diff --git a/xds/src/main/java/io/grpc/xds/GrpcXdsTransportFactory.java b/xds/src/main/java/io/grpc/xds/GrpcXdsTransportFactory.java
index 0da51bf47f7..238e8e9d4c9 100644
--- a/xds/src/main/java/io/grpc/xds/GrpcXdsTransportFactory.java
+++ b/xds/src/main/java/io/grpc/xds/GrpcXdsTransportFactory.java
@@ -31,11 +31,17 @@
 import io.grpc.Status;
 import io.grpc.xds.client.Bootstrapper;
 import io.grpc.xds.client.XdsTransportFactory;
+import java.util.Map;
+import java.util.concurrent.ConcurrentHashMap;
 import java.util.concurrent.TimeUnit;
 
 final class GrpcXdsTransportFactory implements XdsTransportFactory {
 
   private final CallCredentials callCredentials;
+  // The map of xDS server info to its corresponding gRPC xDS transport.
+  // This enables reusing and sharing the same underlying gRPC channel.
+  private static final Map<Bootstrapper.ServerInfo, GrpcXdsTransport> xdsServerInfoToTransportMap =
+      new ConcurrentHashMap<>();
 
   GrpcXdsTransportFactory(CallCredentials callCredentials) {
     this.callCredentials = callCredentials;
@@ -43,12 +49,25 @@ final class GrpcXdsTransportFactory implements XdsTransportFactory {
 
   @Override
   public XdsTransport create(Bootstrapper.ServerInfo serverInfo) {
-    return new GrpcXdsTransport(serverInfo, callCredentials);
+    return xdsServerInfoToTransportMap.compute(
+        serverInfo,
+        (info, transport) -> {
+          if (transport == null) {
+            transport = new GrpcXdsTransport(serverInfo, callCredentials);
+          }
+          ++transport.refCount;
+          return transport;
+        });
   }
 
   @VisibleForTesting
   public XdsTransport createForTest(ManagedChannel channel) {
-    return new GrpcXdsTransport(channel, callCredentials);
+    return new GrpcXdsTransport(channel, callCredentials, null);
+  }
+
+  @VisibleForTesting
+  static boolean hasTransport(Bootstrapper.ServerInfo serverInfo) {
+    return xdsServerInfoToTransportMap.containsKey(serverInfo);
   }
 
   @VisibleForTesting
@@ -56,6 +75,9 @@ static class GrpcXdsTransport implements XdsTransport {
 
     private final ManagedChannel channel;
     private final CallCredentials callCredentials;
+    private final Bootstrapper.ServerInfo serverInfo;
+    // Must only be accessed within the provided atomic methods of ConcurrentHashMap.
+    private int refCount = 0;
 
     public GrpcXdsTransport(Bootstrapper.ServerInfo serverInfo) {
       this(serverInfo, null);
@@ -63,7 +85,7 @@ public GrpcXdsTransport(Bootstrapper.ServerInfo serverInfo) {
 
     @VisibleForTesting
     public GrpcXdsTransport(ManagedChannel channel) {
-      this(channel, null);
+      this(channel, null, null);
     }
 
     public GrpcXdsTransport(Bootstrapper.ServerInfo serverInfo, CallCredentials callCredentials) {
@@ -73,12 +95,17 @@ public GrpcXdsTransport(Bootstrapper.ServerInfo serverInfo, CallCredentials call
           .keepAliveTime(5, TimeUnit.MINUTES)
           .build();
       this.callCredentials = callCredentials;
+      this.serverInfo = serverInfo;
     }
 
     @VisibleForTesting
-    public GrpcXdsTransport(ManagedChannel channel, CallCredentials callCredentials) {
+    public GrpcXdsTransport(
+        ManagedChannel channel,
+        CallCredentials callCredentials,
+        Bootstrapper.ServerInfo serverInfo) {
       this.channel = checkNotNull(channel, "channel");
       this.callCredentials = callCredentials;
+      this.serverInfo = serverInfo;
     }
 
     @Override
@@ -98,7 +125,19 @@ public <ReqT, RespT> StreamingCall<ReqT, RespT> createStreamingCall(
 
     @Override
     public void shutdown() {
-      channel.shutdown();
+      if (serverInfo == null) {
+        channel.shutdown();
+        return;
+      }
+      xdsServerInfoToTransportMap.computeIfPresent(
+          serverInfo,
+          (info, transport) -> {
+            if (--transport.refCount == 0) { // Prefix decrement and return the updated value.
+              transport.channel.shutdown();
+              return null; // Remove mapping.
+            }
+            return transport;
+          });
     }
 
     private class XdsStreamingCall<ReqT, RespT> implements
diff --git a/xds/src/test/java/io/grpc/xds/GrpcXdsTransportFactoryTest.java b/xds/src/test/java/io/grpc/xds/GrpcXdsTransportFactoryTest.java
index 66e0d4b3198..e261624b6a4 100644
--- a/xds/src/test/java/io/grpc/xds/GrpcXdsTransportFactoryTest.java
+++ b/xds/src/test/java/io/grpc/xds/GrpcXdsTransportFactoryTest.java
@@ -118,6 +118,68 @@ public void callApis() throws Exception {
     xdsTransport.shutdown();
   }
 
