diff --git a/plugins/chat/assets/javascripts/discourse/components/chat-channel-metadata.gjs b/plugins/chat/assets/javascripts/discourse/components/chat-channel-metadata.gjs
index e628c932e87..681c472b8c0 100644
--- a/plugins/chat/assets/javascripts/discourse/components/chat-channel-metadata.gjs
+++ b/plugins/chat/assets/javascripts/discourse/components/chat-channel-metadata.gjs
@@ -3,7 +3,11 @@ import { i18n } from "discourse-i18n";
 
 export default class ChatChannelMetadata extends Component {
   get lastMessageFormattedDate() {
-    return moment(this.args.channel.lastMessage.createdAt).calendar(null, {
+    const lastMessageDate = this.showThreadUnreadDate
+      ? this.args.channel.lastUnreadThreadDate
+      : this.args.channel.lastMessage.createdAt;
+
+    return moment(lastMessageDate).calendar(null, {
       sameDay: "LT",
       lastDay: `[${i18n("chat.dates.yesterday")}]`,
       lastWeek: "dddd",
@@ -11,6 +15,13 @@ export default class ChatChannelMetadata extends Component {
     });
   }
 
+  get showThreadUnreadDate() {
+    return (
+      this.args.channel.lastUnreadThreadDate >
+      this.args.channel.lastMessage.createdAt
+    );
+  }
+
   <template>
     <div class="chat-channel__metadata">
       {{#if @channel.lastMessage}}
diff --git a/plugins/chat/assets/javascripts/discourse/models/chat-channel.js b/plugins/chat/assets/javascripts/discourse/models/chat-channel.js
index 440f9f84a62..4f32e8af9f6 100644
--- a/plugins/chat/assets/javascripts/discourse/models/chat-channel.js
+++ b/plugins/chat/assets/javascripts/discourse/models/chat-channel.js
@@ -119,6 +119,16 @@ export default class ChatChannel {
     return this.threadsManager.unreadThreadCount;
   }
 
+  get lastUnreadThreadDate() {
+    if (this.unreadThreadsCount === 0) {
+      return this.lastMessage.createdAt;
+    }
+
+    return Array.from(this.threadsManager.unreadThreadOverview.values())
+      .sort((a, b) => b - a)
+      .pop();
+  }
+
   get watchedThreadsUnreadCount() {
     return this.threadsManager.threads.reduce((unreadCount, thread) => {
       return unreadCount + thread.tracking.watchedThreadsUnreadCount;
diff --git a/plugins/chat/assets/javascripts/discourse/services/chat-channels-manager.js b/plugins/chat/assets/javascripts/discourse/services/chat-channels-manager.js
index 66a134ef1d4..8825dd76c22 100644
--- a/plugins/chat/assets/javascripts/discourse/services/chat-channels-manager.js
+++ b/plugins/chat/assets/javascripts/discourse/services/chat-channels-manager.js
@@ -263,20 +263,33 @@ export default class ChatChannelsManager extends Service {
         b.tracking.mentionCount +
         b.tracking.watchedThreadsUnreadCount;
 
-      if (aUrgent > 0 || bUrgent > 0) {
-        return aUrgent > bUrgent ? -1 : 1;
-      }
+      const aUnread = a.unreadThreadsCountSinceLastViewed;
+      const bUnread = b.unreadThreadsCountSinceLastViewed;
 
-      if (
-        a.unreadThreadsCountSinceLastViewed > 0 ||
-        b.unreadThreadsCountSinceLastViewed > 0
-      ) {
-        return a.unreadThreadsCountSinceLastViewed >
-          b.unreadThreadsCountSinceLastViewed
+      // if both channels have urgent count, sort by last message date
+      if (aUrgent > 0 && bUrgent > 0) {
+        return new Date(a.lastMessage.createdAt) >
+          new Date(b.lastMessage.createdAt)
           ? -1
           : 1;
       }
 
