diff --git a/controller/binding.c b/controller/binding.c
index 492aef530..5b33468ab 100644
--- a/controller/binding.c
+++ b/controller/binding.c
@@ -1871,14 +1871,35 @@ consider_nonvif_lport_(const struct sbrec_port_binding *pb,
                        struct binding_ctx_in *b_ctx_in,
                        struct binding_ctx_out *b_ctx_out)
 {
+    struct local_datapath *ld =
+        get_local_datapath(b_ctx_out->local_datapaths,
+                           pb->datapath->tunnel_key);
+
     if (our_chassis) {
         update_local_lports(pb->logical_port, b_ctx_out);
-        add_local_datapath(b_ctx_in->sbrec_datapath_binding_by_key,
-                           b_ctx_in->sbrec_port_binding_by_datapath,
-                           b_ctx_in->sbrec_port_binding_by_name,
-                           pb->datapath, b_ctx_in->chassis_rec,
-                           b_ctx_out->local_datapaths,
-                           b_ctx_out->tracked_dp_bindings);
+        if (!ld) {
+            add_local_datapath(b_ctx_in->sbrec_datapath_binding_by_key,
+                               b_ctx_in->sbrec_port_binding_by_datapath,
+                               b_ctx_in->sbrec_port_binding_by_name,
+                               pb->datapath, b_ctx_in->chassis_rec,
+                               b_ctx_out->local_datapaths,
+                               b_ctx_out->tracked_dp_bindings);
+        } else {
+            /* Add the peer datapath to the local datapaths if it's
+             * not present yet.
+             */
+            if (need_add_peer_to_local(
+                    b_ctx_in->sbrec_port_binding_by_name, pb,
+                    b_ctx_in->chassis_rec)) {
+                add_local_datapath_peer_port(
+                    pb, b_ctx_in->chassis_rec,
+                    b_ctx_in->sbrec_datapath_binding_by_key,
+                    b_ctx_in->sbrec_port_binding_by_datapath,
+                    b_ctx_in->sbrec_port_binding_by_name,
+                    ld, b_ctx_out->local_datapaths,
+                    b_ctx_out->tracked_dp_bindings);
+            }
+        }
 
         update_related_lport(pb, b_ctx_out);
         return claim_lport(pb, NULL, b_ctx_in->chassis_rec, NULL,
@@ -1895,10 +1916,17 @@ consider_nonvif_lport_(const struct sbrec_port_binding *pb,
             || is_additional_chassis(pb, b_ctx_in->chassis_rec)
             || if_status_is_port_claimed(b_ctx_out->if_mgr,
                                          pb->logical_port)) {
-        return release_lport(pb, b_ctx_in->chassis_rec,
-                             !b_ctx_in->ovnsb_idl_txn,
-                             b_ctx_out->tracked_dp_bindings,
-                             b_ctx_out->if_mgr);
+        if (!release_lport(pb, b_ctx_in->chassis_rec,
+                          !b_ctx_in->ovnsb_idl_txn,
+                          b_ctx_out->tracked_dp_bindings,
+                          b_ctx_out->if_mgr)) {
+            return false;
+        }
+
+        if (ld) {
+            remove_local_datapath_peer_port(pb, ld,
+                                            b_ctx_out->local_datapaths);
+        }
     }
 
     return true;
diff --git a/controller/local_data.c b/controller/local_data.c
index f1a7ce00e..e12523d61 100644
--- a/controller/local_data.c
+++ b/controller/local_data.c
@@ -208,7 +208,11 @@ add_local_datapath_peer_port(
     struct hmap *tracked_datapaths)
 {
     const struct sbrec_port_binding *peer;
-    peer = lport_get_peer(pb, sbrec_port_binding_by_name);
+     if (!strcmp(pb->type, "l3gateway")) {
+        peer = lport_get_l3gw_peer(pb, sbrec_port_binding_by_name);
+    } else {
+        peer = lport_get_peer(pb, sbrec_port_binding_by_name);
+    }
 
