diff --git a/controller/lflow.c b/controller/lflow.c
index 01214a3a6..eb6be0100 100644
--- a/controller/lflow.c
+++ b/controller/lflow.c
@@ -59,6 +59,10 @@ struct condition_aux {
     struct ovsdb_idl_index *sbrec_port_binding_by_name;
     const struct sbrec_chassis *chassis;
     const struct sset *active_tunnels;
+    const struct sbrec_logical_flow *lflow;
+    /* Resource reference to store the port name referenced
+     * in is_chassis_resident() to lhe logicl flow. */
+    struct lflow_resource_ref *lfrr;
 };
 
 static bool
@@ -68,6 +72,8 @@ consider_logical_flow(const struct sbrec_logical_flow *lflow,
                       struct controller_event_options *controller_event_opts,
                       struct lflow_ctx_in *l_ctx_in,
                       struct lflow_ctx_out *l_ctx_out);
+static void lflow_resource_add(struct lflow_resource_ref *, enum ref_type,
+                               const char *ref_name, const struct uuid *);
 
 static bool
 lookup_port_cb(const void *aux_, const char *port_name, unsigned int *portp)
@@ -120,6 +126,14 @@ is_chassis_resident_cb(const void *c_aux_, const char *port_name)
     if (!pb) {
         return false;
     }
+
+    /* Store the port_name to lflow reference. */
+    int64_t dp_id = pb->datapath->tunnel_key;
+    char buf[16];
+    snprintf(buf, sizeof(buf), "%"PRId64"_%"PRId64, dp_id, pb->tunnel_key);
+    lflow_resource_add(c_aux->lfrr, REF_TYPE_PORTBINDING, buf,
+                       &c_aux->lflow->header_.uuid);
+
     if (strcmp(pb->type, "chassisredirect")) {
         /* for non-chassisredirect ports */
         return pb->chassis && pb->chassis == c_aux->chassis;
@@ -594,6 +608,8 @@ consider_logical_flow(const struct sbrec_logical_flow *lflow,
         .sbrec_port_binding_by_name = l_ctx_in->sbrec_port_binding_by_name,
         .chassis = l_ctx_in->chassis,
         .active_tunnels = l_ctx_in->active_tunnels,
+        .lflow = lflow,
+        .lfrr = l_ctx_out->lfrr
     };
     expr = expr_simplify(expr, is_chassis_resident_cb, &cond_aux);
     expr = expr_normalize(expr);
@@ -649,6 +665,8 @@ consider_logical_flow(const struct sbrec_logical_flow *lflow,
                 int64_t dp_id = lflow->logical_datapath->tunnel_key;
                 char buf[16];
                 snprintf(buf, sizeof(buf), "%"PRId64"_%"PRId64, dp_id, port_id);
+                lflow_resource_add(l_ctx_out->lfrr, REF_TYPE_PORTBINDING, buf,
+                                   &lflow->header_.uuid);
                 if (!sset_contains(l_ctx_in->local_lport_ids, buf)) {
                     VLOG_DBG("lflow "UUID_FMT
                              " port %s in match is not local, skip",
@@ -847,3 +865,71 @@ lflow_destroy(void)
     expr_symtab_destroy(&symtab);
     shash_destroy(&symtab);
 }
+
+bool
+lflow_add_flows_for_datapath(const struct sbrec_datapath_binding *dp,
+                             struct lflow_ctx_in *l_ctx_in,
+                             struct lflow_ctx_out *l_ctx_out)
+{
+    bool handled = true;
