diff --git a/etcdserver/api/v3rpc/interceptor.go b/etcdserver/api/v3rpc/interceptor.go
index 45ea5d734fdd..77c7c1fd5975 100644
--- a/etcdserver/api/v3rpc/interceptor.go
+++ b/etcdserver/api/v3rpc/interceptor.go
@@ -25,11 +25,12 @@ import (
 	"go.etcd.io/etcd/v3/pkg/types"
 	"go.etcd.io/etcd/v3/raft"
 
-	pb "go.etcd.io/etcd/v3/etcdserver/etcdserverpb"
 	"go.uber.org/zap"
 	"google.golang.org/grpc"
 	"google.golang.org/grpc/metadata"
 	"google.golang.org/grpc/peer"
+
+	pb "go.etcd.io/etcd/v3/etcdserver/etcdserverpb"
 )
 
 const (
@@ -231,8 +232,13 @@ func newStreamInterceptor(s *etcdserver.EtcdServer) grpc.StreamServerInterceptor
 					return rpctypes.ErrGRPCNoLeader
 				}
 
-				cctx, cancel := context.WithCancel(ss.Context())
-				ss = serverStreamWithCtx{ctx: cctx, cancel: &cancel, ServerStream: ss}
+				cancelCtx, cancelFn := context.WithCancel(ss.Context())
+				monitorCtx := &leaderMonitoringContext{
+					Context: cancelCtx,
+					cancel: cancelFn,
+				}
+				cancelForLeaderLoss := context.CancelFunc(monitorCtx.CancelForLeaderLoss)
+				ss = serverStreamWithCtx{ctx: monitorCtx, cancel: &cancelForLeaderLoss, ServerStream: ss}
 
 				smap.mu.Lock()
 				smap.streams[ss] = struct{}{}
@@ -242,7 +248,7 @@ func newStreamInterceptor(s *etcdserver.EtcdServer) grpc.StreamServerInterceptor
 					smap.mu.Lock()
 					delete(smap.streams, ss)
 					smap.mu.Unlock()
-					cancel()
+					monitorCtx.Cancel()
 				}()
 			}
 		}
@@ -251,6 +257,40 @@ func newStreamInterceptor(s *etcdserver.EtcdServer) grpc.StreamServerInterceptor
 	}
 }
 
+// leaderMonitoringContext wraps a context and provides a custom error when
+// the CancelForLeaderLoss() method is used to cancel the context. This is
+// so downstream context users can disambiguate the reason for the cancellation
+// which could be from the client (for example) or from this interceptor code.
+type leaderMonitoringContext struct {
+	context.Context
+
+	lock sync.Mutex
+	cancel context.CancelFunc
+	cancelReason error
+}
+
+func (c *leaderMonitoringContext) Cancel() {
+	c.lock.Lock()
+	defer c.lock.Unlock()
+	c.cancel()
+}
+
+func (c *leaderMonitoringContext) CancelForLeaderLoss() {
+	c.lock.Lock()
+	defer c.lock.Unlock()
+	c.cancelReason = rpctypes.ErrGRPCNoLeader
+	c.cancel()
+}
+
+func (c *leaderMonitoringContext) Err() error {
+	c.lock.Lock()
+	defer c.lock.Unlock()
+	if c.cancelReason != nil {
+		return c.cancelReason
+	}
+	return c.Context.Err()
+}
+
 type serverStreamWithCtx struct {
 	grpc.ServerStream
 	ctx    context.Context
diff --git a/etcdserver/api/v3rpc/rpctypes/error.go b/etcdserver/api/v3rpc/rpctypes/error.go
index 26e3fd378c14..24fdc85736c4 100644
--- a/etcdserver/api/v3rpc/rpctypes/error.go
+++ b/etcdserver/api/v3rpc/rpctypes/error.go
@@ -35,6 +35,8 @@ var (
 	ErrGRPCLeaseExist       = status.New(codes.FailedPrecondition, "etcdserver: lease already exists").Err()
 	ErrGRPCLeaseTTLTooLarge = status.New(codes.OutOfRange, "etcdserver: too large lease TTL").Err()
 
