diff --git a/packages/keyring-controller/package.json b/packages/keyring-controller/package.json
index e0af02d2ad..303318a456 100644
--- a/packages/keyring-controller/package.json
+++ b/packages/keyring-controller/package.json
@@ -36,7 +36,6 @@
     "@metamask/eth-keyring-controller": "^17.0.1",
     "@metamask/keyring-api": "^3.0.0",
     "@metamask/message-manager": "^7.3.7",
-    "@metamask/preferences-controller": "^6.0.0",
     "@metamask/utils": "^8.3.0",
     "async-mutex": "^0.2.6",
     "ethereumjs-util": "^7.0.10",
@@ -62,9 +61,6 @@
     "typescript": "~4.8.4",
     "uuid": "^8.3.2"
   },
-  "peerDependencies": {
-    "@metamask/preferences-controller": "^6.0.0"
-  },
   "engines": {
     "node": ">=16.0.0"
   },
diff --git a/packages/keyring-controller/src/KeyringController.ts b/packages/keyring-controller/src/KeyringController.ts
index c1a12d3f25..117ae1b93d 100644
--- a/packages/keyring-controller/src/KeyringController.ts
+++ b/packages/keyring-controller/src/KeyringController.ts
@@ -24,7 +24,6 @@ import type {
   PersonalMessageParams,
   TypedMessageParams,
 } from '@metamask/message-manager';
-import type { PreferencesController } from '@metamask/preferences-controller';
 import type { Eip1024EncryptedData, Hex, Json } from '@metamask/utils';
 import { assertIsStrictHexString, hasProperty } from '@metamask/utils';
 import { Mutex } from 'async-mutex';
@@ -200,10 +199,10 @@ export type KeyringControllerMessenger = RestrictedControllerMessenger<
 >;
 
 export type KeyringControllerOptions = {
-  syncIdentities: PreferencesController['syncIdentities'];
-  updateIdentities: PreferencesController['updateIdentities'];
-  setSelectedAddress: PreferencesController['setSelectedAddress'];
-  setAccountLabel?: PreferencesController['setAccountLabel'];
+  syncIdentities: (addresses: string[]) => string;
+  updateIdentities: (addresses: string[]) => void;
+  setSelectedAddress: (selectedAddress: string) => void;
+  setAccountLabel?: (address: string, label: string) => void;
   keyringBuilders?: { (): EthKeyring<Json>; type: string }[];
   messenger: KeyringControllerMessenger;
   state?: { vault?: string };
@@ -249,9 +248,11 @@ export enum SignTypedDataVersion {
   V4 = 'V4',
 }
 
-const defaultState: KeyringControllerState = {
-  isUnlocked: false,
-  keyrings: [],
+export const getDefaultKeyringState = (): KeyringControllerState => {
+  return {
+    isUnlocked: false,
+    keyrings: [],
+  };
 };
 
 /**
@@ -289,13 +290,13 @@ export class KeyringController extends BaseController<
 > {
   private readonly mutex = new Mutex();
 
-  private readonly syncIdentities: PreferencesController['syncIdentities'];
+  private readonly syncIdentities: (addresses: string[]) => string;
 
-  private readonly updateIdentities: PreferencesController['updateIdentities'];
+  private readonly updateIdentities: (addresses: string[]) => void;
 
-  private readonly setSelectedAddress: PreferencesController['setSelectedAddress'];
+  private readonly setSelectedAddress: (selectedAddress: string) => void;
 
-  private readonly setAccountLabel?: PreferencesController['setAccountLabel'];
+  private readonly setAccountLabel?: (address: string, label: string) => void;
 
   #keyring: EthKeyringController;
 
