diff --git a/.changelog/16729.txt b/.changelog/16729.txt
new file mode 100644
index 0000000000..36c6e1aeab
--- /dev/null
+++ b/.changelog/16729.txt
@@ -0,0 +1,3 @@
+```release-note:bug
+peering: Fix issue resulting in prepared query failover to cluster peers never un-failing over.
+```
diff --git a/agent/consul/prepared_query_endpoint.go b/agent/consul/prepared_query_endpoint.go
index ffa4b5e509..54ef82bafd 100644
--- a/agent/consul/prepared_query_endpoint.go
+++ b/agent/consul/prepared_query_endpoint.go
@@ -468,7 +468,7 @@ func (p *PreparedQuery) Execute(args *structs.PreparedQueryExecuteRequest,
 	// by the query setup.
 	if len(reply.Nodes) == 0 {
 		wrapper := &queryServerWrapper{srv: p.srv, executeRemote: p.ExecuteRemote}
-		if err := queryFailover(wrapper, query, args, reply); err != nil {
+		if err := queryFailover(wrapper, *query, args, reply); err != nil {
 			return err
 		}
 	}
@@ -707,7 +707,7 @@ func (q *queryServerWrapper) GetOtherDatacentersByDistance() ([]string, error) {
 
 // queryFailover runs an algorithm to determine which DCs to try and then calls
 // them to try to locate alternative services.
-func queryFailover(q queryServer, query *structs.PreparedQuery,
+func queryFailover(q queryServer, query structs.PreparedQuery,
 	args *structs.PreparedQueryExecuteRequest,
 	reply *structs.PreparedQueryExecuteResponse) error {
 
@@ -789,7 +789,7 @@ func queryFailover(q queryServer, query *structs.PreparedQuery,
 		// the remote query as well.
 		remote := &structs.PreparedQueryExecuteRemoteRequest{
 			Datacenter:   dc,
-			Query:        *query,
+			Query:        query,
 			Limit:        args.Limit,
 			QueryOptions: args.QueryOptions,
 			Connect:      args.Connect,
diff --git a/agent/consul/prepared_query_endpoint_test.go b/agent/consul/prepared_query_endpoint_test.go
index d883c8bf4d..ca1ad0c664 100644
--- a/agent/consul/prepared_query_endpoint_test.go
+++ b/agent/consul/prepared_query_endpoint_test.go
@@ -2092,16 +2092,16 @@ func TestPreparedQuery_Execute(t *testing.T) {
 	require.NoError(t, msgpackrpc.CallWithCodec(codec1, "PreparedQuery.Apply", &query, &query.Query.ID))
 
 	// Update the health of a node to mark it critical.
-	setHealth := func(t *testing.T, codec rpc.ClientCodec, dc string, node string, health string) {
+	setHealth := func(t *testing.T, codec rpc.ClientCodec, dc string, i int, health string) {
 		t.Helper()
 		req := structs.RegisterRequest{
 			Datacenter: dc,
-			Node:       node,
+			Node:       fmt.Sprintf("node%d", i),
 			Address:    "127.0.0.1",
 			Service: &structs.NodeService{
 				Service: "foo",
 				Port:    8000,
-				Tags:    []string{"dc1", "tag1"},
+				Tags:    []string{dc, fmt.Sprintf("tag%d", i)},
 			},
 			Check: &structs.HealthCheck{
 				Name:      "failing",
@@ -2113,7 +2113,7 @@ func TestPreparedQuery_Execute(t *testing.T) {
 		var reply struct{}
 		require.NoError(t, msgpackrpc.CallWithCodec(codec, "Catalog.Register", &req, &reply))
 	}
-	setHealth(t, codec1, "dc1", "node1", api.HealthCritical)
+	setHealth(t, codec1, "dc1", 1, api.HealthCritical)
 
 	// The failing node should be filtered.
 	t.Run("failing node filtered", func(t *testing.T) {
@@ -2133,7 +2133,7 @@ func TestPreparedQuery_Execute(t *testing.T) {
 	})
 
 	// Upgrade it to a warning and re-query, should be 10 nodes again.
-	setHealth(t, codec1, "dc1", "node1", api.HealthWarning)
+	setHealth(t, codec1, "dc1", 1, api.HealthWarning)
 	t.Run("warning nodes are included", func(t *testing.T) {
 		req := structs.PreparedQueryExecuteRequest{
 			Datacenter:    "dc1",
@@ -2303,7 +2303,7 @@ func TestPreparedQuery_Execute(t *testing.T) {
 
 	// Now fail everything in dc1 and we should get an empty list back.
 	for i := 0; i < 10; i++ {
-		setHealth(t, codec1, "dc1", fmt.Sprintf("node%d", i+1), api.HealthCritical)
+		setHealth(t, codec1, "dc1", i+1, api.HealthCritical)
 	}
 	t.Run("everything is failing so should get empty list", func(t *testing.T) {
 		req := structs.PreparedQueryExecuteRequest{
@@ -2474,7 +2474,7 @@ func TestPreparedQuery_Execute(t *testing.T) {
 
 	// Set all checks in dc2 as critical
 	for i := 0; i < 10; i++ {
-		setHealth(t, codec2, "dc2", fmt.Sprintf("node%d", i+1), api.HealthCritical)
+		setHealth(t, codec2, "dc2", i+1, api.HealthCritical)
 	}
 
 	// Now we should see 9 nodes from dc3 (we have the tag filter still)
@@ -2493,6 +2493,31 @@ func TestPreparedQuery_Execute(t *testing.T) {
 		}
 		expectFailoverPeerNodes(t, &query, &reply, 9)
 	})
+
+	// Set all checks in dc1 as passing
+	for i := 0; i < 10; i++ {
+		setHealth(t, codec1, "dc1", i+1, api.HealthPassing)
+	}
+
+	// Nothing is healthy so nothing is returned
+	t.Run("un-failing over", func(t *testing.T) {
+		retry.Run(t, func(r *retry.R) {
+			req := structs.PreparedQueryExecuteRequest{
+				Datacenter:    "dc1",
+				QueryIDOrName: query.Query.ID,
+				QueryOptions:  structs.QueryOptions{Token: execToken},
+			}
+
+			var reply structs.PreparedQueryExecuteResponse
+			require.NoError(t, msgpackrpc.CallWithCodec(codec1, "PreparedQuery.Execute", &req, &reply))
+
+			for _, node := range reply.Nodes {
+				assert.NotEqual(t, "node3", node.Node.Node)
+			}
+
+			expectNodes(t, &query, &reply, 9)
+		})
+	})
 }
 
 func TestPreparedQuery_Execute_ForwardLeader(t *testing.T) {
@@ -2982,7 +3007,7 @@ func (m *mockQueryServer) ExecuteRemote(args *structs.PreparedQueryExecuteRemote
 
 func TestPreparedQuery_queryFailover(t *testing.T) {
 	t.Parallel()
-	query := &structs.PreparedQuery{
+	query := structs.PreparedQuery{
 		Name: "test",
 		Service: structs.ServiceQuery{
 			Failover: structs.QueryFailoverOptions{