+1
 would we need to check if the peer.finishReadFuture ==  peerReadFuture and only set to null in this case ? A.k.a an atomic operation.
 Good catch!
 Please try to use `PlatformDependent.newAtomicReferenceFieldUpdater` first in a static block like we do in other places like:

https://github.com/netty/netty/blob/master/transport/src/main/java/io/netty/channel/ChannelOutboundBuffer.java#L90
 Cool...wasn't aware of this.

LocalChannel sequencing issue leading to HTTP/2 unit test failure
There is a sequencing issue in LocalChannel that is resulting in a unit test failure as picked up on the CI server [Http2ConnectionRoundtripTest.noMoreStreamIdsShouldSendGoAway](https://garage.netty.io/teamcity/viewLog.html?buildId=593&tab=buildResultsDiv&buildTypeId=netty_build_oraclejdk7).

I have a PR pending approval.

transport/src/main/java/io/netty/channel/local/LocalChannel.java
transport/src/main/java/io/netty/channel/local/LocalChannel.java
transport/src/test/java/io/netty/channel/local/LocalChannelTest.java
diff --git a/transport/src/main/java/io/netty/channel/local/LocalChannel.java b/transport/src/main/java/io/netty/channel/local/LocalChannel.java
index 96e0acbfac9..59fc04480fa 100644
--- a/transport/src/main/java/io/netty/channel/local/LocalChannel.java
+++ b/transport/src/main/java/io/netty/channel/local/LocalChannel.java
@@ -27,6 +27,7 @@
 import io.netty.channel.EventLoop;
 import io.netty.channel.SingleThreadEventLoop;
 import io.netty.util.ReferenceCountUtil;
+import io.netty.util.concurrent.Future;
 import io.netty.util.internal.InternalThreadLocalMap;
 import io.netty.util.internal.OneTimeTask;
 import io.netty.util.internal.PlatformDependent;
@@ -37,6 +38,7 @@
 import java.nio.channels.ConnectionPendingException;
 import java.nio.channels.NotYetConnectedException;
 import java.util.Queue;
+import java.util.concurrent.atomic.AtomicReferenceFieldUpdater;
 
 /**
  * A {@link Channel} for the local transport.
@@ -45,8 +47,9 @@ public class LocalChannel extends AbstractChannel {
 
     private enum State { OPEN, BOUND, CONNECTED, CLOSED }
 
+    @SuppressWarnings({ "rawtypes" })
+    private static final AtomicReferenceFieldUpdater<LocalChannel, Future> FINISH_READ_FUTURE_UPDATER;
     private static final ChannelMetadata METADATA = new ChannelMetadata(false);
-
     private static final int MAX_READER_STACK_DEPTH = 8;
 
     private final ChannelConfig config = new DefaultChannelConfig(this);
@@ -81,6 +84,18 @@ public void run() {
     private volatile boolean readInProgress;
     private volatile boolean registerInProgress;
     private volatile boolean writeInProgress;
+    private volatile Future<?> finishReadFuture;
+
+    static {
+        @SuppressWarnings({ "rawtypes" })
+        AtomicReferenceFieldUpdater<LocalChannel, Future> finishReadFutureUpdater =
+                PlatformDependent.newAtomicReferenceFieldUpdater(LocalChannel.class, "finishReadFuture");
+        if (finishReadFutureUpdater == null) {
+            finishReadFutureUpdater =
+                AtomicReferenceFieldUpdater.newUpdater(LocalChannel.class, Future.class, "finishReadFuture");
+        }
+        FINISH_READ_FUTURE_UPDATER = finishReadFutureUpdater;
+    }
 
     public LocalChannel() {
         super(null);
@@ -328,16 +343,37 @@ private void finishPeerRead(final LocalChannel peer) {
         if (peer.eventLoop() == eventLoop() && !peer.writeInProgress) {
             finishPeerRead0(peer);
         } else {
-            peer.eventLoop().execute(new OneTimeTask() {
-                @Override
-                public void run() {
-                    finishPeerRead0(peer);
-                }
-            });
+            runFinishPeerReadTask(peer);
         }
     }
 
