diff --git a/pw_bluetooth_proxy/acl_data_channel.cc b/pw_bluetooth_proxy/acl_data_channel.cc
index de1bd6aac..b70cb41ba 100644
--- a/pw_bluetooth_proxy/acl_data_channel.cc
+++ b/pw_bluetooth_proxy/acl_data_channel.cc
@@ -211,6 +211,36 @@ void AclDataChannel::HandleNumberOfCompletedPacketsEvent(
   }
 }
 
+// Create new tracked connection and pass on to host.
+void AclDataChannel::HandleConnectionCompleteEvent(
+    H4PacketWithHci&& h4_packet) {
+  pw::span<uint8_t> hci_buffer = h4_packet.GetHciSpan();
+  Result<emboss::ConnectionCompleteEventView> connection_complete_event =
+      MakeEmbossView<emboss::ConnectionCompleteEventView>(hci_buffer);
+  if (!connection_complete_event.ok()) {
+    hci_transport_.SendToHost(std::move(h4_packet));
+    return;
+  }
+
+  if (connection_complete_event->status().Read() !=
+      emboss::StatusCode::SUCCESS) {
+    hci_transport_.SendToHost(std::move(h4_packet));
+    return;
+  }
+
+  const uint16_t conn_handle =
+      connection_complete_event->connection_handle().Read();
+
+  if (CreateAclConnection(conn_handle, AclTransportType::kBrEdr) ==
+      Status::ResourceExhausted()) {
+    PW_LOG_ERROR(
+        "Could not track connection like requested. Max connections "
+        "reached.");
+  }
+
+  hci_transport_.SendToHost(std::move(h4_packet));
+}
+
 void AclDataChannel::HandleDisconnectionCompleteEvent(
     H4PacketWithHci&& h4_packet) {
   Result<emboss::DisconnectionCompleteEventView> dc_event =
@@ -246,6 +276,7 @@ void AclDataChannel::HandleDisconnectionCompleteEvent(
         LookupCredits(connection_ptr->transport())
             .MarkCompleted(connection_ptr->num_pending_packets());
       }
+
       active_acl_connections_.erase(connection_ptr);
     } else {
       if (connection_ptr->num_pending_packets() > 0) {
diff --git a/pw_bluetooth_proxy/proxy_host.cc b/pw_bluetooth_proxy/proxy_host.cc
index 1e006a016..8c75b015e 100644
--- a/pw_bluetooth_proxy/proxy_host.cc
+++ b/pw_bluetooth_proxy/proxy_host.cc
@@ -145,6 +145,10 @@ void ProxyHost::HandleEventFromController(H4PacketWithHci&& h4_packet) {
       HandleCommandCompleteEvent(std::move(h4_packet));
       break;
     }
+    case emboss::EventCode::CONNECTION_COMPLETE: {
+      acl_data_channel_.HandleConnectionCompleteEvent(std::move(h4_packet));
+      break;
+    }
     default: {
       hci_transport_.SendToHost(std::move(h4_packet));
       return;
diff --git a/pw_bluetooth_proxy/proxy_host_test.cc b/pw_bluetooth_proxy/proxy_host_test.cc
index 7f8557211..b683e237c 100644
--- a/pw_bluetooth_proxy/proxy_host_test.cc
+++ b/pw_bluetooth_proxy/proxy_host_test.cc
@@ -153,6 +153,24 @@ Status SendNumberOfCompletedPackets(
   return OkStatus();
 }
 
