diff --git a/architecture/security-policy.md b/architecture/security-policy.md
index 44898d70..8c41e5b9 100644
--- a/architecture/security-policy.md
+++ b/architecture/security-policy.md
@@ -716,7 +716,7 @@ If any condition fails, the proxy returns `403 Forbidden`.
 7. Rewrites the request: absolute-form → origin-form (`GET /path HTTP/1.1`), strips hop-by-hop headers, adds `Via: 1.1 openshell-sandbox` and `Connection: close`
 8. Forwards the rewritten request, then relays bidirectionally using `tokio::io::copy_bidirectional` (supports chunked transfer, SSE streams, and other long-lived responses with no idle timeout)
 
-**V1 simplifications**: Forward proxy v1 injects `Connection: close` (no keep-alive) and does not perform L7 inspection on the forwarded traffic. Every forward proxy connection handles exactly one request-response exchange.
+**V1 simplifications**: Forward proxy v1 injects `Connection: close` (no keep-alive). Every forward proxy connection handles exactly one request-response exchange. When an endpoint has L7 rules configured, the forward proxy evaluates the single request's method and path against L7 policy before forwarding.
 
 **Implementation**: See `crates/openshell-sandbox/src/proxy.rs` -- `handle_forward_proxy()`, `parse_proxy_uri()`, `rewrite_forward_request()`.
 
diff --git a/crates/openshell-sandbox/src/l7/relay.rs b/crates/openshell-sandbox/src/l7/relay.rs
index 940e7f94..88f9ce8a 100644
--- a/crates/openshell-sandbox/src/l7/relay.rs
+++ b/crates/openshell-sandbox/src/l7/relay.rs
@@ -180,7 +180,7 @@ fn is_benign_connection_error(err: &miette::Report) -> bool {
 /// Evaluate an L7 request against the OPA engine.
 ///
 /// Returns `(allowed, deny_reason)`.
-fn evaluate_l7_request(
+pub fn evaluate_l7_request(
     engine: &Mutex<regorus::Engine>,
     ctx: &L7EvalContext,
     request: &L7RequestInfo,
diff --git a/crates/openshell-sandbox/src/proxy.rs b/crates/openshell-sandbox/src/proxy.rs
index 6f3eaf9b..088ec46a 100644
--- a/crates/openshell-sandbox/src/proxy.rs
+++ b/crates/openshell-sandbox/src/proxy.rs
@@ -1803,10 +1803,62 @@ async fn handle_forward_proxy(
     };
     let policy_str = matched_policy.as_deref().unwrap_or("-");
 
-    // 4b. Reject if the endpoint has L7 config — the forward proxy path does
-    //     not perform per-request method/path inspection, so L7-configured
-    //     endpoints must go through the CONNECT tunnel where inspection happens.
-    if query_l7_config(&opa_engine, &decision, &host_lc, port).is_some() {
+    // 4b. If the endpoint has L7 config, evaluate the request against
+    //     L7 policy.  The forward proxy handles exactly one request per
+    //     connection (Connection: close), so a single evaluation suffices.
+    if let Some(l7_config) = query_l7_config(&opa_engine, &decision, &host_lc, port) {
+        let tunnel_engine = opa_engine.clone_engine_for_tunnel().unwrap_or_else(|e| {
+            warn!(
+                error = %e,
+                "Failed to clone OPA engine for forward L7"
+            );
+            regorus::Engine::new()
+        });
+        let engine_mutex = std::sync::Mutex::new(tunnel_engine);
+
+        let l7_ctx = crate::l7::relay::L7EvalContext {
+            host: host_lc.clone(),
+            port,
+            policy_name: matched_policy.clone().unwrap_or_default(),
+            binary_path: decision
+                .binary
+                .as_ref()
+                .map(|p| p.to_string_lossy().into_owned())
+                .unwrap_or_default(),
+            ancestors: decision
+                .ancestors
+                .iter()
+                .map(|p| p.to_string_lossy().into_owned())
+                .collect(),
+            cmdline_paths: decision
+                .cmdline_paths
+                .iter()
+                .map(|p| p.to_string_lossy().into_owned())
+                .collect(),
+            secret_resolver: secret_resolver.clone(),
+        };
+
+        let request_info = crate::l7::L7RequestInfo {
+            action: method.to_string(),
+            target: path.clone(),
+        };
+
+        let (allowed, reason) =
+            crate::l7::relay::evaluate_l7_request(&engine_mutex, &l7_ctx, &request_info)
+                .unwrap_or_else(|e| {
+                    warn!(
+                        error = %e,
+                        "L7 eval failed, denying request"
+                    );
+                    (false, format!("L7 evaluation error: {e}"))
+                });
+
+        let decision_str = match (allowed, l7_config.enforcement) {
+            (true, _) => "allow",
+            (false, crate::l7::EnforcementMode::Audit) => "audit",
+            (false, crate::l7::EnforcementMode::Enforce) => "deny",
+        };
+
         info!(
             dst_host = %host_lc,
             dst_port = port,
@@ -1814,21 +1866,28 @@ async fn handle_forward_proxy(
             path = %path,
             binary = %binary_str,
             policy = %policy_str,
-            action = "deny",
-            reason = "endpoint has L7 rules; use CONNECT",
-            "FORWARD",
+            l7_protocol = "rest",
+            l7_decision = decision_str,
+            l7_deny_reason = %reason,
+            "FORWARD_L7",
         );
-        emit_denial_simple(
-            denial_tx,
-            &host_lc,
-            port,
-            &binary_str,
-            &decision,
-            "endpoint has L7 rules configured; forward proxy bypasses L7 inspection — use CONNECT",
-            "forward-l7-bypass",
-        );
-        respond(client, b"HTTP/1.1 403 Forbidden\r\n\r\n").await?;
-        return Ok(());
+
+        let effectively_denied =
+            !allowed && l7_config.enforcement == crate::l7::EnforcementMode::Enforce;
+
+        if effectively_denied {
+            emit_denial_simple(
+                denial_tx,
+                &host_lc,
+                port,
+                &binary_str,
+                &decision,
+                &reason,
+                "forward-l7-deny",
+            );
+            respond(client, b"HTTP/1.1 403 Forbidden\r\n\r\n").await?;
+            return Ok(());
+        }
     }
 