+  @Test
+  public void refCountedXdsTransport_sameXdsServerAddress_returnsExistingTransport() {
+    Bootstrapper.ServerInfo xdsServerInfo =
+        Bootstrapper.ServerInfo.create(
+            "localhost:" + server.getPort(), InsecureChannelCredentials.create());
+    GrpcXdsTransportFactory xdsTransportFactory = new GrpcXdsTransportFactory(null);
+    // Verify calling create() for the first time creates a new GrpcXdsTransport instance.
+    // The ref count was previously 0 and now is 1.
+    XdsTransportFactory.XdsTransport transport1 = xdsTransportFactory.create(xdsServerInfo);
+    assertThat(GrpcXdsTransportFactory.hasTransport(xdsServerInfo)).isTrue();
+    // Verify calling create() for the second time to the same xDS server address returns the same
+    // GrpcXdsTransport instance. The ref count was previously 1 and now is 2.
+    XdsTransportFactory.XdsTransport transport2 = xdsTransportFactory.create(xdsServerInfo);
+    assertThat(transport1).isSameInstanceAs(transport2);
+    assertThat(GrpcXdsTransportFactory.hasTransport(xdsServerInfo)).isTrue();
+    // Verify calling shutdown() for the first time does not shut down the GrpcXdsTransport
+    // instance. The ref count was previously 2 and now is 1.
+    transport1.shutdown();
+    assertThat(GrpcXdsTransportFactory.hasTransport(xdsServerInfo)).isTrue();
+    // Verify calling shutdown() for the second time shuts down and cleans up the
+    // GrpcXdsTransport instance. The ref count was previously 1 and now is 0.
+    transport2.shutdown();
+    assertThat(GrpcXdsTransportFactory.hasTransport(xdsServerInfo)).isFalse();
+  }
+
+  @Test
+  public void refCountedXdsTransport_differentXdsServerAddress_returnsDifferentTransport()
+      throws Exception {
+    // Create and start a second xDS server on a different port.
+    Server server2 =
+        Grpc.newServerBuilderForPort(0, InsecureServerCredentials.create())
+            .addService(echoAdsService())
+            .build()
+            .start();
+    Bootstrapper.ServerInfo xdsServerInfo1 =
+        Bootstrapper.ServerInfo.create(
+            "localhost:" + server.getPort(), InsecureChannelCredentials.create());
+    Bootstrapper.ServerInfo xdsServerInfo2 =
+        Bootstrapper.ServerInfo.create(
+            "localhost:" + server2.getPort(), InsecureChannelCredentials.create());
+    GrpcXdsTransportFactory xdsTransportFactory = new GrpcXdsTransportFactory(null);
+    // Verify calling create() to the first xDS server creates a new GrpcXdsTransport instance.
+    // The ref count was previously 0 and now is 1.
+    XdsTransportFactory.XdsTransport transport1 = xdsTransportFactory.create(xdsServerInfo1);
+    assertThat(GrpcXdsTransportFactory.hasTransport(xdsServerInfo1)).isTrue();
+    // Verify calling create() to the second xDS server creates a different GrpcXdsTransport
+    // instance. The ref count was previously 0 and now is 1.
+    XdsTransportFactory.XdsTransport transport2 = xdsTransportFactory.create(xdsServerInfo2);
+    assertThat(transport1).isNotSameInstanceAs(transport2);
+    assertThat(GrpcXdsTransportFactory.hasTransport(xdsServerInfo2)).isTrue();
+    // Verify calling shutdown() shuts down and cleans up the GrpcXdsTransport instance for
+    // the first xDS server. The ref count was previously 1 and now is 0.
+    transport1.shutdown();
+    assertThat(GrpcXdsTransportFactory.hasTransport(xdsServerInfo1)).isFalse();
+    // Verify calling shutdown() shuts down and cleans up the GrpcXdsTransport instance for
+    // the second xDS server. The ref count was previously 1 and now is 0.
+    transport2.shutdown();
+    assertThat(GrpcXdsTransportFactory.hasTransport(xdsServerInfo2)).isFalse();
+    // Clean up the second xDS server.
+    server2.shutdown();
+  }
+
   private static class FakeEventHandler implements
       XdsTransportFactory.EventHandler<DiscoveryResponse> {
     private final BlockingQueue<DiscoveryResponse> respQ = new LinkedBlockingQueue<>();