diff --git a/pw_transfer/integration_test/BUILD.bazel b/pw_transfer/integration_test/BUILD.bazel
index 59bcdad984..5cb92ee7a2 100644
--- a/pw_transfer/integration_test/BUILD.bazel
+++ b/pw_transfer/integration_test/BUILD.bazel
@@ -55,6 +55,7 @@ py_test(
     main = "proxy_test.py",
     deps = [
         ":config_pb2",
+        "//pw_rpc:internal_packet_proto_pb2",
         "//pw_transfer:transfer_proto_pb2",
         "//pw_transfer/py:pw_transfer",
     ],
diff --git a/pw_transfer/integration_test/JavaClient.java b/pw_transfer/integration_test/JavaClient.java
index 88058655c6..834faadcf5 100644
--- a/pw_transfer/integration_test/JavaClient.java
+++ b/pw_transfer/integration_test/JavaClient.java
@@ -26,6 +26,7 @@
 import dev.pigweed.pw_transfer.TransferClient;
 import dev.pigweed.pw_transfer.TransferError;
 import dev.pigweed.pw_transfer.TransferService;
+import dev.pigweed.pw_transfer.TransferTimeoutSettings;
 import java.io.IOException;
 import java.io.InputStream;
 import java.io.OutputStream;
@@ -155,6 +156,9 @@ public static ConfigProtos.ClientConfig ParseConfigFrom(InputStream reader) thro
     if (config_builder.getMaxRetries() == 0) {
       throw new AssertionError("max_retries may not be 0");
     }
+    if (config_builder.getMaxLifetimeRetries() == 0) {
+      throw new AssertionError("max_lifetime_retries may not be 0");
+    }
     return config_builder.build();
   }
 
@@ -253,10 +257,12 @@ public static void main(String[] args) {
     TransferClient client = new TransferClient(
         hdlc_rpc_client.getRpcClient().method(CHANNEL_ID, TransferService.get().name() + "/Read"),
         hdlc_rpc_client.getRpcClient().method(CHANNEL_ID, TransferService.get().name() + "/Write"),
-        config.getChunkTimeoutMs(),
-        config.getInitialChunkTimeoutMs(),
-        config.getMaxRetries(),
-        () -> false);
+        TransferTimeoutSettings.builder()
+            .setTimeoutMillis(config.getChunkTimeoutMs())
+            .setInitialTimeoutMillis(config.getInitialChunkTimeoutMs())
+            .setMaxRetries(config.getMaxRetries())
+            .setMaxLifetimeRetries(config.getMaxLifetimeRetries())
+            .build());
 
     for (ConfigProtos.TransferAction action : config.getTransferActionsList()) {
       int resourceId = action.getResourceId();
diff --git a/pw_transfer/integration_test/client.cc b/pw_transfer/integration_test/client.cc
index 3ffcc5522e..49bb3f2671 100644
--- a/pw_transfer/integration_test/client.cc
+++ b/pw_transfer/integration_test/client.cc
@@ -88,6 +88,9 @@ pw::Status PerformTransferActions(const pw::transfer::ClientConfig& config) {
                               rpc::integration_test::kChannelId,
                               transfer_thread);
 
+  client.set_max_retries(config.max_retries());
+  client.set_max_lifetime_retries(config.max_lifetime_retries());
+
   Status status = pw::OkStatus();
   for (const pw::transfer::TransferAction& action : config.transfer_actions()) {
     TransferResult result;
diff --git a/pw_transfer/integration_test/config.proto b/pw_transfer/integration_test/config.proto
index 7ad4bfa090..d120fc5762 100644
--- a/pw_transfer/integration_test/config.proto
+++ b/pw_transfer/integration_test/config.proto
@@ -81,6 +81,10 @@ message ClientConfig {
   //
   // TODO(tpudlik): google.protobuf.Duration?
   uint32 chunk_timeout_ms = 4;
+
+  // Cumulative maximum number of times to retry over the course of the transfer
+  // before giving up.
+  uint32 max_lifetime_retries = 5;
 }
 
 // Stacks of paths to use when doing transfers. Each new initiated transfer
diff --git a/pw_transfer/integration_test/expected_errors_test.py b/pw_transfer/integration_test/expected_errors_test.py
index 5cbd303056..64d90a3904 100644
--- a/pw_transfer/integration_test/expected_errors_test.py
+++ b/pw_transfer/integration_test/expected_errors_test.py
@@ -282,6 +282,55 @@ def test_server_read_timeout(self, client_type):
             expected_status=status_pb2.StatusCode.DEADLINE_EXCEEDED,
         )
 