     // 5. DNS resolution + SSRF defence (mirrors the CONNECT path logic).
diff --git a/e2e/rust/tests/forward_proxy_l7_bypass.rs b/e2e/rust/tests/forward_proxy_l7_bypass.rs
index fb75176c..89ecf2cd 100644
--- a/e2e/rust/tests/forward_proxy_l7_bypass.rs
+++ b/e2e/rust/tests/forward_proxy_l7_bypass.rs
@@ -1,10 +1,10 @@
 // SPDX-FileCopyrightText: Copyright (c) 2025-2026 NVIDIA CORPORATION & AFFILIATES. All rights reserved.
 // SPDX-License-Identifier: Apache-2.0
 
-//! Regression test: the forward proxy path must reject requests to endpoints
-//! that have L7 rules configured.  Before the fix, plain `http://` requests
-//! (which use the forward proxy, not CONNECT) bypassed per-request method/path
-//! enforcement entirely.
+//! Regression tests: the forward proxy path must evaluate L7 rules for
+//! endpoints that have them configured.  Allowed requests (e.g. GET on a
+//! read-only endpoint) should succeed; denied requests (e.g. POST) should
+//! receive 403.
 
 #![cfg(feature = "e2e")]
 
@@ -145,6 +145,7 @@ network_policies:
       - host: host.openshell.internal
         port: {port}
         protocol: rest
+        enforcement: enforce
         allowed_ips:
           - "172.0.0.0/8"
         rules:
@@ -164,24 +165,21 @@ network_policies:
     Ok(file)
 }
 
-/// The forward proxy path (plain http:// via HTTP_PROXY) must return 403 for
-/// endpoints with L7 rules, forcing clients through the CONNECT tunnel where
-/// per-request method/path inspection actually happens.
+/// GET /allowed should succeed — the L7 policy explicitly allows it.
 #[tokio::test]
-async fn forward_proxy_rejects_l7_configured_endpoint() {
+async fn forward_proxy_allows_l7_permitted_request() {
     let server = DockerServer::start()
         .await
         .expect("start docker test server");
-    let policy = write_policy_with_l7_rules(server.port).expect("write custom policy");
+    let policy =
+        write_policy_with_l7_rules(server.port)
+            .expect("write custom policy");
     let policy_path = policy
         .path()
         .to_str()
         .expect("temp policy path should be utf-8")
         .to_string();
 
-    // Python script that tries a plain http:// request (forward proxy path).
-    // HTTP_PROXY is set automatically by the sandbox, so urllib will use the
-    // forward proxy for http:// URLs (not CONNECT).
     let script = format!(
         r#"
 import urllib.request, urllib.error, json, sys
@@ -208,10 +206,60 @@ except Exception as e:
     .await
     .expect("sandbox create");
 
-    // The forward proxy should return 403 because the endpoint has L7 rules.
+    // L7 policy allows GET /allowed — should succeed.
+    assert!(
+        guard.create_output.contains("\"status\": 200"),
+        "expected 200 for L7-allowed GET, got:\n{}",
+        guard.create_output
+    );
+}
+
+/// POST /allowed should be denied — the L7 policy only allows GET.
+#[tokio::test]
+async fn forward_proxy_denies_l7_blocked_request() {
+    let server = DockerServer::start()
+        .await
+        .expect("start docker test server");
+    let policy =
+        write_policy_with_l7_rules(server.port)
+            .expect("write custom policy");
+    let policy_path = policy
+        .path()
+        .to_str()
+        .expect("temp policy path should be utf-8")
+        .to_string();
+
+    let script = format!(
+        r#"
+import urllib.request, urllib.error, json, sys
+url = "http://host.openshell.internal:{port}/allowed"
+req = urllib.request.Request(url, data=b"test", method="POST")
+try:
+    resp = urllib.request.urlopen(req, timeout=15)
+    print(json.dumps({{"status": resp.status, "error": None}}))
+except urllib.error.HTTPError as e:
+    print(json.dumps({{"status": e.code, "error": str(e)}}))
+except Exception as e:
+    print(json.dumps({{"status": -1, "error": str(e)}}))
+"#,
+        port = server.port,
+    );
+
+    let guard = SandboxGuard::create(&[
+        "--policy",
+        &policy_path,
+        "--",
+        "python3",
+        "-c",
+        &script,
+    ])
+    .await
+    .expect("sandbox create");
+
+    // L7 policy denies POST — should return 403.
     assert!(
         guard.create_output.contains("\"status\": 403"),
-        "expected 403 from forward proxy for L7-configured endpoint, got:\n{}",
+        "expected 403 for L7-denied POST, got:\n{}",
         guard.create_output
     );
 }