diff --git a/CHANGELOG.md b/CHANGELOG.md
index 9b7c7dd852..d4cf05b4f6 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -7,7 +7,7 @@ IMPROVEMENTS:
   * Add the `envoyExtensions` field to the `ProxyDefaults` and `ServiceDefaults` CRD. [[GH-1823]](https://github.com/hashicorp/consul-k8s/pull/1823)
   * Add the `balanceInboundConnections` field to the `ServiceDefaults` CRD. [[GH-1823]](https://github.com/hashicorp/consul-k8s/pull/1823)
 * Control-Plane
-  * Add support for the annotation `consul.hashicorp.com/use-proxy-health-check`. [[GH-1824](https://github.com/hashicorp/consul-k8s/pull/1824)]
+  * Add support for the annotation `consul.hashicorp.com/use-proxy-health-check`. When this annotation is used by a service, it configures a readiness endpoint on Consul Dataplane and queries it instead of the proxy's inbound port which forwards requests to the application. [[GH-1824](https://github.com/hashicorp/consul-k8s/pull/1824)], [[GH-1841](https://github.com/hashicorp/consul-k8s/pull/1824)]
   * Add health check for synced services based on the status of the Kubernetes readiness probe on synced pod. [[GH-1821](https://github.com/hashicorp/consul-k8s/pull/1821)]
 
 BUG FIXES:
diff --git a/control-plane/connect-inject/constants/constants.go b/control-plane/connect-inject/constants/constants.go
index 62f21740c4..e371677629 100644
--- a/control-plane/connect-inject/constants/constants.go
+++ b/control-plane/connect-inject/constants/constants.go
@@ -7,6 +7,9 @@ const (
 	// ProxyDefaultInboundPort is the default inbound port for the proxy.
 	ProxyDefaultInboundPort = 20000
 
+	// ProxyDefaultHealthPort is the default HTTP health check port for the proxy.
+	ProxyDefaultHealthPort = 21000
+
 	// MetaKeyKubeNS is the meta key name for Kubernetes namespace used for the Consul services.
 	MetaKeyKubeNS = "k8s-namespace"
 
diff --git a/control-plane/connect-inject/webhook/consul_dataplane_sidecar.go b/control-plane/connect-inject/webhook/consul_dataplane_sidecar.go
index d0cd232c84..ad3333ba1b 100644
--- a/control-plane/connect-inject/webhook/consul_dataplane_sidecar.go
+++ b/control-plane/connect-inject/webhook/consul_dataplane_sidecar.go
@@ -47,13 +47,28 @@ func (w *MeshWebhook) consulDataplaneSidecar(namespace corev1.Namespace, pod cor
 		containerName = fmt.Sprintf("%s-%s", sidecarContainer, mpi.serviceName)
 	}
 
-	probe := &corev1.Probe{
-		Handler: corev1.Handler{
-			TCPSocket: &corev1.TCPSocketAction{
-				Port: intstr.FromInt(constants.ProxyDefaultInboundPort + mpi.serviceIndex),
+	var probe *corev1.Probe
+	if useProxyHealthCheck(pod) {
+		// If using the proxy health check for a service, configure an HTTP handler
+		// that queries the '/ready' endpoint of the proxy.
+		probe = &corev1.Probe{
+			Handler: corev1.Handler{
+				HTTPGet: &corev1.HTTPGetAction{
+					Port: intstr.FromInt(constants.ProxyDefaultHealthPort + mpi.serviceIndex),
+					Path: "/ready",
+				},
 			},
-		},
-		InitialDelaySeconds: 1,
+			InitialDelaySeconds: 1,
+		}
+	} else {
+		probe = &corev1.Probe{
+			Handler: corev1.Handler{
+				TCPSocket: &corev1.TCPSocketAction{
+					Port: intstr.FromInt(constants.ProxyDefaultInboundPort + mpi.serviceIndex),
+				},
+			},
+			InitialDelaySeconds: 1,
+		}
 	}
 
 	container := corev1.Container{
@@ -89,13 +104,27 @@ func (w *MeshWebhook) consulDataplaneSidecar(namespace corev1.Namespace, pod cor
 		},
 		Args:           args,
 		ReadinessProbe: probe,
-		LivenessProbe:  probe,
 	}
 
 	if w.AuthMethod != "" {
 		container.VolumeMounts = append(container.VolumeMounts, saTokenVolumeMount)
 	}
 
