diff --git a/okhttp/src/main/java/io/grpc/okhttp/OkHttpClientTransport.java b/okhttp/src/main/java/io/grpc/okhttp/OkHttpClientTransport.java
index 81af4f30d48..02b1c3254fa 100644
--- a/okhttp/src/main/java/io/grpc/okhttp/OkHttpClientTransport.java
+++ b/okhttp/src/main/java/io/grpc/okhttp/OkHttpClientTransport.java
@@ -221,6 +221,9 @@ protected void handleNotInUse() {
   @Nullable
   final HttpConnectProxiedSocketAddress proxiedAddr;
 
+  @VisibleForTesting
+  int proxySocketTimeout = 30000;
+
   // The following fields should only be used for test.
   Runnable connectingCallback;
   SettableFuture<Void> connectedFuture;
@@ -626,8 +629,8 @@ private void sendConnectionPrefaceAndSettings() {
 
   private Socket createHttpProxySocket(InetSocketAddress address, InetSocketAddress proxyAddress,
       String proxyUsername, String proxyPassword) throws StatusException {
+    Socket sock = null;
     try {
-      Socket sock;
       // The proxy address may not be resolved
       if (proxyAddress.getAddress() != null) {
         sock = socketFactory.createSocket(proxyAddress.getAddress(), proxyAddress.getPort());
@@ -636,6 +639,9 @@ private Socket createHttpProxySocket(InetSocketAddress address, InetSocketAddres
             socketFactory.createSocket(proxyAddress.getHostName(), proxyAddress.getPort());
       }
       sock.setTcpNoDelay(true);
+      // A socket timeout is needed because lost network connectivity while reading from the proxy,
+      // can cause reading from the socket to hang.
+      sock.setSoTimeout(proxySocketTimeout);
 
       Source source = Okio.source(sock);
       BufferedSink sink = Okio.buffer(Okio.sink(sock));
@@ -682,8 +688,13 @@ private Socket createHttpProxySocket(InetSocketAddress address, InetSocketAddres
             statusLine.code, statusLine.message, body.readUtf8());
         throw Status.UNAVAILABLE.withDescription(message).asException();
       }
+      // As the socket will be used for RPCs from here on, we want the socket timeout back to zero.
+      sock.setSoTimeout(0);
       return sock;
     } catch (IOException e) {
+      if (sock != null) {
+        GrpcUtil.closeQuietly(sock);
+      }
       throw Status.UNAVAILABLE.withDescription("Failed trying to connect with proxy").withCause(e)
           .asException();
     }
diff --git a/okhttp/src/test/java/io/grpc/okhttp/OkHttpClientTransportTest.java b/okhttp/src/test/java/io/grpc/okhttp/OkHttpClientTransportTest.java
index e632a6c2946..fcc5e0d2381 100644
--- a/okhttp/src/test/java/io/grpc/okhttp/OkHttpClientTransportTest.java
+++ b/okhttp/src/test/java/io/grpc/okhttp/OkHttpClientTransportTest.java
@@ -1877,6 +1877,37 @@ public void proxy_immediateServerClose() throws Exception {
     verify(transportListener, timeout(TIME_OUT_MS)).transportTerminated();
   }
 
+  @Test
+  public void proxy_serverHangs() throws Exception {
+    ServerSocket serverSocket = new ServerSocket(0);
+    InetSocketAddress targetAddress = InetSocketAddress.createUnresolved("theservice", 80);
+    clientTransport = new OkHttpClientTransport(
+        channelBuilder.buildTransportFactory(),
+        targetAddress,
+        "authority",
+        "userAgent",
+        EAG_ATTRS,
+        HttpConnectProxiedSocketAddress.newBuilder()
+            .setTargetAddress(targetAddress)
+            .setProxyAddress(new InetSocketAddress("localhost", serverSocket.getLocalPort()))
+            .build(),
+        tooManyPingsRunnable);
+    clientTransport.proxySocketTimeout = 10;
+    clientTransport.start(transportListener);
+
+    Socket sock = serverSocket.accept();
+    serverSocket.close();
+
+    BufferedReader reader = new BufferedReader(new InputStreamReader(sock.getInputStream(), UTF_8));
+    assertEquals("CONNECT theservice:80 HTTP/1.1", reader.readLine());
+    assertEquals("Host: theservice:80", reader.readLine());
+    while (!"".equals(reader.readLine())) {}
+
+    verify(transportListener, timeout(200)).transportShutdown(any(Status.class));
+    verify(transportListener, timeout(TIME_OUT_MS)).transportTerminated();
+    sock.close();
+  }
+
   @Test
   public void goAway_notUtf8() throws Exception {
     initTransport();