@@ -339,7 +340,7 @@ export class KeyringController extends BaseController<
       },
       messenger,
       state: {
-        ...defaultState,
+        ...getDefaultKeyringState(),
         ...state,
       },
     });
diff --git a/packages/keyring-controller/tsconfig.build.json b/packages/keyring-controller/tsconfig.build.json
index 4cd8644e34..38d8a31843 100644
--- a/packages/keyring-controller/tsconfig.build.json
+++ b/packages/keyring-controller/tsconfig.build.json
@@ -11,9 +11,6 @@
     },
     {
       "path": "../message-manager/tsconfig.build.json"
-    },
-    {
-      "path": "../preferences-controller/tsconfig.build.json"
     }
   ],
   "include": ["../../types", "./src"]
diff --git a/packages/keyring-controller/tsconfig.json b/packages/keyring-controller/tsconfig.json
index 5fc1bae6c4..831b2ae3b4 100644
--- a/packages/keyring-controller/tsconfig.json
+++ b/packages/keyring-controller/tsconfig.json
@@ -9,9 +9,6 @@
     },
     {
       "path": "../message-manager"
-    },
-    {
-      "path": "../preferences-controller"
     }
   ],
   "include": ["../../types", "./src", "./tests"]
diff --git a/packages/preferences-controller/package.json b/packages/preferences-controller/package.json
index 952e88075c..70a1b0b90a 100644
--- a/packages/preferences-controller/package.json
+++ b/packages/preferences-controller/package.json
@@ -36,14 +36,19 @@
   },
   "devDependencies": {
     "@metamask/auto-changelog": "^3.4.4",
+    "@metamask/keyring-controller": "^12.1.0",
     "@types/jest": "^27.4.1",
     "deepmerge": "^4.2.2",
     "jest": "^27.5.1",
+    "lodash": "^4.17.21",
     "ts-jest": "^27.1.4",
     "typedoc": "^0.24.8",
     "typedoc-plugin-missing-exports": "^2.0.0",
     "typescript": "~4.8.4"
   },
+  "peerDependencies": {
+    "@metamask/keyring-controller": "^12.1.0"
+  },
   "engines": {
     "node": ">=16.0.0"
   },
diff --git a/packages/preferences-controller/src/PreferencesController.test.ts b/packages/preferences-controller/src/PreferencesController.test.ts
index cce9969e09..4d4947f0ec 100644
--- a/packages/preferences-controller/src/PreferencesController.test.ts
+++ b/packages/preferences-controller/src/PreferencesController.test.ts
@@ -1,7 +1,14 @@
 import { ControllerMessenger } from '@metamask/base-controller';
+import { getDefaultKeyringState } from '@metamask/keyring-controller';
+import { cloneDeep } from 'lodash';
 
 import { ETHERSCAN_SUPPORTED_CHAIN_IDS } from './constants';
-import type { EtherscanSupportedHexChainId } from './PreferencesController';
+import type {
+  AllowedEvents,
+  EtherscanSupportedHexChainId,
+  PreferencesControllerActions,
+  PreferencesControllerEvents,
+} from './PreferencesController';
 import { PreferencesController } from './PreferencesController';
 
 describe('PreferencesController', () => {
@@ -32,6 +39,199 @@ describe('PreferencesController', () => {
     });
   });
 
