diff --git a/channeldb/invoice_test.go b/channeldb/invoice_test.go
index b38c5cad372..467d7a8901a 100644
--- a/channeldb/invoice_test.go
+++ b/channeldb/invoice_test.go
@@ -2,6 +2,7 @@ package channeldb
 
 import (
 	"crypto/rand"
+	mrand "math/rand"
 	"reflect"
 	"testing"
 	"time"
@@ -393,6 +394,114 @@ func TestInvoiceAddTimeSeries(t *testing.T) {
 	}
 }
 
+// Tests that FetchAllInvoicesWithPaymentHash returns all invoices with their
+// corresponding payment hashes.
+func TestFetchAllInvoicesWithPaymentHash(t *testing.T) {
+	t.Parallel()
+
+	db, cleanup, err := makeTestDB()
+	defer cleanup()
+	if err != nil {
+		t.Fatalf("unable to make test db: %v", err)
+	}
+
+	// With an empty DB we expect to return no error and an empty list.
+	empty, err := db.FetchAllInvoicesWithPaymentHash(false)
+	if err != nil {
+		t.Fatalf("failed to call FetchAllInvoicesWithPaymentHash on empty DB: %v",
+			err)
+	}
+
+	if len(empty) != 0 {
+		t.Fatalf("expected empty list as a result, got: %v", empty)
+	}
+
+	// Now populate the DB and check if we can get all invoices with their
+	// payment hashes as expected.
+	const numInvoices = 20
+	testPendingInvoices := make(map[lntypes.Hash]*Invoice)
+	testAllInvoices := make(map[lntypes.Hash]*Invoice)
+
+	states := []ContractState{
+		ContractOpen, ContractSettled, ContractCanceled, ContractAccepted,
+	}
+
+	for i := lnwire.MilliSatoshi(1); i <= numInvoices; i++ {
+		invoice, err := randInvoice(i)
+		if err != nil {
+			t.Fatalf("unable to create invoice: %v", err)
+		}
+
+		invoice.State = states[mrand.Intn(len(states))]
+		paymentHash := invoice.Terms.PaymentPreimage.Hash()
+
+		if invoice.State != ContractSettled && invoice.State != ContractCanceled {
+			testPendingInvoices[paymentHash] = invoice
+		}
+
+		testAllInvoices[paymentHash] = invoice
+
+		if _, err := db.AddInvoice(invoice, paymentHash); err != nil {
+			t.Fatalf("unable to add invoice: %v", err)
+		}
+	}
+
+	pendingInvoices, err := db.FetchAllInvoicesWithPaymentHash(true)
+	if err != nil {
+		t.Fatalf("can't fetch invoices with payment hash: %v", err)
+	}
+
+	if len(testPendingInvoices) != len(pendingInvoices) {
+		t.Fatalf("expected %v pending invoices, got: %v",
+			len(testPendingInvoices), len(pendingInvoices))
+	}
+
+	allInvoices, err := db.FetchAllInvoicesWithPaymentHash(false)
+	if err != nil {
+		t.Fatalf("can't fetch invoices with payment hash: %v", err)
+	}
+
+	if len(testAllInvoices) != len(allInvoices) {
+		t.Fatalf("expected %v invoices, got: %v",
+			len(testAllInvoices), len(allInvoices))
+	}
+
+	for i := range pendingInvoices {
+		expected, ok := testPendingInvoices[pendingInvoices[i].PaymentHash]
+		if !ok {
+			t.Fatalf("coulnd't find invoice with hash: %v",
+				pendingInvoices[i].PaymentHash)
+		}
+
+		// Zero out add index to not confuse DeepEqual.
+		pendingInvoices[i].Invoice.AddIndex = 0
+		expected.AddIndex = 0
+
+		if !reflect.DeepEqual(*expected, pendingInvoices[i].Invoice) {
+			t.Fatalf("expected: %v, got: %v",
+				spew.Sdump(expected), spew.Sdump(pendingInvoices[i].Invoice))
+		}
+	}
+
+	for i := range allInvoices {
+		expected, ok := testAllInvoices[allInvoices[i].PaymentHash]
+		if !ok {
+			t.Fatalf("coulnd't find invoice with hash: %v",
+				allInvoices[i].PaymentHash)
+		}
+
+		// Zero out add index to not confuse DeepEqual.
+		allInvoices[i].Invoice.AddIndex = 0
+		expected.AddIndex = 0
+
+		if !reflect.DeepEqual(*expected, allInvoices[i].Invoice) {
+			t.Fatalf("expected: %v, got: %v",
+				spew.Sdump(expected), spew.Sdump(allInvoices[i].Invoice))
+		}
+	}
+
+}
+
 // TestDuplicateSettleInvoice tests that if we add a new invoice and settle it
 // twice, then the second time we also receive the invoice that we settled as a
 // return argument.
diff --git a/channeldb/invoices.go b/channeldb/invoices.go
index 8ded522fbd2..14e6c4513b0 100644
--- a/channeldb/invoices.go
+++ b/channeldb/invoices.go
@@ -565,6 +565,83 @@ func (d *DB) LookupInvoice(paymentHash [32]byte) (Invoice, error) {
 	return invoice, nil
 }
 
+// InvoiceWithPaymentHash is used to store an invoice and its corresponding
+// payment hash. This struct is only used to store results of
+// ChannelDB.FetchAllInvoicesWithPaymentHash() call.
+type InvoiceWithPaymentHash struct {
+	// Invoice holds the invoice as selected from the invoices bucket.
+	Invoice Invoice
+
+	// PaymentHash is the payment hash for the Invoice.
+	PaymentHash lntypes.Hash
+}
+
+// FetchAllInvoicesWithPaymentHash returns all invoices and their payment hashes
+// currently stored within the database. If the pendingOnly param is true, then
+// only unsettled invoices and their payment hashes will be returned, skipping
+// all invoices that are fully settled or canceled. Note that the returned
+// array is not ordered by add index.
+func (d *DB) FetchAllInvoicesWithPaymentHash(pendingOnly bool) (
+	[]InvoiceWithPaymentHash, error) {
+
+	var result []InvoiceWithPaymentHash
+
+	err := d.View(func(tx *bbolt.Tx) error {
+		invoices := tx.Bucket(invoiceBucket)
+		if invoices == nil {
+			return ErrNoInvoicesCreated
+		}
+
+		invoiceIndex := invoices.Bucket(invoiceIndexBucket)
+		if invoiceIndex == nil {
+			// Mask the error if there's no invoice
+			// index as that simply means there are no
+			// invoices added yet to the DB. In this case
+			// we simply return an empty list.
+			return nil
+		}
+
+		return invoiceIndex.ForEach(func(k, v []byte) error {
+			// Skip the special numInvoicesKey as that does not
+			// point to a valid invoice.
+			if bytes.Equal(k, numInvoicesKey) {
+				return nil
+			}
+
+			if v == nil {
+				return nil
+			}
+
+			invoice, err := fetchInvoice(v, invoices)
+			if err != nil {
+				return err
+			}
+
+			if pendingOnly &&
+				(invoice.State == ContractSettled ||
+					invoice.State == ContractCanceled) {
+
+				return nil
+			}
+
+			invoiceWithPaymentHash := InvoiceWithPaymentHash{
+				Invoice: invoice,
+			}
+
+			copy(invoiceWithPaymentHash.PaymentHash[:], k)
+			result = append(result, invoiceWithPaymentHash)
+
+			return nil
+		})
+	})
+
+	if err != nil {
+		return nil, err
+	}
+
+	return result, nil
+}
+
 // FetchAllInvoices returns all invoices currently stored within the database.
 // If the pendingOnly param is true, then only unsettled invoices will be
 // returned, skipping all invoices that are fully settled.
diff --git a/clock/default_clock.go b/clock/default_clock.go
new file mode 100644
index 00000000000..3a4f8df323f
--- /dev/null
+++ b/clock/default_clock.go
@@ -0,0 +1,24 @@
+package clock
+
+import (
+	"time"
+)
+
+// DefaultClock implements Clock interface by simply calling the appropriate
+// time functions.
+type DefaultClock struct{}
+
+// NewDefaultClock constructs a new DefaultClock.
+func NewDefaultClock() Clock {
+	return &DefaultClock{}
+}
+
+// Now simply returns time.Now().
+func (DefaultClock) Now() time.Time {
+	return time.Now()
+}
+
+// TickAfter simply wraps time.After().
+func (DefaultClock) TickAfter(duration time.Duration) <-chan time.Time {
+	return time.After(duration)
+}
diff --git a/clock/interface.go b/clock/interface.go
new file mode 100644
index 00000000000..0450410e317
--- /dev/null
+++ b/clock/interface.go
@@ -0,0 +1,16 @@
+package clock
+
+import (
+	"time"
+)
+
+// Clock is an interface that provides a time functions for LND packages.
+// This is useful during testing when a concrete time reference is needed.
+type Clock interface {
+	// Now returns the current local time (as defined by the Clock).
+	Now() time.Time
+
+	// TickAfter returns a channel that will receive a tick after the specified
+	// duration has passed.
+	TickAfter(duration time.Duration) <-chan time.Time
+}
diff --git a/invoices/clock_test.go b/clock/test_clock.go
similarity index 65%
rename from invoices/clock_test.go
rename to clock/test_clock.go
index 41dd4991272..f4319cee38e 100644
--- a/invoices/clock_test.go
+++ b/clock/test_clock.go
@@ -1,42 +1,40 @@
-package invoices
+package clock
 
 import (
 	"sync"
 	"time"
 )
 
