diff --git a/subsys/bluetooth/host/conn.c b/subsys/bluetooth/host/conn.c
index 44c26efa2dad0..63be062050372 100644
--- a/subsys/bluetooth/host/conn.c
+++ b/subsys/bluetooth/host/conn.c
@@ -263,7 +263,13 @@ static void bt_acl_recv(struct bt_conn *conn, struct net_buf *buf,
 
 		if (buf->len > net_buf_tailroom(conn->rx)) {
 			BT_ERR("Not enough buffer space for L2CAP data");
-			bt_conn_reset_rx_state(conn);
+
+			/* Frame is not complete but we still pass it to L2CAP
+			 * so that it may handle error on protocol level
+			 * eg disconnect channel.
+			 */
+			bt_l2cap_recv(conn, conn->rx, false);
+			conn->rx = NULL;
 			net_buf_unref(buf);
 			return;
 		}
@@ -308,7 +314,7 @@ static void bt_acl_recv(struct bt_conn *conn, struct net_buf *buf,
 	conn->rx = NULL;
 
 	BT_DBG("Successfully parsed %u byte L2CAP packet", buf->len);
-	bt_l2cap_recv(conn, buf);
+	bt_l2cap_recv(conn, buf, true);
 }
 
 void bt_conn_recv(struct bt_conn *conn, struct net_buf *buf, uint8_t flags)
diff --git a/subsys/bluetooth/host/l2cap.c b/subsys/bluetooth/host/l2cap.c
index b9b1e48670547..e0128e73503bd 100644
--- a/subsys/bluetooth/host/l2cap.c
+++ b/subsys/bluetooth/host/l2cap.c
@@ -2364,13 +2364,23 @@ static void l2cap_chan_recv_queue(struct bt_l2cap_le_chan *chan,
 }
 #endif /* CONFIG_BT_L2CAP_DYNAMIC_CHANNEL */
 
-static void l2cap_chan_recv(struct bt_l2cap_chan *chan, struct net_buf *buf)
+static void l2cap_chan_recv(struct bt_l2cap_chan *chan, struct net_buf *buf,
+			    bool complete)
 {
 #if defined(CONFIG_BT_L2CAP_DYNAMIC_CHANNEL)
 	struct bt_l2cap_le_chan *ch = BT_L2CAP_LE_CHAN(chan);
 
 	if (L2CAP_LE_CID_IS_DYN(ch->rx.cid)) {
-		l2cap_chan_recv_queue(ch, buf);
+		if (complete) {
+			l2cap_chan_recv_queue(ch, buf);
+		} else {
+			/* if packet was not complete this means peer device
+			 * overflowed our RX and channel shall be disconnected
+			 */
+			bt_l2cap_chan_disconnect(chan);
+			net_buf_unref(buf);
+		}
+
 		return;
 	}
 #endif /* CONFIG_BT_L2CAP_DYNAMIC_CHANNEL */
@@ -2381,7 +2391,7 @@ static void l2cap_chan_recv(struct bt_l2cap_chan *chan, struct net_buf *buf)
 	net_buf_unref(buf);
 }
 
-void bt_l2cap_recv(struct bt_conn *conn, struct net_buf *buf)
+void bt_l2cap_recv(struct bt_conn *conn, struct net_buf *buf, bool complete)
 {
 	struct bt_l2cap_hdr *hdr;
 	struct bt_l2cap_chan *chan;
@@ -2411,7 +2421,7 @@ void bt_l2cap_recv(struct bt_conn *conn, struct net_buf *buf)
 		return;
 	}
 
-	l2cap_chan_recv(chan, buf);
+	l2cap_chan_recv(chan, buf, complete);
 }
 
 int bt_l2cap_update_conn_param(struct bt_conn *conn,
diff --git a/subsys/bluetooth/host/l2cap_internal.h b/subsys/bluetooth/host/l2cap_internal.h
index 03331027bc986..fb0970183a90a 100644
--- a/subsys/bluetooth/host/l2cap_internal.h
+++ b/subsys/bluetooth/host/l2cap_internal.h
@@ -312,7 +312,7 @@ static inline int bt_l2cap_send(struct bt_conn *conn, uint16_t cid,
 }
 
 /* Receive a new L2CAP PDU from a connection */
-void bt_l2cap_recv(struct bt_conn *conn, struct net_buf *buf);
+void bt_l2cap_recv(struct bt_conn *conn, struct net_buf *buf, bool complete);
 
 /* Perform connection parameter update request */
 int bt_l2cap_update_conn_param(struct bt_conn *conn,