+	if useProxyHealthCheck(pod) {
+		// Configure the Readiness Address for the proxy's health check to be the Pod IP.
+		container.Env = append(container.Env, corev1.EnvVar{
+			Name: "DP_ENVOY_READY_BIND_ADDRESS",
+			ValueFrom: &corev1.EnvVarSource{
+				FieldRef: &corev1.ObjectFieldSelector{FieldPath: "status.podIP"},
+			},
+		})
+		// Configure the port on which the readiness probe will query the proxy for its health.
+		container.Ports = append(container.Ports, corev1.ContainerPort{
+			Name:          fmt.Sprintf("%s-%d", "proxy-health", mpi.serviceIndex),
+			ContainerPort: int32(constants.ProxyDefaultHealthPort + mpi.serviceIndex),
+		})
+	}
+
 	// Add any extra VolumeMounts.
 	if userVolMount, ok := pod.Annotations[constants.AnnotationConsulSidecarUserVolumeMount]; ok {
 		var volumeMounts []corev1.VolumeMount
@@ -206,6 +235,11 @@ func (w *MeshWebhook) getContainerSidecarArgs(namespace corev1.Namespace, mpi mu
 		args = append(args, "-tls-disabled")
 	}
 
+	// Configure the readiness port on the dataplane sidecar if proxy health checks are enabled.
+	if useProxyHealthCheck(pod) {
+		args = append(args, fmt.Sprintf("%s=%d", "-envoy-ready-bind-port", constants.ProxyDefaultHealthPort+mpi.serviceIndex))
+	}
+
 	if mpi.serviceName != "" {
 		args = append(args, fmt.Sprintf("-envoy-admin-bind-port=%d", 19000+mpi.serviceIndex))
 	}
@@ -383,3 +417,16 @@ func (w *MeshWebhook) sidecarResources(pod corev1.Pod) (corev1.ResourceRequireme
 
 	return resources, nil
 }
+
+// useProxyHealthCheck returns true if the pod has the annotation 'consul.hashicorp.com/use-proxy-health-check'
+// set to truthy values.
+func useProxyHealthCheck(pod corev1.Pod) bool {
+	if v, ok := pod.Annotations[constants.AnnotationUseProxyHealthCheck]; ok {
+		useProxyHealthCheck, err := strconv.ParseBool(v)
+		if err != nil {
+			return false
+		}
+		return useProxyHealthCheck
+	}
+	return false
+}
diff --git a/control-plane/connect-inject/webhook/consul_dataplane_sidecar_test.go b/control-plane/connect-inject/webhook/consul_dataplane_sidecar_test.go
index f6916bc3e2..37aa1619bf 100644
--- a/control-plane/connect-inject/webhook/consul_dataplane_sidecar_test.go
+++ b/control-plane/connect-inject/webhook/consul_dataplane_sidecar_test.go
@@ -214,7 +214,6 @@ func TestHandlerConsulDataplaneSidecar(t *testing.T) {
 				InitialDelaySeconds: 1,
 			}
 			require.Equal(t, expectedProbe, container.ReadinessProbe)
-			require.Equal(t, expectedProbe, container.LivenessProbe)
 			require.Nil(t, container.StartupProbe)
 			require.Len(t, container.Env, 3)
 			require.Equal(t, container.Env[0].Name, "TMPDIR")
@@ -308,6 +307,158 @@ func TestHandlerConsulDataplaneSidecar_DNSProxy(t *testing.T) {
 	require.Contains(t, container.Args, "-consul-dns-bind-port=8600")
 }
 