+  describe('KeyringController:stateChange', () => {
+    it('should update identities state to reflect new keyring accounts', () => {
+      const messenger = getControllerMessenger();
+      const controller = setupPreferencesController({
+        options: {
+          state: {
+            identities: {
+              '0x00': { address: '0x00', name: 'Account 1' },
+            },
+            selectedAddress: '0x00',
+          },
+        },
+        messenger,
+      });
+
+      messenger.publish(
+        'KeyringController:stateChange',
+        {
+          ...getDefaultKeyringState(),
+          keyrings: [
+            { accounts: ['0x00', '0x01', '0x02'], type: 'CustomKeyring' },
+          ],
+        },
+        [],
+      );
+
+      expect(controller.state.identities).toMatchObject({
+        '0x00': { address: '0x00', name: 'Account 1' },
+        '0x01': {
+          address: '0x01',
+          importTime: expect.any(Number),
+          name: 'Account 2',
+        },
+        '0x02': {
+          address: '0x02',
+          importTime: expect.any(Number),
+          name: 'Account 3',
+        },
+      });
+      expect(controller.state.selectedAddress).toBe('0x00');
+    });
+
+    it('should update identities state to reflect removed keyring accounts', () => {
+      const messenger = getControllerMessenger();
+      const controller = setupPreferencesController({
+        options: {
+          state: {
+            identities: {
+              '0x00': { address: '0x00', name: 'Account 1' },
+              '0x01': { address: '0x01', name: 'Account 2' },
+              '0x02': { address: '0x02', name: 'Account 3' },
+            },
+            selectedAddress: '0x00',
+          },
+        },
+        messenger,
+      });
+
+      messenger.publish(
+        'KeyringController:stateChange',
+        {
+          ...getDefaultKeyringState(),
+          keyrings: [{ accounts: ['0x00'], type: 'CustomKeyring' }],
+        },
+        [],
+      );
+
+      expect(controller.state.identities).toStrictEqual({
+        '0x00': { address: '0x00', name: 'Account 1' },
+      });
+    });
+
+    it('should update selected address to first identity if the selected address was removed', () => {
+      const messenger = getControllerMessenger();
+      const controller = setupPreferencesController({
+        options: {
+          state: {
+            identities: {
+              '0x00': { address: '0x00', name: 'Account 1' },
+              '0x01': { address: '0x01', name: 'Account 2' },
+              '0x02': { address: '0x02', name: 'Account 3' },
+            },
+            selectedAddress: '0x02',
+          },
+        },
+        messenger,
+      });
+
+      messenger.publish(
+        'KeyringController:stateChange',
+        {
+          ...getDefaultKeyringState(),
+          keyrings: [{ accounts: ['0x00'], type: 'CustomKeyring' }],
+        },
+        [],
+      );
+
+      expect(controller.state.selectedAddress).toBe('0x00');
+    });
+
+    it('should not update existing identities', () => {
+      const identitiesState = {
+        '0x00': { address: '0x00', importTime: 1, name: 'Account 1' },
+        '0x01': { address: '0x01', importTime: 2, name: 'Account 2' },
+        '0x02': { address: '0x02', importTime: 3, name: 'Account 3' },
+      };
+      const messenger = getControllerMessenger();
+      const controller = setupPreferencesController({
+        options: {
+          state: {
+            identities: cloneDeep(identitiesState),
+            selectedAddress: '0x00',
+          },
+        },
+        messenger,
+      });
+
+      messenger.publish(
+        'KeyringController:stateChange',
+        {
+          ...getDefaultKeyringState(),
+          keyrings: [
+            { accounts: ['0x00', '0x01', '0x02'], type: 'CustomKeyring' },
+          ],
+        },
+        [],
+      );
+
+      expect(controller.state.identities).toStrictEqual(identitiesState);
+    });
+
+    it('should not duplicate accounts present in multiple keyrings', () => {
+      const identitiesState = {
+        '0x00': { address: '0x00', importTime: 1, name: 'Account 1' },
+        '0x01': { address: '0x01', importTime: 2, name: 'Account 2' },
+        '0x02': { address: '0x02', importTime: 3, name: 'Account 3' },
+      };
+      const messenger = getControllerMessenger();
+      const controller = setupPreferencesController({
+        options: {
+          state: {
+            identities: cloneDeep(identitiesState),
+            selectedAddress: '0x00',
+          },
+        },
+        messenger,
+      });
+
+      messenger.publish(
+        'KeyringController:stateChange',
+        {
+          ...getDefaultKeyringState(),
+          keyrings: [
+            { accounts: ['0x00', '0x01', '0x02'], type: 'CustomKeyring' },
+            { accounts: ['0x00', '0x01', '0x02'], type: 'CustomKeyring' },
+          ],
+        },
+        [],
+      );
+
+      expect(controller.state.identities).toStrictEqual(identitiesState);
+    });
+
+    it('should not update selected address on account removal if it is still among identities', () => {
+      const identitiesState = {
+        '0x00': { address: '0x00', importTime: 1, name: 'Account 1' },
+        '0x01': { address: '0x01', importTime: 2, name: 'Account 2' },
+        '0x02': { address: '0x02', importTime: 3, name: 'Account 3' },
+      };
+      const messenger = getControllerMessenger();
+      const controller = setupPreferencesController({
+        options: {
+          state: {
+            identities: cloneDeep(identitiesState),
+            selectedAddress: '0x01',
+          },
+        },
+        messenger,
+      });
+
+      messenger.publish(
+        'KeyringController:stateChange',
+        {
+          ...getDefaultKeyringState(),
+          keyrings: [{ accounts: ['0x00', '0x01'], type: 'CustomKeyring' }],
+        },
+        [],
+      );
+
+      expect(controller.state.selectedAddress).toBe('0x01');
+    });
+  });
+
   it('should add identities', () => {
     const controller = setupPreferencesController();
     controller.addIdentities(['0x00']);
@@ -45,13 +245,15 @@ describe('PreferencesController', () => {
 