-// testClock can be used in tests to mock time.
-type testClock struct {
+// TestClock can be used in tests to mock time.
+type TestClock struct {
 	currentTime time.Time
 	timeChanMap map[time.Time][]chan time.Time
 	timeLock    sync.Mutex
 }
 
-// newTestClock returns a new test clock.
-func newTestClock(startTime time.Time) *testClock {
-	return &testClock{
+// NewTestClock returns a new test clock.
+func NewTestClock(startTime time.Time) *TestClock {
+	return &TestClock{
 		currentTime: startTime,
 		timeChanMap: make(map[time.Time][]chan time.Time),
 	}
 }
 
-// now returns the current (test) time.
-func (c *testClock) now() time.Time {
+// Now returns the current (test) time.
+func (c *TestClock) Now() time.Time {
 	c.timeLock.Lock()
 	defer c.timeLock.Unlock()
 
 	return c.currentTime
 }
 
-// tickAfter returns a channel that will receive a tick at the specified time.
-func (c *testClock) tickAfter(duration time.Duration) <-chan time.Time {
+// TickAfter returns a channel that will receive a tick after the specified
+// duration has passed passed by the user set test time.
+func (c *TestClock) TickAfter(duration time.Duration) <-chan time.Time {
 	c.timeLock.Lock()
 	defer c.timeLock.Unlock()
 
 	triggerTime := c.currentTime.Add(duration)
-	log.Debugf("tickAfter called: duration=%v, trigger_time=%v",
-		duration, triggerTime)
-
 	ch := make(chan time.Time, 1)
 
 	// If already expired, tick immediately.
@@ -53,8 +51,8 @@ func (c *testClock) tickAfter(duration time.Duration) <-chan time.Time {
 	return ch
 }
 
-// setTime sets the (test) time and triggers tick channels when they expire.
-func (c *testClock) setTime(now time.Time) {
+// SetTime sets the (test) time and triggers tick channels when they expire.
+func (c *TestClock) SetTime(now time.Time) {
 	c.timeLock.Lock()
 	defer c.timeLock.Unlock()
 
diff --git a/clock/test_clock_test.go b/clock/test_clock_test.go
new file mode 100644
index 00000000000..879cc8fd19d
--- /dev/null
+++ b/clock/test_clock_test.go
@@ -0,0 +1,63 @@
+package clock
+
+import (
+	"testing"
+	"time"
+)
+
+var (
+	testTime = time.Date(2009, time.January, 3, 12, 0, 0, 0, time.UTC)
+)
+
+func TestNow(t *testing.T) {
+	c := NewTestClock(testTime)
+	now := c.Now()
+
+	if now != testTime {
+		t.Fatalf("expected: %v, got: %v", testTime, now)
+	}
+
+	now = now.Add(time.Hour)
+	c.SetTime(now)
+	if c.Now() != now {
+		t.Fatalf("epected: %v, got: %v", now, c.Now())
+	}
+}
+
+func TestTickAfter(t *testing.T) {
+	c := NewTestClock(testTime)
+
+	// Should be ticking immediately.
+	ticker0 := c.TickAfter(0)
+
+	// Both should be ticking after SetTime
+	ticker1 := c.TickAfter(time.Hour)
+	ticker2 := c.TickAfter(time.Hour)
+
+	// We don't expect this one to tick.
+	ticker3 := c.TickAfter(2 * time.Hour)
+
+	tickOrTimeOut := func(ticker <-chan time.Time, expectTick bool) {
+		tick := false
+		select {
+		case <-ticker:
+			tick = true
+		case <-time.After(time.Millisecond):
+		}
+
+		if tick != expectTick {
+			t.Fatalf("expected tick: %v, ticked: %v", expectTick, tick)
+		}
+	}
+
+	tickOrTimeOut(ticker0, true)
+	tickOrTimeOut(ticker1, false)
+	tickOrTimeOut(ticker2, false)
+	tickOrTimeOut(ticker3, false)
+
+	c.SetTime(c.Now().Add(time.Hour))
+
+	tickOrTimeOut(ticker1, true)
+	tickOrTimeOut(ticker2, true)
+	tickOrTimeOut(ticker3, false)
+}
diff --git a/htlcswitch/mock.go b/htlcswitch/mock.go
index d3d61ca9c23..1d0731e8afd 100644
--- a/htlcswitch/mock.go
+++ b/htlcswitch/mock.go
@@ -22,6 +22,7 @@ import (
 	sphinx "github.com/lightningnetwork/lightning-onion"
 	"github.com/lightningnetwork/lnd/chainntnfs"
 	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/clock"
 	"github.com/lightningnetwork/lnd/contractcourt"
 	"github.com/lightningnetwork/lnd/htlcswitch/hop"
 	"github.com/lightningnetwork/lnd/input"
@@ -792,6 +793,7 @@ func newMockRegistry(minDelta uint32) *mockInvoiceRegistry {
 
