnabled(t *testing.T) {
 	}
 	pServer := proxyserver.New(t, reqCheck, false)
 
-	// Overwrite the function in the test and restore them in defer.
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == unresolvedTargetURI {
-			return &url.URL{
-				Scheme: "https",
-				Host:   pServer.Addr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, unresolvedTargetURI)
-		return nil, nil
-	}
-	orighpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() { delegatingresolver.HTTPSProxyFromEnvironment = orighpfe }()
+	overrideTestHTTPSProxy(t, pServer.Addr)
 
 	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
 	defer cancel()
@@ -372,20 +320,7 @@ func (s) TestNewClientWithNoProxy(t *testing.T) {
 	reqCheck := func(_ *http.Request) { t.Error("proxy server should not have received a Connect request") }
 	pServer := proxyserver.New(t, reqCheck, false)
 
-	// Overwrite the function in the test and restore them in defer.
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == unresolvedTargetURI {
-			return &url.URL{
-				Scheme: "https",
-				Host:   pServer.Addr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, unresolvedTargetURI)
-		return nil, nil
-	}
-	orighpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() { delegatingresolver.HTTPSProxyFromEnvironment = orighpfe }()
+	overrideTestHTTPSProxy(t, pServer.Addr)
 
 	dopts := []grpc.DialOption{
 		grpc.WithTransportCredentials(insecure.NewCredentials()),
@@ -417,20 +352,7 @@ func (s) TestNewClientWithContextDialer(t *testing.T) {
 	reqCheck := func(_ *http.Request) { t.Error("proxy server should not have received a Connect request") }
 	pServer := proxyserver.New(t, reqCheck, false)
 
-	// Overwrite the function in the test and restore them in defer.
-	hpfe := func(req *http.Request) (*url.URL, error) {
-		if req.URL.Host == unresolvedTargetURI {
-			return &url.URL{
-				Scheme: "https",
-				Host:   pServer.Addr,
-			}, nil
-		}
-		t.Errorf("Unexpected request host to proxy: %s want %s", req.URL.Host, unresolvedTargetURI)
-		return nil, nil
-	}
-	orighpfe := delegatingresolver.HTTPSProxyFromEnvironment
-	delegatingresolver.HTTPSProxyFromEnvironment = hpfe
-	defer func() { delegatingresolver.HTTPSProxyFromEnvironment = orighpfe }()
+	overrideTestHTTPSProxy(t, pServer.Addr)
 
 	// Create a custom dialer that directly dials the backend.
 	customDialer := func(_ context.Context, unresolvedTargetURI string) (net.Conn, error) {
@@ -472,7 +394,7 @@ func (s) TestBasicAuthInNewClientWithProxy(t *testing.T) {
 	reqCheck := func(req *http.Request) {
 		proxyCalled = true
 		if got, want := req.URL.Host, "example.test"; got != want {
-			t.Errorf(" Unexpected request host: %s , want = %s ", got, want)
+			t.Errorf(" Unexpected request host: %s, want = %s ", got, want)
 		}
 		wantProxyAuthStr := "Basic " + base64.StdEncoding.EncodeToString([]byte(user+":"+password))
 		if got := req.Header.Get("Proxy-Authorization"); got != wantProxyAuthStr {
diff --git a/internal/transport/transport_test.go b/internal/transport/transport_test.go
index 8b1219597912..d2c4fac3443c 100644
--- a/internal/transport/transport_test.go
+++ b/internal/transport/transport_test.go
@@ -919,8 +919,9 @@ func (s) TestLargeMessageSuspension(t *testing.T) {
 	}
 	// The server will send an RST stream frame on observing the deadline
 	// expiration making the client stream fail with a DeadlineExceeded status.
-	if _, err := s.readTo(make([]byte, 8)); err != io.EOF {
-		t.Fatalf("Read got unexpected error: %v, want %v", err, io.EOF)
+	_, err = s.readTo(make([]byte, 8))
+	if st, ok := status.FromError(err); !ok || st.Code() != codes.DeadlineExceeded {
+		t.Fatalf("Read got unexpected error: %v, want status with code %v", err, codes.DeadlineExceeded)
 	}
 	if got, want := s.Status().Code(), codes.DeadlineExceeded; got != want {
 		t.Fatalf("Read got status %v with code %v, want %v", s.Status(), got, want)
diff --git a/test/transport_test.go b/test/transport_test.go
index 2f61a6c03729..10e9ab57de30 100644
--- a/test/transport_test.go
+++ b/test/transport_test.go
@@ -19,16 +19,20 @@ package test
 
 import (
 	"context"
+	"encoding/binary"
 	"io"
 	"net"
 	"sync"
 	"testing"
 
