diff --git a/xds/src/main/java/io/grpc/xds/client/XdsResourceType.java b/xds/src/main/java/io/grpc/xds/client/XdsResourceType.java
index f15d6524751..f034fe6b815 100644
--- a/xds/src/main/java/io/grpc/xds/client/XdsResourceType.java
+++ b/xds/src/main/java/io/grpc/xds/client/XdsResourceType.java
@@ -148,15 +148,24 @@ ValidatedResourceUpdate<T> parse(Args args, List<Any> resources) {
       Any resource = resources.get(i);
 
       Message unpackedMessage;
+      String name = "";
       try {
-        resource = maybeUnwrapResources(resource);
+        if (resource.getTypeUrl().equals(TYPE_URL_RESOURCE)) {
+          Resource wrappedResource = unpackCompatibleType(resource, Resource.class,
+              TYPE_URL_RESOURCE, null);
+          resource = wrappedResource.getResource();
+          name = wrappedResource.getName();
+        } 
         unpackedMessage = unpackCompatibleType(resource, unpackedClassName(), typeUrl(), null);
       } catch (InvalidProtocolBufferException e) {
         errors.add(String.format("%s response Resource index %d - can't decode %s: %s",
                 typeName(), i, unpackedClassName().getSimpleName(), e.getMessage()));
         continue;
       }
-      String name = extractResourceName(unpackedMessage);
+      // Fallback to inner resource name if the outer resource didn't have a name.
+      if (name.isEmpty()) {
+        name = extractResourceName(unpackedMessage);
+      }
       if (name == null || !isResourceNameValid(name, resource.getTypeUrl())) {
         errors.add(
             "Unsupported resource name: " + name + " for type: " + typeName());
@@ -209,16 +218,6 @@ protected static <T extends com.google.protobuf.Message> T unpackCompatibleType(
     return any.unpack(clazz);
   }
 
-  private Any maybeUnwrapResources(Any resource)
-      throws InvalidProtocolBufferException {
-    if (resource.getTypeUrl().equals(TYPE_URL_RESOURCE)) {
-      return unpackCompatibleType(resource, Resource.class, TYPE_URL_RESOURCE,
-          null).getResource();
-    } else {
-      return resource;
-    }
-  }
-
   static final class ParsedResource<T extends ResourceUpdate> {
     private final T resourceUpdate;
     private final Any rawResource;
diff --git a/xds/src/test/java/io/grpc/xds/GrpcXdsClientImplTestBase.java b/xds/src/test/java/io/grpc/xds/GrpcXdsClientImplTestBase.java
index 97c82731cf5..3cd0115aeb7 100644
--- a/xds/src/test/java/io/grpc/xds/GrpcXdsClientImplTestBase.java
+++ b/xds/src/test/java/io/grpc/xds/GrpcXdsClientImplTestBase.java
@@ -852,6 +852,25 @@ public void wrappedLdsResource() {
     verifySubscribedResourcesMetadataSizes(1, 0, 0, 0);
   }
 
+  @Test
+  public void wrappedLdsResource_preferWrappedName() {
+    DiscoveryRpcCall call = startResourceWatcher(XdsListenerResource.getInstance(), LDS_RESOURCE,
+        ldsResourceWatcher);
+
+    Any innerResource = Any.pack(mf.buildListenerWithApiListener("random_name" /* name */,
+            mf.buildRouteConfiguration("do not care", mf.buildOpaqueVirtualHosts(VHOST_SIZE))));
+
+    // Client sends an ACK LDS request.
+    call.sendResponse(LDS, mf.buildWrappedResourceWithName(innerResource, LDS_RESOURCE), VERSION_1,
+            "0000");
+    call.verifyRequest(LDS, LDS_RESOURCE, VERSION_1, "0000", NODE);
+    verify(ldsResourceWatcher).onChanged(ldsUpdateCaptor.capture());
+    verifyGoldenListenerVhosts(ldsUpdateCaptor.getValue());
+    assertThat(fakeClock.getPendingTasks(LDS_RESOURCE_FETCH_TIMEOUT_TASK_FILTER)).isEmpty();
+    verifyResourceMetadataAcked(LDS, LDS_RESOURCE, innerResource, VERSION_1, TIME_INCREMENT);
+    verifySubscribedResourcesMetadataSizes(1, 0, 0, 0);
+  }
+
   @Test
   public void ldsResourceFound_containsRdsName() {
     DiscoveryRpcCall call = startResourceWatcher(XdsListenerResource.getInstance(), LDS_RESOURCE,
@@ -3836,6 +3855,8 @@ protected abstract static class MessageFactory {
 
     protected abstract Any buildWrappedResource(Any originalResource);
 
+    protected abstract Any buildWrappedResourceWithName(Any originalResource, String name);
+
     protected Message buildListenerWithApiListener(String name, Message routeConfiguration) {
       return buildListenerWithApiListener(
           name, routeConfiguration, Collections.<Message>emptyList());
diff --git a/xds/src/test/java/io/grpc/xds/GrpcXdsClientImplV3Test.java b/xds/src/test/java/io/grpc/xds/GrpcXdsClientImplV3Test.java
index 91a5fefaa59..71d0895a252 100644
--- a/xds/src/test/java/io/grpc/xds/GrpcXdsClientImplV3Test.java
+++ b/xds/src/test/java/io/grpc/xds/GrpcXdsClientImplV3Test.java
@@ -290,6 +290,14 @@ protected Any buildWrappedResource(Any originalResource) {
           .build());
     }
 
+    @Override
+    protected  Any buildWrappedResourceWithName(Any originalResource, String name) {
+      return Any.pack(Resource.newBuilder()
+      .setResource(originalResource)
+      .setName(name)
+      .build());
+    }
+
     @SuppressWarnings("unchecked")
     @Override
     protected Message buildListenerWithApiListener(