   it('should add multiple identities, skipping those that are already in state', () => {
     const controller = setupPreferencesController({
-      state: {
-        identities: {
-          '0x00': { address: '0x00', name: 'Account 1' },
-          '0x01': { address: '0x01', name: 'Account 2' },
-          '0x02': { address: '0x02', name: 'Account 3' },
+      options: {
+        state: {
+          identities: {
+            '0x00': { address: '0x00', name: 'Account 1' },
+            '0x01': { address: '0x01', name: 'Account 2' },
+            '0x02': { address: '0x02', name: 'Account 3' },
+          },
+          selectedAddress: '0x00',
         },
-        selectedAddress: '0x00',
       },
     });
 
@@ -76,13 +278,15 @@ describe('PreferencesController', () => {
 
   it('should remove identity', () => {
     const controller = setupPreferencesController({
-      state: {
-        identities: {
-          '0x00': { address: '0x00', name: 'Account 1' },
-          '0x01': { address: '0x01', name: 'Account 2' },
-          '0x02': { address: '0x02', name: 'Account 3' },
+      options: {
+        state: {
+          identities: {
+            '0x00': { address: '0x00', name: 'Account 1' },
+            '0x01': { address: '0x01', name: 'Account 2' },
+            '0x02': { address: '0x02', name: 'Account 3' },
+          },
+          selectedAddress: '0x00',
         },
-        selectedAddress: '0x00',
       },
     });
     controller.removeIdentity('0x00');
@@ -138,8 +342,10 @@ describe('PreferencesController', () => {
 
   it('should not update existing identities', () => {
     const controller = setupPreferencesController({
-      state: {
-        identities: { '0x01': { address: '0x01', name: 'Custom name' } },
+      options: {
+        state: {
+          identities: { '0x01': { address: '0x01', name: 'Custom name' } },
+        },
       },
     });
     controller.updateIdentities(['0x00', '0x01']);
@@ -155,10 +361,12 @@ describe('PreferencesController', () => {
 
   it('should remove identities', () => {
     const controller = setupPreferencesController({
-      state: {
-        identities: {
-          '0x01': { address: '0x01', name: 'Account 2' },
-          '0x00': { address: '0x00', name: 'Account 1' },
+      options: {
+        state: {
+          identities: {
+            '0x01': { address: '0x01', name: 'Account 2' },
+            '0x00': { address: '0x00', name: 'Account 1' },
+          },
         },
       },
     });
@@ -170,12 +378,14 @@ describe('PreferencesController', () => {
 
