diff --git a/packages/interface/src/index.ts b/packages/interface/src/index.ts
index 13c381a15b..eb29f1d7f1 100644
--- a/packages/interface/src/index.ts
+++ b/packages/interface/src/index.ts
@@ -161,9 +161,10 @@ export interface Libp2pEvents<T extends ServiceMap = ServiceMap> {
   'peer:connect': CustomEvent<PeerId>
 
   /**
-   * This event will be triggered any time we are disconnected from another peer, regardless of
-   * the circumstances of that disconnection. If we happen to have multiple connections to a
-   * peer, this event will **only** be triggered when the last connection is closed.
+   * This event will be triggered any time we are disconnected from another
+   * peer, regardless of the circumstances of that disconnection. If we happen
+   * to have multiple connections to a peer, this event will **only** be
+   * triggered when the last connection is closed.
    *
    * @example
    *
@@ -177,9 +178,26 @@ export interface Libp2pEvents<T extends ServiceMap = ServiceMap> {
   'peer:disconnect': CustomEvent<PeerId>
 
   /**
-   * This event is dispatched after a remote peer has successfully responded to the identify
-   * protocol. Note that for this to be emitted, both peers must have an identify service
-   * configured.
+   * When a peer tagged with `keep-alive` disconnects, we will make multiple
+   * attempts to reconnect to it with a backoff factor (see the connection
+   * manager settings for details). If these all fail, the `keep-alive` tag will
+   * be removed and this event will be emitted.
+   *
+   * @example
+   *
+   * ```TypeScript
+   * libp2p.addEventListener('peer:reconnect-failure', (event) => {
+   *   const peerId = event.detail
+   *   // ...
+   * })
+   * ```
+   */
+  'peer:reconnect-failure': CustomEvent<PeerId>
+
+  /**
+   * This event is dispatched after a remote peer has successfully responded to
+   * the identify protocol. Note that for this to be emitted, both peers must
+   * have an identify service configured.
    *
    * @example
    *
diff --git a/packages/libp2p/src/connection-manager/reconnect-queue.ts b/packages/libp2p/src/connection-manager/reconnect-queue.ts
index c3dff8bca5..aa1490a014 100644
--- a/packages/libp2p/src/connection-manager/reconnect-queue.ts
+++ b/packages/libp2p/src/connection-manager/reconnect-queue.ts
@@ -33,6 +33,7 @@ export class ReconnectQueue implements Startable {
   private readonly retryInterval?: number
   private readonly backoffFactor?: number
   private readonly connectionManager: ConnectionManager
+  private readonly events: TypedEventTarget<Libp2pEvents>
 
   constructor (components: ReconnectQueueComponents, init: ReconnectQueueInit = {}) {
     this.log = components.logger.forComponent('libp2p:reconnect-queue')
@@ -47,11 +48,12 @@ export class ReconnectQueue implements Startable {
     this.retries = init.retries ?? 5
     this.backoffFactor = init.backoffFactor
     this.retryInterval = init.retryInterval
+    this.events = components.events
 
     components.events.addEventListener('peer:disconnect', (evt) => {
       this.maybeReconnect(evt.detail)
         .catch(err => {
-          this.log.error('failed to maybe reconnect to %p', evt.detail, err)
+          this.log.error('failed to maybe reconnect to %p - %e', evt.detail, err)
         })
     })
   }
@@ -82,7 +84,7 @@ export class ReconnectQueue implements Startable {
             signal: options?.signal
           })
         } catch (err) {
-          this.log('reconnecting to %p attempt %d of %d failed', peerId, attempt, this.retries, err)
+          this.log('reconnecting to %p attempt %d of %d failed - %e', peerId, attempt, this.retries, err)
           throw err
         }
       }, {
@@ -108,6 +110,10 @@ export class ReconnectQueue implements Startable {
         await this.peerStore.merge(peerId, {
           tags
         })
+
+        this.events.safeDispatchEvent('peer:reconnect-failure', {
+          detail: peerId
+        })
       })
       .catch(async err => {
         this.log.error('failed to remove keep-alive tag from %p - %e', peerId, err)
diff --git a/packages/transport-circuit-relay-v2/src/index.ts b/packages/transport-circuit-relay-v2/src/index.ts
index 98d94b0259..4a55cdf2bb 100644
--- a/packages/transport-circuit-relay-v2/src/index.ts
+++ b/packages/transport-circuit-relay-v2/src/index.ts
@@ -64,10 +64,10 @@ export interface CircuitRelayService extends TypedEventEmitter<CircuitRelayServi
 
 export { circuitRelayServer } from './server/index.js'
 export type { CircuitRelayServerInit, CircuitRelayServerComponents } from './server/index.js'
-export type { ReservationStoreInit } from './server/reservation-store.js'
+export type { ReservationStoreInit as ServerReservationStoreInit } from './server/reservation-store.js'
 export { circuitRelayTransport } from './transport/index.js'
 export type { RelayDiscoveryComponents } from './transport/discovery.js'
-export type { RelayStoreInit } from './transport/reservation-store.js'
+export type { ReservationStoreInit as TransportReservationStoreInit } from './transport/reservation-store.js'
 export type { CircuitRelayTransportInit, CircuitRelayTransportComponents } from './transport/index.js'
 