-    private static void finishPeerRead0(LocalChannel peer) {
+    private void runFinishPeerReadTask(final LocalChannel peer) {
+        // If the peer is writing, we must wait until after reads are completed for that peer before we can read. So
+        // we keep track of the task, and coordinate later that our read can't happen until the peer is done.
+        final Runnable finishPeerReadTask = new OneTimeTask() {
+            @Override
+            public void run() {
+                finishPeerRead0(peer);
+            }
+        };
+        if (peer.writeInProgress) {
+            peer.finishReadFuture = peer.eventLoop().submit(finishPeerReadTask);
+        } else {
+            peer.eventLoop().execute(finishPeerReadTask);
+        }
+    }
+
+    private void finishPeerRead0(LocalChannel peer) {
+        Future<?> peerFinishReadFuture = peer.finishReadFuture;
+        if (peerFinishReadFuture != null) {
+            if (!peerFinishReadFuture.isDone()) {
+                runFinishPeerReadTask(peer);
+                return;
+            } else {
+                // Lazy unset to make sure we don't prematurely unset it while scheduling a new task.
+                FINISH_READ_FUTURE_UPDATER.compareAndSet(peer, peerFinishReadFuture, null);
+            }
+        }
         ChannelPipeline peerPipeline = peer.pipeline();
         if (peer.readInProgress) {
             peer.readInProgress = false;

diff --git a/transport/src/test/java/io/netty/channel/local/LocalChannelTest.java b/transport/src/test/java/io/netty/channel/local/LocalChannelTest.java
index 671b78d8459..cdbad06a658 100644
--- a/transport/src/test/java/io/netty/channel/local/LocalChannelTest.java
+++ b/transport/src/test/java/io/netty/channel/local/LocalChannelTest.java
@@ -59,7 +59,7 @@ public class LocalChannelTest {
 
     private static final InternalLogger logger = InternalLoggerFactory.getInstance(LocalChannelTest.class);
 
-    private static final String LOCAL_ADDR_ID = "test.id";
+    private static final LocalAddress TEST_ADDRESS = new LocalAddress("test.id");
 
     private static EventLoopGroup group1;
     private static EventLoopGroup group2;
@@ -85,7 +85,6 @@ public static void afterClass() throws InterruptedException {
     @Test
     public void testLocalAddressReuse() throws Exception {
         for (int i = 0; i < 2; i ++) {
-            LocalAddress addr = new LocalAddress(LOCAL_ADDR_ID);
             Bootstrap cb = new Bootstrap();
             ServerBootstrap sb = new ServerBootstrap();
 
@@ -106,11 +105,11 @@ public void initChannel(LocalChannel ch) throws Exception {
             Channel cc = null;
             try {
                 // Start server
-                sc = sb.bind(addr).sync().channel();
+                sc = sb.bind(TEST_ADDRESS).sync().channel();
 
                 final CountDownLatch latch = new CountDownLatch(1);
                 // Connect to the server
-                cc = cb.connect(addr).sync().channel();
+                cc = cb.connect(sc.localAddress()).sync().channel();
                 final Channel ccCpy = cc;
                 cc.eventLoop().execute(new Runnable() {
                     @Override
@@ -129,7 +128,7 @@ public void run() {
 
                 assertNull(String.format(
                         "Expected null, got channel '%s' for local address '%s'",
-                        LocalChannelRegistry.get(addr), addr), LocalChannelRegistry.get(addr));
+                        LocalChannelRegistry.get(TEST_ADDRESS), TEST_ADDRESS), LocalChannelRegistry.get(TEST_ADDRESS));
             } finally {
                 closeChannel(cc);
                 closeChannel(sc);
@@ -139,7 +138,6 @@ public void run() {
 
     @Test
     public void testWriteFailsFastOnClosedChannel() throws Exception {
-        LocalAddress addr = new LocalAddress(LOCAL_ADDR_ID);
         Bootstrap cb = new Bootstrap();
         ServerBootstrap sb = new ServerBootstrap();
 
@@ -160,10 +158,10 @@ public void initChannel(LocalChannel ch) throws Exception {
         Channel cc = null;
         try {
             // Start server
-            sc = sb.bind(addr).sync().channel();
+            sc = sb.bind(TEST_ADDRESS).sync().channel();
 
             // Connect to the server
-            cc = cb.connect(addr).sync().channel();
+            cc = cb.connect(sc.localAddress()).sync().channel();
 
             // Close the channel and write something.
             cc.close().sync();
@@ -189,7 +187,6 @@ public void initChannel(LocalChannel ch) throws Exception {
 
