diff --git a/playwright/snapshots/crypto/toasts.spec.ts/key-storage-out-of-sync-toast-linux.png b/playwright/snapshots/crypto/toasts.spec.ts/key-storage-out-of-sync-toast-linux.png
index f5514af8cf..09db9d3b5c 100644
Binary files a/playwright/snapshots/crypto/toasts.spec.ts/key-storage-out-of-sync-toast-linux.png and b/playwright/snapshots/crypto/toasts.spec.ts/key-storage-out-of-sync-toast-linux.png differ
diff --git a/res/css/structures/_ToastContainer.pcss b/res/css/structures/_ToastContainer.pcss
index 255aef685c..6f21e495d6 100644
--- a/res/css/structures/_ToastContainer.pcss
+++ b/res/css/structures/_ToastContainer.pcss
@@ -38,6 +38,7 @@ Please see LICENSE files in the repository root for full details.
         grid-template-columns: 22px 1fr;
         column-gap: 8px;
         row-gap: 4px;
+        align-items: center;
         padding: var(--cpd-space-3x);
 
         &.mx_Toast_hasIcon {
@@ -47,10 +48,17 @@ Please see LICENSE files in the repository root for full details.
                 grid-column: 1;
             }
 
-            .mx_Toast_title,
-            .mx_Toast_body {
+            .mx_Toast_title {
                 grid-column: 2;
             }
+
+            .mx_Toast_body {
+                grid-column: 2 / 4;
+            }
+
+            .mx_Toast_closebutton {
+                grid-column: 3;
+            }
         }
         &:not(.mx_Toast_hasIcon) {
             padding-left: 12px;
diff --git a/src/components/structures/ToastContainer.tsx b/src/components/structures/ToastContainer.tsx
index 21245dbe2f..16275d9d8e 100644
--- a/src/components/structures/ToastContainer.tsx
+++ b/src/components/structures/ToastContainer.tsx
@@ -8,10 +8,12 @@ Please see LICENSE files in the repository root for full details.
 
 import React from "react";
 import classNames from "classnames";
-import { Text } from "@vector-im/compound-web";
+import { IconButton, Text } from "@vector-im/compound-web";
 import { type EmptyObject } from "matrix-js-sdk/src/matrix";
+import { CloseIcon } from "@vector-im/compound-design-tokens/assets/web/icons";
 
 import ToastStore, { type IToast } from "../../stores/ToastStore";
+import { _t } from "../../languageHandler";
 
 interface IState {
     toasts: IToast<any>[];
@@ -47,7 +49,7 @@ export default class ToastContainer extends React.Component<EmptyObject, IState>
         let containerClasses;
         if (totalCount !== 0) {
             const topToast = this.state.toasts[0];
-            const { title, icon, key, component, className, bodyClassName, props } = topToast;
+            const { title, icon, key, component, className, bodyClassName, onCloseButtonClicked, props } = topToast;
             const bodyClasses = classNames("mx_Toast_body", bodyClassName);
             const toastClasses = classNames("mx_Toast_toast", className, {
                 mx_Toast_hasIcon: !!icon,
@@ -61,11 +63,24 @@ export default class ToastContainer extends React.Component<EmptyObject, IState>
             let titleElement;
             if (title) {
                 titleElement = (
-                    <div className="mx_Toast_title">
-                        <Text size="lg" weight="semibold" as="h2">
-                            {title}
-                        </Text>
-                    </div>
+                    <>
+                        <div className="mx_Toast_title">
+                            <Text size="lg" weight="semibold" as="h2">
+                                {title}
+                            </Text>
+                        </div>
+                        {onCloseButtonClicked && (
+                            <IconButton
+                                className="mx_Toast_closebutton"
+                                size="28px"
+                                onClick={onCloseButtonClicked}
+                                tooltip={_t("action|close")}
+                                kind="secondary"
+                            >
+                                <CloseIcon />
+                            </IconButton>
+                        )}
+                    </>
                 );
             }
 
diff --git a/src/stores/ToastStore.ts b/src/stores/ToastStore.ts
index 85888ee30f..971e49be58 100644
--- a/src/stores/ToastStore.ts
+++ b/src/stores/ToastStore.ts
@@ -22,6 +22,15 @@ export interface IToast<C extends ComponentClass> {
     component: C;
     className?: string;
     bodyClassName?: string;
+
+    /**
+     * What to do if the user clicks the close button. If this is undefined, the
+     * close button is not displayed.
+     *
+     * Note: the close button is only displayed if the toast has a title (i.e. if {@link title} is truthy).
+     */
+    onCloseButtonClicked?: () => void;
+
     props?: Omit<React.ComponentProps<C>, "toastKey">; // toastKey is injected by ToastContainer
 }
 
diff --git a/src/toasts/SetupEncryptionToast.tsx b/src/toasts/SetupEncryptionToast.tsx
index 1b5f8a4a49..93b97db365 100644
--- a/src/toasts/SetupEncryptionToast.tsx
+++ b/src/toasts/SetupEncryptionToast.tsx
@@ -65,6 +65,18 @@ const getIcon = (state: DeviceStateForToast): IToast<any>["icon"] => {
     }
 };
 
+const shouldShowCloseButton = (state: DeviceStateForToast): boolean => {
+    switch (state) {
+        case "key_storage_out_of_sync":
+        case "identity_needs_reset":
+            return true;
+        case "set_up_recovery":
+        case "verify_this_session":
+        case "turn_on_key_storage":
+            return false;
+    }
+};
+
 const getSetupCaption = (state: DeviceStateForToast): string => {
     switch (state) {
         case "set_up_recovery":
@@ -299,10 +311,15 @@ export const showToast = (state: DeviceStateForToast): void => {
         }
     };
 
+    const onCloseButtonClicked = shouldShowCloseButton(state)
+        ? () => DeviceListener.sharedInstance().dismissEncryptionSetup()
+        : undefined;
+
     ToastStore.sharedInstance().addOrReplaceToast({
         key: TOAST_KEY,
         title: getTitle(state),
         icon: getIcon(state),
+        onCloseButtonClicked,
         props: {
             description: getDescription(state),
             primaryLabel: getSetupCaption(state),
diff --git a/test/unit-tests/toasts/SetupEncryptionToast-test.tsx b/test/unit-tests/toasts/SetupEncryptionToast-test.tsx
index c96e5c1673..52c19984bc 100644
--- a/test/unit-tests/toasts/SetupEncryptionToast-test.tsx
+++ b/test/unit-tests/toasts/SetupEncryptionToast-test.tsx
@@ -189,6 +189,17 @@ describe("SetupEncryptionToast", () => {
                 props: { initialEncryptionState: "change_recovery_key" },
             });
         });
+
+        it("should dismiss the toast when the close button is clicked", async () => {
+            jest.spyOn(DeviceListener.sharedInstance(), "dismissEncryptionSetup");
+
+            act(() => showToast("key_storage_out_of_sync"));
+
+            const user = userEvent.setup();
+            await user.click(await screen.findByRole("button", { name: "Close" }));
+
+            expect(DeviceListener.sharedInstance().dismissEncryptionSetup).toHaveBeenCalled();
+        });
     });
 
     describe("Turn on key storage", () => {