diff --git a/xds/src/main/java/io/grpc/xds/EdsLoadBalancer2.java b/xds/src/main/java/io/grpc/xds/EdsLoadBalancer2.java
index ece7baf742..4ba768030a 100644
--- a/xds/src/main/java/io/grpc/xds/EdsLoadBalancer2.java
+++ b/xds/src/main/java/io/grpc/xds/EdsLoadBalancer2.java
@@ -275,10 +275,8 @@ final class EdsLoadBalancer2 extends LoadBalancer {
               locality, localityLbInfo.getLocalityWeight());
         }
         if (prioritizedLocalityWeights.isEmpty()) {
-          lbHelper.helper.updateBalancingState(
-              TRANSIENT_FAILURE,
-              new ErrorPicker(
-                  Status.UNAVAILABLE.withDescription("No usable priority/locality/endpoint")));
+          propagateResourceError(
+              Status.UNAVAILABLE.withDescription("No usable priority/locality/endpoint"));
           return;
         }
         if (lb == null) {
@@ -310,15 +308,8 @@ final class EdsLoadBalancer2 extends LoadBalancer {
       @Override
       public void onResourceDoesNotExist(String resourceName) {
         logger.log(XdsLogLevel.INFO, "Resource {0} is unavailable", resourceName);
-        if (lb != null) {
-          lb.shutdown();
-          lb = null;
-        }
-        lbHelper.helper.updateBalancingState(
-            TRANSIENT_FAILURE,
-            new ErrorPicker(
-                Status.UNAVAILABLE.withDescription(
-                    "Resource " + resourceName + " is unavailable")));
+        propagateResourceError(
+            Status.UNAVAILABLE.withDescription("Resource " + resourceName + " is unavailable"));
       }
 
       @Override
@@ -330,6 +321,14 @@ final class EdsLoadBalancer2 extends LoadBalancer {
         }
       }
 
+      private void propagateResourceError(Status error) {
+        if (lb != null) {
+          lb.shutdown();
+          lb = null;
+        }
+        lbHelper.helper.updateBalancingState(TRANSIENT_FAILURE, new ErrorPicker(error));
+      }
+
       private final class DropHandlingLbHelper extends ForwardingLoadBalancerHelper {
         private final Helper helper;
         private List<DropOverload> dropPolicies = Collections.emptyList();
diff --git a/xds/src/test/java/io/grpc/xds/EdsLoadBalancer2Test.java b/xds/src/test/java/io/grpc/xds/EdsLoadBalancer2Test.java
index ecb83c9460..8ceb5f7ded 100644
--- a/xds/src/test/java/io/grpc/xds/EdsLoadBalancer2Test.java
+++ b/xds/src/test/java/io/grpc/xds/EdsLoadBalancer2Test.java
@@ -406,6 +406,27 @@ public class EdsLoadBalancer2Test {
         .isEqualTo("No usable priority/locality/endpoint");
   }
 
+  @Test
+  public void handleEndpointResource_shutDownExistingChildLbPoliciesIfNoUsableEndpoints() {
+    deliverSimpleClusterLoadAssignment(EDS_SERVICE_NAME);
+    FakeLoadBalancer childBalancer = Iterables.getOnlyElement(downstreamBalancers);
+    assertThat(childBalancer.shutdown).isFalse();
+
+    EquivalentAddressGroup endpoint1 = makeAddress("endpoint-addr-1");
+    LocalityLbEndpoints localityLbEndpoints1 =
+        buildLocalityLbEndpoints(1, 10, Collections.singletonMap(endpoint1, false));
+    xdsClient.deliverClusterLoadAssignment(
+        EDS_SERVICE_NAME, Collections.singletonMap(locality1, localityLbEndpoints1));
+
+    assertThat(childBalancer.shutdown).isTrue();
+    assertThat(currentState).isEqualTo(ConnectivityState.TRANSIENT_FAILURE);
+    PickResult result = currentPicker.pickSubchannel(mock(PickSubchannelArgs.class));
+    assertThat(result.getStatus().isOk()).isFalse();
+    assertThat(result.getStatus().getCode()).isEqualTo(Code.UNAVAILABLE);
+    assertThat(result.getStatus().getDescription())
+        .isEqualTo("No usable priority/locality/endpoint");
+  }
+
   @Test
   public void handleDrops() {
     FakeLoadBalancerProvider fakeRoundRobinProvider = new FakeLoadBalancerProvider("round_robin");