diff --git a/.changelog/16257.txt b/.changelog/16257.txt
new file mode 100644
index 000000000..8e98530c4
--- /dev/null
+++ b/.changelog/16257.txt
@@ -0,0 +1,3 @@
+```release-note:bug
+peering: Fix issue where mesh gateways would use the wrong address when contacting a remote peer with the same datacenter name.
+```
diff --git a/agent/proxycfg/testing_mesh_gateway.go b/agent/proxycfg/testing_mesh_gateway.go
index 039807ed6..f6b463f9d 100644
--- a/agent/proxycfg/testing_mesh_gateway.go
+++ b/agent/proxycfg/testing_mesh_gateway.go
@@ -659,8 +659,8 @@ func TestConfigSnapshotPeeredMeshGateway(t testing.T, variant string, nsFn func(
 				CorrelationID: "peering-connect-service:peer-a:db",
 				Result: &structs.IndexedCheckServiceNodes{
 					Nodes: structs.CheckServiceNodes{
-						structs.TestCheckNodeServiceWithNameInPeer(t, "db", "peer-a", "10.40.1.1", false),
-						structs.TestCheckNodeServiceWithNameInPeer(t, "db", "peer-a", "10.40.1.2", false),
+						structs.TestCheckNodeServiceWithNameInPeer(t, "db", "dc1", "peer-a", "10.40.1.1", false),
+						structs.TestCheckNodeServiceWithNameInPeer(t, "db", "dc1", "peer-a", "10.40.1.2", false),
 					},
 				},
 			},
@@ -668,8 +668,8 @@ func TestConfigSnapshotPeeredMeshGateway(t testing.T, variant string, nsFn func(
 				CorrelationID: "peering-connect-service:peer-b:alt",
 				Result: &structs.IndexedCheckServiceNodes{
 					Nodes: structs.CheckServiceNodes{
-						structs.TestCheckNodeServiceWithNameInPeer(t, "alt", "peer-b", "10.40.2.1", false),
-						structs.TestCheckNodeServiceWithNameInPeer(t, "alt", "peer-b", "10.40.2.2", true),
+						structs.TestCheckNodeServiceWithNameInPeer(t, "alt", "remote-dc", "peer-b", "10.40.2.1", false),
+						structs.TestCheckNodeServiceWithNameInPeer(t, "alt", "remote-dc", "peer-b", "10.40.2.2", true),
 					},
 				},
 			},
diff --git a/agent/proxycfg/testing_upstreams.go b/agent/proxycfg/testing_upstreams.go
index ed2e65d8d..cb38a3de1 100644
--- a/agent/proxycfg/testing_upstreams.go
+++ b/agent/proxycfg/testing_upstreams.go
@@ -94,7 +94,7 @@ func setupTestVariationConfigEntriesAndSnapshot(
 		events = append(events, UpdateEvent{
 			CorrelationID: "upstream-peer:db?peer=cluster-01",
 			Result: &structs.IndexedCheckServiceNodes{
-				Nodes: structs.CheckServiceNodes{structs.TestCheckNodeServiceWithNameInPeer(t, "db", "cluster-01", "10.40.1.1", false)},
+				Nodes: structs.CheckServiceNodes{structs.TestCheckNodeServiceWithNameInPeer(t, "db", "dc1", "cluster-01", "10.40.1.1", false)},
 			},
 		})
 	case "redirect-to-cluster-peer":
@@ -112,7 +112,7 @@ func setupTestVariationConfigEntriesAndSnapshot(
 		events = append(events, UpdateEvent{
 			CorrelationID: "upstream-peer:db?peer=cluster-01",
 			Result: &structs.IndexedCheckServiceNodes{
-				Nodes: structs.CheckServiceNodes{structs.TestCheckNodeServiceWithNameInPeer(t, "db", "cluster-01", "10.40.1.1", false)},
+				Nodes: structs.CheckServiceNodes{structs.TestCheckNodeServiceWithNameInPeer(t, "db", "dc2", "cluster-01", "10.40.1.1", false)},
 			},
 		})
 	case "failover-through-double-remote-gateway-triggered":
diff --git a/agent/structs/testing_catalog.go b/agent/structs/testing_catalog.go
index 113169051..f7f2a7e71 100644
--- a/agent/structs/testing_catalog.go
+++ b/agent/structs/testing_catalog.go
@@ -55,11 +55,13 @@ func TestNodeServiceWithName(t testing.T, name string) *NodeService {
 
 const peerTrustDomain = "1c053652-8512-4373-90cf-5a7f6263a994.consul"
 
-func TestCheckNodeServiceWithNameInPeer(t testing.T, name, peer, ip string, useHostname bool) CheckServiceNode {
+func TestCheckNodeServiceWithNameInPeer(t testing.T, name, dc, peer, ip string, useHostname bool) CheckServiceNode {
 	service := &NodeService{
-		Kind:     ServiceKindTypical,
-		Service:  name,
-		Port:     8080,
+		Kind:    ServiceKindTypical,
+		Service: name,
+		// We should not see this port number appear in most xds golden tests,
+		// because the WAN addr should typically be used.
+		Port:     9090,
 		PeerName: peer,
 		Connect: ServiceConnect{
 			PeerMeta: &PeeringServiceMeta{
@@ -72,6 +74,13 @@ func TestCheckNodeServiceWithNameInPeer(t testing.T, name, peer, ip string, useH
 				Protocol: "tcp",
 			},
 		},
+		// This value should typically be seen in golden file output, since this is a peered service.
+		TaggedAddresses: map[string]ServiceAddress{
+			TaggedAddressWAN: {
+				Address: ip,
+				Port:    8080,
+			},
+		},
 	}
 
 	if useHostname {
@@ -89,10 +98,12 @@ func TestCheckNodeServiceWithNameInPeer(t testing.T, name, peer, ip string, useH
 
 	return CheckServiceNode{
 		Node: &Node{
-			ID:         "test1",
-			Node:       "test1",
-			Address:    ip,
-			Datacenter: "cloud-dc",
+			ID:   "test1",
+			Node: "test1",
+			// We should not see this address appear in most xds golden tests,
+			// because the WAN addr should typically be used.
+			Address:    "1.23.45.67",
+			Datacenter: dc,
 		},
 		Service: service,
 	}
diff --git a/agent/xds/endpoints.go b/agent/xds/endpoints.go
index dcdbb4d2f..d117f8dd8 100644
--- a/agent/xds/endpoints.go
+++ b/agent/xds/endpoints.go
@@ -449,7 +449,9 @@ func (s *ResourceGenerator) makeEndpointsForOutgoingPeeredServices(
 			la := makeLoadAssignment(
 				clusterName,
 				groups,
-				cfgSnap.Locality,
+				// Use an empty key here so that it never matches. This will force the mesh gateway to always
+				// reference the remote mesh gateway's wan addr.
+				proxycfg.GatewayKey{},
 			)
 			resources = append(resources, la)
 		}