diff --git a/PROGRESS.md b/PROGRESS.md
index 1547f45..e2ba26b 100644
--- a/PROGRESS.md
+++ b/PROGRESS.md
@@ -28,10 +28,10 @@ proceeds. Each item is marked:
 
 ## Phase 3: L7 Proxying
 
-- [ ] 3.1 `internal/l7/` package (`PrefixConn`, HTTP/2 reverse proxy with h2c, `Serve` entry point)
-- [ ] 3.2 Server integration (dispatch to L4 or L7 based on `route.Mode` in `handleConn`)
-- [ ] 3.3 PROXY protocol sending in L7 path
-- [ ] 3.4 Tests (TLS termination, h2c backend, re-encrypt, mixed L4/L7 listener, gRPC through L7)
+- [x] 3.1 `internal/l7/` package (`PrefixConn`, HTTP/2 reverse proxy with h2c, `Serve` entry point)
+- [x] 3.2 Server integration (dispatch to L4 or L7 based on `route.Mode` in `handleConn`)
+- [x] 3.3 PROXY protocol sending in L7 path
+- [x] 3.4 Tests (TLS termination, h2c backend, re-encrypt, mixed L4/L7 listener, gRPC through L7)
 
 ## Phase 4: gRPC API & CLI Updates
 
diff --git a/internal/l7/prefixconn.go b/internal/l7/prefixconn.go
new file mode 100644
index 0000000..6b34048
--- /dev/null
+++ b/internal/l7/prefixconn.go
@@ -0,0 +1,28 @@
+package l7
+
+import "net"
+
+// PrefixConn wraps a net.Conn, prepending buffered bytes before reading
+// from the underlying connection. This is used to replay the TLS ClientHello
+// bytes that were peeked during SNI extraction back into crypto/tls.Server.
+type PrefixConn struct {
+	net.Conn
+	prefix []byte
+	off    int
+}
+
+// NewPrefixConn creates a PrefixConn that returns prefix bytes first,
+// then reads from the underlying conn.
+func NewPrefixConn(conn net.Conn, prefix []byte) *PrefixConn {
+	return &PrefixConn{Conn: conn, prefix: prefix}
+}
+
+// Read returns buffered prefix bytes first, then reads from the underlying conn.
+func (pc *PrefixConn) Read(b []byte) (int, error) {
+	if pc.off < len(pc.prefix) {
+		n := copy(b, pc.prefix[pc.off:])
+		pc.off += n
+		return n, nil
+	}
+	return pc.Conn.Read(b)
+}
diff --git a/internal/l7/prefixconn_test.go b/internal/l7/prefixconn_test.go
new file mode 100644
index 0000000..515d16b
--- /dev/null
+++ b/internal/l7/prefixconn_test.go
@@ -0,0 +1,154 @@
+package l7
+
+import (
+	"io"
+	"net"
+	"testing"
+	"time"
+)
+
+func TestPrefixConnRead(t *testing.T) {
+	// Create a TCP pair.
+	ln, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("listen: %v", err)
+	}
+	defer ln.Close()
+
+	go func() {
+		conn, err := ln.Accept()
+		if err != nil {
+			return
+		}
+		defer conn.Close()
+		conn.Write([]byte("WORLD"))
+	}()
+
+	conn, err := net.Dial("tcp", ln.Addr().String())
+	if err != nil {
+		t.Fatalf("dial: %v", err)
+	}
+	defer conn.Close()
+
+	pc := NewPrefixConn(conn, []byte("HELLO"))
+
+	// Read all data: should get "HELLOWORLD".
+	conn.SetReadDeadline(time.Now().Add(5 * time.Second))
+	all, err := io.ReadAll(pc)
+	if err != nil {
+		t.Fatalf("ReadAll: %v", err)
+	}
+	if string(all) != "HELLOWORLD" {
+		t.Fatalf("got %q, want %q", all, "HELLOWORLD")
+	}
+}
+
+func TestPrefixConnSmallReads(t *testing.T) {
+	ln, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("listen: %v", err)
+	}
+	defer ln.Close()
+
+	go func() {
+		conn, err := ln.Accept()
+		if err != nil {
+			return
+		}
+		defer conn.Close()
+		conn.Write([]byte("CD"))
+	}()
+
+	conn, err := net.Dial("tcp", ln.Addr().String())
+	if err != nil {
+		t.Fatalf("dial: %v", err)
+	}
+	defer conn.Close()
+
+	pc := NewPrefixConn(conn, []byte("AB"))
+
+	// Read 1 byte at a time from the prefix.
+	buf := make([]byte, 1)
+	n, err := pc.Read(buf)
+	if err != nil || n != 1 || buf[0] != 'A' {
+		t.Fatalf("first read: n=%d, err=%v, buf=%q", n, err, buf[:n])
+	}
+	n, err = pc.Read(buf)
+	if err != nil || n != 1 || buf[0] != 'B' {
+		t.Fatalf("second read: n=%d, err=%v, buf=%q", n, err, buf[:n])
+	}
+
+	// Now reads come from the underlying conn.
