diff --git a/tests/federation_acl_test.go b/tests/federation_acl_test.go
index c7f4dae5..06e8754b 100644
--- a/tests/federation_acl_test.go
+++ b/tests/federation_acl_test.go
@@ -12,6 +12,7 @@ import (
 	"github.com/matrix-org/complement/runtime"
 	"github.com/matrix-org/complement/should"
 	"github.com/matrix-org/gomatrixserverlib/spec"
+	"github.com/tidwall/gjson"
 )
 
 // Test for https://github.com/matrix-org/dendrite/issues/3004
@@ -120,3 +121,115 @@ func TestACLs(t *testing.T) {
 		)
 	}
 }
+
+// MSC4163: TestACLsForEDUs checks that ACLs are applied to EDUs (typing notifications and read receipts)
+func TestACLsForEDUs(t *testing.T) {
+	runtime.SkipIf(t, runtime.Dendrite)
+	deployment := complement.Deploy(t, 3)
+	defer deployment.Destroy(t)
+
+	alice := deployment.Register(t, "hs1", helpers.RegistrationOpts{})
+	bob := deployment.Register(t, "hs2", helpers.RegistrationOpts{})
+	charlie := deployment.Register(t, "hs3", helpers.RegistrationOpts{})
+
+	// Create a room where hs2 will be blocked by ACL
+	roomID := alice.MustCreateRoom(t, map[string]interface{}{"preset": "public_chat"})
+	aliceSince := alice.MustSyncUntil(t, client.SyncReq{}, client.SyncJoinedTo(alice.UserID, roomID))
+
+	bob.MustJoinRoom(t, roomID, []spec.ServerName{
+		deployment.GetFullyQualifiedHomeserverName(t, "hs1"),
+	})
+	aliceSince = alice.MustSyncUntil(t, client.SyncReq{Since: aliceSince}, client.SyncJoinedTo(bob.UserID, roomID))
+	bobSince := bob.MustSyncUntil(t, client.SyncReq{}, client.SyncJoinedTo(bob.UserID, roomID))
+
+	// Create a sentinel room without ACLs to confirm federation is working
+	sentinelRoom := alice.MustCreateRoom(t, map[string]interface{}{"preset": "public_chat"})
+	aliceSince = alice.MustSyncUntil(t, client.SyncReq{Since: aliceSince}, client.SyncJoinedTo(alice.UserID, sentinelRoom))
+	bob.MustJoinRoom(t, sentinelRoom, []spec.ServerName{
+		deployment.GetFullyQualifiedHomeserverName(t, "hs1"),
+	})
+	charlie.MustJoinRoom(t, sentinelRoom, []spec.ServerName{
+		deployment.GetFullyQualifiedHomeserverName(t, "hs1"),
+	})
+	aliceSince = alice.MustSyncUntil(t, client.SyncReq{Since: aliceSince},
+		client.SyncJoinedTo(bob.UserID, sentinelRoom),
+		client.SyncJoinedTo(charlie.UserID, sentinelRoom),
+	)
+
+	// Block hs2 from participating in room with id roomID
+	stateKey := ""
+	aclEventID := alice.SendEventSynced(t, roomID, b.Event{
+		Type:     "m.room.server_acl",
+		Sender:   alice.UserID,
+		StateKey: &stateKey,
+		Content: map[string]interface{}{
+			"allow":             []string{"*"},
+			"allow_ip_literals": true,
+			"deny": []string{
+				string(deployment.GetFullyQualifiedHomeserverName(t, "hs2")),
+			},
+		},
+	})
+	// Wait for the ACL to reach hs2 before sending EDUs
+	bob.MustSyncUntil(t, client.SyncReq{Since: bobSince}, client.SyncTimelineHasEventID(roomID, aclEventID))
+
+	// Join charlie to roomID after the ACL is set up
+	charlie.MustJoinRoom(t, roomID, []spec.ServerName{
+		deployment.GetFullyQualifiedHomeserverName(t, "hs1"),
+	})
+	aliceSince = alice.MustSyncUntil(t, client.SyncReq{Since: aliceSince}, client.SyncJoinedTo(charlie.UserID, roomID))
+	charlieSince := charlie.MustSyncUntil(t, client.SyncReq{}, client.SyncJoinedTo(charlie.UserID, roomID))
+
+	// Bob starts typing in both rooms; typing in roomID should be dropped by ACLs
+	bob.SendTyping(t, roomID, true, 10000)
+	bob.SendTyping(t, sentinelRoom, true, 10000)
+
+	// Bob sets read receipts on both rooms; receipts in roomID should be dropped by ACLs
+	bob.MustDo(t, "POST", []string{"_matrix", "client", "v3", "rooms", roomID, "read_markers"},
+		client.WithJSONBody(t, map[string]interface{}{"m.read": aclEventID}))
+
+	// Send a sentinel message to sentinelRoom to use as a receipt anchor
+	sentinelEventID := bob.SendEventSynced(t, sentinelRoom, b.Event{
+		Type:   "m.room.message",
+		Sender: bob.UserID,
+		Content: map[string]interface{}{
+			"msgtype": "m.text",
+			"body":    "sentinel",
+		},
+	})
+	bob.MustDo(t, "POST", []string{"_matrix", "client", "v3", "rooms", sentinelRoom, "read_markers"},
+		client.WithJSONBody(t, map[string]interface{}{"m.read": sentinelEventID}))
+
+	// Wait for the sentinel message and EDUs in sentinelRoom to arrive, proving the federation
+	// transaction containing hs2's EDUs was processed
+	alice.MustSyncUntil(t, client.SyncReq{Since: aliceSince},
+		client.SyncTimelineHasEventID(sentinelRoom, sentinelEventID),
+		client.SyncEphemeralHas(sentinelRoom, func(result gjson.Result) bool {
+			return result.Get("type").Str == "m.receipt"
+		}),
+		client.SyncEphemeralHas(sentinelRoom, func(result gjson.Result) bool {
+			return result.Get("type").Str == "m.typing"
+		}),
+	)
+	charlie.MustSyncUntil(t, client.SyncReq{Since: charlieSince},
+		client.SyncTimelineHasEventID(sentinelRoom, sentinelEventID),
+		client.SyncEphemeralHas(sentinelRoom, func(result gjson.Result) bool {
+			return result.Get("type").Str == "m.receipt"
+		}),
+		client.SyncEphemeralHas(sentinelRoom, func(result gjson.Result) bool {
+			return result.Get("type").Str == "m.typing"
+		}),
+	)
+
+	for _, user := range []*client.CSAPI{alice, charlie} {
+		syncResp, _ := user.MustSync(t, client.SyncReq{})
+
+		// No typing or read receipts from the blocked server should appear in room with id roomID
+		ephemerals := syncResp.Get("rooms.join." + client.GjsonEscape(roomID) + ".ephemeral")
+		must.MatchGJSON(t, ephemerals, match.JSONKeyArrayOfSize("events", 0))
+
+		// sentinelRoom should have received the read receipt and typing notification
+		ephemerals = syncResp.Get("rooms.join." + client.GjsonEscape(sentinelRoom) + ".ephemeral")
+		must.MatchGJSON(t, ephemerals, match.JSONKeyArrayOfSize("events", 2))
+	}
+}