diff --git a/packages/stream_chat/CHANGELOG.md b/packages/stream_chat/CHANGELOG.md
index 667365d0..de445890 100644
--- a/packages/stream_chat/CHANGELOG.md
+++ b/packages/stream_chat/CHANGELOG.md
@@ -1,3 +1,9 @@
+## Upcoming
+
+🐞 Fixed
+
+- markAllRead() now updates local channel states.
+
 ## 3.1.1
 
 ✅ Added
diff --git a/packages/stream_chat/lib/src/client/client.dart b/packages/stream_chat/lib/src/client/client.dart
index ae6716fd..6b6ae933 100644
--- a/packages/stream_chat/lib/src/client/client.dart
+++ b/packages/stream_chat/lib/src/client/client.dart
@@ -1376,6 +1376,8 @@ class ClientState {
     _listenChannelHidden();
 
     _listenUserUpdated();
+
+    _listenAllChannelsRead();
   }
 
   final _subscriptions = <StreamSubscription>[];
@@ -1405,6 +1407,17 @@ class ClientState {
     }));
   }
 
+  void _listenAllChannelsRead() {
+    _subscriptions
+        .add(_client.on(EventType.notificationMarkRead).listen((event) {
+      if (event.cid == null) {
+        channels.forEach((key, value) {
+          value.state?.unreadCount = 0;
+        });
+      }
+    }));
+  }
+
   void _listenChannelDeleted() {
     _subscriptions.add(_client
         .on(