diff --git a/src/transport/MessageCounter.h b/src/transport/MessageCounter.h
index 70ce525e851b80..4ca7dc7206b967 100644
--- a/src/transport/MessageCounter.h
+++ b/src/transport/MessageCounter.h
@@ -109,6 +109,9 @@ class LocalSessionMessageCounter : public MessageCounter
         return CHIP_NO_ERROR;
     }
 
+    // Test-only function to set the counter value
+    void TestSetCounter(uint32_t value) { mValue = value; }
+
 private:
     uint32_t mValue;
 };
diff --git a/src/transport/tests/TestSessionManager.cpp b/src/transport/tests/TestSessionManager.cpp
index cc9179a92b2330..e77f9222f1ef3a 100644
--- a/src/transport/tests/TestSessionManager.cpp
+++ b/src/transport/tests/TestSessionManager.cpp
@@ -759,6 +759,83 @@ void SessionAllocationTest(nlTestSuite * inSuite, void * inContext)
     sessionManager.Shutdown();
 }
 
+void SessionCounterExhaustedTest(nlTestSuite * inSuite, void * inContext)
+{
+    TestContext & ctx = *reinterpret_cast<TestContext *>(inContext);
+
+    IPAddress addr;
+    IPAddress::FromString("::1", addr);
+    CHIP_ERROR err = CHIP_NO_ERROR;
+
+    FabricTable fabricTable;
+    SessionManager sessionManager;
+    secure_channel::MessageCounterManager gMessageCounterManager;
+    chip::TestPersistentStorageDelegate deviceStorage;
+
+    NL_TEST_ASSERT(inSuite, CHIP_NO_ERROR == fabricTable.Init(&deviceStorage));
+    NL_TEST_ASSERT(inSuite,
+                   CHIP_NO_ERROR ==
+                       sessionManager.Init(&ctx.GetSystemLayer(), &ctx.GetTransportMgr(), &gMessageCounterManager, &deviceStorage,
+                                           &fabricTable));
+
+    Transport::PeerAddress peer(Transport::PeerAddress::UDP(addr, CHIP_PORT));
+
+    FabricIndex aliceFabricIndex;
+    FabricInfo aliceFabric;
+    aliceFabric.TestOnlyBuildFabric(GetRootACertAsset().mCert, GetIAA1CertAsset().mCert, GetNodeA1CertAsset().mCert,
+                                    GetNodeA1CertAsset().mKey);
+    NL_TEST_ASSERT(inSuite, CHIP_NO_ERROR == fabricTable.AddNewFabricForTest(aliceFabric, &aliceFabricIndex));
+
+    FabricIndex bobFabricIndex;
+    FabricInfo bobFabric;
+    bobFabric.TestOnlyBuildFabric(GetRootACertAsset().mCert, GetIAA1CertAsset().mCert, GetNodeA2CertAsset().mCert,
+                                  GetNodeA2CertAsset().mKey);
+    NL_TEST_ASSERT(inSuite, CHIP_NO_ERROR == fabricTable.AddNewFabricForTest(bobFabric, &bobFabricIndex));
+
+    SessionHolder aliceToBobSession;
+    err = sessionManager.InjectPaseSessionWithTestKey(aliceToBobSession, 2,
+                                                      fabricTable.FindFabricWithIndex(bobFabricIndex)->GetNodeId(), 1,
+                                                      aliceFabricIndex, peer, CryptoContext::SessionRole::kInitiator);
+    NL_TEST_ASSERT(inSuite, err == CHIP_NO_ERROR);
+
+    SessionHolder bobToAliceSession;
+    err = sessionManager.InjectPaseSessionWithTestKey(bobToAliceSession, 1,
+                                                      fabricTable.FindFabricWithIndex(aliceFabricIndex)->GetNodeId(), 2,
+                                                      bobFabricIndex, peer, CryptoContext::SessionRole::kResponder);
+    NL_TEST_ASSERT(inSuite, err == CHIP_NO_ERROR);
+
+    // ==== Set counter value to max ====
+    LocalSessionMessageCounter & counter = static_cast<LocalSessionMessageCounter &>(
+        aliceToBobSession.Get().Value()->AsSecureSession()->GetSessionMessageCounter().GetLocalMessageCounter());
+    counter.TestSetCounter(LocalSessionMessageCounter::kMaxMessageCounter);
+
+    // ==== Build a valid message with max counter value ====
+    chip::System::PacketBufferHandle buffer = chip::MessagePacketBuffer::NewWithData(PAYLOAD, sizeof(PAYLOAD));
+    NL_TEST_ASSERT(inSuite, !buffer.IsNull());
+
+    PayloadHeader payloadHeader;
+
+    // Set the exchange ID for this header.
+    payloadHeader.SetExchangeID(0);
+
+    // Set the protocol ID and message type for this header.
+    payloadHeader.SetMessageType(chip::Protocols::Echo::MsgType::EchoRequest);
+
+    EncryptedPacketBufferHandle preparedMessage;
+    err = sessionManager.PrepareMessage(aliceToBobSession.Get().Value(), payloadHeader, std::move(buffer), preparedMessage);
+    NL_TEST_ASSERT(inSuite, err == CHIP_NO_ERROR);
+
+    // ==== Build another message which will fail becuase message counter is exhausted ====
+    chip::System::PacketBufferHandle buffer2 = chip::MessagePacketBuffer::NewWithData(PAYLOAD, sizeof(PAYLOAD));
+    NL_TEST_ASSERT(inSuite, !buffer2.IsNull());
+
+    EncryptedPacketBufferHandle preparedMessage2;
+    err = sessionManager.PrepareMessage(aliceToBobSession.Get().Value(), payloadHeader, std::move(buffer2), preparedMessage2);
+    NL_TEST_ASSERT(inSuite, err == CHIP_ERROR_MESSAGE_COUNTER_EXHAUSTED);
+
+    sessionManager.Shutdown();
+}
+
 // Test Suite
 
 /**
@@ -774,6 +851,7 @@ const nlTest sTests[] =
     NL_TEST_DEF("Old counter Test",               SendPacketWithOldCounterTest),
     NL_TEST_DEF("Too-old counter Test",           SendPacketWithTooOldCounterTest),
     NL_TEST_DEF("Session Allocation Test",        SessionAllocationTest),
+    NL_TEST_DEF("Session Counter Exhausted Test", SessionCounterExhaustedTest),
 
     NL_TEST_SENTINEL()
 };