+	conn.SetReadDeadline(time.Now().Add(5 * time.Second))
+	rest, err := io.ReadAll(pc)
+	if err != nil {
+		t.Fatalf("ReadAll: %v", err)
+	}
+	if string(rest) != "CD" {
+		t.Fatalf("got %q, want %q", rest, "CD")
+	}
+}
+
+func TestPrefixConnEmptyPrefix(t *testing.T) {
+	ln, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("listen: %v", err)
+	}
+	defer ln.Close()
+
+	go func() {
+		conn, err := ln.Accept()
+		if err != nil {
+			return
+		}
+		defer conn.Close()
+		conn.Write([]byte("DATA"))
+	}()
+
+	conn, err := net.Dial("tcp", ln.Addr().String())
+	if err != nil {
+		t.Fatalf("dial: %v", err)
+	}
+	defer conn.Close()
+
+	pc := NewPrefixConn(conn, nil)
+	conn.SetReadDeadline(time.Now().Add(5 * time.Second))
+	all, err := io.ReadAll(pc)
+	if err != nil {
+		t.Fatalf("ReadAll: %v", err)
+	}
+	if string(all) != "DATA" {
+		t.Fatalf("got %q, want %q", all, "DATA")
+	}
+}
+
+func TestPrefixConnDelegates(t *testing.T) {
+	ln, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("listen: %v", err)
+	}
+	defer ln.Close()
+
+	go func() {
+		conn, _ := ln.Accept()
+		if conn != nil {
+			conn.Close()
+		}
+	}()
+
+	conn, err := net.Dial("tcp", ln.Addr().String())
+	if err != nil {
+		t.Fatalf("dial: %v", err)
+	}
+	defer conn.Close()
+
+	pc := NewPrefixConn(conn, []byte("X"))
+
+	// RemoteAddr, LocalAddr should delegate.
+	if pc.RemoteAddr() == nil {
+		t.Fatal("RemoteAddr returned nil")
+	}
+	if pc.LocalAddr() == nil {
+		t.Fatal("LocalAddr returned nil")
+	}
+}
diff --git a/internal/l7/serve.go b/internal/l7/serve.go
new file mode 100644
index 0000000..00b5ab6
--- /dev/null
+++ b/internal/l7/serve.go
@@ -0,0 +1,236 @@
+// Package l7 implements L7 TLS-terminating HTTP/2 reverse proxying.
+package l7
+
+import (
+	"context"
+	"crypto/tls"
+	"fmt"
+	"log/slog"
+	"net"
+	"net/http"
+	"net/http/httputil"
+	"net/netip"
+	"net/url"
+	"time"
+
+	"git.wntrmute.dev/kyle/mc-proxy/internal/proxyproto"
+	"golang.org/x/net/http2"
+)
+
+// RouteConfig holds the L7 route parameters needed by the l7 package.
+type RouteConfig struct {
+	Backend           string
+	TLSCert           string
+	TLSKey            string
+	BackendTLS        bool
+	SendProxyProtocol bool
+	ConnectTimeout    time.Duration
+}
+
+// contextKey is an unexported type for context keys in this package.
+type contextKey int
+
+const clientAddrKey contextKey = 0
+
+// Serve handles an L7 (TLS-terminating) connection. It completes the TLS
+// handshake with the client using the route's certificate, then reverse
+// proxies HTTP/2 (or HTTP/1.1) traffic to the backend.
+//
+// peeked contains the TLS ClientHello bytes that were read during SNI
+// extraction. They are replayed into the TLS handshake via PrefixConn.
+func Serve(ctx context.Context, conn net.Conn, peeked []byte, route RouteConfig, clientAddr netip.AddrPort, logger *slog.Logger) error {
+	// Load the TLS certificate for this route.
+	cert, err := tls.LoadX509KeyPair(route.TLSCert, route.TLSKey)
+	if err != nil {
+		return fmt.Errorf("loading TLS cert/key: %w", err)
+	}
+
+	// Wrap the connection to replay the peeked ClientHello.
+	pc := NewPrefixConn(conn, peeked)
+
+	tlsConf := &tls.Config{
+		Certificates: []tls.Certificate{cert},
+		NextProtos:   []string{"h2", "http/1.1"},
+		MinVersion:   tls.VersionTLS12,
+	}
+
+	tlsConn := tls.Server(pc, tlsConf)
+
+	// Complete the TLS handshake with a timeout.
+	if err := tlsConn.SetDeadline(time.Now().Add(10 * time.Second)); err != nil {
+		return fmt.Errorf("setting handshake deadline: %w", err)
+	}
+	if err := tlsConn.Handshake(); err != nil {
+		return fmt.Errorf("TLS handshake: %w", err)
+	}
+	if err := tlsConn.SetDeadline(time.Time{}); err != nil {
+		return fmt.Errorf("clearing handshake deadline: %w", err)
+	}
+
+	// Build the reverse proxy handler.
+	rp, err := newReverseProxy(route, logger)
+	if err != nil {
+		return fmt.Errorf("creating reverse proxy: %w", err)
+	}
+
+	// Wrap the handler to inject the real client IP into the request context.
