diff --git a/client/internal/dnsfwd/cache.go b/client/internal/dnsfwd/cache.go
new file mode 100644
index 000000000..43fe2d020
--- /dev/null
+++ b/client/internal/dnsfwd/cache.go
@@ -0,0 +1,78 @@
+package dnsfwd
+
+import (
+	"net/netip"
+	"slices"
+	"strings"
+	"sync"
+
+	"github.com/miekg/dns"
+)
+
+type cache struct {
+	mu      sync.RWMutex
+	records map[string]*cacheEntry
+}
+
+type cacheEntry struct {
+	ip4Addrs []netip.Addr
+	ip6Addrs []netip.Addr
+}
+
+func newCache() *cache {
+	return &cache{
+		records: make(map[string]*cacheEntry),
+	}
+}
+
+func (c *cache) get(domain string, reqType uint16) ([]netip.Addr, bool) {
+	c.mu.RLock()
+	defer c.mu.RUnlock()
+
+	entry, exists := c.records[normalizeDomain(domain)]
+	if !exists {
+		return nil, false
+	}
+
+	switch reqType {
+	case dns.TypeA:
+		return slices.Clone(entry.ip4Addrs), true
+	case dns.TypeAAAA:
+		return slices.Clone(entry.ip6Addrs), true
+	default:
+		return nil, false
+	}
+
+}
+
+func (c *cache) set(domain string, reqType uint16, addrs []netip.Addr) {
+	c.mu.Lock()
+	defer c.mu.Unlock()
+	norm := normalizeDomain(domain)
+	entry, exists := c.records[norm]
+	if !exists {
+		entry = &cacheEntry{}
+		c.records[norm] = entry
+	}
+
+	switch reqType {
+	case dns.TypeA:
+		entry.ip4Addrs = slices.Clone(addrs)
+	case dns.TypeAAAA:
+		entry.ip6Addrs = slices.Clone(addrs)
+	}
+}
+
+// unset removes cached entries for the given domain and request type.
+func (c *cache) unset(domain string) {
+	c.mu.Lock()
+	defer c.mu.Unlock()
+	delete(c.records, normalizeDomain(domain))
+}
+
+// normalizeDomain converts an input domain into a canonical form used as cache key:
+// lowercase and fully-qualified (with trailing dot).
+func normalizeDomain(domain string) string {
+	// dns.Fqdn ensures trailing dot; ToLower for consistent casing
+	return dns.Fqdn(strings.ToLower(domain))
+}
diff --git a/client/internal/dnsfwd/cache_test.go b/client/internal/dnsfwd/cache_test.go
new file mode 100644
index 000000000..c23f0f31d
--- /dev/null
+++ b/client/internal/dnsfwd/cache_test.go
@@ -0,0 +1,86 @@
+package dnsfwd
+
+import (
+	"net/netip"
+	"testing"
+)
+
+func mustAddr(t *testing.T, s string) netip.Addr {
+	t.Helper()
+	a, err := netip.ParseAddr(s)
+	if err != nil {
+		t.Fatalf("parse addr %s: %v", s, err)
+	}
+	return a
+}
+
+func TestCacheNormalization(t *testing.T) {
+	c := newCache()
+
+	// Mixed case, without trailing dot
+	domainInput := "ExAmPlE.CoM"
+	ipv4 := []netip.Addr{mustAddr(t, "1.2.3.4")}
+	c.set(domainInput, 1 /* dns.TypeA */, ipv4)
+
+	// Lookup with lower, with trailing dot
+	if got, ok := c.get("example.com.", 1); !ok || len(got) != 1 || got[0].String() != "1.2.3.4" {
+		t.Fatalf("expected cached IPv4 result via normalized key, got=%v ok=%v", got, ok)
+	}
+
+	// Lookup with different casing again
+	if got, ok := c.get("EXAMPLE.COM", 1); !ok || len(got) != 1 || got[0].String() != "1.2.3.4" {
+		t.Fatalf("expected cached IPv4 result via different casing, got=%v ok=%v", got, ok)
+	}
+}
+
+func TestCacheSeparateTypes(t *testing.T) {
+	c := newCache()
+
+	domain := "test.local"
+	ipv4 := []netip.Addr{mustAddr(t, "10.0.0.1")}
+	ipv6 := []netip.Addr{mustAddr(t, "2001:db8::1")}
+
+	c.set(domain, 1 /* A */, ipv4)
+	c.set(domain, 28 /* AAAA */, ipv6)
+
+	got4, ok4 := c.get(domain, 1)
+	if !ok4 || len(got4) != 1 || got4[0] != ipv4[0] {
+		t.Fatalf("expected A record from cache, got=%v ok=%v", got4, ok4)
+	}
+
+	got6, ok6 := c.get(domain, 28)
+	if !ok6 || len(got6) != 1 || got6[0] != ipv6[0] {
+		t.Fatalf("expected AAAA record from cache, got=%v ok=%v", got6, ok6)
+	}
+}
+
+func TestCacheCloneOnGetAndSet(t *testing.T) {
+	c := newCache()
+	domain := "clone.test"
+
+	src := []netip.Addr{mustAddr(t, "8.8.8.8")}
+	c.set(domain, 1, src)
+
+	// Mutate source slice; cache should be unaffected
+	src[0] = mustAddr(t, "9.9.9.9")
+
+	got, ok := c.get(domain, 1)
+	if !ok || len(got) != 1 || got[0].String() != "8.8.8.8" {
+		t.Fatalf("expected cached value to be independent of source slice, got=%v ok=%v", got, ok)
+	}
+
+	// Mutate returned slice; internal cache should remain unchanged
+	got[0] = mustAddr(t, "4.4.4.4")
+	got2, ok2 := c.get(domain, 1)
+	if !ok2 || len(got2) != 1 || got2[0].String() != "8.8.8.8" {
+		t.Fatalf("expected returned slice to be a clone, got=%v ok=%v", got2, ok2)
+	}
+}
+
+func TestCacheMiss(t *testing.T) {
+	c := newCache()
+	if got, ok := c.get("missing.example", 1); ok || got != nil {
+		t.Fatalf("expected cache miss, got=%v ok=%v", got, ok)
+	}
+}
+
diff --git a/client/internal/dnsfwd/forwarder.go b/client/internal/dnsfwd/forwarder.go
index d912919a1..7a262fa4c 100644
--- a/client/internal/dnsfwd/forwarder.go
+++ b/client/internal/dnsfwd/forwarder.go
@@ -46,6 +46,7 @@ type DNSForwarder struct {
 	fwdEntries []*ForwarderEntry
 	firewall   firewaller
 	resolver   resolver
+	cache      *cache
 }
 
