diff --git a/netty/src/main/java/io/grpc/netty/ClientTransportLifecycleManager.java b/netty/src/main/java/io/grpc/netty/ClientTransportLifecycleManager.java
index 01e7bc3ed12..2c456aebf54 100644
--- a/netty/src/main/java/io/grpc/netty/ClientTransportLifecycleManager.java
+++ b/netty/src/main/java/io/grpc/netty/ClientTransportLifecycleManager.java
@@ -69,6 +69,14 @@ public void notifyGracefulShutdown(Status s, DisconnectError disconnectError) {
   public boolean notifyShutdown(Status s, DisconnectError disconnectError) {
     notifyGracefulShutdown(s, disconnectError);
     if (shutdownStatus != null) {
+      // Check if the incoming error is just the routine channel closure exception
+      boolean isClosedChannel = s.getCause() instanceof java.nio.channels.ClosedChannelException;
+
+      // Status Upgrade: Overwrite graceful shutdown if a hard network error occurs
+      if (shutdownStatus.getCause() == null && s.getCause() != null && !isClosedChannel) {
+        shutdownStatus = s;
+        return true;
+      }
       return false;
     }
     shutdownStatus = s;
diff --git a/netty/src/test/java/io/grpc/netty/NettyClientTransportTest.java b/netty/src/test/java/io/grpc/netty/NettyClientTransportTest.java
index db44c8f50fd..7d1ead1face 100644
--- a/netty/src/test/java/io/grpc/netty/NettyClientTransportTest.java
+++ b/netty/src/test/java/io/grpc/netty/NettyClientTransportTest.java
@@ -299,6 +299,31 @@ public void maxMessageSizeShouldBeEnforced() throws Throwable {
     }
   }
 
+  @Test
+  public void networkErrorOverridesGracefulShutdownStatus() throws Exception {
+    startServer();
+    NettyClientTransport transport = newTransport(newNegotiator());
+    callMeMaybe(transport.start(clientTransportListener));
+    
+    // 1. Trigger graceful shutdown
+    Status gracefulStatus = Status.UNAVAILABLE.withDescription("Channel shutdown invoked");
+    transport.shutdown(gracefulStatus);
+    
+    // 2. Simulate a real network drop (e.g., Connection Reset)
+    java.io.IOException networkCause = new java.io.IOException("Connection reset by peer");
+    transport.channel().pipeline().fireExceptionCaught(networkCause);
+    transport.channel().pipeline().fireChannelInactive();
+
+    // 3. Verify the listener receives the IO error, NOT the graceful status
+    verify(clientTransportListener, timeout(5000)).transportShutdown(
+        org.mockito.ArgumentMatchers.argThat(status -> 
+            status != null && status.getCause() instanceof java.io.IOException
+        ), 
+        org.mockito.ArgumentMatchers.any()
+    );
+  }
+
+
   /**
    * Verifies that we can create multiple TLS client transports from the same builder.
    */