diff --git a/go.mod b/go.mod
index 3aa884062e..08591aa838 100644
--- a/go.mod
+++ b/go.mod
@@ -130,3 +130,5 @@ require (
 	gopkg.in/yaml.v3 v3.0.1 // indirect
 	lukechampine.com/blake3 v1.3.0 // indirect
 )
+
+replace github.com/pion/webrtc/v3 => ../webrtc
diff --git a/go.sum b/go.sum
index dc2487ca9e..41cd14aeef 100644
--- a/go.sum
+++ b/go.sum
@@ -316,8 +316,6 @@ github.com/pion/transport/v3 v3.0.6/go.mod h1:HvJr2N/JwNJAfipsRleqwFoR3t/pWyHeZU
 github.com/pion/turn/v2 v2.1.3/go.mod h1:huEpByKKHix2/b9kmTAM3YoX6MKP+/D//0ClgUYR2fY=
 github.com/pion/turn/v2 v2.1.6 h1:Xr2niVsiPTB0FPtt+yAWKFUkU1eotQbGgpTIld4x1Gc=
 github.com/pion/turn/v2 v2.1.6/go.mod h1:huEpByKKHix2/b9kmTAM3YoX6MKP+/D//0ClgUYR2fY=
-github.com/pion/webrtc/v3 v3.2.50 h1:C/rwL2mBfCxHv6tlLzDAO3krJpQXfVx8A8WHnGJ2j34=
-github.com/pion/webrtc/v3 v3.2.50/go.mod h1:dytYYoSBy7ZUWhJMbndx9UckgYvzNAfL7xgVnrIKxqo=
 github.com/pkg/errors v0.8.1/go.mod h1:bwawxfHBFNV+L2hUp1rHADufV3IMtnDRdf1r5NINEl0=
 github.com/pkg/errors v0.9.1 h1:FEBLx1zS214owpjy7qsBeixbURkuhQAwrK5UwLGTwt4=
 github.com/pkg/errors v0.9.1/go.mod h1:bwawxfHBFNV+L2hUp1rHADufV3IMtnDRdf1r5NINEl0=
diff --git a/p2p/test/transport/transport_test.go b/p2p/test/transport/transport_test.go
index 297c239793..7cfab5f3ca 100644
--- a/p2p/test/transport/transport_test.go
+++ b/p2p/test/transport/transport_test.go
@@ -770,3 +770,31 @@ func TestConnDroppedWhenBlocked(t *testing.T) {
 		})
 	}
 }
+
+// TestConnClosedWhenRemoteCloses tests that a connection is closed locally when it's closed by remote
+func TestConnClosedWhenRemoteCloses(t *testing.T) {
+	for _, tc := range transportsToTest {
+		t.Run(tc.Name, func(t *testing.T) {
+			server := tc.HostGenerator(t, TransportTestCaseOpts{})
+			client := tc.HostGenerator(t, TransportTestCaseOpts{NoListen: true})
+			defer server.Close()
+			defer client.Close()
+
+			client.Peerstore().AddAddrs(server.ID(), server.Addrs(), peerstore.PermanentAddrTTL)
+			ctx, cancel := context.WithTimeout(context.Background(), 5*time.Second)
+			defer cancel()
+			err := client.Connect(ctx, peer.AddrInfo{ID: server.ID(), Addrs: server.Addrs()})
+			require.NoError(t, err)
+
+			require.Eventually(t, func() bool {
+				return server.Network().Connectedness(client.ID()) != network.NotConnected
+			}, 5*time.Second, 50*time.Millisecond)
+			for _, c := range client.Network().ConnsToPeer(server.ID()) {
+				c.Close()
+			}
+			require.Eventually(t, func() bool {
+				return server.Network().Connectedness(client.ID()) == network.NotConnected
+			}, 5*time.Second, 50*time.Millisecond)
+		})
+	}
+}
diff --git a/p2p/transport/webrtc/connection.go b/p2p/transport/webrtc/connection.go
index e73a236a30..f40e4460ae 100644
--- a/p2p/transport/webrtc/connection.go
+++ b/p2p/transport/webrtc/connection.go
@@ -16,7 +16,6 @@ import (
 
 	ma "github.com/multiformats/go-multiaddr"
 	"github.com/pion/datachannel"
-	"github.com/pion/sctp"
 	"github.com/pion/webrtc/v3"
 )
 
@@ -32,6 +31,8 @@ func (errConnectionTimeout) Error() string   { return "connection timeout" }
 func (errConnectionTimeout) Timeout() bool   { return true }
 func (errConnectionTimeout) Temporary() bool { return false }
 
+var errConnClosed = errors.New("connection closed")
+
 type dataChannel struct {
 	stream  datachannel.ReadWriteCloser
 	channel *webrtc.DataChannel
@@ -56,7 +57,8 @@ type connection struct {
 	streams      map[uint16]*stream
 	nextStreamID atomic.Int32
 
-	acceptQueue chan dataChannel
+	acceptQueue            chan dataChannel
+	peerConnectionClosedCh chan struct{}
 
 	ctx    context.Context
 	cancel context.CancelFunc
@@ -75,6 +77,7 @@ func newConnection(
 	remoteKey ic.PubKey,
 	remoteMultiaddr ma.Multiaddr,
 	incomingDataChannels chan dataChannel,
+	peerConnectionClosedCh chan struct{},
 ) (*connection, error) {
 	ctx, cancel := context.WithCancel(context.Background())
 	c := &connection{
@@ -103,6 +106,18 @@ func newConnection(
 	}
 
 	pc.OnConnectionStateChange(c.onConnectionStateChange)
+	pc.SCTP().OnClose(func(err error) {
+		if err != nil {
+			c.closeWithError(fmt.Errorf("%w: %w", errConnClosed, err))
+		}
+		c.closeWithError(errConnClosed)
+	})
+	select {
+	case <-peerConnectionClosedCh:
+		c.Close()
+		return nil, errConnClosed
+	default:
+	}
 	return c, nil
 }
 
