diff --git a/core/src/main/scala/kafka/network/SocketServer.scala b/core/src/main/scala/kafka/network/SocketServer.scala
index 306b633f6fa37..556cd84a21b28 100644
--- a/core/src/main/scala/kafka/network/SocketServer.scala
+++ b/core/src/main/scala/kafka/network/SocketServer.scala
@@ -731,8 +731,12 @@ private[kafka] abstract class Acceptor(val socketServer: SocketServer,
         s" sendBufferSize [actual|requested]: [${socketChannel.socket.getSendBufferSize}|$sendBufferSize]" +
         s" recvBufferSize [actual|requested]: [${socketChannel.socket.getReceiveBufferSize}|$recvBufferSize]")
       true
-    } else
+    } else{
+      // connection was rejected (likely due to processor shutdown) - close the socket.
+      val listenerName = ListenerName.normalised(endPoint.listener)
+      connectionQuotas.closeChannel(this, listenerName, socketChannel)
       false
+    }
   }
 
   /**
@@ -1154,6 +1158,10 @@ private[kafka] class Processor(
   def accept(socketChannel: SocketChannel,
              mayBlock: Boolean,
              acceptorBlockedPercentMeter: com.yammer.metrics.core.Meter): Boolean = {
+    // reject new connections if the processor is shutting down
+    if (!shouldRun.get())
+      return false
+
     val accepted = {
       if (newConnections.offer(socketChannel))
         true
diff --git a/core/src/test/scala/unit/kafka/network/SocketServerTest.scala b/core/src/test/scala/unit/kafka/network/SocketServerTest.scala
index 6a4b8d8ca672e..05171e41bd7ea 100644
--- a/core/src/test/scala/unit/kafka/network/SocketServerTest.scala
+++ b/core/src/test/scala/unit/kafka/network/SocketServerTest.scala
@@ -934,6 +934,91 @@ class SocketServerTest {
     verifyRemoteConnectionClosed(conn)
   }
 
+  @Test
+  def testNoSocketLeakDuringShutdownRaceCondition(): Unit = {
+    // verify that when acceptor shuts down during connection assignment, no sockets are leaked
+    val address = localAddress
+    
+    // create initial connection to establish baseline
+    val initialSocket = connect()
+    sendRequest(initialSocket, producerRequestBytes())
+    receiveRequest(server.dataPlaneRequestChannel)
+
+    val initialConnectionCount = server.connectionCount(address)
+    assertTrue(initialConnectionCount > 0, "Should have at least one connection")
+
+    server.dataPlaneAcceptors.asScala.values.foreach(_.beginShutdown())
+
+    // give shutdown a small window to start processing
+    Thread.sleep(100)
+
+    // close the acceptor
+    server.dataPlaneAcceptors.asScala.values.foreach(_.close())
+    
+    // cleanup initial connection
+    initialSocket.setSoLinger(true, 0)
+    initialSocket.close()
+    
+    // critical verification for KAFKA-16765: No socket leaks
+    // all sockets must be properly closed during shutdown, not queued indefinitely
+    TestUtils.waitUntilTrue(() => server.connectionCount(address) == 0,
+      "Socket leak detected - connections not closed after shutdown")
+  }
+
+  @Test
+  def testAcceptorClosesSocketWhenProcessorRejectsDuringShutdown(): Unit = {
+    // explicitly simulate the scenario where Acceptor.assignNewConnection attempts to
+    // assign a SocketChannel after the Processor has begun shutting down. The
+    // expected behavior is that the assignment is rejected and the socket is closed
+    // (no leak).
+    // shutdown the default server created in @BeforeEach to avoid metric collisions
+    shutdownServerAndMetrics(server)
+    val testServer = new TestableSocketServer()
+    try {
+      testServer.enableRequestProcessing(Map()).get(1, TimeUnit.MINUTES)
+      val acceptor = testServer.testableAcceptor
+      val processor = acceptor.processors(0)
+
+      // create a socket channel pair (use SocketChannel.open so getChannel != null)
+      val socketServer = new ServerSocket(0)
+      val channel = java.nio.channels.SocketChannel.open(new InetSocketAddress("localhost", socketServer.getLocalPort))
+      val serverConn = socketServer.accept()
+
+      try {
+        // simulate the accept path incrementing the connection count as Acceptor.accept() would
+        val listenerName = ListenerName.normalised(testServer.config.dataPlaneListeners.head.listener)
+        val blockedMeter = new org.apache.kafka.server.metrics.KafkaMetricsGroup("kafka.network", "Acceptor").newMeter("blockedPercentMeter", "blocked time", TimeUnit.NANOSECONDS)
+        testServer.connectionQuotas.inc(listenerName, channel.socket.getInetAddress, blockedMeter)
+
+        // begin processor shutdown so it will reject new connections
+        processor.beginShutdown()
+        // wait for processor to acknowledge shutdown; avoid fixed sleeps
+        TestUtils.waitUntilTrue(() => !processor.shouldRun.get(), "Processor did not begin shutdown")
+
+        // use reflection to invoke the private assignNewConnection to simulate the
+        // acceptor attempting to assign the just-accepted channel after shutdown
+        val m = classOf[Acceptor].getDeclaredMethod("assignNewConnection", classOf[SocketChannel], classOf[Processor], java.lang.Boolean.TYPE)
+        m.setAccessible(true)
+        val assigned = m.invoke(acceptor, channel, processor, java.lang.Boolean.FALSE.asInstanceOf[Object]).asInstanceOf[Boolean]
+
+        // should be rejected and socket closed
+        assertFalse(assigned, "assignNewConnection should reject when processor is shutting down")
+        // channel or its underlying socket must be closed
+        assertTrue(!channel.isOpen || channel.socket.isClosed, "SocketChannel should be closed after rejected assignment")
+
+        // ensure the server does not report leaked connections
+        TestUtils.waitUntilTrue(() => testServer.connectionCount(localAddress) == 0,
+          "Connection should not be leaked after rejected assignment")
+      } finally {
+        try { if (channel != null && channel.isOpen) channel.close() } catch { case _: Throwable => }
+        try { serverConn.close() } catch { case _: Throwable => }
+        try { socketServer.close() } catch { case _: Throwable => }
+      }
+    } finally {
+      shutdownServerAndMetrics(testServer)
+    }
+  }
+
   private def verifyRemoteConnectionClosed(connection: Socket): Unit = {
     val largeChunkOfBytes = new Array[Byte](1000000)
     // doing a subsequent send should throw an exception as the connection should be closed.
@@ -1504,8 +1589,11 @@ class SocketServerTest {
         // attempting to send response. Otherwise, the channel should be removed when all completed buffers are processed.
         // Channel should be closed and removed even if there is a partial buffered request when `hasIncomplete=true`
         val numRequests = if (responseRequiredIndex >= 0) responseRequiredIndex + 1 else numComplete
+        // Use a longer timeout for receiveRequest here since under full test-suite runs
+        // processing can be slower and short timeouts make these tests flaky.
         (0 until numRequests).foreach { i =>
-          val request = receiveRequest(testableServer.dataPlaneRequestChannel)
+          // Allow a longer timeout to accommodate slower full-suite runs on loaded CI machines
+          val request = receiveRequest(testableServer.dataPlaneRequestChannel, timeout = 30000L)
           if (i == numComplete - 1 && hasIncomplete)
             truncateBufferedRequest(channel)
           if (responseRequiredIndex == i)