 	registry := invoices.NewRegistry(
 		cdb,
+		invoices.NewInvoiceExpiryWatcher(clock.NewDefaultClock()),
 		&invoices.RegistryConfig{
 			FinalCltvRejectDelta: 5,
 		},
diff --git a/invoices/invoice_expiry_watcher.go b/invoices/invoice_expiry_watcher.go
new file mode 100644
index 00000000000..db9d9cd57f1
--- /dev/null
+++ b/invoices/invoice_expiry_watcher.go
@@ -0,0 +1,191 @@
+package invoices
+
+import (
+	"fmt"
+	"sync"
+	"time"
+
+	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/clock"
+	"github.com/lightningnetwork/lnd/lntypes"
+	"github.com/lightningnetwork/lnd/queue"
+	"github.com/lightningnetwork/lnd/zpay32"
+)
+
+// invoiceExpiry holds and invoice's payment hash and its expiry. This
+// is used to order invoices by their expiry for cancellation.
+type invoiceExpiry struct {
+	PaymentHash lntypes.Hash
+	Expiry      time.Time
+}
+
+// Less implements PriorityQueueItem.Less such that the top item in the
+// priorty queue will be the one that expires next.
+func (e invoiceExpiry) Less(other queue.PriorityQueueItem) bool {
+	return e.Expiry.Before(other.(*invoiceExpiry).Expiry)
+}
+
+// InvoiceExpiryWatcher handles automatic invoice cancellation of expried
+// invoices. Upon start InvoiceExpiryWatcher will retrieve all pending (not yet
+// settled or canceled) invoices invoices to its watcing queue. When a new
+// invoice is added to the InvoiceRegistry, it'll be forarded to the
+// InvoiceExpiryWatcher and will end up in the watching queue as well.
+// If any of the watched invoices expire, they'll be removed from the watching
+// queue and will be cancelled through InvoiceRegistry.CancelInvoice().
+type InvoiceExpiryWatcher struct {
+	sync.Mutex
+	started bool
+
+	// clock is the clock implementation that InvoiceExpiryWatcher uses.
+	// It is useful for testing.
+	clock clock.Clock
+
+	// cancelInvoice is a template method that cancels an expired invoice.
+	cancelInvoice func(lntypes.Hash) error
+
+	// expiryQueue holds invoiceExpiry items and is used to find the next
+	// invoice to expire.
+	expiryQueue queue.PriorityQueue
+
+	// newInvoices channel is used to wake up the main loop when a new invoices
+	// is added.
+	newInvoices chan *invoiceExpiry
+
+	wg sync.WaitGroup
+
+	// quit signals InvoiceExpiryWatcher to stop.
+	quit chan struct{}
+}
+
+// NewInvoiceExpiryWatcher creates a new InvoiceExpiryWatcher instance.
+func NewInvoiceExpiryWatcher(clock clock.Clock) *InvoiceExpiryWatcher {
+	return &InvoiceExpiryWatcher{
+		clock:       clock,
+		newInvoices: make(chan *invoiceExpiry),
+		quit:        make(chan struct{}),
+	}
+}
+
+// Start starts the the subscription handler and the main loop. Start() will
+// return with error if InvoiceExpiryWatcher is already started. Start()
+// expects a cancellation function passed that will be use to cancel expired
+// invoices by their payment hash.
+func (ew *InvoiceExpiryWatcher) Start(
+	cancelInvoice func(lntypes.Hash) error) error {
+
+	ew.Lock()
+	defer ew.Unlock()
+
+	if ew.started {
+		return fmt.Errorf("InvoiceExpiryWatcher already started")
+	}
+
+	ew.started = true
+	ew.cancelInvoice = cancelInvoice
+	ew.wg.Add(1)
+	go ew.mainLoop()
+
+	return nil
+}
+
+// Stop quits the expiry handler loop and waits for InvoiceExpiryWatcher to
+// fully stop.
+func (ew *InvoiceExpiryWatcher) Stop() {
+	ew.Lock()
+	defer ew.Unlock()
+
+	if ew.started {
+		// Signal subscriptionHandler to quit and wait for it to return.
+		close(ew.quit)
+		ew.wg.Wait()
+		ew.started = false
+	}
+}
+
+// AddInvoice adds a new invoice to the InvoiceExpiryWatcher. This won't check
+// if the invoice is already added and will only add invoices with ContractOpen
+// state.
+func (ew *InvoiceExpiryWatcher) AddInvoice(
+	paymentHash lntypes.Hash, invoice *channeldb.Invoice) {
+
+	if invoice.State != channeldb.ContractOpen {
+		log.Debugf("Invoice not added to expiry watcher: %v", invoice)
+		return
+	}
+
+	realExpiry := invoice.Terms.Expiry
+	if realExpiry == 0 {
+		realExpiry = zpay32.DefaultInvoiceExpiry
+	}
+
+	expiry := invoice.CreationDate.Add(realExpiry)
+
+	log.Debugf("Adding invoice '%v' to expiry watcher, expiration: %v",
+		paymentHash, expiry)
+
+	newInvoiceExpiry := &invoiceExpiry{
+		PaymentHash: paymentHash,
+		Expiry:      expiry,
+	}
+
+	select {
+	case ew.newInvoices <- newInvoiceExpiry:
+	case <-ew.quit:
+		// Select on quit too so that callers won't get blocked in case
+		// of concurrent shutdown.
+	}
+}
+
+// nextExpiry returns a Time chan to wait on until the next invoice expires.
+// If there are no active invoices, then it'll simply wait indefinitely.
+func (ew *InvoiceExpiryWatcher) nextExpiry() <-chan time.Time {
+	if !ew.expiryQueue.Empty() {
+		top := ew.expiryQueue.Top().(*invoiceExpiry)
+		return ew.clock.TickAfter(top.Expiry.Sub(ew.clock.Now()))
+	}
+
+	return nil
+}
+
+// cancelExpiredInvoices will cancel all expired invoices and removes them from
+// the expiry queue.
+func (ew *InvoiceExpiryWatcher) cancelExpiredInvoices() {
+	for !ew.expiryQueue.Empty() {
+		top := ew.expiryQueue.Top().(*invoiceExpiry)
+		if !top.Expiry.Before(ew.clock.Now()) {
+			break
+		}
+
+		err := ew.cancelInvoice(top.PaymentHash)
+		if err != nil && err != channeldb.ErrInvoiceAlreadySettled &&
+			err != channeldb.ErrInvoiceAlreadyCanceled {
+
+			log.Errorf("Unable to cancel invoice: %v", top.PaymentHash)
+		}
+
+		ew.expiryQueue.Pop()
+	}
+}
+
+// mainLoop is a goroutine that receives new invoices and handles cancellation
+// of expired invoices.
+func (ew *InvoiceExpiryWatcher) mainLoop() {
+	defer ew.wg.Done()
+
+	for {
+		// Cancel any invoices that may have expired.
+		ew.cancelExpiredInvoices()
+
+		select {
+		case <-ew.nextExpiry():
+			// Wait until the next invoice expires, then cancel expired invoices.
+			continue
+
+		case newInvoiceExpiry := <-ew.newInvoices:
+			ew.expiryQueue.Push(newInvoiceExpiry)
+
+		case <-ew.quit:
+			return
+		}
+	}
+}
diff --git a/invoices/invoice_expiry_watcher_test.go b/invoices/invoice_expiry_watcher_test.go
new file mode 100644
index 00000000000..8bfdfd69335
--- /dev/null
+++ b/invoices/invoice_expiry_watcher_test.go
@@ -0,0 +1,125 @@
+package invoices
+
+import (
+	"testing"
+	"time"
+
+	"github.com/lightningnetwork/lnd/clock"
+	"github.com/lightningnetwork/lnd/lntypes"
+)
+
+// invoiceExpiryWatcherTest holds a test fixture and implements checks
+// for InvoiceExpiryWatcher tests.
+type invoiceExpiryWatcherTest struct {
+	t                *testing.T
+	watcher          *InvoiceExpiryWatcher
+	testData         invoiceExpiryTestData
+	canceledInvoices []lntypes.Hash
+}
+
+// newInvoiceExpiryWatcherTest creates a new InvoiceExpiryWatcher test fixture
+// and sets up the test environment.
+func newInvoiceExpiryWatcherTest(t *testing.T, now time.Time,
+	numExpiredInvoices, numPendingInvoices int) *invoiceExpiryWatcherTest {
+
+	test := &invoiceExpiryWatcherTest{
+		watcher: NewInvoiceExpiryWatcher(clock.NewTestClock(testTime)),
+		testData: generateInvoiceExpiryTestData(
+			t, now, 0, numExpiredInvoices, numPendingInvoices,
+		),
+	}
+
+	err := test.watcher.Start(func(paymentHash lntypes.Hash) error {
+		test.canceledInvoices = append(test.canceledInvoices, paymentHash)
+		return nil
+	})
+
+	if err != nil {
+		t.Fatalf("cannot start InvoiceExpiryWatcher: %v", err)
+	}
+
+	return test
+}
+
+func (t *invoiceExpiryWatcherTest) checkExpectations() {
+	// Check that invoices that got canceled during the test are the ones
+	// that expired.
+	if len(t.canceledInvoices) != len(t.testData.expiredInvoices) {
+		t.t.Fatalf("expected %v cancellations, got %v",
+			len(t.testData.expiredInvoices), len(t.canceledInvoices))
+	}
+
+	for i := range t.canceledInvoices {
+		if _, ok := t.testData.expiredInvoices[t.canceledInvoices[i]]; !ok {
+			t.t.Fatalf("wrong invoice canceled")
+		}
+	}
+}
+
+// Tests that InvoiceExpiryWatcher can be started and stopped.
+func TestInvoiceExpiryWatcherStartStop(t *testing.T) {
+	watcher := NewInvoiceExpiryWatcher(clock.NewTestClock(testTime))
+	cancel := func(lntypes.Hash) error {
+		t.Fatalf("unexpected call")
+		return nil
+	}
+
+	if err := watcher.Start(cancel); err != nil {
+		t.Fatalf("unexpected error upon start: %v", err)
+	}
+
+	if err := watcher.Start(cancel); err == nil {
+		t.Fatalf("expected error upon second start")
+	}
+
+	watcher.Stop()
+
+	if err := watcher.Start(cancel); err != nil {
+		t.Fatalf("unexpected error upon start: %v", err)
+	}
+}
+
+// Tests that no invoices will expire from an empty InvoiceExpiryWatcher.
+func TestInvoiceExpiryWithNoInvoices(t *testing.T) {
+	t.Parallel()
+	test := newInvoiceExpiryWatcherTest(t, testTime, 0, 0)
+
+	time.Sleep(testTimeout)
+	test.watcher.Stop()
+	test.checkExpectations()
+}
+
+// Tests that if all add invoices are expired, then all invoices
+// will be canceled.
+func TestInvoiceExpiryWithOnlyExpiredInvoices(t *testing.T) {
+	t.Parallel()
+
+	test := newInvoiceExpiryWatcherTest(t, testTime, 0, 5)
+
+	for paymentHash, invoice := range test.testData.pendingInvoices {
+		test.watcher.AddInvoice(paymentHash, invoice)
+	}
+
+	time.Sleep(testTimeout)
+	test.watcher.Stop()
+	test.checkExpectations()
+}
+
+// Tests that if some invoices are expired, then those invoices
+// will be canceled.
+func TestInvoiceExpiryWithPendingAndExpiredInvoices(t *testing.T) {
+	t.Parallel()
+	test := newInvoiceExpiryWatcherTest(t, testTime, 5, 5)
+
+	for paymentHash, invoice := range test.testData.expiredInvoices {
+		test.watcher.AddInvoice(paymentHash, invoice)
+	}
+
+	for paymentHash, invoice := range test.testData.pendingInvoices {
+		test.watcher.AddInvoice(paymentHash, invoice)
+	}
+
+	time.Sleep(testTimeout)
+	test.watcher.Stop()
+	test.checkExpectations()
+}
diff --git a/invoices/invoiceregistry.go b/invoices/invoiceregistry.go
index bfdc54a649a..d4e77ad58cf 100644
--- a/invoices/invoiceregistry.go
+++ b/invoices/invoiceregistry.go
@@ -9,6 +9,7 @@ import (
 
