diff --git a/mercurial/wireprotoframing.py b/mercurial/wireprotoframing.py
--- a/mercurial/wireprotoframing.py
+++ b/mercurial/wireprotoframing.py
@@ -668,6 +668,13 @@
         return makeframe(requestid, self.streamid, streamflags, typeid, flags,
                          payload)
 
+    def setdecoder(self, name, extraobjs):
+        """Set the decoder for this stream.
+
+        Receives the stream profile name and any additional CBOR objects
+        decoded from the stream encoding settings frame payloads.
+        """
+
 def ensureserverstream(stream):
     if stream.streamid % 2:
         raise error.ProgrammingError('server should only write to even '
@@ -1367,6 +1374,7 @@
         self._pendingrequests = collections.deque()
         self._activerequests = {}
         self._incomingstreams = {}
+        self._streamsettingsdecoders = {}
 
     def callcommand(self, name, args, datafh=None, redirect=None):
         """Request that a command be executed.
@@ -1484,6 +1492,9 @@
         if frame.streamflags & STREAM_FLAG_END_STREAM:
             del self._incomingstreams[frame.streamid]
 
+        if frame.typeid == FRAME_TYPE_STREAM_SETTINGS:
+            return self._onstreamsettingsframe(frame)
+
         if frame.requestid not in self._activerequests:
             return 'error', {
                 'message': (_('received frame for inactive request ID: %d') %
@@ -1505,6 +1516,64 @@
 
         return meth(request, frame)
 
+    def _onstreamsettingsframe(self, frame):
+        assert frame.typeid == FRAME_TYPE_STREAM_SETTINGS
+
+        more = frame.flags & FLAG_STREAM_ENCODING_SETTINGS_CONTINUATION
+        eos = frame.flags & FLAG_STREAM_ENCODING_SETTINGS_EOS
+
+        if more and eos:
+            return 'error', {
+                'message': (_('stream encoding settings frame cannot have both '
+                              'continuation and end of stream flags set')),
+            }
+
+        if not more and not eos:
+            return 'error', {
+                'message': _('stream encoding settings frame must have '
+                             'continuation or end of stream flag set'),
+            }
+
+        if frame.streamid not in self._streamsettingsdecoders:
+            decoder = cborutil.bufferingdecoder()
+            self._streamsettingsdecoders[frame.streamid] = decoder
+
+        decoder = self._streamsettingsdecoders[frame.streamid]
+
+        try:
+            decoder.decode(frame.payload)
+        except Exception as e:
+            return 'error', {
+                'message': (_('error decoding CBOR from stream encoding '
+                             'settings frame: %s') %
+                           stringutil.forcebytestr(e)),
+            }
+
+        if more:
+            return 'noop', {}
+
+        assert eos
+
+        decoded = decoder.getavailable()
+        del self._streamsettingsdecoders[frame.streamid]
+
+        if not decoded:
+            return 'error', {
+                'message': _('stream encoding settings frame did not contain '
+                             'CBOR data'),
+            }
+
+        try:
+            self._incomingstreams[frame.streamid].setdecoder(decoded[0],
+                                                             decoded[1:])
+        except Exception as e:
+            return 'error', {
+                'message': (_('error setting stream decoder: %s') %
+                            stringutil.forcebytestr(e)),
+            }
+
+        return 'noop', {}
+
     def _oncommandresponseframe(self, request, frame):
         if frame.flags & FLAG_COMMAND_RESPONSE_EOS:
             request.state = 'received'
diff --git a/tests/test-wireproto-clientreactor.py b/tests/test-wireproto-clientreactor.py
--- a/tests/test-wireproto-clientreactor.py
+++ b/tests/test-wireproto-clientreactor.py
@@ -6,6 +6,9 @@
     error,
     wireprotoframing as framing,
 )
+from mercurial.utils import (
+    cborutil,
+)
 
 ffs = framing.makeframefromhumanstring
 
@@ -162,6 +165,120 @@
                              b"b'redirect': {b'targets': [b'a', b'b'], "
                              b"b'hashes': [b'sha256']}}"))
 
