diff --git a/changelog/unreleased/kong/fix-grpc-web-and-gateway-trailers.md b/changelog/unreleased/kong/fix-grpc-web-and-gateway-trailers.md
new file mode 100644
index 000000000000..91f7e6557547
--- /dev/null
+++ b/changelog/unreleased/kong/fix-grpc-web-and-gateway-trailers.md
@@ -0,0 +1,3 @@
+message: "**grpc-web** and **grpc-gateway: Fixed a bug where the `TE` (transfer-encoding) header would not be sent to the upstream gRPC servers when `grpc-web` or `grpc-gateweay` are in use.
+type: bugfix
+scope: Plugin
diff --git a/kong/pdk/service/request.lua b/kong/pdk/service/request.lua
index f583d390fa14..dfc0e29ecc29 100644
--- a/kong/pdk/service/request.lua
+++ b/kong/pdk/service/request.lua
@@ -313,14 +313,24 @@ local function new(self)
   -- kong.service.request.set_header("X-Foo", "value")
   request.set_header = function(header, value)
     check_phase(access_rewrite_balancer)
-
     validate_header(header, value)
 
-    if string_lower(header) == "host" then
+    local header_lower = string_lower(header)
+
+    if header_lower == "host" then
       ngx_var.upstream_host = value
-    end
+      return
+
+    elseif header_lower == "te" then
+      if (ngx_var.upstream_scheme == "grpc" or
+         ngx_var.upstream_scheme == "grpcs") and value ~= "trailers" then
+         return nil, "grpc requires TE to be set to trailers"
+      end
+
+      ngx.var.upstream_te = value
+      return
 
-    if string_lower(header) == ":authority" then
+    elseif header_lower == ":authority" then
       if ngx_var.upstream_scheme == "grpc" or
          ngx_var.upstream_scheme == "grpcs"
       then
diff --git a/spec/03-plugins/28-grpc-gateway/01-proxy_spec.lua b/spec/03-plugins/28-grpc-gateway/01-proxy_spec.lua
index 0f5d9530fd1d..6319eff9b2fd 100644
--- a/spec/03-plugins/28-grpc-gateway/01-proxy_spec.lua
+++ b/spec/03-plugins/28-grpc-gateway/01-proxy_spec.lua
@@ -48,10 +48,51 @@ for _, strategy in helpers.each_strategy() do
         },
       })
 
-      assert(helpers.start_kong {
+      local mock_grpc_service = assert(bp.services:insert {
+        name = "mock_grpc_service",
+        url = "http://localhost:8765",
+      })
+
+      local mock_grpc_route = assert(bp.routes:insert {
+        protocols = { "http" },
+        hosts = { "grpc_mock.example" },
+        service = mock_grpc_service,
+        preserve_host = true,
+      })
+
+      assert(bp.plugins:insert {
+        route = mock_grpc_route,
+        name = "grpc-gateway",
+        config = {
+          proto = "./spec/fixtures/grpc/targetservice.proto",
+        },
+      })
+
+      local fixtures = {
+        http_mock = {}
+      }
+      fixtures.http_mock.my_server_block = [[
+        server {
+          server_name myserver;
+          listen 8765;
+
+          location ~ / {
+            content_by_lua_block {
+              local headers = ngx.req.get_headers()
+              ngx.header.content_type = "application/grpc"
+              ngx.header.received_host = headers["Host"]
+              ngx.header.received_te = headers["te"]
+              ngx.exit(200, "ok")
+            }
+          }
+        }
+      ]]
+
+      assert(helpers.start_kong({
         database = strategy,
         plugins = "bundled,grpc-gateway",
-      })
+        nginx_conf = "spec/fixtures/custom_nginx.template",
+      }, nil, nil, fixtures))
     end)
 
     before_each(function()
@@ -63,6 +104,35 @@ for _, strategy in helpers.each_strategy() do
       helpers.stop_grpc_target()
     end)
 