+      // otherwise prioritize channel with urgent count
+      if (aUrgent > 0 || bUrgent > 0) {
+        return aUrgent > bUrgent ? -1 : 1;
+      }
+
+      // if both channels have unread threads, sort by last thread reply date
+      if (aUnread > 0 && bUnread > 0) {
+        return a.lastUnreadThreadDate > b.lastUnreadThreadDate ? -1 : 1;
+      }
+
+      // otherwise prioritize channel with unread thread count
+      if (aUnread > 0 || bUnread > 0) {
+        return aUnread > bUnread ? -1 : 1;
+      }
+
+      // read channels are sorted by last message date
       return new Date(a.lastMessage.createdAt) >
         new Date(b.lastMessage.createdAt)
         ? -1
diff --git a/plugins/chat/spec/system/list_channels/drawer_spec.rb b/plugins/chat/spec/system/list_channels/drawer_spec.rb
index 757d76baad4..62defaf8706 100644
--- a/plugins/chat/spec/system/list_channels/drawer_spec.rb
+++ b/plugins/chat/spec/system/list_channels/drawer_spec.rb
@@ -145,45 +145,73 @@ RSpec.describe "List channels | Drawer", type: :system do
         expect(drawer_page).to have_channel_at_position(dm_channel_3, 4)
       end
 
-      it "sorts channels with threads by urgency" do
-        drawer_page.visit_index
-        drawer_page.click_direct_messages
+      context "with unread threads" do
+        fab!(:message_1) do
+          Fabricate(
+            :chat_message,
+            chat_channel: dm_channel_3,
+            user: current_user,
+            use_service: true,
+          )
+        end
+        fab!(:thread_1) do
+          Fabricate(
+            :chat_thread,
+            channel: dm_channel_3,
+            original_message: message_1,
+            use_service: true,
+          )
+        end
+        fab!(:message_2) do
+          Fabricate(
+            :chat_message,
+            chat_channel: dm_channel_4,
+            user: current_user,
+            use_service: true,
+          )
+        end
+        fab!(:thread_2) do
+          Fabricate(
+            :chat_thread,
+            channel: dm_channel_4,
+            original_message: message_2,
+            use_service: true,
+          )
+        end
 
-        Fabricate(
-          :chat_thread,
-          notification_level: :watching,
-          original_message:
-            Fabricate(
-              :chat_message,
-              chat_channel: dm_channel_4,
-              user: current_user,
-              use_service: true,
-            ),
-          with_replies: 2,
-          use_service: true,
-        )
+        before do
+          dm_channel_3.membership_for(current_user).mark_read!(message_1.id)
+          dm_channel_4.membership_for(current_user).mark_read!(message_2.id)
 
-        Fabricate(
-          :chat_thread,
-          original_message:
-            Fabricate(
-              :chat_message,
-              chat_channel: dm_channel_3,
-              user: current_user,
-              use_service: true,
-            ),
-          with_replies: 2,
-          use_service: true,
-        )
+          drawer_page.visit_index
+          drawer_page.click_direct_messages
+        end
 
-        expect(drawer_page).to have_channel_at_position(dm_channel_4, 1)
-        expect(drawer_page).to have_urgent_channel(dm_channel_4)
+        it "sorts channels with unread threads by last reply" do
+          Fabricate(:chat_message, thread: thread_1, user: user_2, use_service: true)
+          Fabricate(:chat_message, thread: thread_2, user: user_3, use_service: true)
 
-        expect(drawer_page).to have_channel_at_position(dm_channel_3, 2)
-        expect(drawer_page).to have_unread_channel(dm_channel_3)
+          expect(drawer_page).to have_channel_at_position(dm_channel_4, 1)
+          expect(drawer_page).to have_unread_channel(dm_channel_4)
 
-        expect(drawer_page).to have_channel_at_position(dm_channel_1, 3)
-        expect(drawer_page).to have_channel_at_position(dm_channel_2, 4)
+          expect(drawer_page).to have_channel_at_position(dm_channel_3, 2)
+          expect(drawer_page).to have_unread_channel(dm_channel_3)
+        end
+
+        it "sorts channels with unread threads by importance" do
+          thread_1.membership_for(current_user).update!(
+            notification_level: ::Chat::NotificationLevels.all[:watching],
+          )
+
+          Fabricate(:chat_message, thread: thread_1, user: user_2, use_service: true)
+          Fabricate(:chat_message, thread: thread_2, user: user_3, use_service: true)
+
+          expect(drawer_page).to have_channel_at_position(dm_channel_3, 1)
+          expect(drawer_page).to have_urgent_channel(dm_channel_3)
+
+          expect(drawer_page).to have_channel_at_position(dm_channel_4, 2)
+          expect(drawer_page).to have_unread_channel(dm_channel_4)
+        end
       end
     end
   end