+    struct hmap dhcp_opts = HMAP_INITIALIZER(&dhcp_opts);
+    struct hmap dhcpv6_opts = HMAP_INITIALIZER(&dhcpv6_opts);
+    const struct sbrec_dhcp_options *dhcp_opt_row;
+    SBREC_DHCP_OPTIONS_TABLE_FOR_EACH (dhcp_opt_row,
+                                       l_ctx_in->dhcp_options_table) {
+        dhcp_opt_add(&dhcp_opts, dhcp_opt_row->name, dhcp_opt_row->code,
+                     dhcp_opt_row->type);
+    }
+
+
+    const struct sbrec_dhcpv6_options *dhcpv6_opt_row;
+    SBREC_DHCPV6_OPTIONS_TABLE_FOR_EACH (dhcpv6_opt_row,
+                                         l_ctx_in->dhcpv6_options_table) {
+       dhcp_opt_add(&dhcpv6_opts, dhcpv6_opt_row->name, dhcpv6_opt_row->code,
+                    dhcpv6_opt_row->type);
+    }
+
+    struct hmap nd_ra_opts = HMAP_INITIALIZER(&nd_ra_opts);
+    nd_ra_opts_init(&nd_ra_opts);
+
+    struct controller_event_options controller_event_opts;
+    controller_event_opts_init(&controller_event_opts);
+
+    struct sbrec_logical_flow *lf_row = sbrec_logical_flow_index_init_row(
+        l_ctx_in->sbrec_logical_flow_by_logical_datapath);
+    sbrec_logical_flow_index_set_logical_datapath(lf_row, dp);
+
+    const struct sbrec_logical_flow *lflow;
+    SBREC_LOGICAL_FLOW_FOR_EACH_EQUAL (
+        lflow, lf_row, l_ctx_in->sbrec_logical_flow_by_logical_datapath) {
+        /* Remove the lflow from flow_table if present before processing it. */
+        ofctrl_remove_flows(l_ctx_out->flow_table, &lflow->header_.uuid);
+
+        if (!consider_logical_flow(lflow, &dhcp_opts, &dhcpv6_opts,
+                                   &nd_ra_opts, &controller_event_opts,
+                                   l_ctx_in, l_ctx_out)) {
+            handled = false;
+            break;
+        }
+    }
+
+    dhcp_opts_destroy(&dhcp_opts);
+    dhcp_opts_destroy(&dhcpv6_opts);
+    nd_ra_opts_destroy(&nd_ra_opts);
+    controller_event_opts_destroy(&controller_event_opts);
+    return handled;
+}
+
+bool
+lflow_handle_flows_for_lport(const struct sbrec_port_binding *pb,
+                             struct lflow_ctx_in *l_ctx_in,
+                             struct lflow_ctx_out *l_ctx_out)
+{
+    int64_t dp_id = pb->datapath->tunnel_key;
+    char pb_ref_name[16];
+    snprintf(pb_ref_name, sizeof(pb_ref_name), "%"PRId64"_%"PRId64,
+             dp_id, pb->tunnel_key);
+    bool changed = true;
+    return lflow_handle_changed_ref(REF_TYPE_PORTBINDING, pb_ref_name,
+                                    l_ctx_in, l_ctx_out, &changed);
+}
diff --git a/controller/lflow.h b/controller/lflow.h
index f02f709d7..ae02eaf5e 100644
--- a/controller/lflow.h
+++ b/controller/lflow.h
@@ -48,6 +48,8 @@ struct sbrec_dhcp_options_table;
 struct sbrec_dhcpv6_options_table;
 struct sbrec_logical_flow_table;
 struct sbrec_mac_binding_table;
+struct sbrec_datapath_binding;
+struct sbrec_port_binding;
 struct simap;
 struct sset;
 struct uuid;
@@ -72,7 +74,8 @@ struct uuid;
 
 enum ref_type {
     REF_TYPE_ADDRSET,
-    REF_TYPE_PORTGROUP
+    REF_TYPE_PORTGROUP,
+    REF_TYPE_PORTBINDING
 };
 
