diff --git a/lib/services/local/externalauditstorage_watcher.go b/lib/services/local/externalauditstorage_watcher.go
index 5cf898cfa6d84..af44537fe6ce9 100644
--- a/lib/services/local/externalauditstorage_watcher.go
+++ b/lib/services/local/externalauditstorage_watcher.go
@@ -63,15 +63,15 @@ func (cfg *ClusterExternalAuditStorageWatcherConfig) CheckAndSetDefaults() error
 
 // ClusterExternalAuditWatcher is a light weight backend watcher for the cluster external audit resource.
 type ClusterExternalAuditWatcher struct {
-	backend     backend.Backend
-	log         logrus.FieldLogger
-	clock       clockwork.Clock
-	onChange    func()
-	retry       retryutils.Retry
-	initialized chan struct{}
-	closed      chan struct{}
-	closeOnce   sync.Once
-	done        chan struct{}
+	backend   backend.Backend
+	log       logrus.FieldLogger
+	clock     clockwork.Clock
+	onChange  func()
+	retry     retryutils.Retry
+	running   chan struct{}
+	closed    chan struct{}
+	closeOnce sync.Once
+	done      chan struct{}
 }
 
 // NewClusterExternalAuditWatcher creates a new cluster external audit resource watcher.
@@ -93,14 +93,14 @@ func NewClusterExternalAuditWatcher(ctx context.Context, cfg ClusterExternalAudi
 	}
 
 	w := &ClusterExternalAuditWatcher{
-		backend:     cfg.Backend,
-		log:         cfg.Log,
-		clock:       cfg.Clock,
-		onChange:    cfg.OnChange,
-		retry:       retry,
-		initialized: make(chan struct{}),
-		closed:      make(chan struct{}),
-		done:        make(chan struct{}),
+		backend:  cfg.Backend,
+		log:      cfg.Log,
+		clock:    cfg.Clock,
+		onChange: cfg.OnChange,
+		retry:    retry,
+		running:  make(chan struct{}),
+		closed:   make(chan struct{}),
+		done:     make(chan struct{}),
 	}
 
 	go w.runWatchLoop(ctx)
@@ -111,13 +111,13 @@ func NewClusterExternalAuditWatcher(ctx context.Context, cfg ClusterExternalAudi
 // WaitInit waits for the watch loop to initialize.
 func (w *ClusterExternalAuditWatcher) WaitInit(ctx context.Context) error {
 	select {
-	case <-w.initialized:
+	case <-w.running:
+		return nil
 	case <-w.done:
-		return errors.New("watcher closed")
+		return trace.Errorf("watcher closed")
 	case <-ctx.Done():
 		return trace.Wrap(ctx.Err())
 	}
-	return nil
 }
 
 // close stops the watcher and waits for the watch loop to exit
@@ -155,8 +155,9 @@ func (w *ClusterExternalAuditWatcher) watch(ctx context.Context) error {
 		case <-watcher.Events():
 			w.log.Infof("Detected change to cluster ExternalAuditStorage config")
 			w.onChange()
+		case w.running <- struct{}{}:
 		case <-watcher.Done():
-			return errors.New("watcher closed")
+			return trace.Errorf("watcher closed")
 		case <-ctx.Done():
 			return ctx.Err()
 		case <-w.closed:
@@ -185,7 +186,6 @@ func (w *ClusterExternalAuditWatcher) newWatcher(ctx context.Context) (backend.W
 		if event.Type != types.OpInit {
 			return nil, trace.BadParameter("expected init event, got %v instead", event.Type)
 		}
-		close(w.initialized)
 	}
 
 	w.retry.Reset()
diff --git a/lib/services/local/externalauditstorage_watcher_test.go b/lib/services/local/externalauditstorage_watcher_test.go
index 5360229b4f414..00552dc564f3d 100644
--- a/lib/services/local/externalauditstorage_watcher_test.go
+++ b/lib/services/local/externalauditstorage_watcher_test.go
@@ -17,10 +17,14 @@ package local
 import (
 	"context"
 	"testing"
+	"time"
 
+	"github.com/jonboulle/clockwork"
 	"github.com/stretchr/testify/require"
 
+	"github.com/gravitational/teleport/lib/backend"
 	"github.com/gravitational/teleport/lib/backend/memory"
+	"github.com/gravitational/teleport/lib/defaults"
 )
 
 func TestClusterExternalAuditWatcher(t *testing.T) {
@@ -34,7 +38,6 @@ func TestClusterExternalAuditWatcher(t *testing.T) {
 	require.NoError(t, err)
 
 	svc := NewExternalAuditStorageService(bk)
-	require.NotNil(t, svc)
 
 	ch := make(chan string)
 
@@ -120,3 +123,80 @@ func TestClusterExternalAuditWatcher(t *testing.T) {
 		})
 	}
 }
+
+// TestClusterExternalAuditWatcher_WatcherClosed tests that the
+// ExternalAuditWatcher can recover from the underlying backend watcher closing.
+func TestClusterExternalAuditWatcher_WatcherClosed(t *testing.T) {
+	t.Parallel()
+	ctx, cancel := context.WithCancel(context.Background())
+	defer cancel()
+
+	bk, err := memory.New(memory.Config{
+		Context: ctx,
+	})
+	require.NoError(t, err)
+
+	svc := NewExternalAuditStorageService(bk)
+
+	interceptor := &watcherInterceptor{
+		Backend:  bk,
+		watchers: make(chan backend.Watcher, 1),
+	}
+
+	changes := make(chan struct{})
+	clock := clockwork.NewFakeClock()
+
+	auditWatcher, err := NewClusterExternalAuditWatcher(ctx, ClusterExternalAuditStorageWatcherConfig{
+		Backend: interceptor,
+		OnChange: func() {
+			changes <- struct{}{}
+		},
+		Clock: clock,
+	})
+	require.NoError(t, err)
+
+	require.NoError(t, auditWatcher.WaitInit(ctx))
+
+	// Sanity test a change is detected
+	_, err = svc.GenerateDraftExternalAuditStorage(ctx, "test-integration", "us-west-2")
+	require.NoError(t, err)
+	err = svc.PromoteToClusterExternalAuditStorage(ctx)
+	require.NoError(t, err)
+	select {
+	case <-changes:
+	case <-time.After(5 * time.Second):
+		t.Fatal("watcher failed to detect change")
+	}
+
+	// Close the backend watcher and make sure the audit watcher recovers
+	w := <-interceptor.watchers
+	w.Close()
+	clock.BlockUntil(1)
+	clock.Advance(defaults.LowResPollingPeriod)
+	require.NoError(t, auditWatcher.WaitInit(ctx))
+
+	// It should still detect changes
+	err = svc.DisableClusterExternalAuditStorage(ctx)
+	require.NoError(t, err)
+	select {
+	case <-changes:
+	case <-time.After(5 * time.Second):
+		t.Fatal("watcher failed to detect change")
+	}
+}
+
+// watcherInterceptor wraps a backend.Backend and writes all backend watchers
+// returned from NewWatcher to a channel.
+type watcherInterceptor struct {
+	backend.Backend
+	watchers chan backend.Watcher
+}
+
+func (i *watcherInterceptor) NewWatcher(ctx context.Context, watch backend.Watch) (backend.Watcher, error) {
+	w, err := i.Backend.NewWatcher(ctx, watch)
+	if err != nil {
+		return nil, err
+	}
+	i.watchers <- w
+	return w, nil
+}