+class StreamSettingsTests(unittest.TestCase):
+    def testnoflags(self):
+        reactor = framing.clientreactor(buffersends=False)
+
+        request, action, meta = reactor.callcommand(b'foo', {})
+        for f in meta[b'framegen']:
+            pass
+
+        action, meta = sendframe(reactor,
+            ffs(b'1 2 stream-begin stream-settings 0 '))
+
+        self.assertEqual(action, b'error')
+        self.assertEqual(meta, {
+            b'message': b'stream encoding settings frame must have '
+                        b'continuation or end of stream flag set',
+        })
+
+    def testconflictflags(self):
+        reactor = framing.clientreactor(buffersends=False)
+
+        request, action, meta = reactor.callcommand(b'foo', {})
+        for f in meta[b'framegen']:
+            pass
+
+        action, meta = sendframe(reactor,
+            ffs(b'1 2 stream-begin stream-settings continuation|eos '))
+
+        self.assertEqual(action, b'error')
+        self.assertEqual(meta, {
+            b'message': b'stream encoding settings frame cannot have both '
+                        b'continuation and end of stream flags set',
+        })
+
+    def testemptypayload(self):
+        reactor = framing.clientreactor(buffersends=False)
+
+        request, action, meta = reactor.callcommand(b'foo', {})
+        for f in meta[b'framegen']:
+            pass
+
+        action, meta = sendframe(reactor,
+            ffs(b'1 2 stream-begin stream-settings eos '))
+
+        self.assertEqual(action, b'error')
+        self.assertEqual(meta, {
+            b'message': b'stream encoding settings frame did not contain '
+                        b'CBOR data'
+        })
+
+    def testbadcbor(self):
+        reactor = framing.clientreactor(buffersends=False)
+
+        request, action, meta = reactor.callcommand(b'foo', {})
+        for f in meta[b'framegen']:
+            pass
+
+        action, meta = sendframe(reactor,
+            ffs(b'1 2 stream-begin stream-settings eos badvalue'))
+
+        self.assertEqual(action, b'error')
+
+    def testsingleobject(self):
+        reactor = framing.clientreactor(buffersends=False)
+
+        request, action, meta = reactor.callcommand(b'foo', {})
+        for f in meta[b'framegen']:
+            pass
+
+        action, meta = sendframe(reactor,
+            ffs(b'1 2 stream-begin stream-settings eos cbor:b"identity"'))
+
+        self.assertEqual(action, b'noop')
+        self.assertEqual(meta, {})
+
+    def testmultipleobjects(self):
+        reactor = framing.clientreactor(buffersends=False)
+
+        request, action, meta = reactor.callcommand(b'foo', {})
+        for f in meta[b'framegen']:
+            pass
+
+        data = b''.join([
+            b''.join(cborutil.streamencode(b'identity')),
+            b''.join(cborutil.streamencode({b'foo', b'bar'})),
+        ])
+
+        action, meta = sendframe(reactor,
+            ffs(b'1 2 stream-begin stream-settings eos %s' % data))
+
+        self.assertEqual(action, b'noop')
+        self.assertEqual(meta, {})
+
+    def testmultipleframes(self):
+        reactor = framing.clientreactor(buffersends=False)
+
+        request, action, meta = reactor.callcommand(b'foo', {})
+        for f in meta[b'framegen']:
+            pass
+
+        data = b''.join(cborutil.streamencode(b'identity'))
+
+        action, meta = sendframe(reactor,
+            ffs(b'1 2 stream-begin stream-settings continuation %s' %
+                data[0:3]))
+
+        self.assertEqual(action, b'noop')
+        self.assertEqual(meta, {})
+
+        action, meta = sendframe(reactor,
+            ffs(b'1 2 0 stream-settings eos %s' % data[3:]))
+
+        self.assertEqual(action, b'noop')
+        self.assertEqual(meta, {})
+
 if __name__ == '__main__':
     import silenttestrunner
     silenttestrunner.main(__name__)