 /* Maintains the relationship for a pair of named resource and
@@ -117,6 +120,7 @@ void lflow_resource_clear(struct lflow_resource_ref *);
 
 struct lflow_ctx_in {
     struct ovsdb_idl_index *sbrec_multicast_group_by_name_datapath;
+    struct ovsdb_idl_index *sbrec_logical_flow_by_logical_datapath;
     struct ovsdb_idl_index *sbrec_port_binding_by_name;
     const struct sbrec_dhcp_options_table *dhcp_options_table;
     const struct sbrec_dhcpv6_options_table *dhcpv6_options_table;
@@ -157,4 +161,10 @@ void lflow_destroy(void);
 
 void lflow_expr_destroy(struct hmap *lflow_expr_cache);
 
+bool lflow_add_flows_for_datapath(const struct sbrec_datapath_binding *,
+                                  struct lflow_ctx_in *,
+                                  struct lflow_ctx_out *);
+bool lflow_handle_flows_for_lport(const struct sbrec_port_binding *,
+                                  struct lflow_ctx_in *,
+                                  struct lflow_ctx_out *);
 #endif /* controller/lflow.h */
diff --git a/controller/ovn-controller.c b/controller/ovn-controller.c
index 351fa32db..53c412927 100644
--- a/controller/ovn-controller.c
+++ b/controller/ovn-controller.c
@@ -1512,6 +1512,11 @@ static void init_lflow_ctx(struct engine_node *node,
                 engine_get_input("SB_port_binding", node),
                 "name");
 
+    struct ovsdb_idl_index *sbrec_logical_flow_by_dp =
+        engine_ovsdb_node_get_index(
+                engine_get_input("SB_logical_flow", node),
+                "logical_datapath");
+
     struct ovsdb_idl_index *sbrec_mc_group_by_name_dp =
         engine_ovsdb_node_get_index(
                 engine_get_input("SB_multicast_group", node),
@@ -1559,6 +1564,8 @@ static void init_lflow_ctx(struct engine_node *node,
 
     l_ctx_in->sbrec_multicast_group_by_name_datapath =
         sbrec_mc_group_by_name_dp;
+    l_ctx_in->sbrec_logical_flow_by_logical_datapath =
+        sbrec_logical_flow_by_dp;
     l_ctx_in->sbrec_port_binding_by_name = sbrec_port_binding_by_name;
     l_ctx_in->dhcp_options_table  = dhcp_table;
     l_ctx_in->dhcpv6_options_table = dhcpv6_table;
@@ -1713,7 +1720,8 @@ flow_output_sb_mac_binding_handler(struct engine_node *node, void *data)
 }
 
 static bool
-flow_output_sb_port_binding_handler(struct engine_node *node, void *data)
+flow_output_sb_port_binding_handler(struct engine_node *node,
+                                    void *data)
 {
     struct ed_type_runtime_data *rt_data =
         engine_get_input_data("runtime_data", node);
@@ -1721,56 +1729,13 @@ flow_output_sb_port_binding_handler(struct engine_node *node, void *data)
     struct ed_type_flow_output *fo = data;
     struct ovn_desired_flow_table *flow_table = &fo->flow_table;
 
