diff --git a/controller/binding.c b/controller/binding.c
index 5df62baef..d85a17730 100644
--- a/controller/binding.c
+++ b/controller/binding.c
@@ -746,6 +746,19 @@ local_binding_get_lport_ofport(const struct shash *local_bindings,
             u16_to_ofp(lbinding->iface->ofport[0]) : 0;
 }
 
+bool
+local_binding_is_ovn_installed(struct shash *local_bindings,
+                               const char *pb_name)
+{
+    struct local_binding *lbinding =
+        local_binding_find(local_bindings, pb_name);
+    if (lbinding && lbinding->iface) {
+        return smap_get_bool(&lbinding->iface->external_ids,
+                             OVN_INSTALLED_EXT_ID, false);
+    }
+    return false;
+}
+
 bool
 local_binding_is_up(struct shash *local_bindings, const char *pb_name,
                     const struct sbrec_chassis *chassis_rec)
@@ -783,6 +796,7 @@ local_binding_is_down(struct shash *local_bindings, const char *pb_name,
         } else if (b_lport->pb->chassis) {
             VLOG_DBG("lport %s already claimed by other chassis",
                      b_lport->pb->logical_port);
+            return true;
         }
     }
 
@@ -834,6 +848,33 @@ local_binding_set_up(struct shash *local_bindings, const char *pb_name,
     }
 }
 
+static void
+remove_ovn_installed(struct local_binding *lbinding, const char *pb_name)
+{
+    if (lbinding && lbinding->iface &&
+        smap_get_bool(&lbinding->iface->external_ids,
+                             OVN_INSTALLED_EXT_ID, false)) {
+        /* If iface has been deleted, do not try to delete a key from it */
+        if (!ovsrec_interface_is_deleted(lbinding->iface)) {
+            VLOG_INFO("Removing lport %s ovn-installed in OVS", pb_name);
+            ovsrec_interface_update_external_ids_delkey(lbinding->iface,
+                                                        OVN_INSTALLED_EXT_ID);
+        }
+    }
+}
+
+void
+local_binding_remove_ovn_installed(struct shash *local_bindings,
+                                   const char *pb_name, bool ovs_readonly)
+{
+    if (ovs_readonly) {
+        return;
+    }
+    struct local_binding *lbinding =
+        local_binding_find(local_bindings, pb_name);
+    remove_ovn_installed(lbinding, pb_name);
+}
+
 void
 local_binding_set_down(struct shash *local_bindings, const char *pb_name,
                        const struct sbrec_chassis *chassis_rec,
@@ -1239,7 +1280,9 @@ claim_lport(const struct sbrec_port_binding *pb,
                     return false;
                 }
             } else {
-                if (pb->n_up && !pb->up[0]) {
+                if ((pb->n_up && !pb->up[0]) ||
+                    !smap_get_bool(&iface_rec->external_ids,
+                                   OVN_INSTALLED_EXT_ID, false)) {
                     if_status_mgr_claim_iface(if_mgr, pb, chassis_rec,
                                               sb_readonly);
                 }
@@ -1464,9 +1507,11 @@ consider_vif_lport_(const struct sbrec_port_binding *pb,
             const char *requested_chassis_option = smap_get(
                 &pb->options, "requested-chassis");
             VLOG_INFO_RL(&rl,
-                "Not claiming lport %s, chassis %s requested-chassis %s",
+                "Not claiming lport %s, chassis %s requested-chassis %s "
+                "pb->chassis %s",
                 pb->logical_port, b_ctx_in->chassis_rec->name,
-                requested_chassis_option ? requested_chassis_option : "[]");
+                requested_chassis_option ? requested_chassis_option : "[]",
+                pb->chassis ? pb->chassis->name: "");
         }
     }
 
@@ -2288,6 +2333,9 @@ consider_iface_release(const struct ovsrec_interface *iface_rec,
                 return false;
             }
         }
+        if (b_ctx_in->ovs_idl_txn) {
+            remove_ovn_installed(lbinding, iface_id);
+        }
 
