diff --git a/libp2p/kad_dht/provider_store.py b/libp2p/kad_dht/provider_store.py
index 3da4ff9a5..5d9973c7b 100644
--- a/libp2p/kad_dht/provider_store.py
+++ b/libp2p/kad_dht/provider_store.py
@@ -226,6 +226,8 @@ async def _send_add_provider(self, peer_id: ID, key: bytes) -> bool:
             True if the message was successfully sent and acknowledged
 
         """
+        stream = None
+
         try:
             result = False
             # Open a stream to the peer
@@ -298,7 +300,8 @@ async def _send_add_provider(self, peer_id: ID, key: bytes) -> bool:
             logger.warning(f"Error sending ADD_PROVIDER to {peer_id}: {e}")
 
         finally:
-            await stream.close()
+            if stream is not None:
+                await stream.close()
             return result
 
     async def find_providers(self, key: bytes, count: int = 20) -> list[PeerInfo]:
diff --git a/newsfragments/1335.bugfix.rst b/newsfragments/1335.bugfix.rst
new file mode 100644
index 000000000..f6f0fdd11
--- /dev/null
+++ b/newsfragments/1335.bugfix.rst
@@ -0,0 +1 @@
+Fixed Kademlia DHT provider advertisement so a failure to open the ADD_PROVIDER stream no longer raises a secondary ``UnboundLocalError``; the underlying connection error is logged instead.
diff --git a/tests/core/kad_dht/test_unit_provider_store.py b/tests/core/kad_dht/test_unit_provider_store.py
index 560c56e5e..abe34a84d 100644
--- a/tests/core/kad_dht/test_unit_provider_store.py
+++ b/tests/core/kad_dht/test_unit_provider_store.py
@@ -564,6 +564,23 @@ async def test_provide_skip_local_peer(self):
             # Should only call _send_add_provider once (skip local peer)
             assert mock_send.call_count == 1
 
+    @pytest.mark.trio
+    async def test_send_add_provider_new_stream_failure(self):
+        """Test _send_add_provider when new_stream fails before stream is opened."""
+        mock_host = Mock()
+        local_peer_id = ID.from_base58("QmTest123")
+        remote_peer_id = ID.from_base58("QmPeer1")
+
+        mock_host.get_id.return_value = local_peer_id
+        mock_host.get_addrs.return_value = [Multiaddr("/ip4/127.0.0.1/tcp/8000")]
+        mock_host.new_stream = AsyncMock(side_effect=Exception("Stream failed"))
+
+        store = ProviderStore(host=mock_host)
+        result = await store._send_add_provider(remote_peer_id, b"test_key")
+
+        assert result is False
+        mock_host.new_stream.assert_awaited_once()
+
     @pytest.mark.trio
     async def test_find_providers_no_host(self):
         """Test find_providers() returns empty list when no host."""