 func NewDNSForwarder(listenAddress string, ttl uint32, firewall firewaller, statusRecorder *peer.Status) *DNSForwarder {
@@ -56,6 +57,7 @@ func NewDNSForwarder(listenAddress string, ttl uint32, firewall firewaller, stat
 		firewall:       firewall,
 		statusRecorder: statusRecorder,
 		resolver:       net.DefaultResolver,
+		cache:          newCache(),
 	}
 }
 
@@ -103,10 +105,39 @@ func (f *DNSForwarder) UpdateDomains(entries []*ForwarderEntry) {
 	f.mutex.Lock()
 	defer f.mutex.Unlock()
 
+	// remove cache entries for domains that no longer appear
+	f.removeStaleCacheEntries(f.fwdEntries, entries)
+
 	f.fwdEntries = entries
 	log.Debugf("Updated DNS forwarder with %d domains", len(entries))
 }
 
+// removeStaleCacheEntries unsets cache items for domains that were present
+// in the old list but not present in the new list.
+func (f *DNSForwarder) removeStaleCacheEntries(oldEntries, newEntries []*ForwarderEntry) {
+	if f.cache == nil {
+		return
+	}
+
+	newSet := make(map[string]struct{}, len(newEntries))
+	for _, e := range newEntries {
+		if e == nil {
+			continue
+		}
+		newSet[e.Domain.PunycodeString()] = struct{}{}
+	}
+
+	for _, e := range oldEntries {
+		if e == nil {
+			continue
+		}
+		pattern := e.Domain.PunycodeString()
+		if _, ok := newSet[pattern]; !ok {
+			f.cache.unset(pattern)
+		}
+	}
+}
+
 func (f *DNSForwarder) Close(ctx context.Context) error {
 	var result *multierror.Error
 
@@ -171,6 +202,7 @@ func (f *DNSForwarder) handleDNSQuery(w dns.ResponseWriter, query *dns.Msg) *dns
 
 	f.updateInternalState(ips, mostSpecificResId, matchingEntries)
 	f.addIPsToResponse(resp, domain, ips)
+	f.cache.set(domain, question.Qtype, ips)
 
 	return resp
 }
@@ -282,29 +314,69 @@ func (f *DNSForwarder) setResponseCodeForNotFound(ctx context.Context, resp *dns
 	resp.Rcode = dns.RcodeSuccess
 }
 
