Described embodiments provide for dynamically optimizing the number of application layer streams that may be multiplexed into a single transport layer connection, providing the advantages of application layer multiplexing without incurring unnecessary congestion-based network delays. A device may monitor net bandwidth and packet loss rates for a connection, and may dynamically increase and decrease a number of concurrent application layer streams to balance throughput and congestion avoidance. As congestion increases, the device may reduce concurrent stream limits in order to spawn additional transport layer connections, allowing faster congestion recovery and reduced performance impairment.