     } else if (lbinding && b_lport && b_lport->type == LP_LOCALPORT) {
         /* lbinding is associated with a localport.  Remove it from the
@@ -2558,6 +2606,7 @@ handle_deleted_lport(const struct sbrec_port_binding *pb,
     if (ld) {
         remove_pb_from_local_datapath(pb,
                                       b_ctx_out, ld);
+        if_status_mgr_release_iface(b_ctx_out->if_mgr, pb->logical_port);
         return;
     }
 
@@ -2581,6 +2630,7 @@ handle_deleted_lport(const struct sbrec_port_binding *pb,
             remove_pb_from_local_datapath(pb, b_ctx_out,
                                           ld);
         }
+        if_status_mgr_release_iface(b_ctx_out->if_mgr, pb->logical_port);
     }
 }
 
@@ -2627,6 +2677,9 @@ handle_deleted_vif_lport(const struct sbrec_port_binding *pb,
     }
 
     handle_deleted_lport(pb, b_ctx_in, b_ctx_out);
+    if (b_ctx_in->ovs_idl_txn) {
+        remove_ovn_installed(lbinding, pb->logical_port);
+    }
     return true;
 }
 
diff --git a/controller/binding.h b/controller/binding.h
index 6c3a98b02..72b4a35b6 100644
--- a/controller/binding.h
+++ b/controller/binding.h
@@ -159,6 +159,12 @@ bool local_binding_is_up(struct shash *local_bindings, const char *pb_name,
 bool local_binding_is_down(struct shash *local_bindings, const char *pb_name,
                            const struct sbrec_chassis *);
 
+bool local_binding_is_ovn_installed(struct shash *local_bindings,
+                                    const char *pb_name);
+void local_binding_remove_ovn_installed(struct shash *local_bindings,
+                                        const char *pb_name,
+                                        bool ovs_readonly);
+
 void local_binding_set_up(struct shash *local_bindings, const char *pb_name,
                           const struct sbrec_chassis *chassis_rec,
                           const char *ts_now_str, bool sb_readonly,
diff --git a/controller/if-status.c b/controller/if-status.c
index d1c14ac30..c008aa79e 100644
--- a/controller/if-status.c
+++ b/controller/if-status.c
@@ -54,32 +54,37 @@ VLOG_DEFINE_THIS_MODULE(if_status);
  */
 
 enum if_state {
-    OIF_CLAIMED,       /* Newly claimed interface. pb->chassis update not yet
-                          initiated. */
-    OIF_INSTALL_FLOWS, /* Claimed interface with pb->chassis update sent to
-                        * SB (but update notification not confirmed, so the
-                        * update may be resent in any of the following states)
-                        * and for which flows are still being installed.
-                        */
-    OIF_MARK_UP,       /* Interface with flows successfully installed in OVS
-                        * but not yet marked "up" in the binding module (in
-                        * SB and OVS databases).
-                        */
-    OIF_MARK_DOWN,     /* Released interface but not yet marked "down" in the
-                        * binding module (in SB and/or OVS databases).
-                        */
-    OIF_INSTALLED,     /* Interface flows programmed in OVS and binding marked
-                        * "up" in the binding module.
-                        */
+    OIF_CLAIMED,         /* Newly claimed interface. pb->chassis update not yet
+                            initiated. */
+    OIF_INSTALL_FLOWS,   /* Claimed interface with pb->chassis update sent to
+                          * SB (but update notification not confirmed, so the
+                          * update may be resent in any of the following
+                          * states and for which flows are still being
+                          * installed.
+                          */
+    OIF_REMOVE_OVN_INST, /* Interface with flows successfully installed in OVS,
+                          * but with ovn-installed still in OVSDB.
+                          */
+    OIF_MARK_UP,         /* Interface with flows successfully installed in OVS
+                          * but not yet marked "up" in the binding module (in
+                          * SB and OVS databases).
+                          */
+    OIF_MARK_DOWN,       /* Released interface but not yet marked "down" in the
+                          * binding module (in SB and/or OVS databases).
+                          */
+    OIF_INSTALLED,       /* Interface flows programmed in OVS and binding
+                          * marked "up" in the binding module.
+                          */
     OIF_MAX,
 };
 
