diff --git a/src/wallet/rpc/wallet.cpp b/src/wallet/rpc/wallet.cpp
index ea3507bc75..74c2272177 100644
--- a/src/wallet/rpc/wallet.cpp
+++ b/src/wallet/rpc/wallet.cpp
@@ -27,6 +27,8 @@ static const std::map<uint64_t, std::string> WALLET_FLAG_CAVEATS{
      "You need to rescan the blockchain in order to correctly mark used "
      "destinations in the past. Until this is done, some destinations may "
      "be considered unused, even if the opposite is the case."},
+    {WALLET_FLAG_EXTERNAL_SIGNER,
+     "The ability to toggle this flag may be removed in a future update."},
 };
 
 /** Checks if a CKey is in the given CWallet compressed or otherwise*/
@@ -302,6 +304,16 @@ static RPCHelpMan setwalletflag()
 
     auto flag = WALLET_FLAG_MAP.at(flag_str);
 
+    if (flag == WALLET_FLAG_EXTERNAL_SIGNER) {
+#ifdef ENABLE_EXTERNAL_SIGNER
+        if (!pwallet->IsWalletFlagSet(WALLET_FLAG_DISABLE_PRIVATE_KEYS) || !pwallet->IsWalletFlagSet(WALLET_FLAG_DESCRIPTORS)) {
+            throw JSONRPCError(RPC_WALLET_ERROR, "This flag can only be set on a watch-only descriptor wallet");
+        }
+#else
+        throw JSONRPCError(RPC_WALLET_ERROR, "Compiled without external signing support (required for external signing)");
+#endif
+    }
+
     if (!(flag & MUTABLE_WALLET_FLAGS)) {
         throw JSONRPCError(RPC_INVALID_PARAMETER, strprintf("Wallet flag is immutable: %s", flag_str));
     }
diff --git a/src/wallet/wallet.h b/src/wallet/wallet.h
index 581a6bd9cb..3a1ce69678 100644
--- a/src/wallet/wallet.h
+++ b/src/wallet/wallet.h
@@ -134,6 +134,7 @@ static constexpr uint64_t KNOWN_WALLET_FLAGS =
     |   WALLET_FLAG_EXTERNAL_SIGNER;
 
 static constexpr uint64_t MUTABLE_WALLET_FLAGS =
+        WALLET_FLAG_EXTERNAL_SIGNER |
         WALLET_FLAG_AVOID_REUSE;
 
 static const std::map<std::string,WalletFlags> WALLET_FLAG_MAP{
diff --git a/test/functional/wallet_signer.py b/test/functional/wallet_signer.py
index 8d25044e43..a95a99d679 100755
--- a/test/functional/wallet_signer.py
+++ b/test/functional/wallet_signer.py
@@ -91,7 +91,14 @@ class WalletSignerTest(BitcoinTestFramework):
         self.nodes[1].createwallet(wallet_name='not_hww', disable_private_keys=True, descriptors=True, external_signer=False)
         not_hww = self.nodes[1].get_wallet_rpc('not_hww')
         assert_equal(not_hww.getwalletinfo()["external_signer"], False)
-        assert_raises_rpc_error(-8, "Wallet flag is immutable: external_signer", not_hww.setwalletflag, "external_signer", True)
+
+        # Flag can be set
+        not_hww.setwalletflag("external_signer", True)
+        assert_equal(not_hww.getwalletinfo()["external_signer"], True)
+
+        # Flag can be unset
+        not_hww.setwalletflag("external_signer", False)
+        assert_equal(not_hww.getwalletinfo()["external_signer"], False)
 
         # assert_raises_rpc_error(-4, "Multiple signers found, please specify which to use", wallet_name='not_hww', disable_private_keys=True, descriptors=True, external_signer=True)