     if (!peer) {
         return;
diff --git a/tests/system-ovn.at b/tests/system-ovn.at
index 861b1cb99..a23471bf8 100644
--- a/tests/system-ovn.at
+++ b/tests/system-ovn.at
@@ -13929,3 +13929,122 @@ OVS_TRAFFIC_VSWITCHD_STOP(["/.*error receiving.*/d
 /.*terminating with signal 15.*/d"])
 AT_CLEANUP
 ])
+
+OVN_FOR_EACH_NORTHD([
+AT_SETUP([IPv6 prefix delegation - l3gateway ports creation])
+AT_SKIP_IF([test $HAVE_DHCPD = no])
+AT_SKIP_IF([test $HAVE_TCPDUMP = no])
+AT_KEYWORDS([ovn-ipv6-prefix_d])
+ovn_start
+OVS_TRAFFIC_VSWITCHD_START()
+
+ADD_BR([br-int])
+ADD_BR([br-ext])
+
+ovs-vsctl set-fail-mode br-ext standalone
+# Set external-ids in br-int needed for ovn-controller
+ovs-vsctl \
+        -- set Open_vSwitch . external-ids:system-id=hv1 \
+        -- set Open_vSwitch . external-ids:ovn-remote=unix:$ovs_base/ovn-sb/ovn-sb.sock \
+        -- set Open_vSwitch . external-ids:ovn-encap-type=geneve \
+        -- set Open_vSwitch . external-ids:ovn-encap-ip=169.0.0.1 \
+        -- set bridge br-int fail-mode=secure other-config:disable-in-band=true
+
+# Start ovn-controller
+start_daemon ovn-controller
+
+ADD_NAMESPACES(server)
+ADD_VETH(s1, server, br-ext, "2001:1db8:3333::2/64", "f0:00:00:01:02:05", \
+         "2001:1db8:3333::1", "nodad")
+
+ovn-nbctl create Logical_Router name=R1 options:chassis=hv1
+
+check ovn-nbctl ls-add sw0
+check ovn-nbctl ls-add public
+
+# Add localnet port on public and router ports between R1 and public.
+# This should create the patch ports.
+# This is done early in the test as this used to cause some recomputes (due
+# to runtime data handler for ovs_interface).
+# Hence, we avoid such recompute later in the test, so we only rely on I+P.
+AT_CHECK([ovs-vsctl set Open_vSwitch . external-ids:ovn-bridge-mappings=phynet:br-ext])
+check ovn-nbctl lsp-add public ln1 \
+        -- lsp-set-addresses ln1 unknown \
+        -- lsp-set-type ln1 localnet \
+        -- lsp-set-options ln1 network_name=phynet
+
+check ovn-nbctl lrp-add R1 rp-public 00:00:02:01:02:03 172.16.1.1/24
+check ovn-nbctl lsp-add public public-rp -- set Logical_Switch_Port public-rp \
+    type=router options:router-port=rp-public \
+    -- lsp-set-addresses public-rp router
+
+# Wait for a flow outputing to patch port, so we know ovn-controller handled the patch port creation in OVS.
+OVN_WAIT_PATCH_PORT_FLOWS(["ln1"], ["./"])
+
+check ovn-nbctl lrp-add R1 rp-sw0 00:00:01:01:02:03 192.168.1.1/24
+
+check ovn-nbctl lsp-add sw0 sw0-rp -- set Logical_Switch_Port sw0-rp \
+    type=router options:router-port=rp-sw0 \
+    -- lsp-set-addresses sw0-rp router
+check ovn-nbctl lsp-add sw0 sw01 \
+    -- lsp-set-addresses sw01 "f0:00:00:01:02:03 192.168.1.2"
+
+check ovn-nbctl set logical_router_port rp-public options:prefix_delegation=true
+check ovn-nbctl set logical_router_port rp-public options:prefix=true
+check ovn-nbctl set logical_router_port rp-sw0 options:prefix=true
+
+OVN_POPULATE_ARP
+
+check ovn-nbctl --wait=hv sync
+
+cat > /etc/dhcp/dhcpd.conf <<EOF
+option dhcp-rebinding-time 10;
+option dhcp-renewal-time 5;
+subnet6 2001:1db8:3333::/64 {
+    prefix6 2001:1db8:3333:100:: 2001:1db8:3333:111:: /96;
+}
+EOF
+rm -f /var/lib/dhcp/dhcpd6.leases
+touch /var/lib/dhcp/dhcpd6.leases
+chown root:dhcpd /var/lib/dhcp /var/lib/dhcp/dhcpd6.leases
+chmod 775 /var/lib/dhcp
+chmod 664 /var/lib/dhcp/dhcpd6.leases
+
+NETNS_START_TCPDUMP([server], [-nni s1], [server])
+NETNS_DAEMONIZE([server], [dhcpd -6 -f s1 > dhcpd.log 2>&1], [dhcpd.pid])
+ovn-nbctl --wait=hv sync
+
+AT_CHECK([ovn-appctl debug/dump-peer-ports | sort], [0], [dnl
+dp R1 : local = rp-public, remote = public-rp
+dp R1 : local = rp-sw0, remote = sw0-rp
+dp public : local = public-rp, remote = rp-public
+dp sw0 : local = sw0-rp, remote = rp-sw0
+])
+
+OVS_WAIT_WHILE([test "$(ovn-nbctl get logical_router_port rp-public ipv6_prefix | cut -c4-15)" = ""])
+OVS_WAIT_WHILE([test "$(ovn-nbctl get logical_router_port rp-sw0 ipv6_prefix | cut -c4-15)" = ""])
+
+AT_CHECK([ovn-nbctl get logical_router_port rp-public ipv6_prefix | cut -c3-16], [0], [dnl
+[2001:1db8:3333]
+])
+AT_CHECK([ovn-nbctl get logical_router_port rp-sw0 ipv6_prefix | cut -c3-16], [0], [dnl
+[2001:1db8:3333]
+])
+
+OVS_APP_EXIT_AND_WAIT([ovn-controller])
+
+as ovn-sb
+OVS_APP_EXIT_AND_WAIT([ovsdb-server])
+
+as ovn-nb
+OVS_APP_EXIT_AND_WAIT([ovsdb-server])
+
+as northd
+OVS_APP_EXIT_AND_WAIT([ovn-northd])
+
+as
+OVS_TRAFFIC_VSWITCHD_STOP(["/.*error receiving.*/d
+/failed to query port patch-.*/d
+/.*terminating with signal 15.*/d"])
+AT_CLEANUP
+])