     @Test
     public void testServerCloseChannelSameEventLoop() throws Exception {
-        LocalAddress addr = new LocalAddress(LOCAL_ADDR_ID);
         final CountDownLatch latch = new CountDownLatch(1);
         ServerBootstrap sb = new ServerBootstrap()
                 .group(group2)
@@ -204,7 +201,7 @@ protected void messageReceived(ChannelHandlerContext ctx, Object msg) throws Exc
         Channel sc = null;
         Channel cc = null;
         try {
-            sc = sb.bind(addr).sync().channel();
+            sc = sb.bind(TEST_ADDRESS).sync().channel();
 
             Bootstrap b = new Bootstrap()
                     .group(group2)
@@ -215,7 +212,7 @@ protected void messageReceived(ChannelHandlerContext ctx, Object msg) throws Exc
                             // discard
                         }
                     });
-            cc = b.connect(addr).sync().channel();
+            cc = b.connect(sc.localAddress()).sync().channel();
             cc.writeAndFlush(new Object());
             assertTrue(latch.await(5, SECONDS));
         } finally {
@@ -226,7 +223,6 @@ protected void messageReceived(ChannelHandlerContext ctx, Object msg) throws Exc
 
     @Test
     public void localChannelRaceCondition() throws Exception {
-        final LocalAddress address = new LocalAddress(LOCAL_ADDR_ID);
         final CountDownLatch closeLatch = new CountDownLatch(1);
         final EventLoopGroup clientGroup = new DefaultEventLoopGroup(1) {
             @Override
@@ -271,7 +267,7 @@ protected void initChannel(Channel ch) throws Exception {
                             closeLatch.countDown();
                         }
                     }).
-                    bind(address).
+                    bind(TEST_ADDRESS).
                     sync().channel();
             Bootstrap bootstrap = new Bootstrap();
             bootstrap.group(clientGroup).
@@ -282,7 +278,7 @@ protected void initChannel(Channel ch) throws Exception {
                             /* Do nothing */
                         }
                     });
-            ChannelFuture future = bootstrap.connect(address);
+            ChannelFuture future = bootstrap.connect(sc.localAddress());
             assertTrue("Connection should finish, not time out", future.await(200));
             cc = future.channel();
         } finally {
@@ -294,7 +290,6 @@ protected void initChannel(Channel ch) throws Exception {
 
     @Test
     public void testReRegister() {
-        LocalAddress addr = new LocalAddress(LOCAL_ADDR_ID);
         Bootstrap cb = new Bootstrap();
         ServerBootstrap sb = new ServerBootstrap();
 
@@ -315,10 +310,10 @@ public void initChannel(LocalChannel ch) throws Exception {
         Channel cc = null;
         try {
             // Start server
-            sc = sb.bind(addr).syncUninterruptibly().channel();
+            sc = sb.bind(TEST_ADDRESS).syncUninterruptibly().channel();
 
             // Connect to the server
-            cc = cb.connect(addr).syncUninterruptibly().channel();
+            cc = cb.connect(sc.localAddress()).syncUninterruptibly().channel();
 
             cc.deregister().syncUninterruptibly();
         } finally {
@@ -329,7 +324,6 @@ public void initChannel(LocalChannel ch) throws Exception {
 
     @Test
     public void testCloseInWritePromiseCompletePreservesOrder() throws InterruptedException {
-        LocalAddress addr = new LocalAddress(LOCAL_ADDR_ID);
         Bootstrap cb = new Bootstrap();
         ServerBootstrap sb = new ServerBootstrap();
         final CountDownLatch messageLatch = new CountDownLatch(2);
@@ -363,10 +357,10 @@ public void channelInactive(ChannelHandlerContext ctx) throws Exception {
             Channel cc = null;
             try {
                 // Start server
-                sc = sb.bind(addr).syncUninterruptibly().channel();
+                sc = sb.bind(TEST_ADDRESS).syncUninterruptibly().channel();
 
                 // Connect to the server
-                cc = cb.connect(addr).syncUninterruptibly().channel();
+                cc = cb.connect(sc.localAddress()).syncUninterruptibly().channel();
 
                 final Channel ccCpy = cc;
                 // Make sure a write operation is executed in the eventloop
@@ -397,7 +391,6 @@ public void operationComplete(ChannelFuture future) throws Exception {
 
