diff --git a/test/functional/p2p_private_broadcast_retry_v1.py b/test/functional/p2p_private_broadcast_retry_v1.py
new file mode 100755
index 00000000000..87fa440a883
--- /dev/null
+++ b/test/functional/p2p_private_broadcast_retry_v1.py
@@ -0,0 +1,199 @@
+#!/usr/bin/env python3
+# Copyright (c) 2026-present The Bitcoin Core developers
+# Distributed under the MIT software license, see the accompanying
+# file COPYING or http://www.opensource.org/licenses/mit-license.php.
+"""
+Ensure that when v2 private broadcast connection to IPv4 fails the v1 retry
+will also be made through the Tor proxy.
+
+The test does:
+* Add a bunch of IPv4 addresses to the node's addrman (they will be added without P2P_V2 flag).
+* Get them to report P2P_V2 in their service flags and connect to each one, so that the flags
+  in addrman are updated to contain P2P_V2.
+* Get one successful connection to a Tor peer (.onion) so that bitcoind assumes the configured
+  Tor proxy works and is indeed a proxy to the Tor network. This will make it open private
+  broadcast connections also to IPv4 addresses via that proxy.
+* Start some private broadcast connections.
+* Remember the destination IPv4 address of the first connection and get it to fail the v2
+  transport.
+* Wait for a subsequent connection also through the Tor proxy to the same IPv4 and expect
+  it to be v1, i.e. the v2->v1 downgrade retry.
+"""
+
+from test_framework.netutil import (
+    format_addr_port
+)
+from test_framework.p2p import (
+    P2PConnection,
+    P2PInterface,
+    P2P_SERVICES,
+    start_p2p_listener,
+)
+from test_framework.messages import (
+    CAddress,
+    NODE_P2P_V2,
+)
+from test_framework.socks5 import (
+    start_socks5_server,
+)
+from test_framework.test_framework import (
+    BitcoinTestFramework,
+)
+from test_framework.v2_p2p import (
+    EncryptedP2PState,
+)
+from test_framework.wallet import (
+    MiniWallet,
+)
+
+class P2PDetermineV2or1AndClose(P2PConnection):
+    def __init__(self, on_v2or1_determined):
+        super().__init__()
+        self.on_v2or1_determined = on_v2or1_determined
+
+    # https://docs.python.org/3/library/asyncio-protocol.html#asyncio.Protocol.data_received
+    def data_received(self, data):
+        self.recvbuf += data
+        if len(self.recvbuf) >= 4:
+            self.on_v2or1_determined(1 if self.recvbuf[0:4] == self.magic_bytes else 2)
+            self.peer_disconnect()
+
+    def on_open(self):
+        pass
+
+    def on_close(self):
+        pass
+
+class P2PPrivateBroadcastRetryV1(BitcoinTestFramework):
+    def set_test_params(self):
+        self.disable_autoconnect = False
+        self.num_nodes = 1
+
+    def ipv4_via_tor_proxy_conn_versions_append(self, v2or1):
+        """
+        Add to the transport versions (v2 or v1) tried towards the first IPv4 which
+        nodes[0] tries to connect to via the Tor proxy.
+        """
+        self.ipv4_via_tor_proxy_conn_versions.append(v2or1)
+
+    def setup_nodes(self):
+        def destinations_factory_all_proxy(requested_to_addr, requested_to_port):
+            """
+            Instruct the SOCKS5 proxy to redirect all connections to newly created P2PInterface
+            objects that claim support for P2P_V2.
+            """
+            listener = P2PInterface()
+            listener.peer_connect_helper(dstaddr="0.0.0.0", dstport=0, net=self.chain, timeout_factor=self.options.timeout_factor)
+            listener.peer_connect_send_version(services=P2P_SERVICES | NODE_P2P_V2)
+
+            actual_to_addr, actual_to_port = start_p2p_listener(self.network_thread, listener)
+
+            self.log.debug("Instructing the common proxy to redirect connection for "
+                           f"{format_addr_port(requested_to_addr, requested_to_port)} to "
+                           f"{format_addr_port(actual_to_addr, actual_to_port)} (Python {type(listener).__name__})")
+
+            return {
+                "actual_to_addr": actual_to_addr,
+                "actual_to_port": actual_to_port,
+            }
+
+        self.all_proxy = start_socks5_server(destinations_factory_all_proxy)
+
+        self.ipv4_via_tor_proxy_addr_port = None # Remember the first IPv4 address connected to via the Tor proxy.
+        self.ipv4_via_tor_proxy_conn_versions = [] # Transport versions tried on that address.
+
+        def destinations_factory_tor_proxy(requested_to_addr, requested_to_port):
+            """
+            Instruct the SOCKS5 proxy to redirect all connections to newly created P2PInterface,
+            except the first connection to an IPv4 address and all subsequent connections to that
+            address which are redirected to P2PDetermineV2or1AndClose.
+            """
+            requested_to = format_addr_port(requested_to_addr, requested_to_port)
+
+            if not requested_to_addr.endswith(".onion") and self.ipv4_via_tor_proxy_addr_port is None: # First IPv4
+                self.ipv4_via_tor_proxy_addr_port = requested_to
+
+            if self.ipv4_via_tor_proxy_addr_port == requested_to:
+                # This is either the first (v2) or the second (the expected v1 retry) connection to requested_to.
