diff --git a/docs/root/intro/arch_overview/http/upgrades.rst b/docs/root/intro/arch_overview/http/upgrades.rst
index 6a4338d39ee5..ba015ff838a9 100644
--- a/docs/root/intro/arch_overview/http/upgrades.rst
+++ b/docs/root/intro/arch_overview/http/upgrades.rst
@@ -94,6 +94,8 @@ will synthesize 200 response headers, and then forward the TCP data as the HTTP
 For an example of proxying connect, please see :repo:`configs/proxy_connect.yaml <configs/proxy_connect.yaml>`
 For an example of terminating connect, please see :repo:`configs/terminate_connect.yaml <configs/terminate_connect.yaml>`
 
+.. _tunneling-tcp-over-http:
+
 Tunneling TCP over HTTP
 ^^^^^^^^^^^^^^^^^^^^^^^
 Envoy also has support for tunneling raw TCP over HTTP CONNECT requests. Find
diff --git a/docs/root/version_history/current.rst b/docs/root/version_history/current.rst
index bb04894db478..3ef7e0a8cd04 100644
--- a/docs/root/version_history/current.rst
+++ b/docs/root/version_history/current.rst
@@ -19,6 +19,7 @@ Removed Config or Runtime
 
 New Features
 ------------
+* tcp_proxy: add support for converting raw TCP streams into HTTP/1.1 CONNECT requests. See :ref:`upgrade documentation <tunneling-tcp-over-http>` for details.
 
 Deprecated
-----------
\ No newline at end of file
+----------
diff --git a/source/common/http/http1/codec_impl.cc b/source/common/http/http1/codec_impl.cc
index f0ce0cfb5f88..bbbff2035344 100644
--- a/source/common/http/http1/codec_impl.cc
+++ b/source/common/http/http1/codec_impl.cc
@@ -1212,15 +1212,6 @@ Envoy::StatusOr<int> ClientConnectionImpl::onHeadersComplete() {
         pending_response_.value().encoder_.connectRequest()) {
       ENVOY_CONN_LOG(trace, "codec entering upgrade mode for CONNECT response.", connection_);
       handling_upgrade_ = true;
-
-      // For responses to connect requests, do not accept the chunked
-      // encoding header: https://tools.ietf.org/html/rfc7231#section-4.3.6
-      if (headers->TransferEncoding() &&
-          absl::EqualsIgnoreCase(headers->TransferEncoding()->value().getStringView(),
-                                 Headers::get().TransferEncodingValues.Chunked)) {
-        RETURN_IF_ERROR(sendProtocolError(Http1ResponseCodeDetails::get().InvalidTransferEncoding));
-        return codecProtocolError("http/1.1 protocol error: unsupported transfer encoding");
-      }
     }
 
     if (strict_1xx_and_204_headers_ && (parser_.status_code < 200 || parser_.status_code == 204)) {
diff --git a/test/integration/integration_test.cc b/test/integration/integration_test.cc
index f662744274f9..70e19b7400b8 100644
--- a/test/integration/integration_test.cc
+++ b/test/integration/integration_test.cc
@@ -1645,10 +1645,13 @@ TEST_P(IntegrationTest, ConnectWithChunkedBody) {
   EXPECT_FALSE(absl::StrContains(data, "onnection")) << data;
   ASSERT_TRUE(fake_upstream_connection->write(
       "HTTP/1.1 200 OK\r\ntransfer-encoding: chunked\r\n\r\nb\r\nHello World\r\n0\r\n\r\n"));
-  // The response will be rejected because chunked headers are not allowed with CONNECT upgrades.
-  // Envoy will send a local reply due to the invalid upstream response.
-  tcp_client->waitForDisconnect(false);
-  EXPECT_TRUE(absl::StartsWith(tcp_client->data(), "HTTP/1.1 503 Service Unavailable\r\n"));
+  tcp_client->waitForData("\r\n\r\n", false);
+  EXPECT_TRUE(absl::StartsWith(tcp_client->data(), "HTTP/1.1 200 OK\r\n")) << tcp_client->data();
+  // Make sure the following payload is proxied without chunks or any other modifications.
+  ASSERT_TRUE(fake_upstream_connection->waitForData(
+      FakeRawConnection::waitForInexactMatch("\r\n\r\npayload"), &data));
+
+  tcp_client->close();
   ASSERT_TRUE(fake_upstream_connection->waitForDisconnect());
 }
 
diff --git a/test/integration/tcp_tunneling_integration_test.cc b/test/integration/tcp_tunneling_integration_test.cc
index aef3d5f66fef..1369dfa79c81 100644
--- a/test/integration/tcp_tunneling_integration_test.cc
+++ b/test/integration/tcp_tunneling_integration_test.cc
@@ -792,9 +792,7 @@ TEST_P(TcpTunnelingIntegrationTest, ContentLengthHeaderIgnoredHttp1) {
   ASSERT_TRUE(fake_upstream_connection_->waitForDisconnect());
 }
 
-// TODO(irozzo): temporarily disabled as a protocol error is thrown when
-// transfer-encoding header is received in CONNECT responses.
-TEST_P(TcpTunnelingIntegrationTest, DISABLED_TransferEncodingHeaderIgnoredHttp1) {
+TEST_P(TcpTunnelingIntegrationTest, TransferEncodingHeaderIgnoredHttp1) {
   if (upstreamProtocol() == FakeHttpConnection::Type::HTTP2) {
     return;
   }
@@ -812,13 +810,17 @@ TEST_P(TcpTunnelingIntegrationTest, DISABLED_TransferEncodingHeaderIgnoredHttp1)
 
   // Send upgrade headers downstream, fully establishing the connection.
   ASSERT_TRUE(
-      fake_upstream_connection->write("HTTP/1.1 299 OK\r\nTransfer-encoding: chunked\r\n\r\n"));
+      fake_upstream_connection->write("HTTP/1.1 200 OK\r\nTransfer-encoding: chunked\r\n\r\n"));
 
   // Now send some data and close the TCP client.
-  ASSERT_TRUE(tcp_client->write("hello", false));
+  ASSERT_TRUE(tcp_client->write("hello"));
+  ASSERT_TRUE(
+      fake_upstream_connection->waitForData(FakeRawConnection::waitForInexactMatch("hello")));
+
+  // Close connections.
+  ASSERT_TRUE(fake_upstream_connection->close());
+  ASSERT_TRUE(fake_upstream_connection->waitForDisconnect());
   tcp_client->close();
-  ASSERT_TRUE(upstream_request_->waitForData(*dispatcher_, 5));
-  ASSERT_TRUE(fake_upstream_connection_->waitForDisconnect());
 }
 
 TEST_P(TcpTunnelingIntegrationTest, DeferTransmitDataUntilSuccessConnectResponseIsReceived) {