 static const char *if_state_names[] = {
-    [OIF_CLAIMED]       = "CLAIMED",
-    [OIF_INSTALL_FLOWS] = "INSTALL_FLOWS",
-    [OIF_MARK_UP]       = "MARK_UP",
-    [OIF_MARK_DOWN]     = "MARK_DOWN",
-    [OIF_INSTALLED]     = "INSTALLED",
+    [OIF_CLAIMED]         = "CLAIMED",
+    [OIF_INSTALL_FLOWS]   = "INSTALL_FLOWS",
+    [OIF_REMOVE_OVN_INST] = "REMOVE_OVN_INST",
+    [OIF_MARK_UP]         = "MARK_UP",
+    [OIF_MARK_DOWN]       = "MARK_DOWN",
+    [OIF_INSTALLED]       = "INSTALLED",
 };
 
 /*
@@ -109,11 +114,26 @@ static const char *if_state_names[] = {
  * |     |                      |   - remove ovn-installed from ovsdb    | | |
  * |     |                      |  mgr_update()                          | | |
  * |     +----------------------+   - sbrec_update_chassis if needed     | | |
- * |                    |                                                | | |
- * |                    |  mgr_run(seqno rcvd)                           | | |
- * |                    |  - set port up in sb                           | | |
- * | release_iface      |  - set ovn-installed in ovs                    | | |
- * |                    V                                                | | |
+ * |        |            |                                               | | |
+ * |        |            +----------------------------------------+      | | |
+ * |        |                                                     |      | | |
+ * |        | mgr_run(seqno rcvd, ovn-installed present)          |      | | |
+ * |        V                                                     |      | | |
+ * |    +--------------------+                                    |      | | |
+ * |    |                    |  mgr_run()                         |      | | |
+ * +--- | REMOVE_OVN_INST    |  - remove ovn-installed in ovs     |      | | |
+ * |    +--------------------+                                    |      | | |
+ * |               |                                              |      | | |
+ * |               |                                              |      | | |
+ * |               | mgr_update( ovn_installed not present)       |      | | |
+ * |               |                                              |      | | |
+ * |               |  +-------------------------------------------+      | | |
+ * |               |  |                                                  | | |
+ * |               |  |  mgr_run(seqno rcvd, ovn-installed not present)  | | |
+ * |               |  |  - set port up in sb                             | | |
+ * |               |  |  - set ovn-installed in ovs                      | | |
+ * |release_iface  |  |                                                  | | |
+ * |               V  V                                                  | | |
  * |   +----------------------+                                          | | |
  * |   |                      |  mgr_run()                               | | |
  * +-- |       MARK_UP        |  - set port up in sb                     | | |
@@ -238,6 +258,7 @@ if_status_mgr_claim_iface(struct if_status_mgr *mgr,
     switch (iface->state) {
     case OIF_CLAIMED:
     case OIF_INSTALL_FLOWS:
+    case OIF_REMOVE_OVN_INST:
     case OIF_MARK_UP:
         /* Nothing to do here. */
         break;
@@ -274,6 +295,7 @@ if_status_mgr_release_iface(struct if_status_mgr *mgr, const char *iface_id)
         /* Not yet fully installed interfaces can be safely deleted. */
         ovs_iface_destroy(mgr, iface);
         break;
+    case OIF_REMOVE_OVN_INST:
     case OIF_MARK_UP:
     case OIF_INSTALLED:
         /* Properly mark interfaces "down" if their flows were already
@@ -305,6 +327,7 @@ if_status_mgr_delete_iface(struct if_status_mgr *mgr, const char *iface_id)
         /* Not yet fully installed interfaces can be safely deleted. */
         ovs_iface_destroy(mgr, iface);
         break;
+    case OIF_REMOVE_OVN_INST:
     case OIF_MARK_UP:
     case OIF_INSTALLED:
         /* Properly mark interfaces "down" if their flows were already
@@ -359,6 +382,17 @@ if_status_mgr_update(struct if_status_mgr *mgr,
     struct shash *bindings = &binding_data->bindings;
     struct hmapx_node *node;
 
