diff --git a/test/envoye2e/http_metadata_exchange/exchange_test.go b/test/envoye2e/http_metadata_exchange/exchange_test.go
index 596edd117c2..c5228235edd 100644
--- a/test/envoye2e/http_metadata_exchange/exchange_test.go
+++ b/test/envoye2e/http_metadata_exchange/exchange_test.go
@@ -90,6 +90,51 @@ func TestHTTPExchange(t *testing.T) {
 	}
 }
 
+func TestHTTPExchangeBaggage(t *testing.T) {
+	params := driver.NewTestParams(t, map[string]string{}, envoye2e.ProxyE2ETests)
+	params.Vars["ServerMetadata"] = params.LoadTestData("testdata/server_node_metadata.json.tmpl")
+	params.Vars["ServerHTTPFilters"] = params.LoadTestData("testdata/filters/mx_native_inbound_baggage.yaml.tmpl")
+	if err := (&driver.Scenario{
+		Steps: []driver.Step{
+			&driver.XDS{},
+			&driver.Update{Node: "server", Version: "0", Listeners: []string{driver.LoadTestData("testdata/listener/server.yaml.tmpl")}},
+			&driver.Envoy{Bootstrap: params.LoadTestData("testdata/bootstrap/server.yaml.tmpl")},
+			&driver.Sleep{Duration: 1 * time.Second},
+			&driver.HTTPCall{
+				IP:   "127.0.0.2",
+				Port: params.Ports.ServerPort,
+				Body: "hello, world!",
+				RequestHeaders: map[string]string{
+					"baggage": "app.version=test-app-v1," +
+						"app.name=test-app," +
+						"service.name=canonical-name," +
+						"k8s.deployment.name=test-deployment," +
+						"k8s.namespace.name=test-namespace," +
+						"service.version=v1," +
+						"k8s.cluster.name=test-cluster," +
+						"cloud.region=test-region," +
+						"cloud.availability_zone=test-zone",
+				},
+				ResponseHeaders: map[string]string{
+					"baggage": "k8s.deployment.name=ratings-v1," +
+						"k8s.namespace.name=default," +
+						"k8s.cluster.name=server-cluster," +
+						"service.name=ratings," +
+						"service.version=version-1," +
+						"app.name=ratings," +
+						"app.version=v1," +
+						"k8s.instance.name=ratings-v1-84975bc778-pxz2w",
+				},
+			},
+			&driver.Stats{AdminPort: params.Ports.ServerAdmin, Matchers: map[string]driver.StatMatcher{
+				"istio_requests_total": &driver.PartialStat{Metric: "testdata/metric/waypoint_downstream_baggage_request.yaml"},
+			}},
+		},
+	}).Run(params); err != nil {
+		t.Fatal(err)
+	}
+}
+
 func TestNativeHTTPExchange(t *testing.T) {
 	params := driver.NewTestParams(t, map[string]string{}, envoye2e.ProxyE2ETests)
 	params.Vars["ServerMetadata"] = params.LoadTestData("testdata/server_node_metadata.json.tmpl")
diff --git a/test/envoye2e/inventory.go b/test/envoye2e/inventory.go
index aed10e00316..bb48991fce8 100644
--- a/test/envoye2e/inventory.go
+++ b/test/envoye2e/inventory.go
@@ -35,6 +35,7 @@ func init() {
 		"TestHTTPExchange",
 		"TestNativeHTTPExchange",
 		"TestHTTPExchangeAdditionalLabels",
+		"TestHTTPExchangeBaggage",
 		"TestStats403Failure/#00",
 		"TestStatsECDS/#00",
 		"TestStatsEndpointLabels/#00",
diff --git a/testdata/filters/mx_native_inbound_baggage.yaml.tmpl b/testdata/filters/mx_native_inbound_baggage.yaml.tmpl
new file mode 100644
index 00000000000..8c94d53f56d
--- /dev/null
+++ b/testdata/filters/mx_native_inbound_baggage.yaml.tmpl
@@ -0,0 +1,14 @@
+- name: mx_inbound{{.N}}
+  typed_config:
+    "@type": type.googleapis.com/udpa.type.v1.TypedStruct
+    type_url: type.googleapis.com/io.istio.http.peer_metadata.Config
+    value:
+      downstream_discovery:
+      - baggage: {}
+      downstream_propagation:
+      - baggage: {}
+      shared_with_upstream: true
+- name: stats_inbound{{.N}}
+  typed_config:
+    "@type": type.googleapis.com/udpa.type.v1.TypedStruct
+    type_url: type.googleapis.com/stats.PluginConfig
diff --git a/testdata/metric/waypoint_downstream_baggage_request.yaml b/testdata/metric/waypoint_downstream_baggage_request.yaml
new file mode 100644
index 00000000000..54d927e4ff6
--- /dev/null
+++ b/testdata/metric/waypoint_downstream_baggage_request.yaml
@@ -0,0 +1,56 @@
+name: istio_requests_total
+type: COUNTER
+metric:
+- counter:
+    value: 1
+  label:
+  - name: reporter
+    value: destination
+  - name: source_workload
+    value: test-deployment
+  - name: source_canonical_service
+    value: canonical-name
+  - name: source_canonical_revision
+    value: v1
+  - name: source_workload_namespace
+    value: test-namespace
+  - name: source_principal
+    value: unknown
+  - name: source_app
+    value: canonical-name
+  - name: source_version
+    value: v1
+  - name: source_cluster
+    value: test-cluster
+  - name: destination_workload
+    value: ratings-v1
+  - name: destination_workload_namespace
+    value: default
+  - name: destination_principal
+    value: unknown
+  - name: destination_app
+    value: ratings
+  - name: destination_version
+    value: v1
+  - name: destination_service
+    value: server.default.svc.cluster.local
+  - name: destination_canonical_service
+    value: ratings
+  - name: destination_canonical_revision
+    value: version-1
+  - name: destination_service_name
+    value: server
+  - name: destination_service_namespace
+    value: default
+  - name: destination_cluster
+    value: server-cluster
+  - name: request_protocol
+    value: http
+  - name: response_code
+    value: "200"
+  - name: grpc_response_status
+    value: ""
+  - name: response_flags
+    value: "-"
+  - name: connection_security_policy
+    value: none