+	ErrGRPCWatchCanceled = status.New(codes.Canceled, "etcdserver: watch canceled").Err()
+
 	ErrGRPCMemberExist            = status.New(codes.FailedPrecondition, "etcdserver: member ID already exist").Err()
 	ErrGRPCPeerURLExist           = status.New(codes.FailedPrecondition, "etcdserver: Peer URLs already exists").Err()
 	ErrGRPCMemberNotEnoughStarted = status.New(codes.FailedPrecondition, "etcdserver: re-configuration failed due to not enough started members").Err()
diff --git a/etcdserver/api/v3rpc/watch.go b/etcdserver/api/v3rpc/watch.go
index 2144779fc4da..504b33a95d95 100644
--- a/etcdserver/api/v3rpc/watch.go
+++ b/etcdserver/api/v3rpc/watch.go
@@ -21,14 +21,14 @@ import (
 	"sync"
 	"time"
 
+	"go.uber.org/zap"
+
 	"go.etcd.io/etcd/v3/auth"
 	"go.etcd.io/etcd/v3/etcdserver"
 	"go.etcd.io/etcd/v3/etcdserver/api/v3rpc/rpctypes"
 	pb "go.etcd.io/etcd/v3/etcdserver/etcdserverpb"
 	"go.etcd.io/etcd/v3/mvcc"
 	"go.etcd.io/etcd/v3/mvcc/mvccpb"
-
-	"go.uber.org/zap"
 )
 
 const minWatchProgressInterval = 100 * time.Millisecond
@@ -199,13 +199,14 @@ func (ws *watchServer) Watch(stream pb.Watch_WatchServer) (err error) {
 
 	select {
 	case err = <-errc:
+		if err == context.Canceled {
+			err = rpctypes.ErrGRPCWatchCanceled
+		}
 		close(sws.ctrlStream)
-
 	case <-stream.Context().Done():
 		err = stream.Context().Err()
-		// the only server-side cancellation is noleader for now.
 		if err == context.Canceled {
-			err = rpctypes.ErrGRPCNoLeader
+			err = rpctypes.ErrGRPCWatchCanceled
 		}
 	}
 
diff --git a/tests/e2e/metrics_test.go b/tests/e2e/metrics_test.go
index e20b0f88d5c1..9666f169ebb4 100644
--- a/tests/e2e/metrics_test.go
+++ b/tests/e2e/metrics_test.go
@@ -49,6 +49,7 @@ func metricsTest(cx ctlCtx) {
 		{"/metrics", fmt.Sprintf("etcd_mvcc_delete_total 3")},
 		{"/metrics", fmt.Sprintf(`etcd_server_version{server_version="%s"} 1`, version.Version)},
 		{"/metrics", fmt.Sprintf(`etcd_cluster_version{cluster_version="%s"} 1`, version.Cluster(version.Version))},
+		{"/metrics", fmt.Sprintf(`grpc_server_handled_total{grpc_code="Canceled",grpc_method="Watch",grpc_service="etcdserverpb.Watch",grpc_type="bidi_stream"} 6`)},
 		{"/health", `{"health":"true","reason":""}`},
 	} {
 		i++
@@ -58,7 +59,9 @@ func metricsTest(cx ctlCtx) {
 		if err := ctlV3Del(cx, []string{fmt.Sprintf("%d", i)}, 1); err != nil {
 			cx.t.Fatal(err)
 		}
-
+		if err := ctlV3Watch(cx, []string{"k", "--rev", "1"}, []kvExec{{key: "k", val: "v"}}...); err != nil {
+			cx.t.Fatal(err)
+		}
 		if err := cURLGet(cx.epc, cURLReq{endpoint: test.endpoint, expected: test.expected, metricsURLScheme: cx.cfg.metricsURLScheme}); err != nil {
 			cx.t.Fatalf("failed get with curl (%v)", err)
 		}