diff --git a/cmd/root.go b/cmd/root.go
index 76eeb8913..132261ca7 100644
--- a/cmd/root.go
+++ b/cmd/root.go
@@ -1243,8 +1243,10 @@ func runSignalWrapper(cmd *Command) (err error) {
 
 	go func() {
 		err := p.Serve(ctx, notifyStarted)
-		cmd.logger.Debugf("proxy server error: %v", err)
-		shutdownCh <- err
+		if err != nil {
+			cmd.logger.Debugf("proxy server error: %v", err)
+			shutdownCh <- err
+		}
 	}()
 
 	err = <-shutdownCh
@@ -1262,7 +1264,9 @@ func runSignalWrapper(cmd *Command) (err error) {
 		cmd.logger.Infof("/quitquitquit received request. Shutting down...")
 		time.Sleep(cmd.conf.WaitBeforeClose)
 	default:
-		cmd.logger.Errorf("The proxy has encountered a terminal error: %v", err)
+		if err != nil {
+			cmd.logger.Errorf("The proxy has encountered a terminal error: %v", err)
+		}
 	}
 	return err
 }
diff --git a/internal/proxy/proxy.go b/internal/proxy/proxy.go
index 5c8732614..07f3d35f0 100644
--- a/internal/proxy/proxy.go
+++ b/internal/proxy/proxy.go
@@ -16,6 +16,7 @@ package proxy
 
 import (
 	"context"
+	"errors"
 	"fmt"
 	"io"
 	"net"
@@ -693,8 +694,11 @@ func (c *Client) Serve(ctx context.Context, notify func()) error {
 	}
 
 	exitCh := make(chan error)
+	var wg sync.WaitGroup
 	for _, m := range c.mnts {
+		wg.Add(1)
 		go func(mnt *socketMount) {
+			defer wg.Done()
 			err := c.serveSocketMount(ctx, mnt)
 			if err != nil {
 				select {
@@ -710,8 +714,17 @@ func (c *Client) Serve(ctx context.Context, notify func()) error {
 			}
 		}(m)
 	}
+	go func() {
+		wg.Wait()
+		close(exitCh)
+	}()
 	notify()
-	return <-exitCh
+	select {
+	case <-ctx.Done():
+		return nil
+	case err := <-exitCh:
+		return err
+	}
 }
 
 // MultiErr is a group of errors wrapped into one.
@@ -799,6 +812,9 @@ func (c *Client) serveSocketMount(ctx context.Context, s *socketMount) error {
 		}
 		cConn, err := s.Accept()
 		if err != nil {
+			if errors.Is(err, net.ErrClosed) || strings.Contains(err.Error(), "use of closed network connection") {
+				return nil
+			}
 			if nerr, ok := err.(net.Error); ok && nerr.Timeout() {
 				c.logger.Errorf("[%s] Error accepting connection: %v", s.inst, err)
 				// For transient errors, wait a small amount of time to see if it resolves itself
diff --git a/internal/proxy/proxy_test.go b/internal/proxy/proxy_test.go
index c529d6a84..51349ef99 100644
--- a/internal/proxy/proxy_test.go
+++ b/internal/proxy/proxy_test.go
@@ -940,3 +940,42 @@ func TestProxyMultiInstances(t *testing.T) {
 		})
 	}
 }
+
+func TestServeExitsCleanlyOnClose(t *testing.T) {
+	in := &proxy.Config{
+		Addr: "127.0.0.1",
+		Port: 24018,
+		Instances: []proxy.InstanceConnConfig{
+			{Name: "proj:region:pg"},
+		},
+	}
+	d := &fakeDialer{}
+	c, err := proxy.NewClient(context.Background(), d, testLogger, in, nil)
+	if err != nil {
+		t.Fatalf("proxy.NewClient error: %v", err)
+	}
+
+	serveErrCh := make(chan error, 1)
+	started := make(chan struct{})
+	go func() {
+		serveErrCh <- c.Serve(context.Background(), func() {
+			close(started)
+		})
+	}()
+
+	<-started
+
+	if err := c.Close(); err != nil {
+		t.Fatalf("c.Close() error: %v", err)
+	}
+
+	select {
+	case err := <-serveErrCh:
+		if err != nil {
+			t.Fatalf("Serve returned non-nil error on Close: %v", err)
+		}
+	case <-time.After(5 * time.Second):
+		t.Fatal("Serve did not exit after Close")
+	}
+}
+