 	"github.com/davecgh/go-spew/spew"
 	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/clock"
 	"github.com/lightningnetwork/lnd/lntypes"
 	"github.com/lightningnetwork/lnd/lnwire"
 	"github.com/lightningnetwork/lnd/queue"
@@ -62,12 +63,10 @@ type RegistryConfig struct {
 	// waiting for the other set members to arrive.
 	HtlcHoldDuration time.Duration
 
-	// Now returns the current time.
-	Now func() time.Time
-
-	// TickAfter returns a channel that is sent on after the specified
-	// duration as passed.
-	TickAfter func(duration time.Duration) <-chan time.Time
+	// Clock holds the clock implementation that is used to provide
+	// Now() and TickAfter() and is useful to stub out the clock functions
+	// during testing.
+	Clock clock.Clock
 }
 
 // htlcReleaseEvent describes an htlc auto-release event. It is used to release
@@ -126,6 +125,8 @@ type InvoiceRegistry struct {
 	// auto-released.
 	htlcAutoReleaseChan chan *htlcReleaseEvent
 
+	expiryWatcher *InvoiceExpiryWatcher
+
 	wg   sync.WaitGroup
 	quit chan struct{}
 }
@@ -134,7 +135,9 @@ type InvoiceRegistry struct {
 // wraps the persistent on-disk invoice storage with an additional in-memory
 // layer. The in-memory layer is in place such that debug invoices can be added
 // which are volatile yet available system wide within the daemon.
-func NewRegistry(cdb *channeldb.DB, cfg *RegistryConfig) *InvoiceRegistry {
+func NewRegistry(cdb *channeldb.DB, expiryWatcher *InvoiceExpiryWatcher,
+	cfg *RegistryConfig) *InvoiceRegistry {
+
 	return &InvoiceRegistry{
 		cdb:                       cdb,
 		notificationClients:       make(map[uint32]*InvoiceSubscription),
@@ -146,21 +149,62 @@ func NewRegistry(cdb *channeldb.DB, cfg *RegistryConfig) *InvoiceRegistry {
 		hodlReverseSubscriptions:  make(map[chan<- interface{}]map[channeldb.CircuitKey]struct{}),
 		cfg:                       cfg,
 		htlcAutoReleaseChan:       make(chan *htlcReleaseEvent),
+		expiryWatcher:             expiryWatcher,
 		quit:                      make(chan struct{}),
 	}
 }
 
+// populateExpiryWatcher fetches all active invoices and their corresponding
+// payment hashes from ChannelDB and adds them to the expiry watcher.
+func (i *InvoiceRegistry) populateExpiryWatcher() error {
+	pendingOnly := true
+	pendingInvoices, err := i.cdb.FetchAllInvoicesWithPaymentHash(pendingOnly)
+	if err != nil && err != channeldb.ErrNoInvoicesCreated {
+		log.Errorf(
+			"Error while prefetching active invoices from the database: %v", err,
+		)
+		return err
+	}
+
+	for idx := range pendingInvoices {
+		i.expiryWatcher.AddInvoice(
+			pendingInvoices[idx].PaymentHash, &pendingInvoices[idx].Invoice,
+		)
+	}
+
+	return nil
+}
+
 // Start starts the registry and all goroutines it needs to carry out its task.
 func (i *InvoiceRegistry) Start() error {
-	i.wg.Add(1)
+	// Start InvoiceExpiryWatcher and prepopulate it with existing active
+	// invoices.
+	err := i.expiryWatcher.Start(func(paymentHash lntypes.Hash) error {
+		cancelIfAccepted := false
+		return i.cancelInvoiceImpl(paymentHash, cancelIfAccepted)
+	})
+
+	if err != nil {
+		return err
+	}
 
+	i.wg.Add(1)
 	go i.invoiceEventLoop()
 
+	// Now prefetch all pending invoices to the expiry watcher.
+	err = i.populateExpiryWatcher()
+	if err != nil {
+		i.Stop()
+		return err
+	}
+
 	return nil
 }
 
 // Stop signals the registry for a graceful shutdown.
 func (i *InvoiceRegistry) Stop() {
+	i.expiryWatcher.Stop()
+
 	close(i.quit)
 
 	i.wg.Wait()
@@ -177,8 +221,8 @@ type invoiceEvent struct {
 // tickAt returns a channel that ticks at the specified time. If the time has
 // already passed, it will tick immediately.
 func (i *InvoiceRegistry) tickAt(t time.Time) <-chan time.Time {
-	now := i.cfg.Now()
-	return i.cfg.TickAfter(t.Sub(now))
+	now := i.cfg.Clock.Now()
+	return i.cfg.Clock.TickAfter(t.Sub(now))
 }
 
 // invoiceEventLoop is the dedicated goroutine responsible for accepting
@@ -471,7 +515,6 @@ func (i *InvoiceRegistry) AddInvoice(invoice *channeldb.Invoice,
 	paymentHash lntypes.Hash) (uint64, error) {
 
 	i.Lock()
-	defer i.Unlock()
 
 	log.Debugf("Invoice(%v): added %v", paymentHash,
 		newLogClosure(func() string {
@@ -481,12 +524,19 @@ func (i *InvoiceRegistry) AddInvoice(invoice *channeldb.Invoice,
 
 	addIndex, err := i.cdb.AddInvoice(invoice, paymentHash)
 	if err != nil {
+		i.Unlock()
 		return 0, err
 	}
 
 	// Now that we've added the invoice, we'll send dispatch a message to
 	// notify the clients of this new invoice.
 	i.notifyClients(paymentHash, invoice, channeldb.ContractOpen)
+	i.Unlock()
+
+	// InvoiceExpiryWatcher.AddInvoice must not be locked by InvoiceRegistry
+	// to avoid deadlock when a new invoice is added while an other is being
+	// canceled.
+	i.expiryWatcher.AddInvoice(paymentHash, invoice)
 
 	return addIndex, nil
 }
@@ -818,6 +868,15 @@ func (i *InvoiceRegistry) SettleHodlInvoice(preimage lntypes.Preimage) error {
 // CancelInvoice attempts to cancel the invoice corresponding to the passed
 // payment hash.
 func (i *InvoiceRegistry) CancelInvoice(payHash lntypes.Hash) error {
+	return i.cancelInvoiceImpl(payHash, true)
+}
+
+// cancelInvoice attempts to cancel the invoice corresponding to the passed
+// payment hash. Accepted invoices will only be canceled if explicitly
+// requested to do so.
+func (i *InvoiceRegistry) cancelInvoiceImpl(payHash lntypes.Hash,
+	cancelAccepted bool) error {
+
 	i.Lock()
 	defer i.Unlock()
 
@@ -826,6 +885,12 @@ func (i *InvoiceRegistry) CancelInvoice(payHash lntypes.Hash) error {
 	updateInvoice := func(invoice *channeldb.Invoice) (
 		*channeldb.InvoiceUpdateDesc, error) {
 
+		// Only cancel the invoice in ContractAccepted state if explicitly
+		// requested to do so.
+		if invoice.State == channeldb.ContractAccepted && !cancelAccepted {
+			return nil, nil
+		}
+
 		// Move invoice to the canceled state. Rely on validation in
 		// channeldb to return an error if the invoice is already
 		// settled or canceled.
@@ -848,6 +913,13 @@ func (i *InvoiceRegistry) CancelInvoice(payHash lntypes.Hash) error {
 		return err
 	}
 
+	// Return without cancellation if the invoice state is ContractAccepted.
+	if invoice.State == channeldb.ContractAccepted {
+		log.Debugf("Invoice(%v): remains accepted as cancel wasn't"+
+			"explicitly requested.", payHash)
+		return nil
+	}
+
 	log.Debugf("Invoice(%v): canceled", payHash)
 
 	// In the callback, some htlcs may have been moved to the canceled
diff --git a/invoices/invoiceregistry_test.go b/invoices/invoiceregistry_test.go
index eabb2ba24bc..e47eaa37061 100644
--- a/invoices/invoiceregistry_test.go
+++ b/invoices/invoiceregistry_test.go
@@ -1,117 +1,16 @@
 package invoices
 
 import (
-	"io/ioutil"
-	"os"
 	"testing"
 	"time"
 