     @Test
     public void testWriteInWritePromiseCompletePreservesOrder() throws InterruptedException {
-        LocalAddress addr = new LocalAddress(LOCAL_ADDR_ID);
         Bootstrap cb = new Bootstrap();
         ServerBootstrap sb = new ServerBootstrap();
         final CountDownLatch messageLatch = new CountDownLatch(2);
@@ -428,10 +421,10 @@ public void channelRead(ChannelHandlerContext ctx, Object msg) throws Exception
             Channel cc = null;
             try {
                 // Start server
-                sc = sb.bind(addr).syncUninterruptibly().channel();
+                sc = sb.bind(TEST_ADDRESS).syncUninterruptibly().channel();
 
                 // Connect to the server
-                cc = cb.connect(addr).syncUninterruptibly().channel();
+                cc = cb.connect(sc.localAddress()).syncUninterruptibly().channel();
 
                 final Channel ccCpy = cc;
                 // Make sure a write operation is executed in the eventloop
@@ -462,7 +455,6 @@ public void operationComplete(ChannelFuture future) throws Exception {
 
     @Test
     public void testPeerWriteInWritePromiseCompleteDifferentEventLoopPreservesOrder() throws InterruptedException {
-        LocalAddress addr = new LocalAddress(LOCAL_ADDR_ID);
         Bootstrap cb = new Bootstrap();
         ServerBootstrap sb = new ServerBootstrap();
         final CountDownLatch messageLatch = new CountDownLatch(2);
@@ -510,10 +502,10 @@ public void channelRead(ChannelHandlerContext ctx, Object msg) throws Exception
         Channel cc = null;
         try {
             // Start server
-            sc = sb.bind(addr).syncUninterruptibly().channel();
+            sc = sb.bind(TEST_ADDRESS).syncUninterruptibly().channel();
 
             // Connect to the server
-            cc = cb.connect(addr).syncUninterruptibly().channel();
+            cc = cb.connect(sc.localAddress()).syncUninterruptibly().channel();
             assertTrue(serverChannelLatch.await(5, SECONDS));
 
             final Channel ccCpy = cc;
@@ -544,7 +536,6 @@ public void operationComplete(ChannelFuture future) throws Exception {
 
     @Test
     public void testPeerWriteInWritePromiseCompleteSameEventLoopPreservesOrder() throws InterruptedException {
-        LocalAddress addr = new LocalAddress(LOCAL_ADDR_ID);
         Bootstrap cb = new Bootstrap();
         ServerBootstrap sb = new ServerBootstrap();
         final CountDownLatch messageLatch = new CountDownLatch(2);
@@ -593,10 +584,10 @@ public void channelRead(ChannelHandlerContext ctx, Object msg) throws Exception
             Channel cc = null;
             try {
                 // Start server
-                sc = sb.bind(addr).syncUninterruptibly().channel();
+                sc = sb.bind(TEST_ADDRESS).syncUninterruptibly().channel();
 
                 // Connect to the server
-                cc = cb.connect(addr).syncUninterruptibly().channel();
+                cc = cb.connect(sc.localAddress()).syncUninterruptibly().channel();
                 assertTrue(serverChannelLatch.await(5, SECONDS));
 
                 final Channel ccCpy = cc;
@@ -630,7 +621,6 @@ public void operationComplete(ChannelFuture future) throws Exception {
 
     @Test
     public void testClosePeerInWritePromiseCompleteSameEventLoopPreservesOrder() throws InterruptedException {
-        LocalAddress addr = new LocalAddress(LOCAL_ADDR_ID);
         Bootstrap cb = new Bootstrap();
         ServerBootstrap sb = new ServerBootstrap();
         final CountDownLatch messageLatch = new CountDownLatch(2);
@@ -673,10 +663,10 @@ public void channelInactive(ChannelHandlerContext ctx) throws Exception {
             Channel cc = null;
             try {
                 // Start server
-                sc = sb.bind(addr).syncUninterruptibly().channel();
+                sc = sb.bind(TEST_ADDRESS).syncUninterruptibly().channel();
 
                 // Connect to the server
-                cc = cb.connect(addr).syncUninterruptibly().channel();
+                cc = cb.connect(sc.localAddress()).syncUninterruptibly().channel();
 
                 assertTrue(serverChannelLatch.await(5, SECONDS));
 
