diff --git a/.changelog/12385.txt b/.changelog/12385.txt
new file mode 100644
index 000000000..11cb6fa02
--- /dev/null
+++ b/.changelog/12385.txt
@@ -0,0 +1,3 @@
+```release-note:bug
+xds: Fixed Envoy http features such as outlier detection and retry policy not working correctly with transparent proxy.
+```