diff --git a/agent/proxycfg/mesh_gateway.go b/agent/proxycfg/mesh_gateway.go
index c9fe60a892..fd2886eca5 100644
--- a/agent/proxycfg/mesh_gateway.go
+++ b/agent/proxycfg/mesh_gateway.go
@@ -295,7 +295,7 @@ func (s *handlerMeshGateway) handleUpdate(ctx context.Context, u UpdateEvent, sn
 					QueryOptions:   structs.QueryOptions{Token: s.token},
 					ServiceKind:    structs.ServiceKindMeshGateway,
 					UseServiceKind: true,
-					NodesOnly:      true,
+					NodesOnly:      false,
 					Source:         *s.source,
 					EnterpriseMeta: *entMeta,
 				}, fmt.Sprintf("mesh-gateway:%s", gk.String()), s.ch)
diff --git a/agent/proxycfg/state.go b/agent/proxycfg/state.go
index a113903c15..7256c3dbcc 100644
--- a/agent/proxycfg/state.go
+++ b/agent/proxycfg/state.go
@@ -544,7 +544,7 @@ func watchMeshGateway(ctx context.Context, opts gatewayWatchOpts) error {
 		QueryOptions:   structs.QueryOptions{Token: opts.token},
 		ServiceKind:    structs.ServiceKindMeshGateway,
 		UseServiceKind: true,
-		NodesOnly:      true,
+		NodesOnly:      false,
 		Source:         opts.source,
 		EnterpriseMeta: *structs.DefaultEnterpriseMetaInPartition(opts.key.Partition),
 	}, correlationId, opts.notifyCh)
diff --git a/agent/proxycfg/upstreams.go b/agent/proxycfg/upstreams.go
index 6e3ea3af65..209a3446d9 100644
--- a/agent/proxycfg/upstreams.go
+++ b/agent/proxycfg/upstreams.go
@@ -354,14 +354,14 @@ func (s *handlerUpstreams) resetWatchesFromChain(
 				Partition:  s.proxyID.PartitionOrDefault(),
 				Datacenter: s.source.Datacenter,
 			}
-			//default:
-			//	// if target.MeshGateway.Mode is not set and target is not peered we don't want to set up watches for the gateway.
-			//	// This is important specifically in wan-fed without mesh gateway use case, as for this case
-			//	//the source and target DC could be different but there is not  mesh-gateway so no need to watch
-			//	// a costly watch (Internal.ServiceDump)
-			//	if target.Peer == "" {
-			//		continue
-			//	}
+		default:
+			// if target.MeshGateway.Mode is not set and target is not peered we don't want to set up watches for the gateway.
+			// This is important specifically in wan-fed without mesh gateway use case, as for this case
+			//the source and target DC could be different but there is not  mesh-gateway so no need to watch
+			// a costly watch (Internal.ServiceDump)
+			if target.Peer == "" {
+				continue
+			}
 		}
 		if s.source.Datacenter != target.Datacenter || s.proxyID.PartitionOrDefault() != target.Partition {
 			needGateways[gk.String()] = struct{}{}