diff --git a/xds/internal/xdsclient/authority.go b/xds/internal/xdsclient/authority.go
index 27abb64ef6d5..04bd278d2c47 100644
--- a/xds/internal/xdsclient/authority.go
+++ b/xds/internal/xdsclient/authority.go
@@ -641,6 +641,11 @@ func (a *authority) watchResource(rType xdsresource.Type, resourceName string, w
 			resource := state.cache
 			a.watcherCallbackSerializer.TrySchedule(func(context.Context) { watcher.OnUpdate(resource, func() {}) })
 		}
+		// If the metadata field is updated to indicate that the management
+		// server does not have this resource, notify the new watcher.
+		if state.md.Status == xdsresource.ServiceStatusNotExist {
+			a.watcherCallbackSerializer.TrySchedule(func(context.Context) { watcher.OnResourceDoesNotExist(func() {}) })
+		}
 		cleanup = a.unwatchResource(rType, resourceName, watcher)
 	}, func() {
 		if a.logger.V(2) {
diff --git a/xds/internal/xdsclient/tests/lds_watchers_test.go b/xds/internal/xdsclient/tests/lds_watchers_test.go
index 2ea2c50ce18b..38e1f1760383 100644
--- a/xds/internal/xdsclient/tests/lds_watchers_test.go
+++ b/xds/internal/xdsclient/tests/lds_watchers_test.go
@@ -871,6 +871,87 @@ func (s) TestLDSWatch_ResourceRemoved(t *testing.T) {
 	}
 }
 
+// TestLDSWatch_NewWatcherForRemovedResource covers the case where a new
+// watcher registers for a resource that has been removed. The test verifies
+// the following scenarios:
+//  1. When a resource is deleted by the management server, any active
+//     watchers of that resource should be notified with a "resource removed"
+//     error through their watch callback.
+//  2. If a new watcher attempts to register for a resource that has already
+//     been deleted, its watch callback should be immediately invoked with a
+//     "resource removed" error.
+func (s) TestLDSWatch_NewWatcherForRemovedResource(t *testing.T) {
+	mgmtServer := e2e.StartManagementServer(t, e2e.ManagementServerOptions{})
+
+	nodeID := uuid.New().String()
+	bc := e2e.DefaultBootstrapContents(t, nodeID, mgmtServer.Address)
+
+	// Create an xDS client with the above bootstrap contents.
+	client, close, err := xdsclient.NewForTesting(xdsclient.OptionsForTesting{
+		Name:     t.Name(),
+		Contents: bc,
+	})
+	if err != nil {
+		t.Fatalf("Failed to create xDS client: %v", err)
+	}
+	defer close()
+
+	// Register watch for the listener resource and have the
+	// callbacks push the received updates on to a channel.
+	lw1 := newListenerWatcher()
+	ldsCancel1 := xdsresource.WatchListener(client, ldsName, lw1)
+	defer ldsCancel1()
+
+	// Configure the management server to return listener resource,
+	// corresponding to the registered watch.
+	resource := e2e.UpdateOptions{
+		NodeID:         nodeID,
+		Listeners:      []*v3listenerpb.Listener{e2e.DefaultClientListener(ldsName, rdsName)},
+		SkipValidation: true,
+	}
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+	if err := mgmtServer.Update(ctx, resource); err != nil {
+		t.Fatalf("Failed to update management server with resource: %v, err: %v", resource, err)
+	}
+
+	// Verify the contents of the received update for existing watch.
+	wantUpdate := listenerUpdateErrTuple{
+		update: xdsresource.ListenerUpdate{
+			RouteConfigName: rdsName,
+			HTTPFilters:     []xdsresource.HTTPFilter{{Name: "router"}},
+		},
+	}
+	if err := verifyListenerUpdate(ctx, lw1.updateCh, wantUpdate); err != nil {
+		t.Fatal(err)
+	}
+
+	// Remove the listener resource on the management server.
+	resource = e2e.UpdateOptions{
+		NodeID:         nodeID,
+		Listeners:      []*v3listenerpb.Listener{},
+		SkipValidation: true,
+	}
+	if err := mgmtServer.Update(ctx, resource); err != nil {
+		t.Fatalf("Failed to update management server with resource: %v, err: %v", resource, err)
+	}
+
+	// The existing watcher should receive a resource removed error.
+	updateError := listenerUpdateErrTuple{err: xdsresource.NewErrorf(xdsresource.ErrorTypeResourceNotFound, "")}
+	if err := verifyListenerUpdate(ctx, lw1.updateCh, updateError); err != nil {
+		t.Fatal(err)
+	}
+
+	// New watchers attempting to register for a deleted resource should also
+	// receive a "resource removed" error.
+	lw2 := newListenerWatcher()
+	ldsCancel2 := xdsresource.WatchListener(client, ldsName, lw2)
+	defer ldsCancel2()
+	if err := verifyListenerUpdate(ctx, lw2.updateCh, updateError); err != nil {
+		t.Fatal(err)
+	}
+}
+
 // TestLDSWatch_NACKError covers the case where an update from the management
 // server is NACK'ed by the xdsclient. The test verifies that the error is
 // propagated to the watcher.