diff --git a/.changelog/17566.txt b/.changelog/17566.txt
new file mode 100644
index 0000000000..f15718bd76
--- /dev/null
+++ b/.changelog/17566.txt
@@ -0,0 +1,3 @@
+```release-note:bug
+xds: Fixed a bug where modifying ACLs on a token being actively used for an xDS connection caused all xDS updates to fail.
+```
diff --git a/agent/proxycfg-glue/glue.go b/agent/proxycfg-glue/glue.go
index 03afd5c155..320d2fc258 100644
--- a/agent/proxycfg-glue/glue.go
+++ b/agent/proxycfg-glue/glue.go
@@ -5,6 +5,7 @@ package proxycfgglue
 
 import (
 	"context"
+	"errors"
 
 	"github.com/hashicorp/go-hclog"
 	"github.com/hashicorp/go-memdb"
@@ -141,6 +142,12 @@ func newUpdateEvent(correlationID string, result any, err error) proxycfg.Update
 	if acl.IsErrNotFound(err) {
 		err = proxycfg.TerminalError(err)
 	}
+	// these are also errors where we should mark them
+	// as terminal for the sake of proxycfg, since they require
+	// a resubscribe.
+	if errors.Is(err, stream.ErrSubForceClosed) || errors.Is(err, stream.ErrShuttingDown) {
+		err = proxycfg.TerminalError(err)
+	}
 	return proxycfg.UpdateEvent{
 		CorrelationID: correlationID,
 		Result:        result,