+	handler := http.HandlerFunc(func(w http.ResponseWriter, r *http.Request) {
+		r = r.WithContext(context.WithValue(r.Context(), clientAddrKey, clientAddr))
+		rp.ServeHTTP(w, r)
+	})
+
+	// Serve HTTP on the TLS connection. Use HTTP/2 if negotiated,
+	// otherwise fall back to HTTP/1.1.
+	proto := tlsConn.ConnectionState().NegotiatedProtocol
+
+	if proto == "h2" {
+		h2srv := &http2.Server{}
+		h2srv.ServeConn(tlsConn, &http2.ServeConnOpts{
+			Context: ctx,
+			Handler: handler,
+		})
+	} else {
+		// HTTP/1.1 fallback: serve a single connection.
+		srv := &http.Server{
+			Handler:           handler,
+			ReadHeaderTimeout: 30 * time.Second,
+		}
+		singleConn := newSingleConnListener(tlsConn)
+		srv.Serve(singleConn)
+	}
+
+	return nil
+}
+
+// newReverseProxy creates an httputil.ReverseProxy for the given route.
+func newReverseProxy(route RouteConfig, logger *slog.Logger) (*httputil.ReverseProxy, error) {
+	scheme := "http"
+	if route.BackendTLS {
+		scheme = "https"
+	}
+
+	target, err := url.Parse(fmt.Sprintf("%s://%s", scheme, route.Backend))
+	if err != nil {
+		return nil, fmt.Errorf("parsing backend URL: %w", err)
+	}
+
+	transport, err := newTransport(route)
+	if err != nil {
+		return nil, err
+	}
+
+	rp := &httputil.ReverseProxy{
+		Rewrite: func(pr *httputil.ProxyRequest) {
+			pr.SetURL(target)
+			// Preserve the original Host header from the client.
+			pr.Out.Host = pr.In.Host
+			// Inject forwarding headers from the real client IP.
+			if addr, ok := pr.In.Context().Value(clientAddrKey).(netip.AddrPort); ok {
+				setForwardingHeaders(pr.Out, addr)
+			}
+		},
+		Transport: transport,
+		ErrorHandler: func(w http.ResponseWriter, r *http.Request, err error) {
+			logger.Error("reverse proxy error", "backend", route.Backend, "error", err)
+			w.WriteHeader(http.StatusBadGateway)
+		},
+	}
+
+	return rp, nil
+}
+
+// newTransport creates the HTTP transport for connecting to the backend.
+func newTransport(route RouteConfig) (http.RoundTripper, error) {
+	connectTimeout := route.ConnectTimeout
+	if connectTimeout == 0 {
+		connectTimeout = 5 * time.Second
+	}
+
+	if route.BackendTLS {
+		// TLS to backend (h2 over TLS).
+		return &http2.Transport{
+			TLSClientConfig: &tls.Config{
+				MinVersion: tls.VersionTLS12,
+			},
+		}, nil
+	}
+
+	// h2c: HTTP/2 over plaintext TCP.
+	return &http2.Transport{
+		AllowHTTP: true,
+		DialTLSContext: func(ctx context.Context, network, addr string, _ *tls.Config) (net.Conn, error) {
+			conn, err := dialBackend(ctx, network, addr, connectTimeout, route)
+			if err != nil {
+				return nil, err
+			}
+			return conn, nil
+		},
+	}, nil
+}
+
+// dialBackend connects to the backend, optionally sending a PROXY protocol header.
+func dialBackend(ctx context.Context, network, addr string, timeout time.Duration, route RouteConfig) (net.Conn, error) {
+	d := &net.Dialer{Timeout: timeout}
+	conn, err := d.DialContext(ctx, network, addr)
+	if err != nil {
+		return nil, err
+	}
+
+	if route.SendProxyProtocol {
+		// Get the real client IP from the context if available.
+		clientAddr, _ := ctx.Value(clientAddrKey).(netip.AddrPort)
+		backendAddr, _ := netip.ParseAddrPort(conn.RemoteAddr().String())
+		if clientAddr.IsValid() {
+			if err := proxyproto.WriteV2(conn, clientAddr, backendAddr); err != nil {
+				conn.Close()
+				return nil, fmt.Errorf("writing PROXY protocol header: %w", err)
+			}
+		}
+	}
+
+	return conn, nil
+}
+
+// setForwardingHeaders sets X-Forwarded-For, X-Forwarded-Proto, and X-Real-IP.
+func setForwardingHeaders(r *http.Request, clientAddr netip.AddrPort) {
+	clientIP := clientAddr.Addr().String()
+	r.Header.Set("X-Forwarded-For", clientIP)
+	r.Header.Set("X-Forwarded-Proto", "https")
+	r.Header.Set("X-Real-IP", clientIP)
+}
+
+// singleConnListener is a net.Listener that returns a single connection once,
+// then blocks until closed. Used to serve HTTP/1.1 on a single TLS connection.
