diff --git a/.changelog/19268.txt b/.changelog/19268.txt
new file mode 100644
index 00000000000..2bb8f489e34
--- /dev/null
+++ b/.changelog/19268.txt
@@ -0,0 +1,3 @@
+```release-note:bug
+Mesh Gateways: Fix a bug where replicated and peered mesh gateways with hostname-based WAN addresses fail to initialize.
+```
diff --git a/agent/xds/clusters.go b/agent/xds/clusters.go
index 2ca1d248a4f..cba036d2165 100644
--- a/agent/xds/clusters.go
+++ b/agent/xds/clusters.go
@@ -477,10 +477,13 @@ func (s *ResourceGenerator) makePeerServerClusters(cfgSnap *proxycfg.ConfigSnaps
 
 		var cluster *envoy_cluster_v3.Cluster
 		if servers.UseCDS {
+			// we use strict DNS here since multiple gateways with hostnames
+			// would result in an invalid cluster due to logical DNS requiring
+			// only a single host
 			cluster = s.makeExternalHostnameCluster(cfgSnap, clusterOpts{
 				name:      name,
 				addresses: servers.Addresses,
-			})
+			}, envoy_cluster_v3.Cluster_STRICT_DNS)
 		} else {
 			cluster = s.makeGatewayCluster(cfgSnap, clusterOpts{
 				name: name,
@@ -699,7 +702,7 @@ func (s *ResourceGenerator) makeDestinationClusters(cfgSnap *proxycfg.ConfigSnap
 			if structs.IsIP(address) {
 				cluster = s.makeExternalIPCluster(cfgSnap, opts)
 			} else {
-				cluster = s.makeExternalHostnameCluster(cfgSnap, opts)
+				cluster = s.makeExternalHostnameCluster(cfgSnap, opts, envoy_cluster_v3.Cluster_LOGICAL_DNS)
 			}
 			if err := s.injectGatewayDestinationAddons(cfgSnap, cluster, svcName); err != nil {
 				return nil, err
@@ -1727,8 +1730,8 @@ func (s *ResourceGenerator) makeExternalIPCluster(snap *proxycfg.ConfigSnapshot,
 }
 
 // makeExternalHostnameCluster creates an Envoy cluster for hostname endpoints that will be resolved with DNS
-// This is used by both terminating gateways for Destinations, and Mesh Gateways for peering control plane traffice
-func (s *ResourceGenerator) makeExternalHostnameCluster(snap *proxycfg.ConfigSnapshot, opts clusterOpts) *envoy_cluster_v3.Cluster {
+// This is used by both terminating gateways for Destinations, and Mesh Gateways for peering control plane traffic
+func (s *ResourceGenerator) makeExternalHostnameCluster(snap *proxycfg.ConfigSnapshot, opts clusterOpts, discoveryType envoy_cluster_v3.Cluster_DiscoveryType) *envoy_cluster_v3.Cluster {
 	cfg, err := ParseGatewayConfig(snap.Proxy.Config)
 	if err != nil {
 		// Don't hard fail on a config typo, just warn. The parse func returns
@@ -1743,7 +1746,7 @@ func (s *ResourceGenerator) makeExternalHostnameCluster(snap *proxycfg.ConfigSna
 
 		// Having an empty config enables outlier detection with default config.
 		OutlierDetection:     &envoy_cluster_v3.OutlierDetection{},
-		ClusterDiscoveryType: &envoy_cluster_v3.Cluster_Type{Type: envoy_cluster_v3.Cluster_LOGICAL_DNS},
+		ClusterDiscoveryType: &envoy_cluster_v3.Cluster_Type{Type: discoveryType},
 		DnsLookupFamily:      envoy_cluster_v3.Cluster_V4_ONLY,
 	}
 