   it('should not update selected address if it is still among identities', () => {
     const controller = setupPreferencesController({
-      state: {
-        identities: {
-          '0x01': { address: '0x01', name: 'Account 2' },
-          '0x00': { address: '0x00', name: 'Account 1' },
+      options: {
+        state: {
+          identities: {
+            '0x01': { address: '0x01', name: 'Account 2' },
+            '0x00': { address: '0x00', name: 'Account 1' },
+          },
+          selectedAddress: '0x01',
         },
-        selectedAddress: '0x01',
       },
     });
     controller.updateIdentities(['0x00', '0x01']);
@@ -184,13 +394,15 @@ describe('PreferencesController', () => {
 
   it('should update selected address to first identity if it was removed from identities', () => {
     const controller = setupPreferencesController({
-      state: {
-        identities: {
-          '0x01': { address: '0x01', name: 'Account 2' },
-          '0x02': { address: '0x02', name: 'Account 3' },
-          '0x00': { address: '0x00', name: 'Account 1' },
+      options: {
+        state: {
+          identities: {
+            '0x01': { address: '0x01', name: 'Account 2' },
+            '0x02': { address: '0x02', name: 'Account 3' },
+            '0x00': { address: '0x00', name: 'Account 1' },
+          },
+          selectedAddress: '0x02',
         },
-        selectedAddress: '0x02',
       },
     });
     controller.updateIdentities(['0x00', '0x01']);
@@ -262,22 +474,50 @@ describe('PreferencesController', () => {
   });
 });
 
+/**
+ * Construct a controller messenger for use in PreferencesController tests.
+ *
+ * This is a utility function that saves us from manually entering the correct
+ * type parameters for the ControllerMessenger each time we construct it.
+ *
+ * @returns A controller messenger
+ */
+function getControllerMessenger(): ControllerMessenger<
+  PreferencesControllerActions,
+  PreferencesControllerEvents | AllowedEvents
+> {
+  return new ControllerMessenger<
+    PreferencesControllerActions,
+    PreferencesControllerEvents | AllowedEvents
+  >();
+}
+
 /**
  * Setup a PreferencesController instance for testing.
  *
- * @param options - PreferencesController options.
+ * @param args - Arguments
+ * @param args.options - PreferencesController options.
+ * @param args.messenger - A controller messenger.
  * @returns A PreferencesController instance.
  */
-function setupPreferencesController(
-  options: Partial<ConstructorParameters<typeof PreferencesController>[0]> = {},
-) {
-  const controllerMessenger = new ControllerMessenger();
+function setupPreferencesController({
+  options = {},
+  messenger,
+}: {
+  options?: Partial<ConstructorParameters<typeof PreferencesController>[0]>;
+  messenger?: ControllerMessenger<
+    PreferencesControllerActions,
+    PreferencesControllerEvents | AllowedEvents
+  >;
+} = {}) {
+  const controllerMessenger = messenger ?? getControllerMessenger();
   const preferencesControllerMessenger = controllerMessenger.getRestricted<
     'PreferencesController',
     never,
-    never
+    AllowedEvents['type']
   >({
     name: 'PreferencesController',
+    allowedEvents: ['KeyringController:stateChange'],
   });
   return new PreferencesController({
     messenger: preferencesControllerMessenger,
diff --git a/packages/preferences-controller/src/PreferencesController.ts b/packages/preferences-controller/src/PreferencesController.ts
index 3f847c738f..060b162c38 100644
--- a/packages/preferences-controller/src/PreferencesController.ts
+++ b/packages/preferences-controller/src/PreferencesController.ts
@@ -5,6 +5,10 @@ import {
   type RestrictedControllerMessenger,
 } from '@metamask/base-controller';
 import { toChecksumHexAddress } from '@metamask/controller-utils';
+import type {
+  KeyringControllerState,
+  KeyringControllerStateChangeEvent,
+} from '@metamask/keyring-controller';
 
 import { ETHERSCAN_SUPPORTED_CHAIN_IDS } from './constants';
 
@@ -139,12 +143,14 @@ export type PreferencesControllerActions = PreferencesControllerGetStateAction;
 
 export type PreferencesControllerEvents = PreferencesControllerStateChangeEvent;
 