+type singleConnListener struct {
+	conn net.Conn
+	ch   chan net.Conn
+	done chan struct{}
+}
+
+func newSingleConnListener(conn net.Conn) *singleConnListener {
+	ch := make(chan net.Conn, 1)
+	ch <- conn
+	return &singleConnListener{conn: conn, ch: ch, done: make(chan struct{})}
+}
+
+func (l *singleConnListener) Accept() (net.Conn, error) {
+	select {
+	case c := <-l.ch:
+		return c, nil
+	case <-l.done:
+		return nil, net.ErrClosed
+	}
+}
+
+func (l *singleConnListener) Close() error {
+	select {
+	case <-l.done:
+	default:
+		close(l.done)
+	}
+	return nil
+}
+
+func (l *singleConnListener) Addr() net.Addr {
+	return l.conn.LocalAddr()
+}
diff --git a/internal/l7/serve_test.go b/internal/l7/serve_test.go
new file mode 100644
index 0000000..fc99f8b
--- /dev/null
+++ b/internal/l7/serve_test.go
@@ -0,0 +1,363 @@
+package l7
+
+import (
+	"context"
+	"crypto/ecdsa"
+	"crypto/elliptic"
+	"crypto/rand"
+	"crypto/tls"
+	"crypto/x509"
+	"crypto/x509/pkix"
+	"encoding/pem"
+	"fmt"
+	"io"
+	"log/slog"
+	"math/big"
+	"net"
+	"net/http"
+	"net/netip"
+	"os"
+	"path/filepath"
+	"testing"
+	"time"
+
+	"golang.org/x/net/http2"
+	"golang.org/x/net/http2/h2c"
+)
+
+// testCert generates a self-signed TLS certificate for the given hostname
+// and writes the cert/key to temporary files, returning their paths.
+func testCert(t *testing.T, hostname string) (certPath, keyPath string) {
+	t.Helper()
+
+	key, err := ecdsa.GenerateKey(elliptic.P256(), rand.Reader)
+	if err != nil {
+		t.Fatalf("generating key: %v", err)
+	}
+
+	tmpl := &x509.Certificate{
+		SerialNumber: big.NewInt(1),
+		Subject:      pkix.Name{CommonName: hostname},
+		DNSNames:     []string{hostname},
+		NotBefore:    time.Now().Add(-time.Hour),
+		NotAfter:     time.Now().Add(time.Hour),
+		KeyUsage:     x509.KeyUsageDigitalSignature,
+		ExtKeyUsage:  []x509.ExtKeyUsage{x509.ExtKeyUsageServerAuth},
+	}
+
+	certDER, err := x509.CreateCertificate(rand.Reader, tmpl, tmpl, &key.PublicKey, key)
+	if err != nil {
+		t.Fatalf("creating certificate: %v", err)
+	}
+
+	dir := t.TempDir()
+	certPath = filepath.Join(dir, "cert.pem")
+	keyPath = filepath.Join(dir, "key.pem")
+
+	certFile, err := os.Create(certPath)
+	if err != nil {
+		t.Fatalf("creating cert file: %v", err)
+	}
+	pem.Encode(certFile, &pem.Block{Type: "CERTIFICATE", Bytes: certDER})
+	certFile.Close()
+
+	keyDER, err := x509.MarshalECPrivateKey(key)
+	if err != nil {
+		t.Fatalf("marshaling key: %v", err)
+	}
+	keyFile, err := os.Create(keyPath)
+	if err != nil {
+		t.Fatalf("creating key file: %v", err)
+	}
+	pem.Encode(keyFile, &pem.Block{Type: "EC PRIVATE KEY", Bytes: keyDER})
+	keyFile.Close()
+
+	return certPath, keyPath
+}
+
+// startH2CBackend starts an h2c (HTTP/2 cleartext) backend server that
+// responds with the given status and body. Returns the listener address.
+func startH2CBackend(t *testing.T, handler http.Handler) string {
+	t.Helper()
+
+	h2s := &http2.Server{}
+	srv := &http.Server{
+		Handler:           h2c.NewHandler(handler, h2s),
+		ReadHeaderTimeout: 5 * time.Second,
+	}
+
+	ln, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("listen: %v", err)
+	}
+	t.Cleanup(func() {
+		srv.Close()
+		ln.Close()
+	})
+
+	go srv.Serve(ln)
+	return ln.Addr().String()
+}
+
+// dialTLSToProxy dials a TCP connection to the proxy, does a TLS handshake
+// with the given serverName (skipping cert verification for self-signed),
+// and returns an *http.Client configured to use that connection for HTTP/2.
+func dialTLSToProxy(t *testing.T, proxyAddr, serverName string) *http.Client {
+	t.Helper()
+
+	tlsConf := &tls.Config{
+		ServerName:         serverName,
+		InsecureSkipVerify: true,
+		NextProtos:         []string{"h2"},
+	}
+
+	conn, err := tls.DialWithDialer(
+		&net.Dialer{Timeout: 5 * time.Second},
+		"tcp", proxyAddr, tlsConf,
+	)
+	if err != nil {
+		t.Fatalf("TLS dial: %v", err)
+	}
+	t.Cleanup(func() { conn.Close() })
+
+	// Create an HTTP/2 client transport over this single connection.