@@ -113,27 +128,29 @@ func (c *connection) ConnState() network.ConnectionState {
 
 // Close closes the underlying peerconnection.
 func (c *connection) Close() error {
-	c.closeOnce.Do(func() { c.closeWithError(errors.New("connection closed")) })
+	c.closeWithError(errConnClosed)
 	return nil
 }
 
 // closeWithError is used to Close the connection when the underlying DTLS connection fails
 func (c *connection) closeWithError(err error) {
-	c.closeErr = err
-	// cancel must be called after closeErr is set. This ensures interested goroutines waiting on
-	// ctx.Done can read closeErr without holding the conn lock.
-	c.cancel()
-	// closing peerconnection will close the datachannels associated with the streams
-	c.pc.Close()
-
-	c.m.Lock()
-	streams := c.streams
-	c.streams = nil
-	c.m.Unlock()
-	for _, s := range streams {
-		s.closeForShutdown(err)
-	}
-	c.scope.Done()
+	c.closeOnce.Do(func() {
+		c.closeErr = err
+		// cancel must be called after closeErr is set. This ensures interested goroutines waiting on
+		// ctx.Done can read closeErr without holding the conn lock.
+		c.cancel()
+		// closing peerconnection will close the datachannels associated with the streams
+		c.pc.Close()
+
+		c.m.Lock()
+		streams := c.streams
+		c.streams = nil
+		c.m.Unlock()
+		for _, s := range streams {
+			s.closeForShutdown(err)
+		}
+		c.scope.Done()
+	})
 }
 
 func (c *connection) IsClosed() bool {
@@ -152,11 +169,6 @@ func (c *connection) OpenStream(ctx context.Context) (network.MuxedStream, error
 	streamID := uint16(id)
 	dc, err := c.pc.CreateDataChannel("", &webrtc.DataChannelInit{ID: &streamID})
 	if err != nil {
-		if errors.Is(err, sctp.ErrStreamClosed) {
-			c.closeOnce.Do(func() {
-				c.closeWithError(errors.New("connection closed"))
-			})
-		}
 		return nil, err
 	}
 	rwc, err := c.detachChannel(ctx, dc)
@@ -215,9 +227,7 @@ func (c *connection) removeStream(id uint16) {
 
 func (c *connection) onConnectionStateChange(state webrtc.PeerConnectionState) {
 	if state == webrtc.PeerConnectionStateFailed || state == webrtc.PeerConnectionStateClosed {
-		c.closeOnce.Do(func() {
-			c.closeWithError(errConnectionTimeout{})
-		})
+		c.closeWithError(errConnectionTimeout{})
 	}
 }
 
diff --git a/p2p/transport/webrtc/listener.go b/p2p/transport/webrtc/listener.go
index 3f465b34fc..96174f3457 100644
--- a/p2p/transport/webrtc/listener.go
+++ b/p2p/transport/webrtc/listener.go
@@ -276,6 +276,7 @@ func (l *listener) setupConnection(
 		remotePubKey,
 		remoteMultiaddr,
 		w.IncomingDataChannels,
+		w.PeerConnectionClosedCh,
 	)
 	if err != nil {
 		return nil, err
diff --git a/p2p/transport/webrtc/transport.go b/p2p/transport/webrtc/transport.go
index 8aaa93e43a..3f23be5b80 100644
--- a/p2p/transport/webrtc/transport.go
+++ b/p2p/transport/webrtc/transport.go
@@ -399,6 +399,7 @@ func (t *WebRTCTransport) dial(ctx context.Context, scope network.ConnManagement
 		remotePubKey,
 		remoteMultiaddrWithoutCerthash,
 		w.IncomingDataChannels,
+		w.PeerConnectionClosedCh,
 	)
 	if err != nil {
 		return nil, err
@@ -572,9 +573,10 @@ func detachHandshakeDataChannel(ctx context.Context, dc *webrtc.DataChannel) (da
 // a small window of time where datachannels created by the peer may not surface to us and cause a
 // memory leak.
 type webRTCConnection struct {
-	PeerConnection       *webrtc.PeerConnection
-	HandshakeDataChannel *webrtc.DataChannel
-	IncomingDataChannels chan dataChannel
+	PeerConnection         *webrtc.PeerConnection
+	HandshakeDataChannel   *webrtc.DataChannel
+	IncomingDataChannels   chan dataChannel
+	PeerConnectionClosedCh chan struct{}
 }
 
 func newWebRTCConnection(settings webrtc.SettingEngine, config webrtc.Configuration) (webRTCConnection, error) {
@@ -613,10 +615,20 @@ func newWebRTCConnection(settings webrtc.SettingEngine, config webrtc.Configurat
 			}
 		})
 	})
+
+	connectionClosedCh := make(chan struct{}, 1)
+	pc.SCTP().OnClose(func(err error) {
+		// We only need one message. Closing a connection is a problem as pion might invoke the callback more than once.
+		select {
+		case connectionClosedCh <- struct{}{}:
+		default:
+		}
+	})
 	return webRTCConnection{
-		PeerConnection:       pc,
-		HandshakeDataChannel: handshakeDataChannel,
-		IncomingDataChannels: incomingDataChannels,
+		PeerConnection:         pc,
+		HandshakeDataChannel:   handshakeDataChannel,
+		IncomingDataChannels:   incomingDataChannels,
+		PeerConnectionClosedCh: connectionClosedCh,
 	}, nil
 }