For Server-Sent Events (SSE) what Nginx proxy configuration is appropriate?

Server-Sent Events (SSE) are a long-running HTTP connection**, so for starters we need this:

proxy_http_version 1.1;
proxy_set_header Connection "";

NOTE: TCP connections in HTTP/1.1 are persistent by default, so setting the Connection header to empty does the right thing and is the Nginx suggestion.

Chunked Transfer-Encoding

Now an aside; SSE responses don't set a Content-Length header because they cannot know how much data will be sent, instead they need to use the Transfer-Encoding header[0][1], what allows for a streaming connection. Also note: if you don't add a Content-Length most HTTP servers will set Transfer-Encoding: chunked; for you. Strangely, HTTP chunking warned against and causes confusion.

The confusion stems from a somewhat vague warning in the Notes section of the W3 EventSource description:

Authors are also cautioned that HTTP chunking can have unexpected negative effects on the reliability of this protocol. Where possible, chunking should be disabled for serving event streams unless the rate of messages is high enough for this not to matter.

Which would lead one to believe Transfer-Encoding: chunked; is a bad thing for SSE. However: this isn't necessarily the case, it's only a problem when your webserver is doing the chunking for you (not knowing information about your data). So, while most posts will suggest adding chunked_transfer_encoding off; this isn't necessary in the typical case[3].

Buffering (the real problem)

Where most problems come from is having any type of buffering between the app server and the client. By default[4], Nginx uses proxy_buffering on (also take a look at uwsgi_buffering and fastcgi_buffering depending on your application) and may choose to buffer the chunks that you want to get out to your client. This is a bad thing because the realtime nature of SSE breaks.

However, instead of turning proxy_buffering off for everything, it's actually best (if you're able to) to add the X-Accel-Buffering: no as a response header in your application server code to only turn buffering off for the SSE based response and not for all responses coming from your app server. Bonus: this will also work for uwsgi and fastcgi.

Solution

And so the really important settings are actually the app-server response headers:

Content-Type: text/event-stream;
Cache-Control: no-cache;
X-Accel-Buffering: no;

And potentially the implementation of some ping mechanism so that the connection doesn't stay idle for too long. The danger of this is that Nginx will close idle connections as set using the keepalive setting.

[0] https://tools.ietf.org/html/rfc2616#section-3.6
[1] https://en.wikipedia.org/wiki/Chunked_transfer_encoding
[2] https://www.w3.org/TR/2009/WD-eventsource-20091029/#text-event-stream
[3] https://github.com/whatwg/html/issues/515
[4] http://nginx.org/en/docs/http/ngx_http_proxy_module.html#proxy_buffering
[5] https://tools.ietf.org/html/rfc7230#section-6.3
[6] https://gist.github.com/CMCDragonkai/6bfade6431e9ffb7fe88