+	tr := &http2.Transport{}
+	h2conn, err := tr.NewClientConn(conn)
+	if err != nil {
+		t.Fatalf("creating h2 client conn: %v", err)
+	}
+
+	return &http.Client{
+		Transport: &singleConnRoundTripper{cc: h2conn},
+	}
+}
+
+// singleConnRoundTripper is an http.RoundTripper that uses a single HTTP/2
+// client connection.
+type singleConnRoundTripper struct {
+	cc *http2.ClientConn
+}
+
+func (s *singleConnRoundTripper) RoundTrip(req *http.Request) (*http.Response, error) {
+	return s.cc.RoundTrip(req)
+}
+
+// serveL7Route starts l7.Serve in a goroutine for a single connection.
+// Returns when the goroutine completes.
+func serveL7Route(t *testing.T, conn net.Conn, peeked []byte, route RouteConfig) {
+	t.Helper()
+	logger := slog.New(slog.NewTextHandler(io.Discard, nil))
+	clientAddr := netip.MustParseAddrPort("203.0.113.50:12345")
+	ctx := context.Background()
+
+	go func() {
+		l7Err := Serve(ctx, conn, peeked, route, clientAddr, logger)
+		if l7Err != nil {
+			t.Logf("l7.Serve: %v", l7Err)
+		}
+	}()
+}
+
+func TestL7H2CBackend(t *testing.T) {
+	certPath, keyPath := testCert(t, "l7.test")
+
+	// Start an h2c backend.
+	backendAddr := startH2CBackend(t, http.HandlerFunc(func(w http.ResponseWriter, r *http.Request) {
+		w.Header().Set("X-Backend", "ok")
+		fmt.Fprintf(w, "hello from backend, path=%s", r.URL.Path)
+	}))
+
+	// Start a TCP listener for the L7 proxy.
+	proxyLn, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("proxy listen: %v", err)
+	}
+	defer proxyLn.Close()
+
+	route := RouteConfig{
+		Backend:        backendAddr,
+		TLSCert:        certPath,
+		TLSKey:         keyPath,
+		ConnectTimeout: 5 * time.Second,
+	}
+
+	// Accept one connection and run L7 serve.
+	go func() {
+		conn, err := proxyLn.Accept()
+		if err != nil {
+			return
+		}
+		logger := slog.New(slog.NewTextHandler(io.Discard, nil))
+		clientAddr := netip.MustParseAddrPort("203.0.113.50:12345")
+		// No peeked bytes — the client is connecting directly with TLS.
+		Serve(context.Background(), conn, nil, route, clientAddr, logger)
+	}()
+
+	// Connect as an HTTP/2 TLS client.
+	client := dialTLSToProxy(t, proxyLn.Addr().String(), "l7.test")
+
+	resp, err := client.Get(fmt.Sprintf("https://l7.test/foo"))
+	if err != nil {
+		t.Fatalf("GET: %v", err)
+	}
+	defer resp.Body.Close()
+
+	if resp.StatusCode != 200 {
+		t.Fatalf("status = %d, want 200", resp.StatusCode)
+	}
+
+	body, _ := io.ReadAll(resp.Body)
+	if got := string(body); got != "hello from backend, path=/foo" {
+		t.Fatalf("body = %q, want %q", got, "hello from backend, path=/foo")
+	}
+
+	if resp.Header.Get("X-Backend") != "ok" {
+		t.Fatalf("X-Backend header missing or wrong")
+	}
+}
+
+func TestL7ForwardingHeaders(t *testing.T) {
+	certPath, keyPath := testCert(t, "headers.test")
+
+	// Backend that echoes the forwarding headers.
+	backendAddr := startH2CBackend(t, http.HandlerFunc(func(w http.ResponseWriter, r *http.Request) {
+		fmt.Fprintf(w, "xff=%s xfp=%s xri=%s",
+			r.Header.Get("X-Forwarded-For"),
+			r.Header.Get("X-Forwarded-Proto"),
+			r.Header.Get("X-Real-IP"),
+		)
+	}))
+
+	proxyLn, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("proxy listen: %v", err)
+	}
+	defer proxyLn.Close()
+
+	route := RouteConfig{
+		Backend:        backendAddr,
+		TLSCert:        certPath,
+		TLSKey:         keyPath,
+		ConnectTimeout: 5 * time.Second,
+	}
+
+	go func() {
+		conn, err := proxyLn.Accept()
+		if err != nil {
+			return
+		}
+		logger := slog.New(slog.NewTextHandler(io.Discard, nil))
+		clientAddr := netip.MustParseAddrPort("203.0.113.50:12345")
+		Serve(context.Background(), conn, nil, route, clientAddr, logger)
+	}()
+
+	client := dialTLSToProxy(t, proxyLn.Addr().String(), "headers.test")
+	resp, err := client.Get("https://headers.test/")
+	if err != nil {
+		t.Fatalf("GET: %v", err)
+	}
+	defer resp.Body.Close()
+
+	body, _ := io.ReadAll(resp.Body)
+	want := "xff=203.0.113.50 xfp=https xri=203.0.113.50"
+	if string(body) != want {
+		t.Fatalf("body = %q, want %q", body, want)
+	}
+}
+
+func TestL7BackendUnreachable(t *testing.T) {
+	certPath, keyPath := testCert(t, "unreachable.test")
+
+	// Find a port that nothing is listening on.