+	"golang.org/x/net/http2"
 	"google.golang.org/grpc"
 	"google.golang.org/grpc/codes"
 	"google.golang.org/grpc/credentials"
+	"google.golang.org/grpc/credentials/insecure"
 	"google.golang.org/grpc/internal/grpcsync"
 	"google.golang.org/grpc/internal/stubserver"
+	"google.golang.org/grpc/internal/testutils"
 	"google.golang.org/grpc/internal/transport"
 	"google.golang.org/grpc/status"
 
@@ -153,3 +157,75 @@ func (s) TestClientTransportRestartsAfterStreamIDExhausted(t *testing.T) {
 		t.Fatal("Timeout expired when waiting for first client transport to close")
 	}
 }
+
+// Tests that an RST_STREAM frame that causes an io.ErrUnexpectedEOF while
+// reading a gRPC message is correctly converted to a gRPC status with code
+// CANCELLED. The test sends a data frame with a partial gRPC message, followed
+// by an RST_STREAM frame with HTTP/2 code CANCELLED. The test asserts the
+// client receives the correct status.
+func (s) TestRSTDuringMessageRead(t *testing.T) {
+	lis, err := testutils.LocalTCPListener()
+	if err != nil {
+		t.Fatal(err)
+	}
+	defer lis.Close()
+
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+	cc, err := grpc.NewClient(lis.Addr().String(), grpc.WithTransportCredentials(insecure.NewCredentials()))
+	if err != nil {
+		t.Fatalf("grpc.NewClient(%s) = %v", lis.Addr().String(), err)
+	}
+	defer cc.Close()
+
+	go func() {
+		conn, err := lis.Accept()
+		if err != nil {
+			t.Errorf("lis.Accept() = %v", err)
+			return
+		}
+		defer conn.Close()
+		framer := http2.NewFramer(conn, conn)
+
+		if _, err := io.ReadFull(conn, make([]byte, len(clientPreface))); err != nil {
+			t.Errorf("Error while reading client preface: %v", err)
+			return
+		}
+		if err := framer.WriteSettings(); err != nil {
+			t.Errorf("Error while writing settings: %v", err)
+			return
+		}
+		if err := framer.WriteSettingsAck(); err != nil {
+			t.Errorf("Error while writing settings: %v", err)
+			return
+		}
+		for ctx.Err() == nil {
+			frame, err := framer.ReadFrame()
+			if err != nil {
+				return
+			}
+			switch frame := frame.(type) {
+			case *http2.HeadersFrame:
+				// When the client creates a stream, write a partial gRPC
+				// message followed by an RST_STREAM.
+				const messageLen = 2048
+				buf := make([]byte, messageLen/2)
+				// Write the gRPC message length header.
+				binary.BigEndian.PutUint32(buf[1:5], uint32(messageLen))
+				if err := framer.WriteData(1, false, buf); err != nil {
+					return
+				}
+				framer.WriteRSTStream(1, http2.ErrCodeCancel)
+			default:
+				t.Logf("Server received frame: %v", frame)
+			}
+		}
+	}()
+
+	// The server will send a partial gRPC message before cancelling the stream.
+	// The client should get a gRPC status with code CANCELLED.
+	client := testgrpc.NewTestServiceClient(cc)
+	if _, err := client.EmptyCall(ctx, &testpb.Empty{}); status.Code(err) != codes.Canceled {
+		t.Fatalf("client.EmptyCall() returned %v; want status with code %v", err, codes.Canceled)
+	}
+}
diff --git a/version.go b/version.go
index 90237b1dbbd9..2bae4db890dc 100644
--- a/version.go
+++ b/version.go
@@ -19,4 +19,4 @@
 package grpc
 
 // Version is the current grpc version.
-const Version = "1.72.0"
+const Version = "1.72.2"