 export {
diff --git a/packages/transport-circuit-relay-v2/src/transport/index.ts b/packages/transport-circuit-relay-v2/src/transport/index.ts
index 77841f932f..442f29697b 100644
--- a/packages/transport-circuit-relay-v2/src/transport/index.ts
+++ b/packages/transport-circuit-relay-v2/src/transport/index.ts
@@ -1,6 +1,6 @@
 import { CircuitRelayTransport } from './transport.js'
 import type { RelayDiscoveryComponents } from './discovery.js'
-import type { RelayStoreInit } from './reservation-store.js'
+import type { ReservationStoreInit } from './reservation-store.js'
 import type { Transport, Upgrader, Libp2pEvents, ConnectionGater, TypedEventTarget, PeerId, TopologyFilter } from '@libp2p/interface'
 import type { AddressManager, Registrar } from '@libp2p/interface-internal'
 
@@ -16,7 +16,7 @@ export interface CircuitRelayTransportComponents extends RelayDiscoveryComponent
 /**
  * RelayConfig configures the circuit v2 relay transport.
  */
-export interface CircuitRelayTransportInit extends RelayStoreInit {
+export interface CircuitRelayTransportInit extends ReservationStoreInit {
   /**
    * The number of peers running diable relays to search for and connect to
    *
diff --git a/packages/transport-circuit-relay-v2/src/transport/reservation-store.ts b/packages/transport-circuit-relay-v2/src/transport/reservation-store.ts
index 4a2e73bae2..e67b96ebe1 100644
--- a/packages/transport-circuit-relay-v2/src/transport/reservation-store.ts
+++ b/packages/transport-circuit-relay-v2/src/transport/reservation-store.ts
@@ -9,7 +9,7 @@ import { DEFAULT_MAX_RESERVATION_QUEUE_LENGTH, DEFAULT_RESERVATION_COMPLETION_TI
 import { HopMessage, Status } from '../pb/index.js'
 import { getExpirationMilliseconds } from '../utils.js'
 import type { Reservation } from '../pb/index.js'
-import type { TypedEventTarget, Libp2pEvents, AbortOptions, ComponentLogger, Logger, Connection, PeerId, PeerStore, Startable, Metrics } from '@libp2p/interface'
+import type { TypedEventTarget, Libp2pEvents, AbortOptions, ComponentLogger, Logger, Connection, PeerId, PeerStore, Startable, Metrics, Peer } from '@libp2p/interface'
 import type { ConnectionManager, TransportManager } from '@libp2p/interface-internal'
 import type { Filter } from '@libp2p/utils/filters'
 
@@ -22,7 +22,7 @@ const REFRESH_TIMEOUT = (60 * 1000) * 5
 // minimum duration before which a reservation must not be refreshed
 const REFRESH_TIMEOUT_MIN = 30 * 1000
 
-export interface RelayStoreComponents {
+export interface ReservationStoreComponents {
   peerId: PeerId
   connectionManager: ConnectionManager
   transportManager: TransportManager
@@ -32,7 +32,7 @@ export interface RelayStoreComponents {
   metrics?: Metrics
 }
 
-export interface RelayStoreInit {
+export interface ReservationStoreInit {
   /**
    * Multiple relays may be discovered simultaneously - to prevent listening
    * on too many relays, this value controls how many to attempt to reserve a
@@ -94,7 +94,7 @@ export class ReservationStore extends TypedEventEmitter<ReservationStoreEvents>
   private readonly log: Logger
   private readonly relayFilter: Filter
 
-  constructor (components: RelayStoreComponents, init?: RelayStoreInit) {
+  constructor (components: ReservationStoreComponents, init?: ReservationStoreInit) {
     super()
 
     this.log = components.logger.forComponent('libp2p:circuit-relay:transport:reservation-store')
@@ -120,7 +120,7 @@ export class ReservationStore extends TypedEventEmitter<ReservationStoreEvents>
     // When a peer disconnects, if we had a reservation on that peer
     // remove the reservation and multiaddr and maybe trigger search
     // for new relays
-    this.events.addEventListener('peer:disconnect', (evt) => {
+    this.events.addEventListener('peer:reconnect-failure', (evt) => {
       this.#removeRelay(evt.detail)
     })
   }
@@ -134,10 +134,37 @@ export class ReservationStore extends TypedEventEmitter<ReservationStoreEvents>
   }
 