+	ln, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("listen: %v", err)
+	}
+	deadAddr := ln.Addr().String()
+	ln.Close()
+
+	proxyLn, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("proxy listen: %v", err)
+	}
+	defer proxyLn.Close()
+
+	route := RouteConfig{
+		Backend:        deadAddr,
+		TLSCert:        certPath,
+		TLSKey:         keyPath,
+		ConnectTimeout: 1 * time.Second,
+	}
+
+	go func() {
+		conn, err := proxyLn.Accept()
+		if err != nil {
+			return
+		}
+		logger := slog.New(slog.NewTextHandler(io.Discard, nil))
+		clientAddr := netip.MustParseAddrPort("203.0.113.50:12345")
+		Serve(context.Background(), conn, nil, route, clientAddr, logger)
+	}()
+
+	client := dialTLSToProxy(t, proxyLn.Addr().String(), "unreachable.test")
+	resp, err := client.Get("https://unreachable.test/")
+	if err != nil {
+		t.Fatalf("GET: %v", err)
+	}
+	defer resp.Body.Close()
+
+	if resp.StatusCode != http.StatusBadGateway {
+		t.Fatalf("status = %d, want 502", resp.StatusCode)
+	}
+}
+
+func TestL7MultipleRequests(t *testing.T) {
+	certPath, keyPath := testCert(t, "multi.test")
+
+	var reqCount int
+	backendAddr := startH2CBackend(t, http.HandlerFunc(func(w http.ResponseWriter, r *http.Request) {
+		reqCount++
+		fmt.Fprintf(w, "req=%d path=%s", reqCount, r.URL.Path)
+	}))
+
+	proxyLn, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("proxy listen: %v", err)
+	}
+	defer proxyLn.Close()
+
+	route := RouteConfig{
+		Backend:        backendAddr,
+		TLSCert:        certPath,
+		TLSKey:         keyPath,
+		ConnectTimeout: 5 * time.Second,
+	}
+
+	go func() {
+		conn, err := proxyLn.Accept()
+		if err != nil {
+			return
+		}
+		logger := slog.New(slog.NewTextHandler(io.Discard, nil))
+		clientAddr := netip.MustParseAddrPort("203.0.113.50:12345")
+		Serve(context.Background(), conn, nil, route, clientAddr, logger)
+	}()
+
+	client := dialTLSToProxy(t, proxyLn.Addr().String(), "multi.test")
+
+	// Send multiple requests over the same HTTP/2 connection.
+	for i := range 3 {
+		path := fmt.Sprintf("/req%d", i)
+		resp, err := client.Get(fmt.Sprintf("https://multi.test%s", path))
+		if err != nil {
+			t.Fatalf("GET %s: %v", path, err)
+		}
+		body, _ := io.ReadAll(resp.Body)
+		resp.Body.Close()
+
+		want := fmt.Sprintf("req=%d path=%s", i+1, path)
+		if string(body) != want {
+			t.Fatalf("request %d: body = %q, want %q", i, body, want)
+		}
+	}
+}
diff --git a/internal/server/server.go b/internal/server/server.go
index c22396d..2cc2edd 100644
--- a/internal/server/server.go
+++ b/internal/server/server.go
@@ -13,6 +13,7 @@ import (
 
 	"git.wntrmute.dev/kyle/mc-proxy/internal/config"
 	"git.wntrmute.dev/kyle/mc-proxy/internal/firewall"
+	"git.wntrmute.dev/kyle/mc-proxy/internal/l7"
 	"git.wntrmute.dev/kyle/mc-proxy/internal/proxy"
 	"git.wntrmute.dev/kyle/mc-proxy/internal/proxyproto"
 	"git.wntrmute.dev/kyle/mc-proxy/internal/sni"
@@ -298,11 +299,10 @@ func (s *Server) handleConn(ctx context.Context, conn net.Conn, ls *ListenerStat
 		return
 	}
 
-	// Dispatch based on route mode. L7 will be implemented in a later phase.
+	// Dispatch based on route mode.
 	switch route.Mode {
 	case "l7":
-		s.logger.Error("L7 mode not yet implemented", "hostname", hostname)
-		return
+		s.handleL7(ctx, conn, addr, addrPort, hostname, route, peeked)
 	default:
 		s.handleL4(ctx, conn, addr, addrPort, hostname, route, peeked)
 	}
@@ -340,3 +340,25 @@ func (s *Server) handleL4(ctx context.Context, conn net.Conn, addr netip.Addr, c
 		"backend_bytes", result.BackendBytes,
 	)
 }
+
+// handleL7 handles an L7 (TLS-terminating) connection.