+    /* Move all interfaces that have been confirmed without ovn-installed,
+     * from OIF_REMOVE_OVN_INST to OIF_MARK_UP.
+     */
+    HMAPX_FOR_EACH_SAFE (node, &mgr->ifaces_per_state[OIF_REMOVE_OVN_INST]) {
+        struct ovs_iface *iface = node->data;
+
+        if (!local_binding_is_ovn_installed(bindings, iface->id)) {
+            ovs_iface_set_state(mgr, iface, OIF_MARK_UP);
+        }
+    }
+
     /* Interfaces in OIF_MARK_UP/INSTALL_FLOWS state have already set their
      * pb->chassis. However, the update might still be in fly (confirmation
      * not received yet) or pb->chassis was overwitten by another chassis.
@@ -471,7 +505,19 @@ if_status_mgr_run(struct if_status_mgr *mgr,
                                           iface->install_seqno)) {
             continue;
         }
-        ovs_iface_set_state(mgr, iface, OIF_MARK_UP);
+        /* Wait for ovn-installed to be absent before moving to MARK_UP state.
+         * Most of the times ovn-installed is already absent and hence we will
+         * not have to wait.
+         * If there is no binding_data, we can't determine if ovn-installed is
+         * present or not; hence also go to the OIF_REMOVE_OVN_INST state.
+         */
+        if (!binding_data ||
+            local_binding_is_ovn_installed(&binding_data->bindings,
+                                           iface->id)) {
+            ovs_iface_set_state(mgr, iface, OIF_REMOVE_OVN_INST);
+        } else {
+            ovs_iface_set_state(mgr, iface, OIF_MARK_UP);
+        }
     }
     ofctrl_acked_seqnos_destroy(acked_seqnos);
 
@@ -558,7 +604,16 @@ if_status_mgr_update_bindings(struct if_status_mgr *mgr,
                                sb_readonly, ovs_readonly);
     }
 