 	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/clock"
 	"github.com/lightningnetwork/lnd/lntypes"
 	"github.com/lightningnetwork/lnd/lnwire"
 	"github.com/lightningnetwork/lnd/record"
 )
 
-var (
-	testTimeout = 5 * time.Second
-
-	testTime = time.Date(2018, time.February, 2, 14, 0, 0, 0, time.UTC)
-
-	preimage = lntypes.Preimage{
-		0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0,
-		0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 1,
-	}
-
-	hash = preimage.Hash()
-
-	testHtlcExpiry = uint32(5)
-
-	testInvoiceCltvDelta = uint32(4)
-
-	testFinalCltvRejectDelta = int32(4)
-
-	testCurrentHeight = int32(1)
-
-	testFeatures = lnwire.NewFeatureVector(
-		nil, lnwire.Features,
-	)
-
-	testPayload = &mockPayload{}
-)
-
-var (
-	testInvoiceAmt = lnwire.MilliSatoshi(100000)
-	testInvoice    = &channeldb.Invoice{
-		Terms: channeldb.ContractTerm{
-			PaymentPreimage: preimage,
-			Value:           lnwire.MilliSatoshi(100000),
-			Features:        testFeatures,
-		},
-	}
-
-	testHodlInvoice = &channeldb.Invoice{
-		Terms: channeldb.ContractTerm{
-			PaymentPreimage: channeldb.UnknownPreimage,
-			Value:           testInvoiceAmt,
-			Features:        testFeatures,
-		},
-	}
-)
-
-type testContext struct {
-	registry *InvoiceRegistry
-	clock    *testClock
-
-	cleanup func()
-	t       *testing.T
-}
-
-func newTestContext(t *testing.T) *testContext {
-	clock := newTestClock(testTime)
-
-	cdb, cleanup, err := newDB()
-	if err != nil {
-		t.Fatal(err)
-	}
-	cdb.Now = clock.now
-
-	// Instantiate and start the invoice ctx.registry.
-	cfg := RegistryConfig{
-		FinalCltvRejectDelta: testFinalCltvRejectDelta,
-		HtlcHoldDuration:     30 * time.Second,
-		Now:                  clock.now,
-		TickAfter:            clock.tickAfter,
-	}
-	registry := NewRegistry(cdb, &cfg)
-
-	err = registry.Start()
-	if err != nil {
-		cleanup()
-		t.Fatal(err)
-	}
-
-	ctx := testContext{
-		registry: registry,
-		clock:    clock,
-		t:        t,
-		cleanup: func() {
-			registry.Stop()
-			cleanup()
-		},
-	}
-
-	return &ctx
-}
-
-func getCircuitKey(htlcID uint64) channeldb.CircuitKey {
-	return channeldb.CircuitKey{
-		ChanID: lnwire.ShortChannelID{
-			BlockHeight: 1, TxIndex: 2, TxPosition: 3,
-		},
-		HtlcID: htlcID,
-	}
-}
-
 // TestSettleInvoice tests settling of an invoice and related notifications.
 func TestSettleInvoice(t *testing.T) {
 	ctx := newTestContext(t)
@@ -121,18 +20,18 @@ func TestSettleInvoice(t *testing.T) {
 	defer allSubscriptions.Cancel()
 
 	// Subscribe to the not yet existing invoice.
-	subscription, err := ctx.registry.SubscribeSingleInvoice(hash)
+	subscription, err := ctx.registry.SubscribeSingleInvoice(testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
 	defer subscription.Cancel()
 
-	if subscription.hash != hash {
+	if subscription.hash != testInvoicePaymentHash {
 		t.Fatalf("expected subscription for provided hash")
 	}
 
 	// Add the invoice.
-	addIdx, err := ctx.registry.AddInvoice(testInvoice, hash)
+	addIdx, err := ctx.registry.AddInvoice(testInvoice, testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
@@ -168,7 +67,7 @@ func TestSettleInvoice(t *testing.T) {
 
 	// Try to settle invoice with an htlc that expires too soon.
 	event, err := ctx.registry.NotifyExitHopHtlc(
-		hash, testInvoice.Terms.Value,
+		testInvoicePaymentHash, testInvoice.Terms.Value,
 		uint32(testCurrentHeight)+testInvoiceCltvDelta-1,
 		testCurrentHeight, getCircuitKey(10), hodlChan, testPayload,
 	)
@@ -186,7 +85,7 @@ func TestSettleInvoice(t *testing.T) {
 	// Settle invoice with a slightly higher amount.
 	amtPaid := lnwire.MilliSatoshi(100500)
 	_, err = ctx.registry.NotifyExitHopHtlc(
-		hash, amtPaid, testHtlcExpiry, testCurrentHeight,
+		testInvoicePaymentHash, amtPaid, testHtlcExpiry, testCurrentHeight,
 		getCircuitKey(0), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -222,7 +121,7 @@ func TestSettleInvoice(t *testing.T) {
 	// Try to settle again with the same htlc id. We need this idempotent
 	// behaviour after a restart.
 	event, err = ctx.registry.NotifyExitHopHtlc(
-		hash, amtPaid, testHtlcExpiry, testCurrentHeight,
+		testInvoicePaymentHash, amtPaid, testHtlcExpiry, testCurrentHeight,
 		getCircuitKey(0), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -236,7 +135,7 @@ func TestSettleInvoice(t *testing.T) {
 	// should also be accepted, to prevent any change in behaviour for a
 	// paid invoice that may open up a probe vector.
 	event, err = ctx.registry.NotifyExitHopHtlc(
-		hash, amtPaid+600, testHtlcExpiry, testCurrentHeight,
+		testInvoicePaymentHash, amtPaid+600, testHtlcExpiry, testCurrentHeight,
 		getCircuitKey(1), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -249,7 +148,7 @@ func TestSettleInvoice(t *testing.T) {
 	// Try to settle again with a lower amount. This should fail just as it
 	// would have failed if it were the first payment.
 	event, err = ctx.registry.NotifyExitHopHtlc(
-		hash, amtPaid-600, testHtlcExpiry, testCurrentHeight,
+		testInvoicePaymentHash, amtPaid-600, testHtlcExpiry, testCurrentHeight,
 		getCircuitKey(2), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -261,7 +160,7 @@ func TestSettleInvoice(t *testing.T) {
 
 	// Check that settled amount is equal to the sum of values of the htlcs
 	// 0 and 1.
-	inv, err := ctx.registry.LookupInvoice(hash)
+	inv, err := ctx.registry.LookupInvoice(testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
@@ -270,7 +169,7 @@ func TestSettleInvoice(t *testing.T) {
 	}
 
 	// Try to cancel.
-	err = ctx.registry.CancelInvoice(hash)
+	err = ctx.registry.CancelInvoice(testInvoicePaymentHash)
 	if err != channeldb.ErrInvoiceAlreadySettled {
 		t.Fatal("expected cancelation of a settled invoice to fail")
 	}
@@ -292,25 +191,25 @@ func TestCancelInvoice(t *testing.T) {
 	defer allSubscriptions.Cancel()
 
 	// Try to cancel the not yet existing invoice. This should fail.
-	err := ctx.registry.CancelInvoice(hash)
+	err := ctx.registry.CancelInvoice(testInvoicePaymentHash)
 	if err != channeldb.ErrInvoiceNotFound {
 		t.Fatalf("expected ErrInvoiceNotFound, but got %v", err)
 	}
 
 	// Subscribe to the not yet existing invoice.
-	subscription, err := ctx.registry.SubscribeSingleInvoice(hash)
+	subscription, err := ctx.registry.SubscribeSingleInvoice(testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
 	defer subscription.Cancel()
 
-	if subscription.hash != hash {
+	if subscription.hash != testInvoicePaymentHash {
 		t.Fatalf("expected subscription for provided hash")
 	}
 
 	// Add the invoice.
 	amt := lnwire.MilliSatoshi(100000)
-	_, err = ctx.registry.AddInvoice(testInvoice, hash)
+	_, err = ctx.registry.AddInvoice(testInvoice, testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
@@ -342,7 +241,7 @@ func TestCancelInvoice(t *testing.T) {
 	}
 
 	// Cancel invoice.
-	err = ctx.registry.CancelInvoice(hash)
+	err = ctx.registry.CancelInvoice(testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
@@ -365,7 +264,7 @@ func TestCancelInvoice(t *testing.T) {
 	// subscribers (backwards compatibility).
 
