diff --git a/packages/libp2p/src/connection.ts b/packages/libp2p/src/connection.ts
index 4f4ee18ade..6308e1e422 100644
--- a/packages/libp2p/src/connection.ts
+++ b/packages/libp2p/src/connection.ts
@@ -6,7 +6,7 @@ import { CONNECTION_CLOSE_TIMEOUT, PROTOCOL_NEGOTIATION_TIMEOUT } from './connec
 import { isDirect } from './connection-manager/utils.ts'
 import { MuxerUnavailableError } from './errors.ts'
 import { DEFAULT_MAX_INBOUND_STREAMS, DEFAULT_MAX_OUTBOUND_STREAMS } from './registrar.ts'
-import type { AbortOptions, Logger, MessageStreamDirection, Connection as ConnectionInterface, Stream, NewStreamOptions, PeerId, ConnectionLimits, StreamMuxer, Metrics, PeerStore, MultiaddrConnection, MessageStreamEvents, MultiaddrConnectionTimeline, ConnectionStatus, MessageStream } from '@libp2p/interface'
+import type { AbortOptions, Logger, MessageStreamDirection, Connection as ConnectionInterface, Stream, NewStreamOptions, PeerId, ConnectionLimits, StreamMuxer, Metrics, PeerStore, MultiaddrConnection, MessageStreamEvents, MultiaddrConnectionTimeline, ConnectionStatus, MessageStream, StreamMiddleware } from '@libp2p/interface'
 import type { Registrar } from '@libp2p/interface-internal'
 import type { Multiaddr } from '@multiformats/multiaddr'
 
@@ -126,7 +126,7 @@ export class Connection extends TypedEventEmitter<MessageStreamEvents> implement
     }
 
     this.log.trace('starting new stream for protocols %s', protocols)
-    let muxedStream = await this.muxer.createStream({
+    const muxedStream = await this.muxer.createStream({
       ...options,
 
       // most underlying transports only support negotiating a single protocol
@@ -179,23 +179,7 @@ export class Connection extends TypedEventEmitter<MessageStreamEvents> implement
 
       const middleware = this.components.registrar.getMiddleware(muxedStream.protocol)
 
-      middleware.push((stream, connection, next) => {
-        next(stream, connection)
-      })
-
-      let i = 0
-      let connection: ConnectionInterface = this
-
-      while (i < middleware.length) {
-        // eslint-disable-next-line no-loop-func
-        middleware[i](muxedStream, connection, (s, c) => {
-          muxedStream = s
-          connection = c
-          i++
-        })
-      }
-
-      return muxedStream
+      return await this.runMiddlewareChain(muxedStream, this, middleware)
     } catch (err: any) {
       if (muxedStream.status === 'open') {
         muxedStream.abort(err)
@@ -208,7 +192,7 @@ export class Connection extends TypedEventEmitter<MessageStreamEvents> implement
   }
 
   private async onIncomingStream (evt: CustomEvent<Stream>): Promise<void> {
-    let muxedStream = evt.detail
+    const muxedStream = evt.detail
 
     const signal = AbortSignal.timeout(this.inboundStreamProtocolNegotiationTimeout)
     setMaxListeners(Infinity, signal)
@@ -260,20 +244,40 @@ export class Connection extends TypedEventEmitter<MessageStreamEvents> implement
         next(stream, connection)
       })
 
-      let connection: ConnectionInterface = this
-
-      for (const m of middleware) {
-        // eslint-disable-next-line no-loop-func
-        await m(muxedStream, connection, (s, c) => {
-          muxedStream = s
-          connection = c
-        })
-      }
+      await this.runMiddlewareChain(muxedStream, this, middleware)
     } catch (err: any) {
       muxedStream.abort(err)
     }
   }
 