+func TestHandlerConsulDataplaneSidecar_ProxyHealthCheck(t *testing.T) {
+	h := MeshWebhook{
+		ConsulConfig:  &consul.Config{HTTPPort: 8500, GRPCPort: 8502},
+		ConsulAddress: "1.1.1.1",
+		LogLevel:      "info",
+	}
+	pod := corev1.Pod{
+		ObjectMeta: metav1.ObjectMeta{
+			Annotations: map[string]string{
+				constants.AnnotationUseProxyHealthCheck: "true",
+			},
+		},
+		Spec: corev1.PodSpec{
+			Containers: []corev1.Container{
+				{
+					Name: "web",
+				},
+			},
+		},
+	}
+	container, err := h.consulDataplaneSidecar(testNS, pod, multiPortInfo{})
+	expectedProbe := &corev1.Probe{
+		Handler: corev1.Handler{
+			HTTPGet: &corev1.HTTPGetAction{
+				Port: intstr.FromInt(21000),
+				Path: "/ready",
+			},
+		},
+		InitialDelaySeconds: 1,
+	}
+	require.NoError(t, err)
+	require.Contains(t, container.Args, "-envoy-ready-bind-port=21000")
+	require.Equal(t, expectedProbe, container.ReadinessProbe)
+	require.Contains(t, container.Env, corev1.EnvVar{
+		Name: "DP_ENVOY_READY_BIND_ADDRESS",
+		ValueFrom: &corev1.EnvVarSource{
+			FieldRef: &corev1.ObjectFieldSelector{FieldPath: "status.podIP"},
+		},
+	})
+	require.Contains(t, container.Ports, corev1.ContainerPort{
+		Name:          "proxy-health-0",
+		ContainerPort: 21000,
+	})
+}
+
+func TestHandlerConsulDataplaneSidecar_ProxyHealthCheck_Multiport(t *testing.T) {
+	h := MeshWebhook{
+		ConsulConfig:  &consul.Config{HTTPPort: 8500, GRPCPort: 8502},
+		ConsulAddress: "1.1.1.1",
+		LogLevel:      "info",
+	}
+	pod := corev1.Pod{
+		ObjectMeta: metav1.ObjectMeta{
+			Name: "test-pod",
+			Annotations: map[string]string{
+				constants.AnnotationService:             "web,web-admin",
+				constants.AnnotationUseProxyHealthCheck: "true",
+			},
+		},
+
+		Spec: corev1.PodSpec{
+			Volumes: []corev1.Volume{
+				{
+					Name: "web-admin-service-account",
+				},
+			},
+			Containers: []corev1.Container{
+				{
+					Name: "web",
+				},
+				{
+					Name: "web-side",
+				},
+				{
+					Name: "web-admin",
+				},
+				{
+					Name: "web-admin-side",
+				},
+				{
+					Name: "auth-method-secret",
+					VolumeMounts: []corev1.VolumeMount{
+						{
+							Name:      "service-account-secret",
+							MountPath: "/var/run/secrets/kubernetes.io/serviceaccount",
+						},
+					},
+				},
+			},
+			ServiceAccountName: "web",
+		},
+	}
+	multiPortInfos := []multiPortInfo{
+		{
+			serviceIndex: 0,
+			serviceName:  "web",
+		},
+		{
+			serviceIndex: 1,
+			serviceName:  "web-admin",
+		},
+	}
+	expectedArgs := []string{
+		"-envoy-ready-bind-port=21000",
+		"-envoy-ready-bind-port=21001",
+	}
+	expectedProbe := []*corev1.Probe{
+		{
+			Handler: corev1.Handler{
+				HTTPGet: &corev1.HTTPGetAction{
+					Port: intstr.FromInt(21000),
+					Path: "/ready",
+				},
+			},
+			InitialDelaySeconds: 1,
+		},
+		{
+			Handler: corev1.Handler{
+				HTTPGet: &corev1.HTTPGetAction{
+					Port: intstr.FromInt(21001),
+					Path: "/ready",
+				},
+			},
+			InitialDelaySeconds: 1,
+		},
+	}
+	expectedPort := []corev1.ContainerPort{
+		{
+			Name:          "proxy-health-0",
+			ContainerPort: 21000,
+		},
+		{
+			Name:          "proxy-health-1",
+			ContainerPort: 21001,
+		},
+	}
+	expectedEnvVar := corev1.EnvVar{
+		Name: "DP_ENVOY_READY_BIND_ADDRESS",
+		ValueFrom: &corev1.EnvVarSource{
+			FieldRef: &corev1.ObjectFieldSelector{FieldPath: "status.podIP"},
+		},
+	}
+	for i, info := range multiPortInfos {
+		container, err := h.consulDataplaneSidecar(testNS, pod, info)
+		require.NoError(t, err)
+		require.Contains(t, container.Args, expectedArgs[i])
+		require.Equal(t, expectedProbe[i], container.ReadinessProbe)
+		require.Contains(t, container.Ports, expectedPort[i])
+		require.Contains(t, container.Env, expectedEnvVar)
+	}
+}
+
 func TestHandlerConsulDataplaneSidecar_Multiport(t *testing.T) {
 	for _, aclsEnabled := range []bool{false, true} {
 		name := fmt.Sprintf("acls enabled: %t", aclsEnabled)
@@ -430,7 +581,6 @@ func TestHandlerConsulDataplaneSidecar_Multiport(t *testing.T) {
 					InitialDelaySeconds: 1,
 				}
 				require.Equal(t, expectedProbe, container.ReadinessProbe)
-				require.Equal(t, expectedProbe, container.LivenessProbe)
 				require.Nil(t, container.StartupProbe)
 			}
 		})
diff --git a/control-plane/connect-inject/webhook/redirect_traffic.go b/control-plane/connect-inject/webhook/redirect_traffic.go
index 73040b39e7..eab23a2b91 100644
--- a/control-plane/connect-inject/webhook/redirect_traffic.go
+++ b/control-plane/connect-inject/webhook/redirect_traffic.go
@@ -52,6 +52,12 @@ func (w *MeshWebhook) iptablesConfigJSON(pod corev1.Pod, ns corev1.Namespace) (s
 		return "", err
 	}
 