-    /* XXX: now we handle port-binding changes for physical flow processing
-     * only, but port-binding change can have impact to logical flow
-     * processing, too, in below circumstances:
-     *
-     *  - When a port-binding for a lport is inserted/deleted but the lflow
-     *    using that lport doesn't change.
-     *
-     *    This can happen only when the lport name is used by ACL match
-     *    condition, which is specified by user. Even in that case, if the port
-     *    is actually bound on the current chassis it will trigger recompute on
-     *    that chassis since ovs interface would be updated. So the only
-     *    situation this would have real impact is when user defines an ACL
-     *    that includes lport that is not on current chassis, and there is a
-     *    port-binding creation/deletion related to that lport.e.g.: an ACL is
-     *    defined:
-     *
-     *    to-lport 1000 'outport=="A" && inport=="B"' allow-related
-     *
-     *    If "A" is on current chassis, but "B" is lport that hasn't been
-     *    created yet. When a lport "B" is created and bound on another
-     *    chassis, the ACL will not take effect on the current chassis until a
-     *    recompute is triggered later. This case doesn't seem to be a problem
-     *    for real world use cases because usually lport is created before
-     *    being referenced by name in ACLs.
-     *
-     *  - When is_chassis_resident(<lport>) is used in lflow. In this case the
-     *    port binding is not a regular VIF. It can be either "patch" or
-     *    "external", with ha-chassis-group assigned.  In current
-     *    "runtime_data" handling, port-binding changes for these types always
-     *    trigger recomputing. So it is fine even if we do not handle it here.
-     *    (due to the ovsdb tracking support for referenced table changes,
-     *    ha-chassis-group changes will appear as port-binding change).
-     *
-     *  - When a mac-binding doesn't change but the port-binding related to
-     *    that mac-binding is deleted. In this case the neighbor flow generated
-     *    for the mac-binding should be deleted. This would not cause any real
-     *    issue for now, since the port-binding related to mac-binding is
-     *    always logical router port, and any change to logical router port
-     *    would just trigger recompute.
-     *
-     * Although there is no correctness issue so far (except the unusual ACL
-     * use case, which doesn't seem to be a real problem), it might be better
-     * to handle this more gracefully, without the need to consider these
-     * tricky scenarios.  One approach is to maintain a mapping between lport
-     * names and the lflows that uses them, and reprocess the related lflows
-     * when related port-bindings change.
-     */
     struct physical_ctx p_ctx;
     init_physical_ctx(node, rt_data, &p_ctx);
 
+    /* We handle port-binding changes for physical flow processing
+     * only. flow_output runtime data handler takes care of processing
+     * logical flows for any port binding changes.
+     */
     physical_handle_port_binding_changes(&p_ctx, flow_table);
 
     engine_set_node_state(node, EN_UPDATED);
@@ -1858,6 +1823,9 @@ _flow_output_resource_ref_handler(struct engine_node *node, void *data,
             updated = &pg_data->updated;
             deleted = &pg_data->deleted;
             break;
+
+        /* This ref type is handled in the flow_output_runtime_data_handler. */
+        case REF_TYPE_PORTBINDING:
         default:
             OVS_NOT_REACHED();
     }
@@ -1919,16 +1887,42 @@ flow_output_runtime_data_handler(struct engine_node *node,
         return false;
     }
 
-    if (!hmap_is_empty(&rt_data->tracked_dp_bindings)) {
-        /* We are not yet handling the tracked datapath binding
-         * changes. Return false to trigger full recompute. */
-        return false;
+    struct hmap *tracked_dp_bindings = &rt_data->tracked_dp_bindings;
+    if (hmap_is_empty(tracked_dp_bindings)) {
+        if (rt_data->local_lports_changed) {
+            engine_set_node_state(node, EN_UPDATED);
+        }
+        return true;
     }
 
-    if (rt_data->local_lports_changed) {
-        engine_set_node_state(node, EN_UPDATED);
+    struct lflow_ctx_in l_ctx_in;
+    struct lflow_ctx_out l_ctx_out;
+    struct ed_type_flow_output *fo = data;
+    init_lflow_ctx(node, rt_data, fo, &l_ctx_in, &l_ctx_out);
+
+    struct physical_ctx p_ctx;
+    init_physical_ctx(node, rt_data, &p_ctx);
+
+    struct tracked_binding_datapath *tdp;
+    HMAP_FOR_EACH (tdp, node, tracked_dp_bindings) {
+        if (tdp->is_new) {
+            if (!lflow_add_flows_for_datapath(tdp->dp, &l_ctx_in,
+                                              &l_ctx_out)) {
+                return false;
+            }
+        } else {
+            struct shash_node *shash_node;
+            SHASH_FOR_EACH (shash_node, &tdp->lports) {
+                struct tracked_binding_lport *lport = shash_node->data;
+                if (!lflow_handle_flows_for_lport(lport->pb, &l_ctx_in,
+                                                  &l_ctx_out)) {
+                    return false;
+                }
+            }
+        }
     }
 
