diff --git a/Gems/Multiplayer/Code/Include/IMultiplayer.h b/Gems/Multiplayer/Code/Include/IMultiplayer.h
index 94744dbb54..0f28bef403 100644
--- a/Gems/Multiplayer/Code/Include/IMultiplayer.h
+++ b/Gems/Multiplayer/Code/Include/IMultiplayer.h
@@ -92,6 +92,10 @@ namespace Multiplayer
         //! @return the stats object bound to this multiplayer instance
         MultiplayerStats& GetStats() { return m_stats; }
 
+        //! Sends a packet telling if entity update messages can be sent
+        //! @param readyForEntityUpdates Ready for entity updates or not
+        virtual void SendReadyForEntityUpdates(bool readyForEntityUpdates) = 0;
+
     private:
         MultiplayerStats m_stats;
     };
diff --git a/Gems/Multiplayer/Code/Source/AutoGen/Multiplayer.AutoPackets.xml b/Gems/Multiplayer/Code/Source/AutoGen/Multiplayer.AutoPackets.xml
index e5549e90d6..758ea27ad7 100644
--- a/Gems/Multiplayer/Code/Source/AutoGen/Multiplayer.AutoPackets.xml
+++ b/Gems/Multiplayer/Code/Source/AutoGen/Multiplayer.AutoPackets.xml
@@ -14,6 +14,10 @@
         <Member Type="Multiplayer::HostId" Name="hostId" Init="Multiplayer::InvalidHostId" />
         <Member Type="Multiplayer::LongNetworkString" Name="map" />
     </Packet>
+  
+    <Packet Name="ReadyForEntityUpdates" Desc="Client confirming it is ready to receive entity updates">
+      <Member Type="bool" Name="readyForEntityUpdates" />
+    </Packet>
 
     <Packet Name="SyncConsole" Desc="Packet for synchornizing cvars between hosts">
         <Member Type="Multiplayer::LongNetworkString" Name="commandSet" Container="Vector" Count="32" />
diff --git a/Gems/Multiplayer/Code/Source/ConnectionData/ServerToClientConnectionData.h b/Gems/Multiplayer/Code/Source/ConnectionData/ServerToClientConnectionData.h
index 02b045e63f..596bdc88d9 100644
--- a/Gems/Multiplayer/Code/Source/ConnectionData/ServerToClientConnectionData.h
+++ b/Gems/Multiplayer/Code/Source/ConnectionData/ServerToClientConnectionData.h
@@ -36,7 +36,8 @@ namespace Multiplayer
         void Update(AZ::TimeMs serverGameTimeMs) override;
         //! @}
 
-        bool CanSendUpdates();
+        bool CanSendUpdates() const;
+        void SetCanSendUpdates(bool canSendUpdates);
 
         NetworkEntityHandle GetPrimaryPlayerEntity();
         const NetworkEntityHandle& GetPrimaryPlayerEntity() const;
@@ -51,7 +52,7 @@ namespace Multiplayer
         EntityStopEvent::Handler m_controlledEntityRemovedHandler;
         EntityMigrationEvent::Handler m_controlledEntityMigrationHandler;
         AzNetworking::IConnection* m_connection = nullptr;
-        bool m_canSendUpdates = true;
+        bool m_canSendUpdates = false;
     };
 }
 
diff --git a/Gems/Multiplayer/Code/Source/ConnectionData/ServerToClientConnectionData.inl b/Gems/Multiplayer/Code/Source/ConnectionData/ServerToClientConnectionData.inl
index 07bfb51536..0a4215a363 100644
--- a/Gems/Multiplayer/Code/Source/ConnectionData/ServerToClientConnectionData.inl
+++ b/Gems/Multiplayer/Code/Source/ConnectionData/ServerToClientConnectionData.inl
@@ -12,11 +12,17 @@
 
 namespace Multiplayer
 {
-    inline bool ServerToClientConnectionData::CanSendUpdates()
+    inline bool ServerToClientConnectionData::CanSendUpdates() const
     {
         return m_canSendUpdates;
     }
 
+    inline void ServerToClientConnectionData::SetCanSendUpdates(bool canSendUpdates)
+    {
+        m_canSendUpdates = canSendUpdates;
+    }
+
+
     inline NetworkEntityHandle ServerToClientConnectionData::GetPrimaryPlayerEntity()
     {
         return m_controlledEntity;
diff --git a/Gems/Multiplayer/Code/Source/MultiplayerSystemComponent.cpp b/Gems/Multiplayer/Code/Source/MultiplayerSystemComponent.cpp
index e40e9e9d66..49a0f63b63 100644
--- a/Gems/Multiplayer/Code/Source/MultiplayerSystemComponent.cpp
+++ b/Gems/Multiplayer/Code/Source/MultiplayerSystemComponent.cpp
@@ -381,6 +381,19 @@ namespace Multiplayer
         return false;
     }
 
+    bool MultiplayerSystemComponent::HandleRequest( AzNetworking::IConnection* connection,
+        [[maybe_unused]] const AzNetworking::IPacketHeader& packetHeader, MultiplayerPackets::ReadyForEntityUpdates& packet)
+    {
+        auto* connectionData = reinterpret_cast<ServerToClientConnectionData*>(connection->GetUserData());
+        if (connectionData)
+        {
+            connectionData->SetCanSendUpdates(packet.GetReadyForEntityUpdates());
+            return true;
+        }
+
+        return false;
+    }
+
     ConnectResult MultiplayerSystemComponent::ValidateConnect
     (
         [[maybe_unused]] const IpAddress& remoteAddress,
@@ -503,6 +516,15 @@ namespace Multiplayer
         handler.Connect(m_shutdownEvent);
     }
 