-    /* Notifiy the binding module to set "up" all bindings that have had
+    /* Notify the binding module to remove "ovn-installed" for all bindings
+     * in the OIF_REMOVE_OVN_INST state.
+     */
+    HMAPX_FOR_EACH (node, &mgr->ifaces_per_state[OIF_REMOVE_OVN_INST]) {
+        struct ovs_iface *iface = node->data;
+
+        local_binding_remove_ovn_installed(bindings, iface->id, ovs_readonly);
+    }
+
+    /* Notify the binding module to set "up" all bindings that have had
      * their flows installed but are not yet marked "up" in the binding
      * module.
      */
diff --git a/tests/ovn.at b/tests/ovn.at
index d2163d87d..a0378a728 100644
--- a/tests/ovn.at
+++ b/tests/ovn.at
@@ -34248,3 +34248,260 @@ AT_CHECK([ovs-ofctl dump-flows br-int | grep table=68 | ofctl_strip_all], [0], [
 OVN_CLEANUP([hv1])
 AT_CLEANUP
 ])
+
+# This tests port->up/down and ovn-installed after adding and removing Ports and Interfaces.
+# 3 Conditions x 3 tests:
+# - 3 Conditions:
+#   - In normal conditions
+#   - Remove interface while starting and stopping SB and Controller
+#   - Remove and add back interface while starting and stopping SB and Controller
+# - 3 tests:
+#   - Add/Remove Logical Port
+#   - Add/Remove iface-id
+#   - Add/Remove Interface
+# Each tests/conditions checks for
+# - Port_binding->chassis
+# - Port up or down
+# - ovn-installed
+OVN_FOR_EACH_NORTHD([
+AT_SETUP([ovn-installed and ports up or down])
+ovn_start
+
+net_add n1
+sim_add hv1
+as hv1
+check ovs-vsctl add-br br-phys
+ovs-vsctl set open . external-ids:ovn-bridge-mappings=phys:br-phys
+ovn_attach n1 br-phys 192.168.0.1 24 geneve
+
+check ovn-nbctl ls-add ls1
+check ovn-nbctl set Logical_Switch ls1 other_config:subnet=10.1.0.0/16
+
+check ovn-nbctl --wait=hv sync
+
+add_logical_ports() {
+  echo Adding logical ports
+  check ovn-nbctl lsp-add ls1 lsp1
+  check ovn-nbctl lsp-add ls1 lsp2
+}
+
+remove_logical_ports() {
+  echo Removing logical ports
+  check ovn-nbctl lsp-del lsp1
+  check ovn-nbctl lsp-del lsp2
+}
+
+add_ovs_interfaces() {
+  echo Adding interfaces
+  ovs-vsctl --no-wait -- add-port br-int vif1 \
+                      -- set Interface vif1 external_ids:iface-id=lsp1
+  ovs-vsctl --no-wait -- add-port br-int vif2 \
+                      -- set Interface vif2 external_ids:iface-id=lsp2
+}
+remove_ovs_interfaces() {
+  echo Removing interfaces
+  check ovs-vsctl --no-wait -- del-port vif1
+  check ovs-vsctl --no-wait -- del-port vif2
+}
+add_iface_ids() {
+  echo Adding back iface-id
+  ovs-vsctl --no-wait -- set Interface vif1 external_ids:iface-id=lsp1
+  ovs-vsctl --no-wait -- set Interface vif2 external_ids:iface-id=lsp2
+}
+remove_iface_ids() {
+  echo Removing iface-id
+  check ovs-vsctl remove Interface vif1 external_ids iface-id
+  check ovs-vsctl remove Interface vif2 external_ids iface-id
+}
+wait_for_local_bindings() {
+  OVS_WAIT_UNTIL(
+      [test `ovs-appctl -t ovn-controller debug/dump-local-bindings | grep interface | wc -l` -eq 2],
+      [kill -CONT $(cat ovn-sb/ovsdb-server.pid)]
+  )
+}
+sleep_sb() {
+  echo SB going to sleep
+  AT_CHECK([kill -STOP $(cat ovn-sb/ovsdb-server.pid)])
+}
+wake_up_sb() {
+  echo SB waking up
+  AT_CHECK([kill -CONT $(cat ovn-sb/ovsdb-server.pid)])
+}
+sleep_controller() {
+  echo Controller going to sleep
+  ovn-appctl debug/pause
+  OVS_WAIT_UNTIL([test x$(as hv1 ovn-appctl -t ovn-controller debug/status) = "xpaused"])
+}
+wake_up_controller() {
+  echo Controller waking up
+  ovn-appctl debug/resume
+}
+ensure_controller_run() {
+# We want to make sure controller could run at least one full loop.
+# We can't use wait=hv as sb might be sleeping.
+# Use 2 ovn-appctl to guarentee that ovn-controller run the full loop, and not just the unixctl handling
+  OVS_WAIT_UNTIL([test x$(as hv1 ovn-appctl -t ovn-controller debug/status) = "xrunning"])
+  OVS_WAIT_UNTIL([test x$(as hv1 ovn-appctl -t ovn-controller debug/status) = "xrunning"])
+}
+sleep_ovsdb() {
+  echo OVSDB going to sleep
+  AT_CHECK([kill -STOP $(cat hv1/ovsdb-server.pid)])
+}
+wake_up_ovsdb() {
+  echo OVSDB waking up
+  AT_CHECK([kill -CONT $(cat hv1/ovsdb-server.pid)])
+}
+check_ovn_installed() {
+  OVS_WAIT_UNTIL([test `as hv1 ovs-vsctl get Interface vif1 external_ids:ovn-installed` = '"true"'])