+    @parameterized.expand(
+        [
+            ("cpp"),
+            ("java"),
+            ("python"),
+        ]
+    )
+    def test_data_drop_client_lifetime_timeout(self, client_type):
+        """Drops the first data chunk of a transfer but allows the rest."""
+        payload = random.Random(67336391945).randbytes(1234)
+
+        # This test is expected to hit the lifetime retry count, so make it
+        # reasonable.
+        client_config = self.default_client_config()
+        client_config.max_lifetime_retries = 20
+        client_config.chunk_timeout_ms = 1000
+
+        config = TransferConfig(
+            self.default_server_config(),
+            client_config,
+            text_format.Parse(
+                """
+                client_filter_stack: [
+                    { hdlc_packetizer: {} },
+                    { window_packet_dropper: { window_packet_to_drop: 0 } }
+                ]
+
+                server_filter_stack: [
+                    { hdlc_packetizer: {} },
+                    { window_packet_dropper: { window_packet_to_drop: 0 } }
+            ]""",
+                config_pb2.ProxyConfig(),
+            ),
+        )
+        # Resource ID is arbitrary, but deliberately set to be >1 byte.
+        resource_id = 7332
+
+        # This test deliberately tries to time out the transfer, so because of
+        # the retry process the resource ID might be re-initialized multiple
+        # times.
+        self.do_single_read(
+            client_type,
+            config,
+            resource_id,
+            payload,
+            permanent_resource_id=True,
+            expected_status=status_pb2.StatusCode.DEADLINE_EXCEEDED,
+        )
+
 
 if __name__ == '__main__':
     test_fixture.run_tests_for(ErrorTransferIntegrationTest)
diff --git a/pw_transfer/integration_test/legacy_binaries_test.py b/pw_transfer/integration_test/legacy_binaries_test.py
index 7187788469..7c6b8aa997 100644
--- a/pw_transfer/integration_test/legacy_binaries_test.py
+++ b/pw_transfer/integration_test/legacy_binaries_test.py
@@ -61,6 +61,14 @@ class LegacyTransferIntegrationTest(test_fixture.TransferIntegrationTest):
     LEGACY_SERVER = False
     LEGACY_CLIENT = False
 
+    def default_config(self) -> test_fixture.TransferConfig:
+        # The legacy binaries aren't aware of the max_lifetime_retries field,
+        # which was added more recently. Clear it so it isn't encoded into the
+        # serialized message.
+        config = super().default_config()
+        config.client.max_lifetime_retries = 0
+        return config
+
     @parameterized.expand(
         [
             ("cpp"),
diff --git a/pw_transfer/integration_test/proxy.py b/pw_transfer/integration_test/proxy.py
index 6c74491b04..d9df6555c6 100644
--- a/pw_transfer/integration_test/proxy.py
+++ b/pw_transfer/integration_test/proxy.py
@@ -32,6 +32,7 @@
 
 from google.protobuf import text_format
 
+from pigweed.pw_rpc.internal import packet_pb2
 from pigweed.pw_transfer import transfer_pb2
 from pigweed.pw_transfer.integration_test import config_pb2
 from pw_hdlc import decode
@@ -58,6 +59,7 @@ class Event(Enum):
     TRANSFER_START = 1
     PARAMETERS_RETRANSMIT = 2
     PARAMETERS_CONTINUE = 3
+    START_ACK_CONFIRMATION = 4
 
 
 class Filter(abc.ABC):
@@ -345,15 +347,28 @@ def __init__(
         self._window_packet = 0
 
     async def process(self, data: bytes) -> None:
-        if self._window_packet != self._window_packet_to_drop:
-            await self.send_data(data)
+        try:
+            is_data_chunk = (
+                _extract_transfer_chunk(data).type is Chunk.Type.DATA
+            )
+        except Exception:
+            # Invalid / non-chunk data (e.g. text logs); ignore.
+            is_data_chunk = False
 
-        self._window_packet += 1
+        # Only count transfer data chunks as part of a window.
+        if is_data_chunk:
+            if self._window_packet != self._window_packet_to_drop:
+                await self.send_data(data)
+
+            self._window_packet += 1
+        else:
+            await self.send_data(data)
 
     def handle_event(self, event: Event) -> None:
-        if (
-            event is Event.PARAMETERS_RETRANSMIT
-            or event is Event.PARAMETERS_CONTINUE
+        if event in (
+            Event.PARAMETERS_RETRANSMIT,
+            Event.PARAMETERS_CONTINUE,
+            Event.START_ACK_CONFIRMATION,
         ):
             self._window_packet = 0
 
@@ -376,11 +391,11 @@ def __init__(
 
     async def process(self, data: bytes) -> None:
         try:
-            raw_chunk = transfer_pb2.Chunk()
-            raw_chunk.ParseFromString(data)
-            chunk = Chunk.from_message(raw_chunk)
+            chunk = _extract_transfer_chunk(data)
             if chunk.type is Chunk.Type.START:
                 await self._queue.put(Event.TRANSFER_START)
+            if chunk.type is Chunk.Type.START_ACK_CONFIRMATION:
+                await self._queue.put(Event.START_ACK_CONFIRMATION)
             elif chunk.type is Chunk.Type.PARAMETERS_RETRANSMIT:
                 await self._queue.put(Event.PARAMETERS_RETRANSMIT)
             elif chunk.type is Chunk.Type.PARAMETERS_CONTINUE:
@@ -392,6 +407,23 @@ async def process(self, data: bytes) -> None:
         await self.send_data(data)
 