+	// Exclude the port on which the proxy health check port will be configured if
+	// using the proxy health check for a service.
+	if useProxyHealthCheck(pod) {
+		cfg.ExcludeInboundPorts = append(cfg.ExcludeInboundPorts, strconv.Itoa(constants.ProxyDefaultHealthPort))
+	}
+
 	if overwriteProbes {
 		for i, container := range pod.Spec.Containers {
 			// skip the "envoy-sidecar" container from having its probes overridden
diff --git a/control-plane/connect-inject/webhook/redirect_traffic_test.go b/control-plane/connect-inject/webhook/redirect_traffic_test.go
index 5ed660d96d..2ad9940fbe 100644
--- a/control-plane/connect-inject/webhook/redirect_traffic_test.go
+++ b/control-plane/connect-inject/webhook/redirect_traffic_test.go
@@ -72,6 +72,39 @@ func TestAddRedirectTrafficConfig(t *testing.T) {
 				ExcludeUIDs:       []string{"5996"},
 			},
 		},
+		{
+			name: "proxy health checks enabled",
+			webhook: MeshWebhook{
+				Log:                   logrtest.TestLogger{T: t},
+				AllowK8sNamespacesSet: mapset.NewSetWith("*"),
+				DenyK8sNamespacesSet:  mapset.NewSet(),
+				decoder:               decoder,
+			},
+			pod: &corev1.Pod{
+				ObjectMeta: metav1.ObjectMeta{
+					Namespace: defaultNamespace,
+					Name:      defaultPodName,
+					Annotations: map[string]string{
+						constants.AnnotationUseProxyHealthCheck: "true",
+					},
+				},
+				Spec: corev1.PodSpec{
+					Containers: []corev1.Container{
+						{
+							Name: "test",
+						},
+					},
+				},
+			},
+			expCfg: iptables.Config{
+				ConsulDNSIP:         "",
+				ProxyUserID:         strconv.Itoa(sidecarUserAndGroupID),
+				ProxyInboundPort:    constants.ProxyDefaultInboundPort,
+				ProxyOutboundPort:   iptables.DefaultTProxyOutboundPort,
+				ExcludeUIDs:         []string{"5996"},
+				ExcludeInboundPorts: []string{"21000"},
+			},
+		},
 		{
 			name: "metrics enabled",
 			webhook: MeshWebhook{