+                listener = P2PDetermineV2or1AndClose(self.ipv4_via_tor_proxy_conn_versions_append)
+                listener.peer_connect_helper(dstaddr="0.0.0.0", dstport=0, net=self.chain, timeout_factor=self.options.timeout_factor)
+            else:
+                listener = P2PInterface()
+                listener.peer_connect_helper(dstaddr="0.0.0.0", dstport=0, net=self.chain, timeout_factor=self.options.timeout_factor)
+                listener.peer_connect_send_version(services=P2P_SERVICES | NODE_P2P_V2)
+                if not requested_to_addr.endswith(".onion"):
+                    listener.v2_state = EncryptedP2PState(initiating=False, net=self.chain)
+
+            actual_to_addr, actual_to_port = start_p2p_listener(self.network_thread, listener)
+
+            self.log.debug(f"Instructing the Tor proxy to redirect connection for {requested_to} to "
+                           f"{format_addr_port(actual_to_addr, actual_to_port)} (Python {type(listener).__name__})")
+
+            return {
+                "actual_to_addr": actual_to_addr,
+                "actual_to_port": actual_to_port,
+            }
+
+        self.tor_proxy = start_socks5_server(destinations_factory_tor_proxy)
+
+        self.extra_args = [
+            [
+                "-privatebroadcast=1",
+                f"-proxy={self.all_proxy.conf.addr[0]}:{self.all_proxy.conf.addr[1]}",
+                f"-onion={self.tor_proxy.conf.addr[0]}:{self.tor_proxy.conf.addr[1]}",
+                "-test=addrman",
+                "-v2transport=0",
+            ],
+        ]
+
+        super().setup_nodes()
+
+    def setup_network(self):
+        self.setup_nodes()
+
+    def run_test(self):
+        node0 = self.nodes[0]
+
+        self.log.info("Filling node0's addrman with addresses")
+        self.fill_node_addrman(node_index=0, address_types_to_add=[CAddress.NET_IPV4])
+
+        self.log.info("Opening manual connections to all IPv4 addresses to add P2P_V2 flag to addrman entries")
+        for a in node0.getnodeaddresses(count=0, network="ipv4"):
+            node0.addnode(node=format_addr_port(a["address"], a["port"]), command="onetry", v2transport=False)
+
+        self.log.info("Waiting for all IPv4 addresses to get P2P_V2 as a result of peers advertising support")
+        self.wait_until(lambda: all(a["services"] & NODE_P2P_V2 != 0 for a in node0.getnodeaddresses(count=0, network="ipv4")))
+
+        # The destinations behind the -proxy= don't actually support v2. When bitcoind runs with -v2transport=1
+        # and tries v2 on them they would print benign "magic byte mismatch" warnings.
+        # Disable those since none of them are needed anymore.
+        self.all_proxy.conf.destinations_factory = None
+
+        self.restart_node(0, extra_args=self.extra_args[0] + ["-v2transport=1"])
+
+        self.log.info("Opening a connection to a Tor addresses, so bitcoind considers -onion= is a real Tor proxy")
+        node0.addnode(node="testonlyad777777777777777777777777777777777777777775b6qd.onion:1234", command="onetry", v2transport=False)
+
+        self.log.info("Waiting for at least one Tor connection")
+        self.wait_until(lambda: any(p["network"] == "onion" for p in node0.getpeerinfo()))
+
+        self.log.info("Starting private broadcast connections")
+        wallet = MiniWallet(node0)
+        tx = wallet.create_self_transfer()
+        node0.sendrawtransaction(hexstring=tx["hex"])
+
+        self.log.info("Tor proxy: waiting for connection to an IPv4 address")
+        self.wait_until(lambda: self.ipv4_via_tor_proxy_addr_port is not None)
+        self.log.info(f"Tor proxy: got {self.ipv4_via_tor_proxy_addr_port}, waiting for v2")
+        self.wait_until(lambda: 2 in self.ipv4_via_tor_proxy_conn_versions)
+        self.log.info(f"Tor proxy: got {self.ipv4_via_tor_proxy_addr_port} v2, waiting for v1")
+        self.wait_until(lambda: 1 in self.ipv4_via_tor_proxy_conn_versions)
+        self.log.info(f"Tor proxy: got {self.ipv4_via_tor_proxy_addr_port} v2, v1")
+
+        self.stop_node(0)
+        self.all_proxy.stop()
+        self.tor_proxy.stop()
+
+
+if __name__ == "__main__":
+    P2PPrivateBroadcastRetryV1(__file__).main()
diff --git a/test/functional/test_runner.py b/test/functional/test_runner.py
index 698742bc79e..813d1d9507a 100755
--- a/test/functional/test_runner.py
+++ b/test/functional/test_runner.py
@@ -368,6 +368,7 @@ BASE_SCRIPTS = [
     'p2p_permissions.py',
     'feature_blocksdir.py',
     'wallet_startup.py',
+    'p2p_private_broadcast_retry_v1.py',
     'feature_remove_pruned_files_on_startup.py',
     'p2p_i2p_ports.py',
     'p2p_i2p_sessions.py',