diff --git a/apps/meteor/ee/server/startup/federation.ts b/apps/meteor/ee/server/startup/federation.ts
index d2e20f9ead1e7..1c6889c018b24 100644
--- a/apps/meteor/ee/server/startup/federation.ts
+++ b/apps/meteor/ee/server/startup/federation.ts
@@ -3,33 +3,57 @@ import { FederationMatrix, setupFederationMatrix } from '@rocket.chat/federation
 import { InstanceStatus } from '@rocket.chat/instance-status';
 import { Logger } from '@rocket.chat/logger';
 
+import { settings } from '../../../app/settings/server';
 import { StreamerCentral } from '../../../server/modules/streamer/streamer.module';
 import { registerFederationRoutes } from '../api/federation';
 
 const logger = new Logger('Federation');
 
+const CRITICAL_SETTINGS = [
+	'Federation_Service_Enabled',
+	'Federation_Service_Domain',
+	'Federation_Service_Matrix_Signing_Key',
+	'Federation_Service_Matrix_Signing_Algorithm',
+	'Federation_Service_Matrix_Signing_Version',
+	'Federation_Service_Join_Encrypted_Rooms',
+	'Federation_Service_Join_Non_Private_Rooms',
+	'Federation_Service_EDU_Process_Typing',
+	'Federation_Service_EDU_Process_Presence',
+];
+
+let serviceRegistered = false;
+let watcherRegistered = false;
+
 export const startFederationService = async (): Promise<void> => {
 	try {
 		const isEnabled = await setupFederationMatrix(InstanceStatus.id());
+		if (isEnabled) {
+			if (!serviceRegistered) {
+				api.registerService(new FederationMatrix());
 
-		api.registerService(new FederationMatrix());
+				await registerFederationRoutes();
 
-		await registerFederationRoutes();
+				// TODO move to service/setup?
+				StreamerCentral.on('broadcast', (name, eventName, args) => {
+					if (name === 'notify-room' && eventName.endsWith('user-activity')) {
+						const [rid] = eventName.split('/');
+						const [user, activity] = args;
+						void FederationMatrixService.notifyUserTyping(rid, user, activity.includes('user-typing'));
+					}
+				});
 
-		// only registers the typing listener if the service is enabled
-		if (!isEnabled) {
-			return;
+				serviceRegistered = true;
+			}
 		}
 
-		// TODO move to service/setup?
-		StreamerCentral.on('broadcast', (name, eventName, args) => {
-			if (name === 'notify-room' && eventName.endsWith('user-activity')) {
-				const [rid] = eventName.split('/');
-				const [user, activity] = args;
-				void FederationMatrixService.notifyUserTyping(rid, user, activity.includes('user-typing'));
-			}
-		});
+		if (!watcherRegistered) {
+			settings.watchMultiple(CRITICAL_SETTINGS, async () => {
+				await startFederationService();
+			});
+			watcherRegistered = true;
+		}
 	} catch (error) {
-		logger.error('Failed to start federation-matrix service:', error);
+		logger.error('Failed to start federation service', { error });
+		throw error;
 	}
 };
diff --git a/ee/packages/federation-matrix/src/setup.ts b/ee/packages/federation-matrix/src/setup.ts
index 8f82e3062272c..55010b600edbe 100644
--- a/ee/packages/federation-matrix/src/setup.ts
+++ b/ee/packages/federation-matrix/src/setup.ts
@@ -1,7 +1,7 @@
 import { License } from '@rocket.chat/core-services';
 import { Emitter } from '@rocket.chat/emitter';
 import type { HomeserverEventSignatures } from '@rocket.chat/federation-sdk';
-import { ConfigService, createFederationContainer } from '@rocket.chat/federation-sdk';
+import { ConfigService, createFederationContainer, getAllServices } from '@rocket.chat/federation-sdk';
 import { Logger } from '@rocket.chat/logger';
 import { Settings } from '@rocket.chat/models';
 
@@ -9,6 +9,8 @@ import { registerEvents } from './events';
 
 const logger = new Logger('FederationSetup');
 
+let containerInitialized = false;
+
 function validateDomain(domain: string): boolean {
 	const value = domain.trim();
 
@@ -40,6 +42,11 @@ export async function setupFederationMatrix(instanceId: string): Promise<boolean
 	const settingEnabled = (await Settings.getValueById<boolean>('Federation_Service_Enabled')) || false;
 	const serverName = (await Settings.getValueById<string>('Federation_Service_Domain')) || '';
 
+	const serviceEnabled = (await License.hasModule('federation')) && settingEnabled && validateDomain(serverName);
+	if (!serviceEnabled) {
+		return false;
+	}
+
 	const processEDUTyping = (await Settings.getValueById<boolean>('Federation_Service_EDU_Process_Typing')) || false;
 	const processEDUPresence = (await Settings.getValueById<boolean>('Federation_Service_EDU_Process_Presence')) || false;
 	const signingKey = (await Settings.getValueById<string>('Federation_Service_Matrix_Signing_Key')) || '';
@@ -52,7 +59,7 @@ export async function setupFederationMatrix(instanceId: string): Promise<boolean
 	const mongoUri = process.env.MONGO_URL || 'mongodb://localhost:3001/meteor';
 	const dbName = process.env.DATABASE_NAME || new URL(mongoUri).pathname.slice(1);
 
-	const config = new ConfigService({
+	const configValues = {
 		instanceId,
 		serverName,
 		keyRefreshInterval: Number.parseInt(process.env.MATRIX_KEY_REFRESH_INTERVAL || '60', 10),
@@ -89,26 +96,29 @@ export async function setupFederationMatrix(instanceId: string): Promise<boolean
 			allowedEncryptedRooms,
 			allowedNonPrivateRooms,
 		},
-	});
+	};
 
-	const eventHandler = new Emitter<HomeserverEventSignatures>();
+	if (!containerInitialized) {
+		const config = new ConfigService(configValues);
+		const eventHandler = new Emitter<HomeserverEventSignatures>();
 
-	await createFederationContainer(
-		{
-			emitter: eventHandler,
-		},
-		config,
-	);
-
-	const serviceEnabled = (await License.hasModule('federation')) && settingEnabled && validateDomain(serverName);
-	if (!serviceEnabled) {
-		return false;
+		await createFederationContainer(
+			{
+				emitter: eventHandler,
+			},
+			config,
+		);
+
+		registerEvents(eventHandler, serverName, {
+			typing: processEDUTyping,
+			presence: processEDUPresence,
+		});
+
+		containerInitialized = true;
+	} else {
+		const services = getAllServices();
+		services.config.updateConfig(configValues);
 	}
 
-	registerEvents(eventHandler, serverName, {
-		typing: processEDUTyping,
-		presence: processEDUPresence,
-	});
-
 	return true;
 }