+  OVS_WAIT_UNTIL([test `as hv1 ovs-vsctl get Interface vif2 external_ids:ovn-installed` = '"true"'])
+}
+check_ovn_uninstalled() {
+  OVS_WAIT_UNTIL([test x`as hv1 ovs-vsctl get Interface vif1 external_ids:ovn-installed` = x])
+  OVS_WAIT_UNTIL([test x`as hv1 ovs-vsctl get Interface vif2 external_ids:ovn-installed` = x])
+}
+check_ports_up() {
+  OVS_WAIT_UNTIL([test `ovn-sbctl get Port_Binding lsp1 up` = 'true'])
+  OVS_WAIT_UNTIL([test `ovn-sbctl get Port_Binding lsp2 up` = 'true'])
+}
+check_ports_down() {
+  OVS_WAIT_UNTIL([test `ovn-sbctl get Port_Binding lsp1 up` = 'false'])
+  OVS_WAIT_UNTIL([test `ovn-sbctl get Port_Binding lsp2 up` = 'false'])
+}
+
+check_ports_bound() {
+  ch=$(fetch_column Chassis _uuid name=hv1)
+  wait_row_count Port_Binding 1 logical_port=lsp1 chassis=$ch
+  wait_row_count Port_Binding 1 logical_port=lsp2 chassis=$ch
+}
+check_ports_unbound() {
+  wait_column "" Port_Binding chassis logical_port=lsp1
+  wait_column "" Port_Binding chassis logical_port=lsp2
+}
+add_logical_ports
+add_ovs_interfaces
+wait_for_local_bindings
+wait_for_ports_up
+check ovn-nbctl --wait=hv sync
+############################################################
+################### Add/Remove iface-id ####################
+############################################################
+AS_BOX(["iface-id removal and added back (no sleeping sb or controller)"])
+remove_iface_ids
+check_ovn_uninstalled
+check_ports_down
+check_ports_unbound
+add_iface_ids
+check_ovn_installed
+check_ports_up
+check_ports_bound
+
+AS_BOX(["iface-id removal"])
+sleep_sb
+remove_iface_ids
+ensure_controller_run
+sleep_controller
+wake_up_sb
+wake_up_controller
+check_ovn_uninstalled
+# Port_down not always set on iface-id removal
+# check_ports_down
+# Port_Binding(chassis) not always removed on iface-id removal
+# check_ports_unbound
+add_iface_ids
+check ovn-nbctl --wait=hv sync
+
+AS_BOX(["iface-id removal and added back"])
+sleep_sb
+remove_iface_ids
+ensure_controller_run
+sleep_controller
+add_iface_ids
+wake_up_sb
+wake_up_controller
+check_ovn_installed
+check_ports_up
+check_ports_bound
+############################################################
+###################### Add/Remove Interface ################
+############################################################
+AS_BOX(["Interface removal and added back (no sleeping sb or controller)"])
+remove_ovs_interfaces
+check_ovn_uninstalled
+check_ports_down
+check_ports_unbound
+add_ovs_interfaces
+check_ovn_installed
+check_ports_up
+check_ports_bound
+check ovn-nbctl --wait=hv sync
+
+AS_BOX(["Interface removal"])
+sleep_sb
+remove_ovs_interfaces
+ensure_controller_run
+sleep_controller
+wake_up_sb
+wake_up_controller
+check_ovn_uninstalled
+# Port_down not always set on Interface removal
+# check_ports_down
+# Port_Binding(chassis) not always removed on Interface removal
+# check_ports_unbound
+add_ovs_interfaces
+check ovn-nbctl --wait=hv sync
+
+AS_BOX(["Interface removal and added back"])
+sleep_sb
+remove_ovs_interfaces
+ensure_controller_run
+sleep_controller
+add_ovs_interfaces
+wake_up_sb
+wake_up_controller
+check_ovn_installed
+check_ports_up
+check_ports_bound
+check ovn-nbctl --wait=hv sync
+############################################################
+###################### Add/Remove Logical Port #############
+############################################################
+AS_BOX(["Logical port removal and added back (no sleeping sb or controller)"])
+remove_logical_ports
+check_ovn_uninstalled
+check_ports_unbound
+sleep_ovsdb
+add_logical_ports
+ensure_controller_run
+wake_up_ovsdb
+check_ovn_installed
+check_ports_up
+check_ports_bound
+check ovn-nbctl --wait=hv sync
+
+AS_BOX(["Logical port removal"])
+sleep_sb
+remove_logical_ports
+ensure_controller_run
+sleep_controller
+wake_up_sb
+wake_up_controller
+check_ovn_uninstalled
+check_ports_unbound
+add_logical_ports
+check ovn-nbctl --wait=hv sync
+
+AS_BOX(["Logical port removal and added back"])
+sleep_sb
+remove_logical_ports
+ensure_controller_run
+sleep_controller
+add_logical_ports
+wake_up_sb
+wake_up_controller
+check_ovn_installed
+check_ports_up
+check_ports_bound
+OVN_CLEANUP([hv1])
+AT_CLEANUP
+])
+