+    test("Sets 'TE: trailers'", function()
+      local res, err = proxy_client:post("/v1/echo", {
+        headers = {
+          ["Host"] = "grpc_mock.example",
+          ["Content-Type"] = "application/json",
+        },
+      })
+
+      assert.equal("trailers", res.headers["received-te"])
+      assert.is_nil(err)
+    end)
+
+    test("Ignores user-agent TE", function()
+      -- in grpc-gateway, kong acts as a grpc client on behalf of the client
+      -- (which generally is a web-browser); as such, the Te header must be
+      -- set by kong, which will append trailers to the response body
+      local res, err = proxy_client:post("/v1/echo", {
+        headers = {
+          ["Host"] = "grpc_mock.example",
+          ["Content-Type"] = "application/json",
+          ["TE"] = "chunked",
+        },
+      })
+
+      assert.equal("trailers", res.headers["received-te"])
+      assert.is_nil(err)
+    end)
+
+
     test("main entrypoint", function()
       local res, err = proxy_client:get("/v1/messages/john_doe")
 
diff --git a/spec/03-plugins/32-grpc-web/01-proxy_spec.lua b/spec/03-plugins/32-grpc-web/01-proxy_spec.lua
index 8c37776204a3..dd2fa1f53b57 100644
--- a/spec/03-plugins/32-grpc-web/01-proxy_spec.lua
+++ b/spec/03-plugins/32-grpc-web/01-proxy_spec.lua
@@ -49,6 +49,25 @@ for _, strategy in helpers.each_strategy() do
         service = service1,
       })
 
+      local mock_grpc_service = assert(bp.services:insert {
+        name = "mock_grpc_service",
+        url = "http://localhost:8765",
+      })
+
+      local mock_grpc_route = assert(bp.routes:insert {
+        protocols = { "http" },
+        hosts = { "grpc_mock.example" },
+        service = mock_grpc_service,
+        preserve_host = true,
+      })
+
+      assert(bp.plugins:insert {
+        route = mock_grpc_route,
+        name = "grpc-web",
+        config = {
+        },
+      })
+
       assert(bp.plugins:insert {
         route = route1,
         name = "grpc-web",
@@ -66,10 +85,31 @@ for _, strategy in helpers.each_strategy() do
         },
       })
 
-      assert(helpers.start_kong {
+      local fixtures = {
+        http_mock = {}
+      }
+      fixtures.http_mock.my_server_block = [[
+        server {
+          server_name myserver;
+          listen 8765;
+
+          location ~ / {
+            content_by_lua_block {
+              local headers = ngx.req.get_headers()
+              ngx.header.content_type = "application/grpc"
+              ngx.header.received_host = headers["Host"]
+              ngx.header.received_te = headers["te"]
+              ngx.exit(200, "ok")
+            }
+          }
+        }
+      ]]
+
+      assert(helpers.start_kong({
         database = strategy,
         plugins = "bundled,grpc-web",
-      })
+        nginx_conf = "spec/fixtures/custom_nginx.template",
+      }, nil, nil, fixtures))
     end)
 
     before_each(function()
@@ -81,6 +121,33 @@ for _, strategy in helpers.each_strategy() do
       helpers.stop_kong()
     end)
 
+    test("Sets 'TE: trailers'", function()
+      local res, err = proxy_client:post("/", {
+        headers = {
+          ["Host"] = "grpc_mock.example",
+          ["Content-Type"] = "application/grpc-web-text",
+        },
+      })
+
+      assert.equal("trailers", res.headers["received-te"])
+      assert.is_nil(err)
+    end)
+
+    test("Ignores user-agent TE", function()
+      -- in grpc-web, kong acts as a grpc client on behalf of the client
+      -- (which generally is a web-browser); as such, the Te header must be
+      -- set by kong, which will append trailers to the response body
+      local res, err = proxy_client:post("/", {
+        headers = {
+          ["Host"] = "grpc_mock.example",
+          ["Content-Type"] = "application/grpc-web-text",
+          ["TE"] = "chunked",
+        },
+      })
+
+      assert.equal("trailers", res.headers["received-te"])
+      assert.is_nil(err)
+    end)
 
     test("Call gRCP-base64 via HTTP", function()
       local res, err = proxy_client:post("/hello.HelloService/SayHello", {