   afterStart (): void {
-    if (this.reservations.size < this.maxDiscoveredRelays) {
-      this.log('not enough relays %d/%d', this.reservations.size, this.maxDiscoveredRelays)
-      this.safeDispatchEvent('relay:not-enough-relays', {})
-    }
+    // remove old relay tags
+    void Promise.resolve()
+      .then(async () => {
+        const relayPeers: Peer[] = await this.peerStore.all({
+          filters: [(peer) => {
+            return peer.tags.has(RELAY_TAG)
+          }]
+        })
+
+        this.log('removing tag from %d old relays', relayPeers.length)
+
+        // remove old relay tag and redial
+        await Promise.all(
+          relayPeers.map(async peer => {
+            await this.peerStore.merge(peer.id, {
+              tags: {
+                [RELAY_TAG]: undefined,
+                [KEEP_ALIVE_TAG]: undefined
+              }
+            })
+          })
+        )
+
+        if (this.reservations.size < this.maxDiscoveredRelays) {
+          this.log('not enough relays %d/%d', this.reservations.size, this.maxDiscoveredRelays)
+          this.safeDispatchEvent('relay:not-enough-relays', {})
+        }
+      })
+      .catch(err => {
+        this.log.error(err)
+      })
   }
 
   stop (): void {
@@ -360,11 +387,23 @@ export class ReservationStore extends TypedEventEmitter<ReservationStoreEvents>
     clearTimeout(existingReservation.timeout)
     this.reservations.delete(peerId)
 
-    this.safeDispatchEvent('relay:removed', { detail: peerId })
+    // ensure we don't close the connection to the relay
+    this.peerStore.merge(peerId, {
+      tags: {
+        [RELAY_TAG]: undefined,
+        [KEEP_ALIVE_TAG]: undefined
+      }
+    })
+      .then(() => {
+        this.safeDispatchEvent('relay:removed', { detail: peerId })
 
-    if (this.reservations.size < this.maxDiscoveredRelays) {
-      this.log('not enough relays %d/%d', this.reservations.size, this.maxDiscoveredRelays)
-      this.safeDispatchEvent('relay:not-enough-relays', {})
-    }
+        if (this.reservations.size < this.maxDiscoveredRelays) {
+          this.log('not enough relays %d/%d', this.reservations.size, this.maxDiscoveredRelays)
+          this.safeDispatchEvent('relay:not-enough-relays', {})
+        }
+      })
+      .catch(err => {
+        this.log('could not update tags for relay %p - %e', peerId, err)
+      })
   }
 }
diff --git a/packages/transport-circuit-relay-v2/test/transport/reservation-store.spec.ts b/packages/transport-circuit-relay-v2/test/transport/reservation-store.spec.ts
new file mode 100644
index 0000000000..a6466d868d
--- /dev/null
+++ b/packages/transport-circuit-relay-v2/test/transport/reservation-store.spec.ts
@@ -0,0 +1,64 @@
+import { generateKeyPair } from '@libp2p/crypto/keys'
+import { TypedEventEmitter, start } from '@libp2p/interface'
+import { defaultLogger } from '@libp2p/logger'
+import { peerIdFromPrivateKey } from '@libp2p/peer-id'
+import { expect } from 'aegir/chai'
+import delay from 'delay'
+import { stubInterface } from 'sinon-ts'
+import { KEEP_ALIVE_TAG, RELAY_TAG } from '../../src/constants.js'
+import { ReservationStore } from '../../src/transport/reservation-store.js'
+import type { ComponentLogger, Libp2pEvents, Peer, PeerId, PeerStore, TypedEventTarget } from '@libp2p/interface'
+import type { ConnectionManager, TransportManager } from '@libp2p/interface-internal'
+import type { StubbedInstance } from 'sinon-ts'
+
+export interface StubbedReservationStoreComponents {
+  peerId: PeerId
+  connectionManager: StubbedInstance<ConnectionManager>
+  transportManager: StubbedInstance<TransportManager>
+  peerStore: StubbedInstance<PeerStore>
+  events: TypedEventTarget<Libp2pEvents>
+  logger: ComponentLogger
+}
+
+describe('transport reservation-store', () => {
+  let store: ReservationStore
+  let components: StubbedReservationStoreComponents
+
+  beforeEach(async () => {
+    const privateKey = await generateKeyPair('Ed25519')
+
+    components = {
+      peerId: peerIdFromPrivateKey(privateKey),
+      connectionManager: stubInterface(),
+      transportManager: stubInterface(),
+      peerStore: stubInterface(),
+      events: new TypedEventEmitter(),
+      logger: defaultLogger()
+    }
+
+    store = new ReservationStore(components)
+  })
+
+  it('should remove relay tags on start', async () => {
+    const peer: Peer = {
+      id: peerIdFromPrivateKey(await generateKeyPair('Ed25519')),
+      addresses: [],
+      metadata: new Map(),
+      tags: new Map([[RELAY_TAG, { value: 1 }]]),
+      protocols: []
+    }
+
+    components.peerStore.all.resolves([peer])
+
+    await start(store)
+
+    await delay(100)
+
+    expect(components.peerStore.merge.calledWith(peer.id, {
+      tags: {
+        [RELAY_TAG]: undefined,
+        [KEEP_ALIVE_TAG]: undefined
+      }
+    })).to.be.true()
+  })
+})