diff --git a/proxy/grpcproxy/leader.go b/proxy/grpcproxy/leader.go
new file mode 100644
index 000000000..db6cfe94c
--- /dev/null
+++ b/proxy/grpcproxy/leader.go
@@ -0,0 +1,94 @@
+// Copyright 2017 The etcd Authors
+//
+// Licensed under the Apache License, Version 2.0 (the "License");
+// you may not use this file except in compliance with the License.
+// You may obtain a copy of the License at
+//
+//     http://www.apache.org/licenses/LICENSE-2.0
+//
+// Unless required by applicable law or agreed to in writing, software
+// distributed under the License is distributed on an "AS IS" BASIS,
+// WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+// See the License for the specific language governing permissions and
+// limitations under the License.
+
+package grpcproxy
+
+import (
+	"math"
+	"sync"
+
+	"golang.org/x/net/context"
+	"golang.org/x/time/rate"
+	"google.golang.org/grpc"
+
+	"github.com/coreos/etcd/clientv3"
+)
+
+const (
+	lostLeaderKey  = "__lostleader" // watched to detect leader loss
+	retryPerSecond = 10
+)
+
+type leader struct {
+	ctx context.Context
+	w   clientv3.Watcher
+	// mu protects leaderc updates.
+	mu       sync.RWMutex
+	leaderc  chan struct{}
+	disconnc chan struct{}
+	donec    chan struct{}
+}
+
+func newLeader(ctx context.Context, w clientv3.Watcher) *leader {
+	l := &leader{
+		ctx:      clientv3.WithRequireLeader(ctx),
+		w:        w,
+		leaderc:  make(chan struct{}),
+		disconnc: make(chan struct{}),
+		donec:    make(chan struct{}),
+	}
+	// begin assuming leader is lost
+	close(l.leaderc)
+	go l.recvLoop()
+	return l
+}
+
+func (l *leader) recvLoop() {
+	defer close(l.donec)
+
+	limiter := rate.NewLimiter(rate.Limit(retryPerSecond), retryPerSecond)
+	rev := int64(math.MaxInt64 - 2)
+	for limiter.Wait(l.ctx) == nil {
+		wch := l.w.Watch(l.ctx, lostLeaderKey, clientv3.WithRev(rev), clientv3.WithCreatedNotify())
+		cresp, ok := <-wch
+		if !ok {
+			continue
+		}
+		if cresp.Err() != nil {
+			if grpc.ErrorDesc(cresp.Err()) == grpc.ErrClientConnClosing.Error() {
+				close(l.disconnc)
+				return
+			}
+			continue
+		}
+		// leader is available
+		l.mu.Lock()
+		l.leaderc = make(chan struct{})
+		l.mu.Unlock()
+		<-wch
+		close(l.leaderc)
+	}
+}
+
+func (l *leader) disconnectNotify() <-chan struct{} { return l.disconnc }
+
+func (l *leader) stopNotify() <-chan struct{} { return l.donec }
+
+// lostNotify returns a channel that is closed if there has been
+// a leader loss not yet followed by a leader reacquire.
+func (l *leader) lostNotify() <-chan struct{} {
+	l.mu.RLock()
+	defer l.mu.RUnlock()
+	return l.leaderc
+}
diff --git a/proxy/grpcproxy/watch.go b/proxy/grpcproxy/watch.go
index b7e64daf3..a127c3100 100644
--- a/proxy/grpcproxy/watch.go
+++ b/proxy/grpcproxy/watch.go
@@ -18,7 +18,7 @@ import (
 	"sync"
 
 	"golang.org/x/net/context"
-	"golang.org/x/time/rate"
+	"google.golang.org/grpc"
 	"google.golang.org/grpc/metadata"
 
 	"github.com/coreos/etcd/clientv3"
@@ -31,50 +31,35 @@ type watchProxy struct {
 	cw  clientv3.Watcher
 	ctx context.Context
 
