diff --git a/agent/router/manager.go b/agent/router/manager.go
index 288a30bd0a..f31f0bb775 100644
--- a/agent/router/manager.go
+++ b/agent/router/manager.go
@@ -315,8 +315,7 @@ func (m *Manager) RebalanceServers() {
 			break
 		}
 		m.logger.Printf(`[DEBUG] manager: pinging server "%s" failed: %s`, srv, err)
-
-		l.cycleServer()
+		l.servers = l.cycleServer()
 	}
 
 	// If no healthy servers were found, sleep and wait for Serf to make
diff --git a/agent/router/manager_test.go b/agent/router/manager_test.go
index 00d63938de..4ba9b1801e 100644
--- a/agent/router/manager_test.go
+++ b/agent/router/manager_test.go
@@ -13,17 +13,38 @@ import (
 	"github.com/hashicorp/consul/agent/router"
 )
 
+type fauxAddr struct {
+	addr string
+}
+
+func (a *fauxAddr) Network() string {
+	return "faux"
+}
+
+func (a *fauxAddr) String() string {
+	return a.addr
+}
+
 type fauxConnPool struct {
-	// failPct between 0.0 and 1.0 == pct of time a Ping should fail
+	// failPct between 0.0 and 1.0 == pct of time a Ping should fail.
 	failPct float64
+
+	// failAddr fail whenever we see this address.
+	failAddr net.Addr
 }
 
-func (cp *fauxConnPool) Ping(string, net.Addr, int, bool) (bool, error) {
+func (cp *fauxConnPool) Ping(dc string, addr net.Addr, version int, useTLS bool) (bool, error) {
 	var success bool
+
 	successProb := rand.Float64()
 	if successProb > cp.failPct {
 		success = true
 	}
+
+	if cp.failAddr != nil && addr.String() == cp.failAddr.String() {
+		success = false
+	}
+
 	return success, nil
 }
 
@@ -48,6 +69,13 @@ func testManagerFailProb(failPct float64) (m *router.Manager) {
 	return m
 }
 
+func testManagerFailAddr(failAddr net.Addr) (m *router.Manager) {
+	logger := log.New(os.Stderr, "", log.LstdFlags)
+	shutdownCh := make(chan struct{})
+	m = router.New(logger, shutdownCh, &fauxSerf{}, &fauxConnPool{failAddr: failAddr})
+	return m
+}
+
 // func (m *Manager) AddServer(server *metadata.Server) {
 func TestServers_AddServer(t *testing.T) {
 	m := testManager()
@@ -282,6 +310,31 @@ func TestServers_RebalanceServers(t *testing.T) {
 	}
 }
 
+func TestServers_RebalanceServers_AvoidFailed(t *testing.T) {
+	// Do a large number of rebalances with one failed server in the
+	// list and make sure we never have that one selected afterwards.
+	// This was added when fixing #3463, when we were just doing the
+	// shuffle and not actually cycling servers. We do a large number
+	// of trials with a small number of servers to try to make sure
+	// the shuffle alone won't give the right answer.
+	servers := []*metadata.Server{
+		&metadata.Server{Name: "s1", Addr: &fauxAddr{"s1"}},
+		&metadata.Server{Name: "s2", Addr: &fauxAddr{"s2"}},
+		&metadata.Server{Name: "s3", Addr: &fauxAddr{"s3"}},
+	}
+	for i := 0; i < 100; i++ {
+		m := testManagerFailAddr(&fauxAddr{"s2"})
+		for _, s := range servers {
+			m.AddServer(s)
+		}
+
+		m.RebalanceServers()
+		if front := m.FindServer().Name; front == "s2" {
+			t.Fatalf("should have avoided the failed server")
+		}
+	}
+}
+
 // func (m *Manager) RemoveServer(server *metadata.Server) {
 func TestManager_RemoveServer(t *testing.T) {
 	const nodeNameFmt = "s%02d"