 	// Try to cancel again.
-	err = ctx.registry.CancelInvoice(hash)
+	err = ctx.registry.CancelInvoice(testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal("expected cancelation of a canceled invoice to succeed")
 	}
@@ -374,7 +273,7 @@ func TestCancelInvoice(t *testing.T) {
 	// result in a cancel event.
 	hodlChan := make(chan interface{})
 	event, err := ctx.registry.NotifyExitHopHtlc(
-		hash, amt, testHtlcExpiry, testCurrentHeight,
+		testInvoicePaymentHash, amt, testHtlcExpiry, testCurrentHeight,
 		getCircuitKey(0), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -393,9 +292,9 @@ func TestCancelInvoice(t *testing.T) {
 // TestSettleHoldInvoice tests settling of a hold invoice and related
 // notifications.
 func TestSettleHoldInvoice(t *testing.T) {
-	defer timeout(t)()
+	defer timeout()()
 
-	cdb, cleanup, err := newDB()
+	cdb, cleanup, err := newTestChannelDB()
 	if err != nil {
 		t.Fatal(err)
 	}
@@ -404,8 +303,9 @@ func TestSettleHoldInvoice(t *testing.T) {
 	// Instantiate and start the invoice ctx.registry.
 	cfg := RegistryConfig{
 		FinalCltvRejectDelta: testFinalCltvRejectDelta,
+		Clock:                clock.NewTestClock(testTime),
 	}
-	registry := NewRegistry(cdb, &cfg)
+	registry := NewRegistry(cdb, NewInvoiceExpiryWatcher(cfg.Clock), &cfg)
 
 	err = registry.Start()
 	if err != nil {
@@ -417,18 +317,18 @@ func TestSettleHoldInvoice(t *testing.T) {
 	defer allSubscriptions.Cancel()
 
 	// Subscribe to the not yet existing invoice.
-	subscription, err := registry.SubscribeSingleInvoice(hash)
+	subscription, err := registry.SubscribeSingleInvoice(testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
 	defer subscription.Cancel()
 
-	if subscription.hash != hash {
+	if subscription.hash != testInvoicePaymentHash {
 		t.Fatalf("expected subscription for provided hash")
 	}
 
 	// Add the invoice.
-	_, err = registry.AddInvoice(testHodlInvoice, hash)
+	_, err = registry.AddInvoice(testHodlInvoice, testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
@@ -455,7 +355,7 @@ func TestSettleHoldInvoice(t *testing.T) {
 	// NotifyExitHopHtlc without a preimage present in the invoice registry
 	// should be possible.
 	event, err := registry.NotifyExitHopHtlc(
-		hash, amtPaid, testHtlcExpiry, testCurrentHeight,
+		testInvoicePaymentHash, amtPaid, testHtlcExpiry, testCurrentHeight,
 		getCircuitKey(0), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -467,7 +367,7 @@ func TestSettleHoldInvoice(t *testing.T) {
 
 	// Test idempotency.
 	event, err = registry.NotifyExitHopHtlc(
-		hash, amtPaid, testHtlcExpiry, testCurrentHeight,
+		testInvoicePaymentHash, amtPaid, testHtlcExpiry, testCurrentHeight,
 		getCircuitKey(0), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -480,7 +380,7 @@ func TestSettleHoldInvoice(t *testing.T) {
 	// Test replay at a higher height. We expect the same result because it
 	// is a replay.
 	event, err = registry.NotifyExitHopHtlc(
-		hash, amtPaid, testHtlcExpiry, testCurrentHeight+10,
+		testInvoicePaymentHash, amtPaid, testHtlcExpiry, testCurrentHeight+10,
 		getCircuitKey(0), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -493,7 +393,7 @@ func TestSettleHoldInvoice(t *testing.T) {
 	// Test a new htlc coming in that doesn't meet the final cltv delta
 	// requirement. It should be rejected.
 	event, err = registry.NotifyExitHopHtlc(
-		hash, amtPaid, 1, testCurrentHeight,
+		testInvoicePaymentHash, amtPaid, 1, testCurrentHeight,
 		getCircuitKey(1), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -516,13 +416,13 @@ func TestSettleHoldInvoice(t *testing.T) {
 	}
 
 	// Settling with preimage should succeed.
-	err = registry.SettleHodlInvoice(preimage)
+	err = registry.SettleHodlInvoice(testInvoicePreimage)
 	if err != nil {
 		t.Fatal("expected set preimage to succeed")
 	}
 
 	hodlEvent := (<-hodlChan).(HodlEvent)
-	if *hodlEvent.Preimage != preimage {
+	if *hodlEvent.Preimage != testInvoicePreimage {
 		t.Fatal("unexpected preimage in hodl event")
 	}
 	if hodlEvent.AcceptHeight != testCurrentHeight {
@@ -549,13 +449,13 @@ func TestSettleHoldInvoice(t *testing.T) {
 	}
 
 	// Idempotency.
-	err = registry.SettleHodlInvoice(preimage)
+	err = registry.SettleHodlInvoice(testInvoicePreimage)
 	if err != channeldb.ErrInvoiceAlreadySettled {
 		t.Fatalf("expected ErrInvoiceAlreadySettled but got %v", err)
 	}
 
 	// Try to cancel.
-	err = registry.CancelInvoice(hash)
+	err = registry.CancelInvoice(testInvoicePaymentHash)
 	if err == nil {
 		t.Fatal("expected cancelation of a settled invoice to fail")
 	}
@@ -564,9 +464,9 @@ func TestSettleHoldInvoice(t *testing.T) {
 // TestCancelHoldInvoice tests canceling of a hold invoice and related
 // notifications.
 func TestCancelHoldInvoice(t *testing.T) {
-	defer timeout(t)()
+	defer timeout()()
 
-	cdb, cleanup, err := newDB()
+	cdb, cleanup, err := newTestChannelDB()
 	if err != nil {
 		t.Fatal(err)
 	}
@@ -575,8 +475,9 @@ func TestCancelHoldInvoice(t *testing.T) {
 	// Instantiate and start the invoice ctx.registry.
 	cfg := RegistryConfig{
 		FinalCltvRejectDelta: testFinalCltvRejectDelta,
+		Clock:                clock.NewTestClock(testTime),
 	}
-	registry := NewRegistry(cdb, &cfg)
+	registry := NewRegistry(cdb, NewInvoiceExpiryWatcher(cfg.Clock), &cfg)
 
 	err = registry.Start()
 	if err != nil {
@@ -585,7 +486,7 @@ func TestCancelHoldInvoice(t *testing.T) {
 	defer registry.Stop()
 
 	// Add the invoice.
-	_, err = registry.AddInvoice(testHodlInvoice, hash)
+	_, err = registry.AddInvoice(testHodlInvoice, testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
@@ -596,7 +497,7 @@ func TestCancelHoldInvoice(t *testing.T) {
 	// NotifyExitHopHtlc without a preimage present in the invoice registry
 	// should be possible.
 	event, err := registry.NotifyExitHopHtlc(
-		hash, amtPaid, testHtlcExpiry, testCurrentHeight,
+		testInvoicePaymentHash, amtPaid, testHtlcExpiry, testCurrentHeight,
 		getCircuitKey(0), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -607,7 +508,7 @@ func TestCancelHoldInvoice(t *testing.T) {
 	}
 
 	// Cancel invoice.
-	err = registry.CancelInvoice(hash)
+	err = registry.CancelInvoice(testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal("cancel invoice failed")
 	}
@@ -621,7 +522,7 @@ func TestCancelHoldInvoice(t *testing.T) {
 	// in a rejection. The accept height is expected to be the original
 	// accept height.
 	event, err = registry.NotifyExitHopHtlc(
-		hash, amtPaid, testHtlcExpiry, testCurrentHeight+1,
+		testInvoicePaymentHash, amtPaid, testHtlcExpiry, testCurrentHeight+1,
 		getCircuitKey(0), hodlChan, testPayload,
 	)
 	if err != nil {
@@ -636,29 +537,6 @@ func TestCancelHoldInvoice(t *testing.T) {
 	}
 }
 
-func newDB() (*channeldb.DB, func(), error) {
-	// First, create a temporary directory to be used for the duration of
-	// this test.
-	tempDirName, err := ioutil.TempDir("", "channeldb")
-	if err != nil {
-		return nil, nil, err
-	}
-
-	// Next, create channeldb for the first time.
-	cdb, err := channeldb.Open(tempDirName)
-	if err != nil {
-		os.RemoveAll(tempDirName)
-		return nil, nil, err
-	}
-
-	cleanUp := func() {
-		cdb.Close()
-		os.RemoveAll(tempDirName)
-	}
-
-	return cdb, cleanUp, nil
-}
-
 // TestUnknownInvoice tests that invoice registry returns an error when the
 // invoice is unknown. This is to guard against returning a cancel hodl event
 // for forwarded htlcs. In the link, NotifyExitHopHtlc is only called if we are
@@ -673,7 +551,7 @@ func TestUnknownInvoice(t *testing.T) {
 	hodlChan := make(chan interface{})
 	amt := lnwire.MilliSatoshi(100000)
 	_, err := ctx.registry.NotifyExitHopHtlc(
-		hash, amt, testHtlcExpiry, testCurrentHeight,
+		testInvoicePaymentHash, amt, testHtlcExpiry, testCurrentHeight,
 		getCircuitKey(0), hodlChan, testPayload,
 	)
 	if err != channeldb.ErrInvoiceNotFound {
@@ -681,27 +559,15 @@ func TestUnknownInvoice(t *testing.T) {
 	}
 }
 
