diff --git a/xds/csds/csds.go b/xds/csds/csds.go
index 73b92e9443c..468580f0b6a 100644
--- a/xds/csds/csds.go
+++ b/xds/csds/csds.go
@@ -25,7 +25,6 @@ package csds
 
 import (
 	"context"
-	"fmt"
 	"io"
 	"time"
 
@@ -59,14 +58,23 @@ type xdsClientInterface interface {
 
 var (
 	logger       = grpclog.Component("xds")
-	newXDSClient = func() (xdsClientInterface, error) {
-		return client.New()
+	newXDSClient = func() xdsClientInterface {
+		c, err := client.New()
+		if err != nil {
+			// If err is not nil, c is a typed nil (of type *xdsclient.Client).
+			// If c is returned and assigned to the xdsClient field in the CSDS
+			// server, the nil checks in the handlers will not handle it
+			// properly.
+			logger.Warningf("failed to create xds client: %v", err)
+			return nil
+		}
+		return c
 	}
 )
 
 // ClientStatusDiscoveryServer implementations interface ClientStatusDiscoveryServiceServer.
 type ClientStatusDiscoveryServer struct {
-	// xdsClient will always be the same in practise. But we keep a copy in each
+	// xdsClient will always be the same in practice. But we keep a copy in each
 	// server instance for testing.
 	xdsClient xdsClientInterface
 }
@@ -74,13 +82,7 @@ type ClientStatusDiscoveryServer struct {
 // NewClientStatusDiscoveryServer returns an implementation of the CSDS server that can be
 // registered on a gRPC server.
 func NewClientStatusDiscoveryServer() (*ClientStatusDiscoveryServer, error) {
-	xdsC, err := newXDSClient()
-	if err != nil {
-		return nil, fmt.Errorf("failed to create xds client: %v", err)
-	}
-	return &ClientStatusDiscoveryServer{
-		xdsClient: xdsC,
-	}, nil
+	return &ClientStatusDiscoveryServer{xdsClient: newXDSClient()}, nil
 }
 
 // StreamClientStatus implementations interface ClientStatusDiscoveryServiceServer.
@@ -113,6 +115,9 @@ func (s *ClientStatusDiscoveryServer) FetchClientStatus(_ context.Context, req *
 //
 // If it returns an error, the error is a status error.
 func (s *ClientStatusDiscoveryServer) buildClientStatusRespForReq(req *v3statuspb.ClientStatusRequest) (*v3statuspb.ClientStatusResponse, error) {
+	if s.xdsClient == nil {
+		return &v3statuspb.ClientStatusResponse{}, nil
+	}
 	// Field NodeMatchers is unsupported, by design
 	// https://github.com/grpc/proposal/blob/master/A40-csds-support.md#detail-node-matching.
 	if len(req.NodeMatchers) != 0 {
@@ -137,7 +142,9 @@ func (s *ClientStatusDiscoveryServer) buildClientStatusRespForReq(req *v3statusp
 
 // Close cleans up the resources.
 func (s *ClientStatusDiscoveryServer) Close() {
-	s.xdsClient.Close()
+	if s.xdsClient != nil {
+		s.xdsClient.Close()
+	}
 }
 
 // nodeProtoToV3 converts the given proto into a v3.Node. n is from bootstrap
diff --git a/xds/csds/csds_test.go b/xds/csds/csds_test.go
index 6cf88f6d394..a051092a840 100644
--- a/xds/csds/csds_test.go
+++ b/xds/csds/csds_test.go
@@ -275,9 +275,7 @@ func commonSetup(t *testing.T) (xdsClientInterfaceWithWatch, *e2e.ManagementServ
 		t.Fatalf("failed to create xds client: %v", err)
 	}
 	oldNewXDSClient := newXDSClient
-	newXDSClient = func() (xdsClientInterface, error) {
-		return xdsC, nil
-	}
+	newXDSClient = func() xdsClientInterface { return xdsC }
 
 	// Initialize an gRPC server and register CSDS on it.
 	server := grpc.NewServer()
@@ -635,6 +633,58 @@ func protoToJSON(p proto.Message) string {
 	return ret
 }
 
+func TestCSDSNoXDSClient(t *testing.T) {
+	oldNewXDSClient := newXDSClient
+	newXDSClient = func() xdsClientInterface { return nil }
+	defer func() { newXDSClient = oldNewXDSClient }()
+
+	// Initialize an gRPC server and register CSDS on it.
+	server := grpc.NewServer()
+	csdss, err := NewClientStatusDiscoveryServer()
+	if err != nil {
+		t.Fatal(err)
+	}
+	defer csdss.Close()
+	v3statuspbgrpc.RegisterClientStatusDiscoveryServiceServer(server, csdss)
+	// Create a local listener and pass it to Serve().
+	lis, err := xtestutils.LocalTCPListener()
+	if err != nil {
+		t.Fatalf("xtestutils.LocalTCPListener() failed: %v", err)
+	}
+	go func() {
+		if err := server.Serve(lis); err != nil {
+			t.Errorf("Serve() failed: %v", err)
+		}
+	}()
+	defer server.Stop()
+
+	// Create CSDS client.
+	conn, err := grpc.Dial(lis.Addr().String(), grpc.WithInsecure())
+	if err != nil {
+		t.Fatalf("cannot connect to server: %v", err)
+	}
+	defer conn.Close()
+	c := v3statuspbgrpc.NewClientStatusDiscoveryServiceClient(conn)
+	ctx, cancel := context.WithTimeout(context.Background(), defaultTestTimeout)
+	defer cancel()
+	stream, err := c.StreamClientStatus(ctx, grpc.WaitForReady(true))
+	if err != nil {
+		t.Fatalf("cannot get ServerReflectionInfo: %v", err)
+	}
+
+	if err := stream.Send(&v3statuspb.ClientStatusRequest{Node: nil}); err != nil {
+		t.Fatalf("failed to send: %v", err)
+	}
+	r, err := stream.Recv()
+	if err != nil {
+		// io.EOF is not ok.
+		t.Fatalf("failed to recv response: %v", err)
+	}
+	if n := len(r.Config); n != 0 {
+		t.Fatalf("got %d configs, want 0: %v", n, proto.MarshalTextString(r))
+	}
+}
+
 func Test_nodeProtoToV3(t *testing.T) {
 	const (
 		testID      = "test-id"