diff --git a/embed/etcd.go b/embed/etcd.go
index 7ebbcf201cb..f77dee0e065 100644
--- a/embed/etcd.go
+++ b/embed/etcd.go
@@ -15,12 +15,16 @@
 package embed
 
 import (
+	"context"
 	"crypto/tls"
 	"fmt"
+	"io/ioutil"
+	defaultLog "log"
 	"net"
 	"net/http"
 	"path/filepath"
 	"sync"
+	"time"
 
 	"github.com/coreos/etcd/etcdserver"
 	"github.com/coreos/etcd/etcdserver/api/v2http"
@@ -51,7 +55,7 @@ const (
 
 // Etcd contains a running etcd server and its listeners.
 type Etcd struct {
-	Peers   []net.Listener
+	Peers   []*peerListener
 	Clients []net.Listener
 	Server  *etcdserver.EtcdServer
 
@@ -63,6 +67,12 @@ type Etcd struct {
 	closeOnce sync.Once
 }
 
+type peerListener struct {
+	net.Listener
+	serve func() error
+	close func(context.Context) error
+}
+
 // StartEtcd launches the etcd server and HTTP handlers for client/server communication.
 // The returned Etcd.Server is not guaranteed to have joined the cluster. Wait
 // on the Etcd.Server.ReadyNotify() channel to know when it completes and is ready for use.
@@ -138,6 +148,25 @@ func StartEtcd(inCfg *Config) (e *Etcd, err error) {
 		return
 	}
 
+	// configure peer handlers after rafthttp.Transport started
+	ph := v2http.NewPeerHandler(e.Server)
+	for i := range e.Peers {
+		srv := &http.Server{
+			Handler:     ph,
+			ReadTimeout: 5 * time.Minute,
+			ErrorLog:    defaultLog.New(ioutil.Discard, "", 0), // do not log user error
+		}
+		e.Peers[i].serve = func() error {
+			return srv.Serve(e.Peers[i].Listener)
+		}
+		e.Peers[i].close = func(ctx context.Context) error {
+			// gracefully shutdown http.Server
+			// close open listeners, idle connections
+			// until context cancel or time-out
+			return srv.Shutdown(ctx)
+		}
+	}
+
 	// buffer channel so goroutines on closed connections won't wait forever
 	e.errc = make(chan error, len(e.Peers)+len(e.Clients)+2*len(e.sctxs))
 
@@ -168,24 +197,30 @@ func (e *Etcd) Close() {
 	for _, sctx := range e.sctxs {
 		sctx.cancel()
 	}
-	for i := range e.Peers {
-		if e.Peers[i] != nil {
-			e.Peers[i].Close()
-		}
-	}
 	for i := range e.Clients {
 		if e.Clients[i] != nil {
 			e.Clients[i].Close()
 		}
 	}
+
+	// close rafthttp transports
 	if e.Server != nil {
 		e.Server.Stop()
 	}
+
+	// close all idle connections in peer handler (wait up to 1-second)
+	for i := range e.Peers {
+		if e.Peers[i] != nil && e.Peers[i].close != nil {
+			ctx, cancel := context.WithTimeout(context.Background(), time.Second)
+			e.Peers[i].close(ctx)
+			cancel()
+		}
+	}
 }
 
 func (e *Etcd) Err() <-chan error { return e.errc }
 
-func startPeerListeners(cfg *Config) (plns []net.Listener, err error) {
+func startPeerListeners(cfg *Config) (peers []*peerListener, err error) {
 	if cfg.PeerAutoTLS && cfg.PeerTLSInfo.Empty() {
 		phosts := make([]string, len(cfg.LPUrls))
 		for i, u := range cfg.LPUrls {
@@ -203,17 +238,16 @@ func startPeerListeners(cfg *Config) (plns []net.Listener, err error) {
 		plog.Infof("peerTLS: %s", cfg.PeerTLSInfo)
 	}
 
-	plns = make([]net.Listener, len(cfg.LPUrls))
+	peers = make([]*peerListener, len(cfg.LPUrls))
 	defer func() {
 		if err == nil {
 			return
 		}
-		for i := range plns {
-			if plns[i] == nil {
-				continue
+		for i := range peers {
+			if peers[i] != nil && peers[i].close != nil {
+				plog.Info("stopping listening for peers on ", cfg.LPUrls[i].String())
+				peers[i].close(context.Background())
 			}
-			plns[i].Close()
-			plog.Info("stopping listening for peers on ", cfg.LPUrls[i].String())
 		}
 	}()
 
@@ -226,12 +260,18 @@ func startPeerListeners(cfg *Config) (plns []net.Listener, err error) {
 				plog.Warningf("The scheme of peer url %s is HTTP while client cert auth (--peer-client-cert-auth) is enabled. Ignored client cert auth for this url.", u.String())
 			}
 		}
-		if plns[i], err = rafthttp.NewListener(u, &cfg.PeerTLSInfo); err != nil {
+		peers[i] = &peerListener{close: func(context.Context) error { return nil }}
+		peers[i].Listener, err = rafthttp.NewListener(u, &cfg.PeerTLSInfo)
+		if err != nil {
 			return nil, err
 		}
+		// once serve, overwrite with 'http.Server.Shutdown'
+		peers[i].close = func(context.Context) error {
+			return peers[i].Listener.Close()
+		}
 		plog.Info("listening for peers on ", u.String())
 	}
-	return plns, nil
+	return peers, nil
 }
 
 func startClientListeners(cfg *Config) (sctxs map[string]*serveCtx, err error) {
@@ -336,11 +376,10 @@ func (e *Etcd) serve() (err error) {
 	}
 
 	// Start the peer server in a goroutine
-	ph := v2http.NewPeerHandler(e.Server)
-	for _, l := range e.Peers {
-		go func(l net.Listener) {
-			e.errHandler(servePeerHTTP(l, ph))
-		}(l)
+	for _, pl := range e.Peers {
+		go func(l *peerListener) {
+			e.errHandler(l.serve())
+		}(pl)
 	}
 
 	// Start a client server goroutine for each listen address
diff --git a/embed/serve.go b/embed/serve.go
index e862c4897a4..e43611f77a3 100644
--- a/embed/serve.go
+++ b/embed/serve.go
@@ -21,7 +21,6 @@ import (
 	"net"
 	"net/http"
 	"strings"
-	"time"
 
 	"github.com/coreos/etcd/etcdserver"
 	"github.com/coreos/etcd/etcdserver/api/v3client"
@@ -161,17 +160,6 @@ func grpcHandlerFunc(grpcServer *grpc.Server, otherHandler http.Handler) http.Ha
 	})
 }
 
-func servePeerHTTP(l net.Listener, handler http.Handler) error {
-	logger := defaultLog.New(ioutil.Discard, "etcdhttp", 0)
-	// TODO: add debug flag; enable logging when debug flag is set
-	srv := &http.Server{
-		Handler:     handler,
-		ReadTimeout: 5 * time.Minute,
-		ErrorLog:    logger, // do not log user error
-	}
-	return srv.Serve(l)
-}
-
 type registerHandlerFunc func(context.Context, *gw.ServeMux, string, []grpc.DialOption) error
 
 func (sctx *serveCtx) registerGateway(opts []grpc.DialOption) (*gw.ServeMux, error) {