-// handleDNSError processes DNS lookup errors and sends an appropriate error response
-func (f *DNSForwarder) handleDNSError(ctx context.Context, w dns.ResponseWriter, question dns.Question, resp *dns.Msg, domain string, err error) {
+// handleDNSError processes DNS lookup errors and sends an appropriate error response.
+func (f *DNSForwarder) handleDNSError(
+	ctx context.Context,
+	w dns.ResponseWriter,
+	question dns.Question,
+	resp *dns.Msg,
+	domain string,
+	err error,
+) {
+	// Default to SERVFAIL; override below when appropriate.
+	resp.Rcode = dns.RcodeServerFailure
+
+	qType := question.Qtype
+	qTypeName := dns.TypeToString[qType]
+
+	// Prefer typed DNS errors; fall back to generic logging otherwise.
 	var dnsErr *net.DNSError
-
-	switch {
-	case errors.As(err, &dnsErr):
-		resp.Rcode = dns.RcodeServerFailure
-		if dnsErr.IsNotFound {
-			f.setResponseCodeForNotFound(ctx, resp, domain, question.Qtype)
+	if !errors.As(err, &dnsErr) {
+		log.Warnf(errResolveFailed, domain, err)
+		if writeErr := w.WriteMsg(resp); writeErr != nil {
+			log.Errorf("failed to write failure DNS response: %v", writeErr)
 		}
+		return
+	}
 
-		if dnsErr.Server != "" {
-			log.Warnf("failed to resolve query for type=%s domain=%s server=%s: %v", dns.TypeToString[question.Qtype], domain, dnsErr.Server, err)
-		} else {
-			log.Warnf(errResolveFailed, domain, err)
+	// NotFound: set NXDOMAIN / appropriate code via helper.
+	if dnsErr.IsNotFound {
+		f.setResponseCodeForNotFound(ctx, resp, domain, qType)
+		if writeErr := w.WriteMsg(resp); writeErr != nil {
+			log.Errorf("failed to write failure DNS response: %v", writeErr)
 		}
-	default:
-		resp.Rcode = dns.RcodeServerFailure
+		f.cache.set(domain, question.Qtype, nil)
+		return
+	}
+
+	// Upstream failed but we might have a cached answer—serve it if present.
+	if ips, ok := f.cache.get(domain, qType); ok {
+		if len(ips) > 0 {
+			log.Debugf("serving cached DNS response after upstream failure: domain=%s type=%s", domain, qTypeName)
+			f.addIPsToResponse(resp, domain, ips)
+			resp.Rcode = dns.RcodeSuccess
+			if writeErr := w.WriteMsg(resp); writeErr != nil {
+				log.Errorf("failed to write cached DNS response: %v", writeErr)
+			}
+		} else { // send NXDOMAIN / appropriate code if cache is empty
+			f.setResponseCodeForNotFound(ctx, resp, domain, qType)
+			if writeErr := w.WriteMsg(resp); writeErr != nil {
+				log.Errorf("failed to write failure DNS response: %v", writeErr)
+			}
+		}
+		return
+	}
+
+	// No cache. Log with or without the server field for more context.
+	if dnsErr.Server != "" {
+		log.Warnf("failed to resolve: type=%s domain=%s server=%s: %v", qTypeName, domain, dnsErr.Server, err)
+	} else {
 		log.Warnf(errResolveFailed, domain, err)
 	}
 
-	if err := w.WriteMsg(resp); err != nil {
-		log.Errorf("failed to write failure DNS response: %v", err)
+	// Write final failure response.
+	if writeErr := w.WriteMsg(resp); writeErr != nil {
+		log.Errorf("failed to write failure DNS response: %v", writeErr)
 	}
 }
 
diff --git a/client/internal/dnsfwd/forwarder_test.go b/client/internal/dnsfwd/forwarder_test.go
index 57085e19a..c1c95a2c1 100644
--- a/client/internal/dnsfwd/forwarder_test.go
+++ b/client/internal/dnsfwd/forwarder_test.go
@@ -648,6 +648,95 @@ func TestDNSForwarder_TCPTruncation(t *testing.T) {
 	assert.LessOrEqual(t, writtenResp.Len(), dns.MinMsgSize, "Response should fit in minimum UDP size")
 }
 