-type mockPayload struct {
-	mpp *record.MPP
-}
-
-func (p *mockPayload) MultiPath() *record.MPP {
-	return p.mpp
-}
-
-func (p *mockPayload) CustomRecords() record.CustomSet {
-	return make(record.CustomSet)
-}
-
 // TestSettleMpp tests settling of an invoice with multiple partial payments.
 func TestSettleMpp(t *testing.T) {
-	defer timeout(t)()
+	defer timeout()()
 
 	ctx := newTestContext(t)
 	defer ctx.cleanup()
 
 	// Add the invoice.
-	_, err := ctx.registry.AddInvoice(testInvoice, hash)
+	_, err := ctx.registry.AddInvoice(testInvoice, testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
@@ -713,7 +579,7 @@ func TestSettleMpp(t *testing.T) {
 	// Send htlc 1.
 	hodlChan1 := make(chan interface{}, 1)
 	event, err := ctx.registry.NotifyExitHopHtlc(
-		hash, testInvoice.Terms.Value/2,
+		testInvoicePaymentHash, testInvoice.Terms.Value/2,
 		testHtlcExpiry,
 		testCurrentHeight, getCircuitKey(10), hodlChan1, mppPayload,
 	)
@@ -725,7 +591,7 @@ func TestSettleMpp(t *testing.T) {
 	}
 
 	// Simulate mpp timeout releasing htlc 1.
-	ctx.clock.setTime(testTime.Add(30 * time.Second))
+	ctx.clock.SetTime(testTime.Add(30 * time.Second))
 
 	hodlEvent := (<-hodlChan1).(HodlEvent)
 	if hodlEvent.Preimage != nil {
@@ -735,7 +601,7 @@ func TestSettleMpp(t *testing.T) {
 	// Send htlc 2.
 	hodlChan2 := make(chan interface{}, 1)
 	event, err = ctx.registry.NotifyExitHopHtlc(
-		hash, testInvoice.Terms.Value/2,
+		testInvoicePaymentHash, testInvoice.Terms.Value/2,
 		testHtlcExpiry,
 		testCurrentHeight, getCircuitKey(11), hodlChan2, mppPayload,
 	)
@@ -749,7 +615,7 @@ func TestSettleMpp(t *testing.T) {
 	// Send htlc 3.
 	hodlChan3 := make(chan interface{}, 1)
 	event, err = ctx.registry.NotifyExitHopHtlc(
-		hash, testInvoice.Terms.Value/2,
+		testInvoicePaymentHash, testInvoice.Terms.Value/2,
 		testHtlcExpiry,
 		testCurrentHeight, getCircuitKey(12), hodlChan3, mppPayload,
 	)
@@ -762,7 +628,7 @@ func TestSettleMpp(t *testing.T) {
 
