diff --git a/synapse/storage/persist_events.py b/synapse/storage/persist_events.py
index 3186061f96c9..61fc49c69c8d 100644
--- a/synapse/storage/persist_events.py
+++ b/synapse/storage/persist_events.py
@@ -846,9 +846,32 @@ async def _prune_extremities(
         one_day_ago = self._clock.time_msec() - 24 * 60 * 60 * 1000
         current_depth = max(e.depth for e, _ in events_context)
         for event in dropped_events.values():
-            if self.is_mine_id(event.sender) and event.type != EventTypes.Dummy:
-                logger.debug("Not dropping own event")
-                return new_latest_event_ids
+            # If the event is a local dummy event then we should check it
+            # doesn't reference any local events, as we want to reference those
+            # if we send any new events.
+            #
+            # Note we do this recursively to handle the case where a dummy event
+            # references a dummy event that only references remote events.
+            #
+            # Ideally we'd figure out a way of still being able to drop old
+            # dummy events that reference local events, but this is good enough
+            # as a first cut.
+            events_to_check = [event]
+            while events_to_check:
+                new_events = set()
+                for event_to_check in events_to_check:
+                    if self.is_mine_id(event_to_check.sender):
+                        if event_to_check.type != EventTypes.Dummy:
+                            logger.debug("Not dropping own event")
+                            return new_latest_event_ids
+                        new_events.update(event_to_check.prev_event_ids())
+
+                prev_events = await self.main_store.get_events(
+                    new_events,
+                    allow_rejected=True,
+                    redact_behaviour=EventRedactBehaviour.AS_IS,
+                )
+                events_to_check = prev_events.values()
 
             if (
                 event.origin_server_ts < one_day_ago
diff --git a/tests/storage/test_events.py b/tests/storage/test_events.py
index 1db0dc648e54..71210ce6065c 100644
--- a/tests/storage/test_events.py
+++ b/tests/storage/test_events.py
@@ -217,9 +217,9 @@ def test_do_not_prune_gap_if_other_server(self):
         # Check the new extremity is just the new remote event.
         self.assert_extremities([self.remote_event_1.event_id, remote_event_2.event_id])
 
-    def test_prune_gap_if_dummy(self):
+    def test_prune_gap_if_dummy_remote(self):
         """Test that we drop extremities after a gap when the previous extremity
-        is a local dummy event and "old".
+        is a local dummy event and only points to remote events.
         """
 
         body = self.helper.send_event(
@@ -257,6 +257,48 @@ def test_prune_gap_if_dummy(self):
         # Check the new extremity is just the new remote event.
         self.assert_extremities([remote_event_2.event_id])
 
+    def test_prune_gap_if_dummy_local(self):
+        """Test that we don't drop extremities after a gap when the previous
+        extremity is a local dummy event and points to local events.
+        """
+
+        body = self.helper.send(self.room_id, body="Test", tok=self.token)
+
+        body = self.helper.send_event(
+            self.room_id, type=EventTypes.Dummy, content={}, tok=self.token
+        )
+        local_message_event_id = body["event_id"]
+        self.assert_extremities([local_message_event_id])
+
+        # Advance the clock for many days to make the old extremity "old". We
+        # also set the depth to "lots".
+        self.reactor.advance(7 * 24 * 60 * 60)
+
+        # Fudge a second event which points to an event we don't have. This is a
+        # state event so that the state changes (otherwise we won't prune the
+        # extremity as they'll have the same state group).
+        remote_event_2 = event_from_pdu_json(
+            {
+                "type": EventTypes.Member,
+                "state_key": "@user:other2",
+                "content": {"membership": Membership.JOIN},
+                "room_id": self.room_id,
+                "sender": "@user:other2",
+                "depth": 10000,
+                "prev_events": ["$some_unknown_message"],
+                "auth_events": [],
+                "origin_server_ts": self.clock.time_msec(),
+            },
+            RoomVersions.V6,
+        )
+
+        state_before_gap = self.get_success(self.state.get_current_state(self.room_id))
+
+        self.persist_event(remote_event_2, state=state_before_gap.values())
+
+        # Check the new extremity is just the new remote event.
+        self.assert_extremities([remote_event_2.event_id, local_message_event_id])
+
     def test_do_not_prune_gap_if_not_dummy(self):
         """Test that we do not drop extremities after a gap when the previous extremity
         is not a dummy event.