+// Send a Connection_Complete event to `proxy` indicating the provided
+// `handle` has disconnected.
+Status SendConnectionCompleteEvent(ProxyHost& proxy,
+                                   uint16_t handle,
+                                   emboss::StatusCode status) {
+  std::array<uint8_t, emboss::ConnectionCompleteEvent::IntrinsicSizeInBytes()>
+      hci_arr_dc{};
+  H4PacketWithHci dc_event{emboss::H4PacketType::EVENT, hci_arr_dc};
+  PW_TRY_ASSIGN(auto view,
+                MakeEmbossWriter<emboss::ConnectionCompleteEventWriter>(
+                    dc_event.GetHciSpan()));
+  view.header().event_code_enum().Write(emboss::EventCode::CONNECTION_COMPLETE);
+  view.status().Write(status);
+  view.connection_handle().Write(handle);
+  proxy.HandleH4HciFromController(std::move(dc_event));
+  return OkStatus();
+}
+
 // Send a Disconnection_Complete event to `proxy` indicating the provided
 // `handle` has disconnected.
 Status SendDisconnectionCompleteEvent(ProxyHost& proxy,
@@ -4638,7 +4656,51 @@ TEST(RfcommReadTest, InvalidReads) {
   EXPECT_EQ(capture.host_called, 2);
 }
 
-// TODO: https://pwbug.dev/360929142 - Add many more tests exercising queueing +
+// ########## ProxyHostConnectionEventTest
+
+TEST(ProxyHostConnectionEventTest, ConnectionCompletePassthroughOk) {
+  size_t host_called = 0;
+  pw::Function<void(H4PacketWithH4 && packet)> send_to_controller_fn(
+      []([[maybe_unused]] H4PacketWithH4&& packet) {});
+
+  pw::Function<void(H4PacketWithHci && packet)> send_to_host_fn(
+      [&host_called]([[maybe_unused]] H4PacketWithHci&& packet) {
+        ++host_called;
+      });
+
+  ProxyHost proxy = ProxyHost(std::move(send_to_host_fn),
+                              std::move(send_to_controller_fn),
+                              /*le_acl_credits_to_reserve=*/0);
+
+  PW_TEST_EXPECT_OK(
+      SendConnectionCompleteEvent(proxy, 1, emboss::StatusCode::SUCCESS));
+  EXPECT_EQ(host_called, 1U);
+
+  PW_TEST_EXPECT_OK(SendDisconnectionCompleteEvent(proxy, 1));
+  EXPECT_EQ(host_called, 2U);
+}
+
+TEST(ProxyHostConnectionEventTest,
+     ConnectionCompleteWithErrorStatusPassthroughOk) {
+  size_t host_called = 0;
+  pw::Function<void(H4PacketWithH4 && packet)> send_to_controller_fn(
+      []([[maybe_unused]] H4PacketWithH4&& packet) {});
+
+  pw::Function<void(H4PacketWithHci && packet)> send_to_host_fn(
+      [&host_called]([[maybe_unused]] H4PacketWithHci&& packet) {
+        ++host_called;
+      });
+
+  ProxyHost proxy = ProxyHost(std::move(send_to_host_fn),
+                              std::move(send_to_controller_fn),
+                              /*le_acl_credits_to_reserve=*/0);
+
+  PW_TEST_EXPECT_OK(SendConnectionCompleteEvent(
+      proxy, 1, emboss::StatusCode::CONNECTION_FAILED_TO_BE_ESTABLISHED));
+  EXPECT_EQ(host_called, 1U);
+}
+
+// TODO: https://pwbug.dev/360929142 - Add many more tests exercising queueing
 // credit-based control flow.
 
 }  // namespace
diff --git a/pw_bluetooth_proxy/public/pw_bluetooth_proxy/internal/acl_data_channel.h b/pw_bluetooth_proxy/public/pw_bluetooth_proxy/internal/acl_data_channel.h
index 0701d308a..ac097d663 100644
--- a/pw_bluetooth_proxy/public/pw_bluetooth_proxy/internal/acl_data_channel.h
+++ b/pw_bluetooth_proxy/public/pw_bluetooth_proxy/internal/acl_data_channel.h
@@ -80,6 +80,9 @@ class AclDataChannel {
   // Reclaim any credits we have associated with the removed connection.
   void HandleDisconnectionCompleteEvent(H4PacketWithHci&& h4_packet);
 
+  // Create new tracked connection and pass on to host.
+  void HandleConnectionCompleteEvent(H4PacketWithHci&& h4_packet);
+
   /// Indicates whether the proxy has the capability of sending ACL packets.
   /// Note that this indicates intention, so it can be true even if the proxy
   /// has not yet or has been unable to reserve credits from the host.