+    void MultiplayerSystemComponent::SendReadyForEntityUpdates(bool readyForEntityUpdates)
+    {
+        IConnectionSet& connectionSet = m_networkInterface->GetConnectionSet();
+        connectionSet.VisitConnections([readyForEntityUpdates](IConnection& connection)
+        {
+            connection.SendReliablePacket(MultiplayerPackets::ReadyForEntityUpdates(readyForEntityUpdates));
+        });
+    }
+
     void MultiplayerSystemComponent::DumpStats([[maybe_unused]] const AZ::ConsoleCommandContainer& arguments)
     {
         const MultiplayerStats& stats = GetStats();
diff --git a/Gems/Multiplayer/Code/Source/MultiplayerSystemComponent.h b/Gems/Multiplayer/Code/Source/MultiplayerSystemComponent.h
index 1e10f9841e..8695dea7dd 100644
--- a/Gems/Multiplayer/Code/Source/MultiplayerSystemComponent.h
+++ b/Gems/Multiplayer/Code/Source/MultiplayerSystemComponent.h
@@ -71,6 +71,7 @@ namespace Multiplayer
         bool HandleRequest(AzNetworking::IConnection* connection, const AzNetworking::IPacketHeader& packetHeader, MultiplayerPackets::ClientMigration& packet);
         bool HandleRequest(AzNetworking::IConnection* connection, const AzNetworking::IPacketHeader& packetHeader, MultiplayerPackets::NotifyClientMigration& packet);
         bool HandleRequest(AzNetworking::IConnection* connection, const AzNetworking::IPacketHeader& packetHeader, MultiplayerPackets::EntityMigration& packet);
+        bool HandleRequest(AzNetworking::IConnection* connection, const AzNetworking::IPacketHeader& packetHeader, MultiplayerPackets::ReadyForEntityUpdates& packet);
 
         //! IConnectionListener interface
         //! @{
@@ -88,6 +89,7 @@ namespace Multiplayer
         void AddConnectionAcquiredHandler(ConnectionAcquiredEvent::Handler& handler) override;
         void AddSessionInitHandler(SessionInitEvent::Handler& handler) override;
         void AddSessionShutdownHandler(SessionShutdownEvent::Handler& handler) override;
+        void SendReadyForEntityUpdates(bool readyForEntityUpdates) override;
         //! @}
 
         //! Console commands.
diff --git a/Gems/Multiplayer/Code/Source/NetworkEntity/NetworkEntityManager.cpp b/Gems/Multiplayer/Code/Source/NetworkEntity/NetworkEntityManager.cpp
index 2eb93d706d..131e7be3f1 100644
--- a/Gems/Multiplayer/Code/Source/NetworkEntity/NetworkEntityManager.cpp
+++ b/Gems/Multiplayer/Code/Source/NetworkEntity/NetworkEntityManager.cpp
@@ -11,19 +11,19 @@
  */
 
 #include <Source/NetworkEntity/NetworkEntityManager.h>
-#include <Source/Components/NetBindComponent.h>
-#include <Include/IMultiplayer.h>
-#include <AzCore/Interface/Interface.h>
+
+#include <AzCore/Asset/AssetManager.h>
 #include <AzCore/Console/IConsole.h>
 #include <AzCore/Console/ILogger.h>
+#include <AzCore/Interface/Interface.h>
 #include <AzCore/Serialization/SerializeContext.h>
 #include <AzCore/Slice/SliceMetadataInfoComponent.h>
+#include <AzFramework/Components/TransformComponent.h>
 #include <AzFramework/Entity/EntityContextBus.h>
 #include <AzFramework/Entity/GameEntityContextBus.h>
-#include <AzFramework/Components/TransformComponent.h>
 #include <Include/IMultiplayer.h>
 #include <Pipeline/NetworkSpawnableHolderComponent.h>
-#include <AzCore/Asset/AssetManager.h>
+#include <Source/Components/NetBindComponent.h>
 
 namespace Multiplayer
 {
@@ -462,7 +462,9 @@ namespace Multiplayer
 
         m_rootSpawnableAsset = netSpawnableAsset;
 
-        const auto agentType = AZ::Interface<IMultiplayer>::Get()->GetAgentType();
+        auto* iMultiplayer = AZ::Interface<IMultiplayer>::Get();
+
+        const auto agentType = iMultiplayer->GetAgentType();
         const bool spawnImmediately =
             (agentType == MultiplayerAgentType::ClientServer || agentType == MultiplayerAgentType::DedicatedServer);
 
@@ -470,6 +472,12 @@ namespace Multiplayer
         {
             CreateEntitiesImmediate(*netSpawnable, NetEntityRole::Authority);
         }
+        else
+        {
+            // If we don't spawn net entities immediately (i.e. it is a client),
+            // tell the server/host it can start sending updates that will instantiate entities.
+            iMultiplayer->SendReadyForEntityUpdates(true);
+        }
     }
 
     void NetworkEntityManager::OnRootSpawnableReleased([[maybe_unused]] uint32_t generation)