diff --git a/spec/unit/matrixrtc/MatrixRTCSessionManager.spec.ts b/spec/unit/matrixrtc/MatrixRTCSessionManager.spec.ts
index c2e6fc52f..bbc9c9f7e 100644
--- a/spec/unit/matrixrtc/MatrixRTCSessionManager.spec.ts
+++ b/spec/unit/matrixrtc/MatrixRTCSessionManager.spec.ts
@@ -102,6 +102,7 @@ describe("MatrixRTCSessionManager", () => {
             getContent: jest.fn().mockReturnValue({}),
             getSender: jest.fn().mockReturnValue("@mock:user.example"),
             getRoomId: jest.fn().mockReturnValue("!room:id"),
+            isDecryptionFailure: jest.fn().mockReturnValue(false),
             sender: {
                 userId: "@mock:user.example",
             },
@@ -110,4 +111,93 @@ describe("MatrixRTCSessionManager", () => {
         await new Promise(process.nextTick);
         expect(onCallEncryptionMock).toHaveBeenCalled();
     });
+
+    describe("event decryption", () => {
+        it("Retries decryption and processes success", async () => {
+            try {
+                jest.useFakeTimers();
+                const room1 = makeMockRoom([membershipTemplate]);
+                jest.spyOn(client, "getRooms").mockReturnValue([room1]);
+                jest.spyOn(client, "getRoom").mockReturnValue(room1);
+
+                client.emit(ClientEvent.Room, room1);
+                const onCallEncryptionMock = jest.fn();
+                client.matrixRTC.getRoomSession(room1).onCallEncryption = onCallEncryptionMock;
+                let isDecryptionFailure = true;
+                client.decryptEventIfNeeded = jest
+                    .fn()
+                    .mockReturnValueOnce(Promise.resolve())
+                    .mockImplementation(() => {
+                        isDecryptionFailure = false;
+                        return Promise.resolve();
+                    });
+                const timelineEvent = {
+                    getType: jest.fn().mockReturnValue(EventType.CallEncryptionKeysPrefix),
+                    getContent: jest.fn().mockReturnValue({}),
+                    getSender: jest.fn().mockReturnValue("@mock:user.example"),
+                    getRoomId: jest.fn().mockReturnValue("!room:id"),
+                    isDecryptionFailure: jest.fn().mockImplementation(() => isDecryptionFailure),
+                    getId: jest.fn().mockReturnValue("event_id"),
+                    sender: {
+                        userId: "@mock:user.example",
+                    },
+                } as unknown as MatrixEvent;
+                client.emit(RoomEvent.Timeline, timelineEvent, undefined, undefined, false, {} as IRoomTimelineData);
+
+                expect(client.decryptEventIfNeeded).toHaveBeenCalledTimes(1);
+                expect(onCallEncryptionMock).toHaveBeenCalledTimes(0);
+
+                // should retry after one second:
+                await jest.advanceTimersByTimeAsync(1500);
+
+                expect(client.decryptEventIfNeeded).toHaveBeenCalledTimes(2);
+                expect(onCallEncryptionMock).toHaveBeenCalledTimes(1);
+            } finally {
+                jest.useRealTimers();
+            }
+        });
+
+        it("Retries decryption and processes failure", async () => {
+            try {
+                jest.useFakeTimers();
+                const room1 = makeMockRoom([membershipTemplate]);
+                jest.spyOn(client, "getRooms").mockReturnValue([room1]);
+                jest.spyOn(client, "getRoom").mockReturnValue(room1);
+
+                client.emit(ClientEvent.Room, room1);
+                const onCallEncryptionMock = jest.fn();
+                client.matrixRTC.getRoomSession(room1).onCallEncryption = onCallEncryptionMock;
+                client.decryptEventIfNeeded = jest.fn().mockReturnValue(Promise.resolve());
+                const timelineEvent = {
+                    getType: jest.fn().mockReturnValue(EventType.CallEncryptionKeysPrefix),
+                    getContent: jest.fn().mockReturnValue({}),
+                    getSender: jest.fn().mockReturnValue("@mock:user.example"),
+                    getRoomId: jest.fn().mockReturnValue("!room:id"),
+                    isDecryptionFailure: jest.fn().mockReturnValue(true), // always fail
+                    getId: jest.fn().mockReturnValue("event_id"),
+                    sender: {
+                        userId: "@mock:user.example",
+                    },
+                } as unknown as MatrixEvent;
+                client.emit(RoomEvent.Timeline, timelineEvent, undefined, undefined, false, {} as IRoomTimelineData);
+
+                expect(client.decryptEventIfNeeded).toHaveBeenCalledTimes(1);
+                expect(onCallEncryptionMock).toHaveBeenCalledTimes(0);
+
+                // should retry after one second:
+                await jest.advanceTimersByTimeAsync(1500);
+
+                expect(client.decryptEventIfNeeded).toHaveBeenCalledTimes(2);
+                expect(onCallEncryptionMock).toHaveBeenCalledTimes(0);
+
+                // doesn't retry again:
+                await jest.advanceTimersByTimeAsync(1500);
+
+                expect(client.decryptEventIfNeeded).toHaveBeenCalledTimes(2);
+                expect(onCallEncryptionMock).toHaveBeenCalledTimes(0);
+            } finally {
+                jest.useRealTimers();
+            }
+        });
+    });
 });
diff --git a/spec/unit/matrixrtc/mocks.ts b/spec/unit/matrixrtc/mocks.ts
index ac5831b0f..57863dc2c 100644
--- a/spec/unit/matrixrtc/mocks.ts
+++ b/spec/unit/matrixrtc/mocks.ts
@@ -73,5 +73,6 @@ export function mockRTCEvent(membershipData: MembershipData, roomId: string): Ma
         sender: {
             userId: "@mock:user.example",
         },
+        isDecryptionFailure: jest.fn().mockReturnValue(false),
     } as unknown as MatrixEvent;
 }
diff --git a/src/matrixrtc/MatrixRTCSessionManager.ts b/src/matrixrtc/MatrixRTCSessionManager.ts
index 2fd5d2583..22480cffc 100644
--- a/src/matrixrtc/MatrixRTCSessionManager.ts
+++ b/src/matrixrtc/MatrixRTCSessionManager.ts
@@ -98,8 +98,23 @@ export class MatrixRTCSessionManager extends TypedEventEmitter<MatrixRTCSessionM
         return this.roomSessions.get(room.roomId)!;
     }
 
-    private async consumeCallEncryptionEvent(event: MatrixEvent): Promise<void> {
+    private async consumeCallEncryptionEvent(event: MatrixEvent, isRetry = false): Promise<void> {
         await this.client.decryptEventIfNeeded(event);
+        if (event.isDecryptionFailure()) {
+            if (!isRetry) {
+                logger.warn(
+                    `Decryption failed for event ${event.getId()}: ${event.decryptionFailureReason} will retry once only`,
+                );
+                // retry after 1 second. After this we give up.
+                setTimeout(() => this.consumeCallEncryptionEvent(event, true), 1000);
+            } else {
+                logger.warn(`Decryption failed for event ${event.getId()}: ${event.decryptionFailureReason}`);
+            }
+            return;
+        } else if (isRetry) {
+            logger.info(`Decryption succeeded for event ${event.getId()} after retry`);
+        }
+
         if (event.getType() !== EventType.CallEncryptionKeysPrefix) return Promise.resolve();
 
         const room = this.client.getRoom(event.getRoomId());