+	leader *leader
+
 	ranges *watchRanges
 
-	// retryLimiter controls the create watch retry rate on lost leaders.
-	retryLimiter *rate.Limiter
-
-	// mu protects leaderc updates.
-	mu      sync.RWMutex
-	leaderc chan struct{}
+	// mu protects adding outstanding watch servers through wg.
+	mu sync.Mutex
 
 	// wg waits until all outstanding watch servers quit.
 	wg sync.WaitGroup
 }
 
-const (
-	lostLeaderKey  = "__lostleader" // watched to detect leader loss
-	retryPerSecond = 10
-)
-
 func NewWatchProxy(c *clientv3.Client) (pb.WatchServer, <-chan struct{}) {
+	cctx, cancel := context.WithCancel(c.Ctx())
 	wp := &watchProxy{
-		cw:           c.Watcher,
-		ctx:          c.Ctx(),
-		retryLimiter: rate.NewLimiter(rate.Limit(retryPerSecond), retryPerSecond),
-		leaderc:      make(chan struct{}),
+		cw:     c.Watcher,
+		ctx:    cctx,
+		leader: newLeader(c.Ctx(), c.Watcher),
 	}
 	wp.ranges = newWatchRanges(wp)
 	ch := make(chan struct{})
 	go func() {
 		defer close(ch)
-		// a new streams without opening any watchers won't catch
-		// a lost leader event, so have a special watch to monitor it
-		rev := int64((uint64(1) << 63) - 2)
-		lctx := clientv3.WithRequireLeader(wp.ctx)
-		for wp.ctx.Err() == nil {
-			wch := wp.cw.Watch(lctx, lostLeaderKey, clientv3.WithRev(rev))
-			for range wch {
-			}
-			wp.mu.Lock()
-			close(wp.leaderc)
-			wp.leaderc = make(chan struct{})
-			wp.mu.Unlock()
-			wp.retryLimiter.Wait(wp.ctx)
-		}
+		<-wp.leader.stopNotify()
 		wp.mu.Lock()
+		select {
+		case <-wp.ctx.Done():
+		case <-wp.leader.disconnectNotify():
+			cancel()
+		}
 		<-wp.ctx.Done()
 		wp.mu.Unlock()
 		wp.wg.Wait()
@@ -104,11 +89,19 @@ func (wp *watchProxy) Watch(stream pb.Watch_WatchServer) (err error) {
 		cancel:   cancel,
 	}
 
-	var leaderc <-chan struct{}
+	var lostLeaderC <-chan struct{}
 	if md, ok := metadata.FromContext(stream.Context()); ok {
 		v := md[rpctypes.MetadataRequireLeaderKey]
 		if len(v) > 0 && v[0] == rpctypes.MetadataHasLeader {
-			leaderc = wp.lostLeaderNotify()
+			lostLeaderC = wp.leader.lostNotify()
+			// if leader is known to be lost at creation time, avoid
+			// letting events through at all
+			select {
+			case <-lostLeaderC:
+				wp.wg.Done()
+				return rpctypes.ErrNoLeader
+			default:
+			}
 		}
 	}
 
@@ -127,7 +120,7 @@ func (wp *watchProxy) Watch(stream pb.Watch_WatchServer) (err error) {
 	go func() {
 		defer func() { stopc <- struct{}{} }()
 		select {
-		case <-leaderc:
+		case <-lostLeaderC:
 		case <-ctx.Done():
 		case <-wp.ctx.Done():
 		}
@@ -146,19 +139,15 @@ func (wp *watchProxy) Watch(stream pb.Watch_WatchServer) (err error) {
 	}()
 
 	select {
-	case <-leaderc:
+	case <-lostLeaderC:
 		return rpctypes.ErrNoLeader
+	case <-wp.leader.disconnectNotify():
+		return grpc.ErrClientConnClosing
 	default:
 		return wps.ctx.Err()
 	}
 }
 
-func (wp *watchProxy) lostLeaderNotify() <-chan struct{} {
-	wp.mu.RLock()
-	defer wp.mu.RUnlock()
-	return wp.leaderc
-}
-
 // watchProxyStream forwards etcd watch events to a proxied client stream.
 type watchProxyStream struct {
 	ranges *watchRanges