+func (s *Server) handleL7(ctx context.Context, conn net.Conn, addr netip.Addr, clientAddrPort netip.AddrPort, hostname string, route RouteInfo, peeked []byte) {
+	s.logger.Debug("L7 proxying", "addr", addr, "hostname", hostname, "backend", route.Backend)
+
+	rc := l7.RouteConfig{
+		Backend:           route.Backend,
+		TLSCert:           route.TLSCert,
+		TLSKey:            route.TLSKey,
+		BackendTLS:        route.BackendTLS,
+		SendProxyProtocol: route.SendProxyProtocol,
+		ConnectTimeout:    s.cfg.Proxy.ConnectTimeout.Duration,
+	}
+
+	if err := l7.Serve(ctx, conn, peeked, rc, clientAddrPort, s.logger); err != nil {
+		if ctx.Err() == nil {
+			s.logger.Debug("L7 serve ended", "hostname", hostname, "error", err)
+		}
+	}
+
+	s.logger.Info("L7 connection closed", "addr", addr, "hostname", hostname)
+}
diff --git a/internal/server/server_test.go b/internal/server/server_test.go
index 8ca9577..ceda29b 100644
--- a/internal/server/server_test.go
+++ b/internal/server/server_test.go
@@ -3,11 +3,23 @@ package server
 import (
 	"bytes"
 	"context"
+	"crypto/ecdsa"
+	"crypto/elliptic"
+	"crypto/rand"
+	"crypto/tls"
+	"crypto/x509"
+	"crypto/x509/pkix"
 	"encoding/binary"
+	"encoding/pem"
+	"fmt"
 	"io"
 	"log/slog"
+	"math/big"
 	"net"
+	"net/http"
 	"net/netip"
+	"os"
+	"path/filepath"
 	"sync"
 	"testing"
 	"time"
@@ -15,6 +27,8 @@ import (
 	"git.wntrmute.dev/kyle/mc-proxy/internal/config"
 	"git.wntrmute.dev/kyle/mc-proxy/internal/firewall"
 	"git.wntrmute.dev/kyle/mc-proxy/internal/proxyproto"
+	"golang.org/x/net/http2"
+	"golang.org/x/net/http2/h2c"
 )
 
 // l4Route creates a RouteInfo for an L4 passthrough route.
@@ -1038,6 +1052,220 @@ func TestProxyProtocolFirewallUsesRealIP(t *testing.T) {
 	wg.Wait()
 }
 
+// --- L7 server integration tests ---
+
+// testCert generates a self-signed TLS certificate for the given hostname.
+func testCert(t *testing.T, hostname string) (certPath, keyPath string) {
+	t.Helper()
+	key, err := ecdsa.GenerateKey(elliptic.P256(), rand.Reader)
+	if err != nil {
+		t.Fatalf("generating key: %v", err)
+	}
+	tmpl := &x509.Certificate{
+		SerialNumber: big.NewInt(1),
+		Subject:      pkix.Name{CommonName: hostname},
+		DNSNames:     []string{hostname},
+		NotBefore:    time.Now().Add(-time.Hour),
+		NotAfter:     time.Now().Add(time.Hour),
+		KeyUsage:     x509.KeyUsageDigitalSignature,
+		ExtKeyUsage:  []x509.ExtKeyUsage{x509.ExtKeyUsageServerAuth},
+	}
+	certDER, err := x509.CreateCertificate(rand.Reader, tmpl, tmpl, &key.PublicKey, key)
+	if err != nil {
+		t.Fatalf("creating certificate: %v", err)
+	}
+	dir := t.TempDir()
+	certPath = filepath.Join(dir, "cert.pem")
+	keyPath = filepath.Join(dir, "key.pem")
+	cf, _ := os.Create(certPath)
+	pem.Encode(cf, &pem.Block{Type: "CERTIFICATE", Bytes: certDER})
+	cf.Close()
+	keyDER, _ := x509.MarshalECPrivateKey(key)
+	kf, _ := os.Create(keyPath)
+	pem.Encode(kf, &pem.Block{Type: "EC PRIVATE KEY", Bytes: keyDER})
+	kf.Close()
+	return
+}
+
+// startH2CBackend starts an h2c backend for testing.
+func startH2CBackend(t *testing.T, handler http.Handler) string {
+	t.Helper()
+	h2s := &http2.Server{}
+	srv := &http.Server{
+		Handler:           h2c.NewHandler(handler, h2s),
+		ReadHeaderTimeout: 5 * time.Second,
+	}
+	ln, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("listen: %v", err)
+	}
+	t.Cleanup(func() { srv.Close(); ln.Close() })
+	go srv.Serve(ln)
+	return ln.Addr().String()
+}
+
+func TestL7ThroughServer(t *testing.T) {
+	certPath, keyPath := testCert(t, "l7srv.test")
+
+	backendAddr := startH2CBackend(t, http.HandlerFunc(func(w http.ResponseWriter, r *http.Request) {
+		fmt.Fprintf(w, "ok path=%s xff=%s", r.URL.Path, r.Header.Get("X-Forwarded-For"))
+	}))
+
+	proxyLn, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("proxy listen: %v", err)
+	}
+	proxyAddr := proxyLn.Addr().String()
+	proxyLn.Close()
+
+	srv := newTestServer(t, []ListenerData{
+		{
+			ID:   1,
+			Addr: proxyAddr,
+			Routes: map[string]RouteInfo{
+				"l7srv.test": {
+					Backend: backendAddr,
+					Mode:    "l7",
+					TLSCert: certPath,
+					TLSKey:  keyPath,
+				},
+			},
+		},
+	})
+
+	stop := startAndStop(t, srv)
+	defer stop()
+
+	// Connect with TLS and make an HTTP/2 request.