diff --git a/agent/xds/testdata/clusters/mesh-gateway-with-peer-through-mesh-gateway-enabled.latest.golden b/agent/xds/testdata/clusters/mesh-gateway-with-peer-through-mesh-gateway-enabled.latest.golden
index 8ab3fe5761a..86cac4c9b3f 100644
--- a/agent/xds/testdata/clusters/mesh-gateway-with-peer-through-mesh-gateway-enabled.latest.golden
+++ b/agent/xds/testdata/clusters/mesh-gateway-with-peer-through-mesh-gateway-enabled.latest.golden
@@ -1,48 +1,48 @@
 {
-  "versionInfo":  "00000001",
-  "resources":  [
+  "versionInfo": "00000001",
+  "resources": [
     {
-      "@type":  "type.googleapis.com/envoy.config.cluster.v3.Cluster",
-      "name":  "server.dc2.peering.6d942ff2-6a78-46f4-a52f-915e26c48797",
-      "type":  "EDS",
-      "edsClusterConfig":  {
-        "edsConfig":  {
-          "ads":  {},
-          "resourceApiVersion":  "V3"
+      "@type": "type.googleapis.com/envoy.config.cluster.v3.Cluster",
+      "name": "server.dc2.peering.6d942ff2-6a78-46f4-a52f-915e26c48797",
+      "type": "EDS",
+      "edsClusterConfig": {
+        "edsConfig": {
+          "ads": {},
+          "resourceApiVersion": "V3"
         }
       },
-      "connectTimeout":  "5s",
-      "outlierDetection":  {}
+      "connectTimeout": "5s",
+      "outlierDetection": {}
     },
     {
-      "@type":  "type.googleapis.com/envoy.config.cluster.v3.Cluster",
-      "name":  "server.dc2.peering.f3f41279-001d-42bb-912e-f6103fb036b8",
-      "type":  "EDS",
-      "edsClusterConfig":  {
-        "edsConfig":  {
-          "ads":  {},
-          "resourceApiVersion":  "V3"
+      "@type": "type.googleapis.com/envoy.config.cluster.v3.Cluster",
+      "name": "server.dc2.peering.f3f41279-001d-42bb-912e-f6103fb036b8",
+      "type": "EDS",
+      "edsClusterConfig": {
+        "edsConfig": {
+          "ads": {},
+          "resourceApiVersion": "V3"
         }
       },
-      "connectTimeout":  "5s",
-      "outlierDetection":  {}
+      "connectTimeout": "5s",
+      "outlierDetection": {}
     },
     {
-      "@type":  "type.googleapis.com/envoy.config.cluster.v3.Cluster",
-      "name":  "server.dc3.peering.f622dc37-7238-4485-ab58-0f53864a9ae5",
-      "type":  "LOGICAL_DNS",
-      "connectTimeout":  "5s",
-      "loadAssignment":  {
-        "clusterName":  "server.dc3.peering.f622dc37-7238-4485-ab58-0f53864a9ae5",
-        "endpoints":  [
+      "@type": "type.googleapis.com/envoy.config.cluster.v3.Cluster",
+      "name": "server.dc3.peering.f622dc37-7238-4485-ab58-0f53864a9ae5",
+      "type": "STRICT_DNS",
+      "connectTimeout": "5s",
+      "loadAssignment": {
+        "clusterName": "server.dc3.peering.f622dc37-7238-4485-ab58-0f53864a9ae5",
+        "endpoints": [
           {
-            "lbEndpoints":  [
+            "lbEndpoints": [
               {
-                "endpoint":  {
-                  "address":  {
-                    "socketAddress":  {
-                      "address":  "my-load-balancer-1234567890abcdef.elb.us-east-2.amazonaws.com",
-                      "portValue":  8080
+                "endpoint": {
+                  "address": {
+                    "socketAddress": {
+                      "address": "my-load-balancer-1234567890abcdef.elb.us-east-2.amazonaws.com",
+                      "portValue": 8080
                     }
                   }
                 }
@@ -51,11 +51,11 @@
           }
         ]
       },
-      "dnsRefreshRate":  "10s",
-      "dnsLookupFamily":  "V4_ONLY",
-      "outlierDetection":  {}
+      "dnsRefreshRate": "10s",
+      "dnsLookupFamily": "V4_ONLY",
+      "outlierDetection": {}
     }
   ],
-  "typeUrl":  "type.googleapis.com/envoy.config.cluster.v3.Cluster",
-  "nonce":  "00000001"
+  "typeUrl": "type.googleapis.com/envoy.config.cluster.v3.Cluster",
+  "nonce": "00000001"
 }
\ No newline at end of file