VPC peering between Atlas cluster and AWS

I have set up VPC Peering between my AWS VPC and Atlas cluster. My problem is that when I go to change my “IP access list” to remove the “0.0.0.0/0” IP, I am no longer able to connect to the cluster. I have included the VPC’s CIDR block in the allowed IPs.

On the AWS side, I have a lambda that is being triggered and which then communicates with Mongo. The VPC that the lambda sits within, has no “internet gateway” so as I understand it, it should not be able to connect to the open internet. The VPC’s Route table diverts all traffic (from the lambda) to the peering connection (which connects Atlas to my VPC).

From my setup, it seems that no traffic should be leaving my AWS VPC from any other IP address than the ones included in my VPC CIDR block. So why is it that removing the “0.0.0.0/0” IP from the list of allowed IP’s on mongo stops me from being able to connect?

I have also tried adding the security group ID to the IP access list now. This also did not fix the problem.