+// Ensures that when the first query succeeds and populates the cache,
+// a subsequent upstream failure still returns a successful response from cache.
+func TestDNSForwarder_ServeFromCacheOnUpstreamFailure(t *testing.T) {
+	mockResolver := &MockResolver{}
+	forwarder := NewDNSForwarder("127.0.0.1:0", 300, nil, &peer.Status{})
+	forwarder.resolver = mockResolver
+
+	d, err := domain.FromString("example.com")
+	require.NoError(t, err)
+	entries := []*ForwarderEntry{{Domain: d, ResID: "res-cache"}}
+	forwarder.UpdateDomains(entries)
+
+	ip := netip.MustParseAddr("1.2.3.4")
+
+	// First call resolves successfully and populates cache
+	mockResolver.On("LookupNetIP", mock.Anything, "ip4", dns.Fqdn("example.com")).
+		Return([]netip.Addr{ip}, nil).Once()
+
+	// Second call fails upstream; forwarder should serve from cache
+	mockResolver.On("LookupNetIP", mock.Anything, "ip4", dns.Fqdn("example.com")).
+		Return([]netip.Addr{}, &net.DNSError{Err: "temporary failure"}).Once()
+
+	// First query: populate cache
+	q1 := &dns.Msg{}
+	q1.SetQuestion(dns.Fqdn("example.com"), dns.TypeA)
+	w1 := &test.MockResponseWriter{}
+	resp1 := forwarder.handleDNSQuery(w1, q1)
+	require.NotNil(t, resp1)
+	require.Equal(t, dns.RcodeSuccess, resp1.Rcode)
+	require.Len(t, resp1.Answer, 1)
+
+	// Second query: serve from cache after upstream failure
+	q2 := &dns.Msg{}
+	q2.SetQuestion(dns.Fqdn("example.com"), dns.TypeA)
+	var writtenResp *dns.Msg
+	w2 := &test.MockResponseWriter{WriteMsgFunc: func(m *dns.Msg) error { writtenResp = m; return nil }}
+	_ = forwarder.handleDNSQuery(w2, q2)
+
+	require.NotNil(t, writtenResp, "expected response to be written")
+	require.Equal(t, dns.RcodeSuccess, writtenResp.Rcode)
+	require.Len(t, writtenResp.Answer, 1)
+
+	mockResolver.AssertExpectations(t)
+}
+
+// Verifies that cache normalization works across casing and trailing dot variations.
+func TestDNSForwarder_CacheNormalizationCasingAndDot(t *testing.T) {
+	mockResolver := &MockResolver{}
+	forwarder := NewDNSForwarder("127.0.0.1:0", 300, nil, &peer.Status{})
+	forwarder.resolver = mockResolver
+
+	d, err := domain.FromString("ExAmPlE.CoM")
+	require.NoError(t, err)
+	entries := []*ForwarderEntry{{Domain: d, ResID: "res-norm"}}
+	forwarder.UpdateDomains(entries)
+
+	ip := netip.MustParseAddr("9.8.7.6")
+
+	// Initial resolution with mixed case to populate cache
+	mixedQuery := "ExAmPlE.CoM"
+	mockResolver.On("LookupNetIP", mock.Anything, "ip4", dns.Fqdn(strings.ToLower(mixedQuery))).
+		Return([]netip.Addr{ip}, nil).Once()
+
+	q1 := &dns.Msg{}
+	q1.SetQuestion(mixedQuery+".", dns.TypeA)
+	w1 := &test.MockResponseWriter{}
+	resp1 := forwarder.handleDNSQuery(w1, q1)
+	require.NotNil(t, resp1)
+	require.Equal(t, dns.RcodeSuccess, resp1.Rcode)
+	require.Len(t, resp1.Answer, 1)
+
+	// Subsequent query without dot and upper case should hit cache even if upstream fails
+	// Forwarder lowercases and uses the question name as-is (no trailing dot here)
+	mockResolver.On("LookupNetIP", mock.Anything, "ip4", strings.ToLower("EXAMPLE.COM")).
+		Return([]netip.Addr{}, &net.DNSError{Err: "temporary failure"}).Once()
+
+	q2 := &dns.Msg{}
+	q2.SetQuestion("EXAMPLE.COM", dns.TypeA)
+	var writtenResp *dns.Msg
+	w2 := &test.MockResponseWriter{WriteMsgFunc: func(m *dns.Msg) error { writtenResp = m; return nil }}
+	_ = forwarder.handleDNSQuery(w2, q2)
+
+	require.NotNil(t, writtenResp)
+	require.Equal(t, dns.RcodeSuccess, writtenResp.Rcode)
+	require.Len(t, writtenResp.Answer, 1)
+
+	mockResolver.AssertExpectations(t)
+}
+
 func TestDNSForwarder_MultipleOverlappingPatterns(t *testing.T) {
 	// Test complex overlapping pattern scenarios
 	mockFirewall := &MockFirewall{}