+export type AllowedEvents = KeyringControllerStateChangeEvent;
+
 export type PreferencesControllerMessenger = RestrictedControllerMessenger<
   typeof name,
   PreferencesControllerActions,
-  PreferencesControllerEvents,
+  PreferencesControllerEvents | AllowedEvents,
   never,
-  never
+  AllowedEvents['type']
 >;
 
 /**
@@ -224,6 +230,19 @@ export class PreferencesController extends BaseController<
         ...state,
       },
     });
+
+    messenger.subscribe(
+      'KeyringController:stateChange',
+      (keyringState: KeyringControllerState) => {
+        const accounts = new Set<string>();
+        for (const keyring of keyringState.keyrings) {
+          for (const account of keyring.accounts) {
+            accounts.add(account);
+          }
+        }
+        this.syncIdentities(Array.from(accounts));
+      },
+    );
   }
 
   /**
@@ -301,6 +320,7 @@ export class PreferencesController extends BaseController<
    *
    * @param addresses - List of addresses corresponding to identities to sync.
    * @returns Newly-selected address after syncing.
+   * @deprecated This will be removed in a future release
    */
   syncIdentities(addresses: string[]) {
     addresses = addresses.map((address: string) =>
diff --git a/packages/preferences-controller/tsconfig.build.json b/packages/preferences-controller/tsconfig.build.json
index bbfe057a20..6a7f4f10ac 100644
--- a/packages/preferences-controller/tsconfig.build.json
+++ b/packages/preferences-controller/tsconfig.build.json
@@ -7,7 +7,8 @@
   },
   "references": [
     { "path": "../base-controller/tsconfig.build.json" },
-    { "path": "../controller-utils/tsconfig.build.json" }
+    { "path": "../controller-utils/tsconfig.build.json" },
+    { "path": "../keyring-controller/tsconfig.build.json" }
   ],
   "include": ["../../types", "./src"]
 }
diff --git a/packages/preferences-controller/tsconfig.json b/packages/preferences-controller/tsconfig.json
index 7ee9852347..0a81b60369 100644
--- a/packages/preferences-controller/tsconfig.json
+++ b/packages/preferences-controller/tsconfig.json
@@ -5,7 +5,8 @@
   },
   "references": [
     { "path": "../base-controller" },
-    { "path": "../controller-utils" }
+    { "path": "../controller-utils" },
+    { "path": "../keyring-controller" }
   ],
   "include": ["../../types", "./src"]
 }
diff --git a/yarn.lock b/yarn.lock
index cdfbbdf1cd..515103ff52 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -2245,7 +2245,6 @@ __metadata:
     "@metamask/eth-sig-util": ^7.0.1
     "@metamask/keyring-api": ^3.0.0
     "@metamask/message-manager": ^7.3.7
-    "@metamask/preferences-controller": ^6.0.0
     "@metamask/scure-bip39": ^2.1.1
     "@metamask/utils": ^8.3.0
     "@types/jest": ^27.4.1
@@ -2262,8 +2261,6 @@ __metadata:
     typedoc-plugin-missing-exports: ^2.0.0
     typescript: ~4.8.4
     uuid: ^8.3.2
-  peerDependencies:
-    "@metamask/preferences-controller": ^6.0.0
   languageName: unknown
   linkType: soft
 
@@ -2529,13 +2526,17 @@ __metadata:
     "@metamask/auto-changelog": ^3.4.4
     "@metamask/base-controller": ^4.1.0
     "@metamask/controller-utils": ^8.0.1
+    "@metamask/keyring-controller": ^12.1.0
     "@types/jest": ^27.4.1
     deepmerge: ^4.2.2
     jest: ^27.5.1
+    lodash: ^4.17.21
     ts-jest: ^27.1.4
     typedoc: ^0.24.8
     typedoc-plugin-missing-exports: ^2.0.0
     typescript: ~4.8.4
+  peerDependencies:
+    "@metamask/keyring-controller": ^12.1.0
   languageName: unknown
   linkType: soft