+    engine_set_node_state(node, EN_UPDATED);
     return true;
 }
 
@@ -2099,6 +2093,9 @@ main(int argc, char *argv[])
         = chassis_index_create(ovnsb_idl_loop.idl);
     struct ovsdb_idl_index *sbrec_multicast_group_by_name_datapath
         = mcast_group_index_create(ovnsb_idl_loop.idl);
+    struct ovsdb_idl_index *sbrec_logical_flow_by_logical_datapath
+        = ovsdb_idl_index_create1(ovnsb_idl_loop.idl,
+                                  &sbrec_logical_flow_col_logical_datapath);
     struct ovsdb_idl_index *sbrec_port_binding_by_name
         = ovsdb_idl_index_create1(ovnsb_idl_loop.idl,
                                   &sbrec_port_binding_col_logical_port);
@@ -2258,6 +2255,8 @@ main(int argc, char *argv[])
     engine_ovsdb_node_add_index(&en_sb_chassis, "name", sbrec_chassis_by_name);
     engine_ovsdb_node_add_index(&en_sb_multicast_group, "name_datapath",
                                 sbrec_multicast_group_by_name_datapath);
+    engine_ovsdb_node_add_index(&en_sb_logical_flow, "logical_datapath",
+                                sbrec_logical_flow_by_logical_datapath);
     engine_ovsdb_node_add_index(&en_sb_port_binding, "name",
                                 sbrec_port_binding_by_name);
     engine_ovsdb_node_add_index(&en_sb_port_binding, "key",
diff --git a/tests/ovn-performance.at b/tests/ovn-performance.at
index 08acd3bae..a12757e18 100644
--- a/tests/ovn-performance.at
+++ b/tests/ovn-performance.at
@@ -274,7 +274,7 @@ for i in 1 2; do
     )
 
     # Add router port to $ls
-    OVN_CONTROLLER_EXPECT_HIT(
+    OVN_CONTROLLER_EXPECT_NO_HIT(
         [hv1 hv2], [lflow_run],
         [ovn-nbctl --wait=hv lrp-add lr1 $lrp 02:00:00:00:0$i:01 10.0.$i.1/24]
     )
@@ -282,7 +282,7 @@ for i in 1 2; do
         [hv1 hv2], [lflow_run],
         [ovn-nbctl --wait=hv lsp-add $ls $lsp]
     )
-    OVN_CONTROLLER_EXPECT_HIT(
+    OVN_CONTROLLER_EXPECT_NO_HIT(
         [hv1 hv2], [lflow_run],
         [ovn-nbctl --wait=hv lsp-set-type $lsp router]
     )
@@ -353,8 +353,8 @@ for i in 1 2; do
     )
 
     # Bind port $lp and wait for it to come up
-    OVN_CONTROLLER_EXPECT_HIT_COND(
-        [hv$i hv$j], [lflow_run], [>0 =0],
+    OVN_CONTROLLER_EXPECT_NO_HIT(
+        [hv$i hv$j], [lflow_run],
         [as hv$i ovs-vsctl add-port br-int $vif -- set Interface $vif external-ids:iface-id=$lp &&
          ovn-nbctl wait-until Logical_Switch_Port $lp 'up=true' &&
          ovn-nbctl --wait=hv sync]
@@ -404,8 +404,8 @@ for i in 1 2; do
     lp=lp$i
 
     # Delete port $lp
-    OVN_CONTROLLER_EXPECT_HIT_COND(
-        [hv$i hv$j], [lflow_run], [>0 =0],
+    OVN_CONTROLLER_EXPECT_NO_HIT(
+        [hv$i hv$j], [lflow_run],
         [ovn-nbctl --wait=hv lsp-del $lp]
     )
 done