+  private async runMiddlewareChain (stream: Stream, connection: ConnectionInterface, middleware: StreamMiddleware[]): Promise<Stream> {
+    for (let i = 0; i < middleware.length; i++) {
+      const mw = middleware[i]
+      stream.log.trace('running middleware', i, mw)
+
+      // eslint-disable-next-line no-loop-func
+      await new Promise<void>((resolve, reject) => {
+        try {
+          const result = mw(stream, connection, (s, c) => {
+            stream = s
+            connection = c
+            resolve()
+          })
+
+          if (result instanceof Promise) {
+            result.catch(reject)
+          }
+        } catch (err) {
+          reject(err)
+        }
+      })
+
+      stream.log.trace('ran middleware', i, mw)
+    }
+
+    return stream
+  }
+
   /**
    * Close the connection
    */
diff --git a/packages/libp2p/test/connection/index.spec.ts b/packages/libp2p/test/connection/index.spec.ts
index a08401a4f1..df97511479 100644
--- a/packages/libp2p/test/connection/index.spec.ts
+++ b/packages/libp2p/test/connection/index.spec.ts
@@ -1,4 +1,5 @@
 import { StreamCloseEvent } from '@libp2p/interface'
+import { defaultLogger } from '@libp2p/logger'
 import { peerIdFromString } from '@libp2p/peer-id'
 import { echoStream, streamPair, echo, multiaddrConnectionPair, mockMuxer } from '@libp2p/utils'
 import { multiaddr } from '@multiformats/multiaddr'
@@ -361,6 +362,7 @@ describe('connection', () => {
     }
 
     const incomingStream = stubInterface<Stream>({
+      log: defaultLogger().forComponent('stream'),
       protocol: streamProtocol
     })
 
@@ -371,24 +373,100 @@ describe('connection', () => {
     onIncomingStream(new CustomEvent('stream', {
       detail: incomingStream
     }))
-    /*
+
+    // incoming stream is opened asynchronously
+    await delay(100)
+
+    expect(middleware1.called).to.be.true()
+    expect(middleware2.called).to.be.true()
+  })
+
+  it('should not call outbound middleware if previous middleware errors', async () => {
+    const streamProtocol = '/test/protocol'
+    const err = new Error('boom')
+
+    const middleware1 = Sinon.stub().callsFake((stream, connection, next) => {
+      throw err
+    })
+    const middleware2 = Sinon.stub().callsFake((stream, connection, next) => {
+      next(stream, connection)
+    })
+
+    const middleware = [
+      middleware1,
+      middleware2
+    ]
+
+    registrar.getMiddleware.withArgs(streamProtocol).returns(middleware)
+    registrar.getHandler.withArgs(streamProtocol).returns({
+      handler: () => {},
+      options: {}
+    })
+
+    const connection = createConnection(components, init)
+
+    await expect(connection.newStream(streamProtocol))
+      .to.eventually.be.rejectedWith(err)
+
+    expect(middleware1.called).to.be.true()
+    expect(middleware2.called).to.be.false()
+  })
+
+  it('should not call inbound middleware if previous middleware errors', async () => {
+    const streamProtocol = '/test/protocol'
+
+    const middleware1 = Sinon.stub().callsFake((stream, connection, next) => {
+      throw new Error('boom')
+    })
+    const middleware2 = Sinon.stub().callsFake((stream, connection, next) => {
+      next(stream, connection)
+    })
+
+    const middleware = [
+      middleware1,
+      middleware2
+    ]
+
+    registrar.getMiddleware.withArgs(streamProtocol).returns(middleware)
+    registrar.getHandler.withArgs(streamProtocol).returns({
+      handler: () => {},
+      options: {}
+    })
+
+    const muxer = stubInterface<StreamMuxer>({
+      streams: []
+    })
+
+    createConnection(components, {
+      ...init,
+      muxer
+    })
+
+    expect(muxer.addEventListener.getCall(0).args[0]).to.equal('stream')
+    const onIncomingStream = muxer.addEventListener.getCall(0).args[1]
+
+    if (onIncomingStream == null) {
+      throw new Error('No incoming stream handler registered')
+    }
+
     const incomingStream = stubInterface<Stream>({
-      id: 'stream-id',
-      log: logger('test-stream'),
-      direction: 'outbound',
-      sink: async (source) => drain(source),
-      source: map((async function * () {
-        yield '/multistream/1.0.0\n'
-        yield `${streamProtocol}\n`
-      })(), str => encode.single(uint8ArrayFromString(str)))
+      log: defaultLogger().forComponent('stream'),
+      protocol: streamProtocol
     })
-*/
-    //    onIncomingStream?.(incomingStream)
+
+    if (typeof onIncomingStream !== 'function') {
+      throw new Error('Stream handler was not function')
+    }
+
+    onIncomingStream(new CustomEvent('stream', {
+      detail: incomingStream
+    }))
 
     // incoming stream is opened asynchronously
     await delay(100)
 
     expect(middleware1.called).to.be.true()
-    expect(middleware2.called).to.be.true()
+    expect(middleware2.called).to.be.false()
+    expect(incomingStream).to.have.nested.property('abort.called', true)
   })
 })