diff --git a/server/raft.go b/server/raft.go
index 87e48d9e693..52a1cbf6085 100644
--- a/server/raft.go
+++ b/server/raft.go
@@ -2061,13 +2061,34 @@ func (n *raft) Peers() []*Peer {
 
 	var peers []*Peer
 	for id, ps := range n.peers {
+		var current bool
 		var lag uint64
-		if n.commit > ps.li {
-			lag = n.commit - ps.li
+		if id == n.id {
+			// We are current and have no lag when compared with ourselves.
+			current = true
+		} else if n.id == n.leader {
+			// We are the leader, we know how many entries this replica has persisted.
+			// Lag is determined by how many entries we have quorum on in our log that haven't yet
+			// been persisted on the replica. They are current if there's no lag.
+			// This will show all peers that are part of quorum as "current".
+			if n.commit > ps.li {
+				lag = n.commit - ps.li
+			}
+			current = lag == 0
+		} else if id == n.leader {
+			// This peer is the leader, we don't know our lag, but we can report
+			// on whether we've seen the leader recently.
+			okInterval := hbInterval * 2
+			current = time.Since(ps.ts) <= okInterval
+		} else {
+			// The remaining condition is another follower that we're not in contact with.
+			// We intentionally leave current and lag as empty.
+			current, lag = false, 0
 		}
+
 		p := &Peer{
 			ID:      id,
-			Current: id == n.leader || ps.li >= n.applied,
+			Current: current,
 			Last:    ps.ts,
 			Lag:     lag,
 		}
@@ -3838,14 +3859,17 @@ func (n *raft) updateLeader(newLeader string) {
 			}
 		}
 	}
-	// Reset last seen timestamps.
+	// Reset last seen timestamps and indices.
 	// If we are (or were) the leader we track(ed) everyone, and don't reset.
 	// But if we're a follower we only track the leader, and reset all others.
 	if newLeader != n.id && !wasLeader {
 		for peer, ps := range n.peers {
+			// Always reset last replicated index.
+			ps.li = 0
 			if peer == newLeader {
 				continue
 			}
+			// Only reset the last seen timestamp if this peer is not the leader.
 			ps.ts = time.Time{}
 		}
 	}
diff --git a/server/raft_test.go b/server/raft_test.go
index 19420c1ae53..d09d2839956 100644
--- a/server/raft_test.go
+++ b/server/raft_test.go
@@ -5304,3 +5304,139 @@ func TestNRGReplayAddPeerKeepsClusterSize(t *testing.T) {
 	n.WaitForStop()
 	fs.Stop()
 }
+
+func TestNRGTrackPeerLag(t *testing.T) {
+	c := createJetStreamClusterExplicit(t, "R3S", 3)
+	defer c.shutdown()
+
+	rg := c.createRaftGroup("TEST", 3, newStateAdder)
+	lsm := rg.waitOnLeader()
+	require_NotNil(t, lsm)
+	ls := lsm.(*stateAdder)
+
+	checkPeerData := func() {
+		for _, sm := range rg {
+			rn := sm.node().(*raft)
+			rn.RLock()
+			leader := rn.leader
+			isLeader := RaftState(rn.state.Load()) == Leader
+			for id, ps := range rn.peers {
+				// If this peer is the leader (but not ourselves), then these values need to be populated.
+				if isLeader && id != rn.id {
+					if li := ps.li; li == 0 {
+						rn.RUnlock()
+						t.Fatal("require last replicated index to be set")
+					}
+					if ts := ps.ts; ts.IsZero() {
+						rn.RUnlock()
+						t.Fatal("require last seen timestamp to be set")
+					}
+					continue
+				}
+				if li := ps.li; li != 0 {
+					rn.RUnlock()
+					t.Fatalf("require equal, but got: %v != %v", ps.li, 0)
+				}
+				if ts := ps.ts; id != rn.leader && !ts.IsZero() {
+					rn.RUnlock()
+					t.Fatalf("require zero ts, but got: %v", ts)
+				}
+			}
+			rn.RUnlock()
+
+			// This test expects no lag and all nodes as current (except for followers as seen by other followers).
+			for _, ps := range rn.Peers() {
+				require_Equal(t, ps.Lag, 0)
+				require_Equal(t, ps.Current, ps.ID == rn.id || ps.ID == leader || isLeader)
+			}
+		}
+	}
+
+	for i := range 5 {
+		ls.proposeDelta(10)
+		rg.waitOnTotal(t, int64(10*(i+1)))
+	}
+	checkPeerData()
+
+	require_NoError(t, lsm.node().StepDown())
+	lsm = rg.waitOnLeader()
+	require_NotNil(t, lsm)
+	ls = lsm.(*stateAdder)
+
+	for i := range 5 {
+		ls.proposeDelta(10)
+		rg.waitOnTotal(t, int64(50+10*(i+1)))
+	}
+	checkPeerData()
+}
+
+func TestNRGPeersResponse(t *testing.T) {
+	// As a leader.
+	rn := &raft{
+		id:     "me",
+		leader: "me",
+		peers: map[string]*lps{
+			"me":    {li: 0},
+			"peer1": {li: 10},
+			"peer2": {li: 3},
+			"peer3": {li: 0},
+		},
+		pindex:  10,
+		commit:  10,
+		applied: 10,
+	}
+	rn.state.Store(int32(Leader))
+	for _, ps := range rn.Peers() {
+		switch ps.ID {
+		case "me":
+			require_Equal(t, ps.Lag, 0)
+			require_True(t, ps.Current)
+		case "peer1":
+			require_Equal(t, ps.Lag, 0)
+			require_True(t, ps.Current)
+		case "peer2":
+			require_Equal(t, ps.Lag, 7) // We persisted 10 entries, they have only 3.
+			require_False(t, ps.Current)
+		case "peer3":
+			require_Equal(t, ps.Lag, 10) // We persisted 10 entries, they have none.
+			require_False(t, ps.Current)
+		default:
+			t.Fatalf("unexpected peer ID: %s", ps.ID)
+		}
+	}
+
+	// As a follower.
+	rn = &raft{
+		id:     "me",
+		leader: "leader",
+		peers: map[string]*lps{
+			"me":     {li: 0},
+			"leader": {li: 0},
+			"peer":   {li: 0},
+		},
+	}
+	rn.state.Store(int32(Follower))
+	for _, ps := range rn.Peers() {
+		switch ps.ID {
+		case "me":
+			require_Equal(t, ps.Lag, 0)
+			require_True(t, ps.Current)
+		case "leader":
+			require_Equal(t, ps.Lag, 0)
+			require_False(t, ps.Current)
+		default:
+			// As a follower ourselves, we don't know about the state of other followers.
+			require_Equal(t, ps.Lag, 0)
+			require_False(t, ps.Current)
+		}
+	}
+
+	// If we've heard from the leader recently, we report it as current.
+	rn.peers["leader"].ts = time.Now()
+	for _, ps := range rn.Peers() {
+		if ps.ID == "leader" {
+			require_Equal(t, ps.Lag, 0)
+			require_True(t, ps.Current)
+		}
+	}
+}