diff --git a/synapse/federation/federation_server.py b/synapse/federation/federation_server.py
index f9e97ea13e..b440c03ceb 100644
--- a/synapse/federation/federation_server.py
+++ b/synapse/federation/federation_server.py
@@ -82,7 +82,10 @@ from synapse.logging.opentracing import (
     tag_args,
     trace,
 )
-from synapse.metrics.background_process_metrics import wrap_as_background_process
+from synapse.metrics.background_process_metrics import (
+    run_as_background_process,
+    wrap_as_background_process,
+)
 from synapse.replication.http.federation import (
     ReplicationFederationSendEduRestServlet,
     ReplicationGetQueryRestServlet,
@@ -129,6 +132,7 @@ last_pdu_ts_metric = Gauge(
 # federation.
 _INBOUND_EVENT_HANDLING_LOCK_NAME = "federation_inbound_pdu"
 
+_MAX_STAGED_EVENT_HANDLERS = 2
 
 class FederationServer(FederationBase):
     def __init__(self, hs: "HomeServer"):
@@ -185,6 +189,8 @@ class FederationServer(FederationBase):
         # Whether we have started handling old events in the staging area.
         self._started_handling_of_staged_events = False
 
+        self._staged_event_handler_count = 0
+
     @wrap_as_background_process("_handle_old_staged_events")
     async def _handle_old_staged_events(self) -> None:
         """Handle old staged events by fetching all rooms that have staged
@@ -201,18 +207,10 @@ class FederationServer(FederationBase):
         for room_id in room_ids:
             room_version = await self.store.get_room_version(room_id)
 
-            # Try and acquire the processing lock for the room, if we get it start a
-            # background process for handling the events in the room.
-            lock = await self.store.try_acquire_lock(
-                _INBOUND_EVENT_HANDLING_LOCK_NAME, room_id
+            self._process_inbound_pdus_in_room(
+                room_id,
+                room_version,
             )
-            if lock:
-                logger.info("Handling old staged inbound events in %s", room_id)
-                self._process_incoming_pdus_in_room_inner(
-                    room_id,
-                    room_version,
-                    lock,
-                )
 
             # We pause a bit so that we don't start handling all rooms at once.
             await self._clock.sleep(random.uniform(0, 0.1))
@@ -1164,15 +1162,10 @@ class FederationServer(FederationBase):
         # Add the event to our staging area
         await self.store.insert_received_event_to_staging(origin, pdu)
 
-        # Try and acquire the processing lock for the room, if we get it start a
-        # background process for handling the events in the room.
-        lock = await self.store.try_acquire_lock(
-            _INBOUND_EVENT_HANDLING_LOCK_NAME, pdu.room_id
+        # Consider starting a background process for handling the events in the room.
+        self._process_inbound_pdus_in_room(
+            pdu.room_id, room_version, origin, pdu
         )
-        if lock:
-            self._process_incoming_pdus_in_room_inner(
-                pdu.room_id, room_version, lock, origin, pdu
-            )
 
     async def _get_next_nonspam_staged_event_for_room(
         self, room_id: str, room_version: RoomVersion
@@ -1211,20 +1204,54 @@ class FederationServer(FederationBase):
 
             return next
 
-    @wrap_as_background_process("_process_incoming_pdus_in_room_inner")
-    async def _process_incoming_pdus_in_room_inner(
+    def _process_inbound_pdus_in_room(
         self,
         room_id: str,
         room_version: RoomVersion,
-        lock: Lock,
         latest_origin: Optional[str] = None,
         latest_event: Optional[EventBase] = None,
     ) -> None:
-        """Process events in the staging area for the given room.
+        """Start off a background process to take the inter-process lock and process
+        events in the staging area for the given room.
 
         The latest_origin and latest_event args are the latest origin and event
         received (or None to simply pull the next event from the database).
         """
+        if self._staged_event_handler_count >= _MAX_STAGED_EVENT_HANDLERS:
+            logger.info("Not yet processing staged inbound events in room %s: we already have %i active processors",
+                        room_id, self._staged_event_handler_count)
+            # We'll pick up this event next time _handle_old_staged_events runs
+            return
+
+        async def inner() -> None:
+            self._staged_event_handler_count += 1
+            try:
+                # Try and acquire the processing lock for the room, if we get it start a
+                # background process for handling the events in the room.
+                lock = await self.store.try_acquire_lock(
+                    _INBOUND_EVENT_HANDLING_LOCK_NAME, room_id
+                )
+                if not lock:
+                    # someone else has the lock on this room and will process these events
+                    return
+
+                await self._process_inbound_pdus_in_room_inner(
+                    room_id, room_version, lock, latest_origin, latest_event
+                )
+            finally:
+                self._staged_event_handler_count -= 1
+
+        run_as_background_process("process_inbound_pdus_in_room", inner)
+
+    async def _process_inbound_pdus_in_room_inner(
+        self,
+        room_id: str,
+        room_version: RoomVersion,
+        lock: Lock,
+        latest_origin: Optional[str],
+        latest_event: Optional[EventBase],
+    ) -> None:
+        logger.info("Handling staged inbound events in %s", room_id)
 
         # The common path is for the event we just received be the only event in
         # the room, so instead of pulling the event out of the DB and parsing