 
+def _extract_transfer_chunk(data: bytes) -> Chunk:
+    """Gets a transfer Chunk from an HDLC frame containing an RPC packet.
+
+    Raises an exception if a valid chunk does not exist.
+    """
+
+    decoder = decode.FrameDecoder()
+    for frame in decoder.process(data):
+        packet = packet_pb2.RpcPacket()
+        packet.ParseFromString(frame.data)
+        raw_chunk = transfer_pb2.Chunk()
+        raw_chunk.ParseFromString(packet.payload)
+        return Chunk.from_message(raw_chunk)
+
+    raise ValueError("Invalid transfer frame")
+
+
 async def _handle_simplex_events(
     event_queue: asyncio.Queue, handlers: List[Callable[[Event], None]]
 ):
diff --git a/pw_transfer/integration_test/proxy_test.py b/pw_transfer/integration_test/proxy_test.py
index ec4d18c05f..5a0599c96c 100644
--- a/pw_transfer/integration_test/proxy_test.py
+++ b/pw_transfer/integration_test/proxy_test.py
@@ -21,6 +21,12 @@
 from typing import List
 import unittest
 
+from pigweed.pw_rpc.internal import packet_pb2
+from pigweed.pw_transfer import transfer_pb2
+from pw_hdlc import encode
+from pw_transfer import ProtocolVersion
+from pw_transfer.chunk import Chunk
+
 import proxy
 
 
@@ -204,11 +210,21 @@ async def append(list: List[bytes], data: bytes):
         )
 
         packets = [
-            b'1',
-            b'2',
-            b'3',
-            b'4',
-            b'5',
+            _encode_rpc_frame(
+                Chunk(ProtocolVersion.VERSION_TWO, Chunk.Type.DATA, data=b'1')
+            ),
+            _encode_rpc_frame(
+                Chunk(ProtocolVersion.VERSION_TWO, Chunk.Type.DATA, data=b'2')
+            ),
+            _encode_rpc_frame(
+                Chunk(ProtocolVersion.VERSION_TWO, Chunk.Type.DATA, data=b'3')
+            ),
+            _encode_rpc_frame(
+                Chunk(ProtocolVersion.VERSION_TWO, Chunk.Type.DATA, data=b'4')
+            ),
+            _encode_rpc_frame(
+                Chunk(ProtocolVersion.VERSION_TWO, Chunk.Type.DATA, data=b'5')
+            ),
         ]
 
         expected_packets = packets[1:]
@@ -230,5 +246,16 @@ async def append(list: List[bytes], data: bytes):
             window_packet_dropper.handle_event(event)
 
 
+def _encode_rpc_frame(chunk: Chunk) -> bytes:
+    packet = packet_pb2.RpcPacket(
+        type=packet_pb2.PacketType.SERVER_STREAM,
+        channel_id=101,
+        service_id=1001,
+        method_id=100001,
+        payload=chunk.to_message().SerializeToString(),
+    ).SerializeToString()
+    return encode.ui_frame(73, packet)
+
+
 if __name__ == '__main__':
     unittest.main()
diff --git a/pw_transfer/integration_test/python_client.py b/pw_transfer/integration_test/python_client.py
index e618433d31..4c27189b0b 100644
--- a/pw_transfer/integration_test/python_client.py
+++ b/pw_transfer/integration_test/python_client.py
@@ -73,6 +73,7 @@ def _main() -> int:
         default_response_timeout_s=config.chunk_timeout_ms / 1000,
         initial_response_timeout_s=config.initial_chunk_timeout_ms / 1000,
         max_retries=config.max_retries,
+        max_lifetime_retries=config.max_lifetime_retries,
         default_protocol_version=pw_transfer.ProtocolVersion.LATEST,
     )
 
diff --git a/pw_transfer/integration_test/test_fixture.py b/pw_transfer/integration_test/test_fixture.py
index 04a2d04e9b..a7b297c770 100644
--- a/pw_transfer/integration_test/test_fixture.py
+++ b/pw_transfer/integration_test/test_fixture.py
@@ -376,6 +376,7 @@ def default_server_config() -> config_pb2.ServerConfig:
     def default_client_config() -> config_pb2.ClientConfig:
         return config_pb2.ClientConfig(
             max_retries=5,
+            max_lifetime_retries=1500,
             initial_chunk_timeout_ms=4000,
             chunk_timeout_ms=4000,
         )