+	tlsConf := &tls.Config{
+		ServerName:         "l7srv.test",
+		InsecureSkipVerify: true,
+		NextProtos:         []string{"h2"},
+	}
+	conn, err := tls.DialWithDialer(
+		&net.Dialer{Timeout: 5 * time.Second},
+		"tcp", proxyAddr, tlsConf,
+	)
+	if err != nil {
+		t.Fatalf("TLS dial: %v", err)
+	}
+	defer conn.Close()
+
+	tr := &http2.Transport{}
+	h2conn, err := tr.NewClientConn(conn)
+	if err != nil {
+		t.Fatalf("h2 client conn: %v", err)
+	}
+
+	req, _ := http.NewRequest("GET", "https://l7srv.test/hello", nil)
+	resp, err := h2conn.RoundTrip(req)
+	if err != nil {
+		t.Fatalf("RoundTrip: %v", err)
+	}
+	defer resp.Body.Close()
+
+	body, _ := io.ReadAll(resp.Body)
+	// The X-Forwarded-For should be the TCP source IP (127.0.0.1) since
+	// no PROXY protocol is in use.
+	if resp.StatusCode != 200 {
+		t.Fatalf("status = %d, want 200", resp.StatusCode)
+	}
+	got := string(body)
+	if got != "ok path=/hello xff=127.0.0.1" {
+		t.Fatalf("body = %q", got)
+	}
+}
+
+func TestMixedL4L7SameListener(t *testing.T) {
+	certPath, keyPath := testCert(t, "l7mixed.test")
+
+	// L4 backend: echo server.
+	l4BackendLn, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("l4 backend listen: %v", err)
+	}
+	defer l4BackendLn.Close()
+	go echoServer(t, l4BackendLn)
+
+	// L7 backend: h2c HTTP server.
+	l7BackendAddr := startH2CBackend(t, http.HandlerFunc(func(w http.ResponseWriter, r *http.Request) {
+		fmt.Fprint(w, "l7-response")
+	}))
+
+	proxyLn, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("proxy listen: %v", err)
+	}
+	proxyAddr := proxyLn.Addr().String()
+	proxyLn.Close()
+
+	srv := newTestServer(t, []ListenerData{
+		{
+			ID:   1,
+			Addr: proxyAddr,
+			Routes: map[string]RouteInfo{
+				"l4echo.test": l4Route(l4BackendLn.Addr().String()),
+				"l7mixed.test": {
+					Backend: l7BackendAddr,
+					Mode:    "l7",
+					TLSCert: certPath,
+					TLSKey:  keyPath,
+				},
+			},
+		},
+	})
+
+	stop := startAndStop(t, srv)
+	defer stop()
+
+	// Test L4 route works: send ClientHello, get echo.
+	l4Conn, err := net.DialTimeout("tcp", proxyAddr, 2*time.Second)
+	if err != nil {
+		t.Fatalf("dial L4: %v", err)
+	}
+	defer l4Conn.Close()
+	hello := buildClientHello("l4echo.test")
+	l4Conn.Write(hello)
+	echoed := make([]byte, len(hello))
+	l4Conn.SetReadDeadline(time.Now().Add(5 * time.Second))
+	if _, err := io.ReadFull(l4Conn, echoed); err != nil {
+		t.Fatalf("L4 echo read: %v", err)
+	}
+
+	// Test L7 route works: TLS + HTTP/2.
+	tlsConf := &tls.Config{
+		ServerName:         "l7mixed.test",
+		InsecureSkipVerify: true,
+		NextProtos:         []string{"h2"},
+	}
+	l7Conn, err := tls.DialWithDialer(
+		&net.Dialer{Timeout: 5 * time.Second},
+		"tcp", proxyAddr, tlsConf,
+	)
+	if err != nil {
+		t.Fatalf("TLS dial L7: %v", err)
+	}
+	defer l7Conn.Close()
+
+	tr := &http2.Transport{}
+	h2conn, err := tr.NewClientConn(l7Conn)
+	if err != nil {
+		t.Fatalf("h2 client conn: %v", err)
+	}
+
+	req, _ := http.NewRequest("GET", "https://l7mixed.test/", nil)
+	resp, err := h2conn.RoundTrip(req)
+	if err != nil {
+		t.Fatalf("L7 RoundTrip: %v", err)
+	}
+	defer resp.Body.Close()
+	body, _ := io.ReadAll(resp.Body)
+
+	if string(body) != "l7-response" {
+		t.Fatalf("L7 body = %q, want %q", body, "l7-response")
+	}
+}
+
 // --- ClientHello builder helpers (mirrors internal/sni test helpers) ---
 
 func buildClientHello(serverName string) []byte {