 	// Check that settled amount is equal to the sum of values of the htlcs
 	// 0 and 1.
-	inv, err := ctx.registry.LookupInvoice(hash)
+	inv, err := ctx.registry.LookupInvoice(testInvoicePaymentHash)
 	if err != nil {
 		t.Fatal(err)
 	}
@@ -774,3 +640,105 @@ func TestSettleMpp(t *testing.T) {
 			testInvoice.Terms.Value, inv.AmtPaid)
 	}
 }
+
+// Tests that invoices are canceled after expiration.
+func TestInvoiceExpiryWithRegistry(t *testing.T) {
+	t.Parallel()
+
+	cdb, cleanup, err := newTestChannelDB()
+	defer cleanup()
+
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	testClock := clock.NewTestClock(testTime)
+
+	cfg := RegistryConfig{
+		FinalCltvRejectDelta: testFinalCltvRejectDelta,
+		Clock:                testClock,
+	}
+
+	expiryWatcher := NewInvoiceExpiryWatcher(cfg.Clock)
+	registry := NewRegistry(cdb, expiryWatcher, &cfg)
+
+	// First prefill the Channel DB with some pre-existing invoices,
+	// half of them still pending, half of them expired.
+	const numExpired = 5
+	const numPending = 5
+	existingInvoices := generateInvoiceExpiryTestData(
+		t, testTime, 0, numExpired, numPending,
+	)
+
+	var expectedCancellations []lntypes.Hash
+
+	for paymentHash, expiredInvoice := range existingInvoices.expiredInvoices {
+		if _, err := cdb.AddInvoice(expiredInvoice, paymentHash); err != nil {
+			t.Fatalf("cannot add invoice to channel db: %v", err)
+		}
+		expectedCancellations = append(expectedCancellations, paymentHash)
+	}
+
+	for paymentHash, pendingInvoice := range existingInvoices.pendingInvoices {
+		if _, err := cdb.AddInvoice(pendingInvoice, paymentHash); err != nil {
+			t.Fatalf("cannot add invoice to channel db: %v", err)
+		}
+	}
+
+	if err = registry.Start(); err != nil {
+		t.Fatalf("cannot start registry: %v", err)
+	}
+
+	// Now generate pending and invoices and add them to the registry while
+	// it is up and running. We'll manipulate the clock to let them expire.
+	newInvoices := generateInvoiceExpiryTestData(
+		t, testTime, numExpired+numPending, 0, numPending,
+	)
+
+	var invoicesThatWillCancel []lntypes.Hash
+	for paymentHash, pendingInvoice := range newInvoices.pendingInvoices {
+		_, err := registry.AddInvoice(pendingInvoice, paymentHash)
+		invoicesThatWillCancel = append(invoicesThatWillCancel, paymentHash)
+		if err != nil {
+			t.Fatal(err)
+		}
+	}
+
+	// Check that they are really not canceled until before the clock is
+	// advanced.
+	for i := range invoicesThatWillCancel {
+		invoice, err := registry.LookupInvoice(invoicesThatWillCancel[i])
+		if err != nil {
+			t.Fatalf("cannot find invoice: %v", err)
+		}
+
+		if invoice.State == channeldb.ContractCanceled {
+			t.Fatalf("expected pending invoice, got canceled")
+		}
+	}
+
+	// Fwd time 1 day.
+	testClock.SetTime(testTime.Add(24 * time.Hour))
+
+	// Give some time to the watcher to cancel everything.
+	time.Sleep(testTimeout)
+	registry.Stop()
+
+	// Create the expected cancellation set before the final check.
+	expectedCancellations = append(
+		expectedCancellations, invoicesThatWillCancel...,
+	)
+
+	// Retrospectively check that all invoices that were expected to be canceled
+	// are indeed canceled.
+	for i := range expectedCancellations {
+		invoice, err := registry.LookupInvoice(expectedCancellations[i])
+		if err != nil {
+			t.Fatalf("cannot find invoice: %v", err)
+		}
+
+		if invoice.State != channeldb.ContractCanceled {
+			t.Fatalf("expected canceled invoice, got: %v", invoice.State)
+		}
+	}
+}
diff --git a/invoices/test_utils_test.go b/invoices/test_utils_test.go
new file mode 100644
index 00000000000..d6298543782
--- /dev/null
+++ b/invoices/test_utils_test.go
@@ -0,0 +1,280 @@
+package invoices
+
+import (
+	"encoding/binary"
+	"encoding/hex"
+	"fmt"
+	"io/ioutil"
+	"os"
+	"runtime/pprof"
+	"testing"
+	"time"
+
+	"github.com/btcsuite/btcd/btcec"
+	"github.com/btcsuite/btcd/chaincfg"
+	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/clock"
+	"github.com/lightningnetwork/lnd/lntypes"
+	"github.com/lightningnetwork/lnd/lnwire"
+	"github.com/lightningnetwork/lnd/record"
+	"github.com/lightningnetwork/lnd/zpay32"
+)
+
+type mockPayload struct {
+	mpp *record.MPP
+}
+
+func (p *mockPayload) MultiPath() *record.MPP {
+	return p.mpp
+}
+
+func (p *mockPayload) CustomRecords() record.CustomSet {
+	return make(record.CustomSet)
+}
+
+var (
+	testTimeout = 5 * time.Second
+
+	testTime = time.Date(2018, time.February, 2, 14, 0, 0, 0, time.UTC)
+
+	testInvoicePreimage = lntypes.Preimage{1}
+
+	testInvoicePaymentHash = testInvoicePreimage.Hash()
+
+	testHtlcExpiry = uint32(5)
+
+	testInvoiceCltvDelta = uint32(4)
+
+	testFinalCltvRejectDelta = int32(4)
+
+	testCurrentHeight = int32(1)
+
+	testPrivKeyBytes, _ = hex.DecodeString(
+		"e126f68f7eafcc8b74f54d269fe206be715000f94dac067d1c04a8ca3b2db734")
+
+	testPrivKey, _ = btcec.PrivKeyFromBytes(
+		btcec.S256(), testPrivKeyBytes)
+
+	testInvoiceDescription = "coffee"
+
+	testInvoiceAmount = lnwire.MilliSatoshi(100000)
+
+	testNetParams = &chaincfg.MainNetParams
+
+	testMessageSigner = zpay32.MessageSigner{
+		SignCompact: func(hash []byte) ([]byte, error) {
+			sig, err := btcec.SignCompact(btcec.S256(), testPrivKey, hash, true)
+			if err != nil {
+				return nil, fmt.Errorf("can't sign the message: %v", err)
+			}
+			return sig, nil
+		},
+	}
+
+	testFeatures = lnwire.NewFeatureVector(
+		nil, lnwire.Features,
+	)
+
+	testPayload = &mockPayload{}
+
+	testInvoiceCreationDate = testTime
+)
+
+var (
+	testInvoiceAmt = lnwire.MilliSatoshi(100000)
+	testInvoice    = &channeldb.Invoice{
+		Terms: channeldb.ContractTerm{
+			PaymentPreimage: testInvoicePreimage,
+			Value:           testInvoiceAmt,
+			Expiry:          time.Hour,
+			Features:        testFeatures,
+		},
+		CreationDate: testInvoiceCreationDate,
+	}
+
+	testHodlInvoice = &channeldb.Invoice{
+		Terms: channeldb.ContractTerm{
+			PaymentPreimage: channeldb.UnknownPreimage,
+			Value:           testInvoiceAmt,
+			Expiry:          time.Hour,
+			Features:        testFeatures,
+		},
+		CreationDate: testInvoiceCreationDate,
+	}
+)
+
+func newTestChannelDB() (*channeldb.DB, func(), error) {
+	// First, create a temporary directory to be used for the duration of
+	// this test.
+	tempDirName, err := ioutil.TempDir("", "channeldb")
+	if err != nil {
+		return nil, nil, err
+	}
+
+	// Next, create channeldb for the first time.
+	cdb, err := channeldb.Open(tempDirName)
+	if err != nil {
+		os.RemoveAll(tempDirName)
+		return nil, nil, err
+	}
+
+	cleanUp := func() {
+		cdb.Close()
+		os.RemoveAll(tempDirName)
+	}
+
+	return cdb, cleanUp, nil
+}
+
+type testContext struct {
+	cdb      *channeldb.DB
+	registry *InvoiceRegistry
+	clock    *clock.TestClock
+
+	cleanup func()
+	t       *testing.T
+}
+
+func newTestContext(t *testing.T) *testContext {
+	clock := clock.NewTestClock(testTime)
+
+	cdb, cleanup, err := newTestChannelDB()
+	if err != nil {
+		t.Fatal(err)
+	}
+	cdb.Now = clock.Now
+
+	expiryWatcher := NewInvoiceExpiryWatcher(clock)
+
+	// Instantiate and start the invoice ctx.registry.
+	cfg := RegistryConfig{
+		FinalCltvRejectDelta: testFinalCltvRejectDelta,
+		HtlcHoldDuration:     30 * time.Second,
+		Clock:                clock,
+	}
+	registry := NewRegistry(cdb, expiryWatcher, &cfg)
+
+	err = registry.Start()
+	if err != nil {
+		cleanup()
+		t.Fatal(err)
+	}
+
+	ctx := testContext{
+		cdb:      cdb,
+		registry: registry,
+		clock:    clock,
+		t:        t,
+		cleanup: func() {
+			registry.Stop()
+			cleanup()
+		},
+	}
+
+	return &ctx
+}
+
+func getCircuitKey(htlcID uint64) channeldb.CircuitKey {
+	return channeldb.CircuitKey{
+		ChanID: lnwire.ShortChannelID{
+			BlockHeight: 1, TxIndex: 2, TxPosition: 3,
+		},
+		HtlcID: htlcID,
+	}
+}
+
+func newTestInvoice(t *testing.T, preimage lntypes.Preimage,
+	timestamp time.Time, expiry time.Duration) *channeldb.Invoice {
+
+	if expiry == 0 {
+		expiry = time.Hour
+	}
+
+	rawInvoice, err := zpay32.NewInvoice(
+		testNetParams,
+		preimage.Hash(),
+		timestamp,
+		zpay32.Amount(testInvoiceAmount),
+		zpay32.Description(testInvoiceDescription),
+		zpay32.Expiry(expiry))
+
+	if err != nil {
+		t.Fatalf("Error while creating new invoice: %v", err)
+	}
+
+	paymentRequest, err := rawInvoice.Encode(testMessageSigner)
+
+	if err != nil {
+		t.Fatalf("Error while encoding payment request: %v", err)
+	}
+
+	return &channeldb.Invoice{
+		Terms: channeldb.ContractTerm{
+			PaymentPreimage: preimage,
+			Value:           testInvoiceAmount,
+			Expiry:          expiry,
+			Features:        testFeatures,
+		},
+		PaymentRequest: []byte(paymentRequest),
+		CreationDate:   timestamp,
+	}
+}
+
+// timeout implements a test level timeout.
+func timeout() func() {
+	done := make(chan struct{})
+
+	go func() {
+		select {
+		case <-time.After(5 * time.Second):
+			err := pprof.Lookup("goroutine").WriteTo(os.Stdout, 1)
+			if err != nil {
+				panic(fmt.Sprintf("error writing to std out after timeout: %v", err))
+			}
+			panic("timeout")
+		case <-done:
+		}
+	}()
+
+	return func() {
+		close(done)
+	}
+}
+
+// invoiceExpiryTestData simply holds generated expired and pending invoices.
+type invoiceExpiryTestData struct {
+	expiredInvoices map[lntypes.Hash]*channeldb.Invoice
+	pendingInvoices map[lntypes.Hash]*channeldb.Invoice
+}
+
+// generateInvoiceExpiryTestData generates the specified number of fake expired
+// and pending invoices anchored to the passed now timestamp.
+func generateInvoiceExpiryTestData(
+	t *testing.T, now time.Time,
+	offset, numExpired, numPending int) invoiceExpiryTestData {
+
+	var testData invoiceExpiryTestData
+
+	testData.expiredInvoices = make(map[lntypes.Hash]*channeldb.Invoice)
+	testData.pendingInvoices = make(map[lntypes.Hash]*channeldb.Invoice)
+
+	expiredCreationDate := now.Add(-24 * time.Hour)
+
+	for i := 1; i <= numExpired; i++ {
+		var preimage lntypes.Preimage
+		binary.BigEndian.PutUint32(preimage[:4], uint32(offset+i))
+		expiry := time.Duration((i+offset)%24) * time.Hour
+		invoice := newTestInvoice(t, preimage, expiredCreationDate, expiry)
+		testData.expiredInvoices[preimage.Hash()] = invoice
+	}
+
+	for i := 1; i <= numPending; i++ {
+		var preimage lntypes.Preimage
+		binary.BigEndian.PutUint32(preimage[4:], uint32(offset+i))
+		expiry := time.Duration((i+offset)%24) * time.Hour
+		invoice := newTestInvoice(t, preimage, now, expiry)
+		testData.pendingInvoices[preimage.Hash()] = invoice
+	}
+
+	return testData
+}
diff --git a/invoices/utils_test.go b/invoices/utils_test.go
deleted file mode 100644
index f33a93e83be..00000000000
--- a/invoices/utils_test.go
+++ /dev/null
@@ -1,26 +0,0 @@
-package invoices
-
-import (
-	"os"
-	"runtime/pprof"
-	"testing"
-	"time"
-)
-
-// timeout implements a test level timeout.
-func timeout(t *testing.T) func() {
-	done := make(chan struct{})
-	go func() {
-		select {
-		case <-time.After(5 * time.Second):
-			pprof.Lookup("goroutine").WriteTo(os.Stdout, 1)
-
-			panic("test timeout")
-		case <-done:
-		}
-	}()
-
-	return func() {
-		close(done)
-	}
-}
diff --git a/queue/priority_queue.go b/queue/priority_queue.go
index aae7b423c3b..06485e5316e 100644
--- a/queue/priority_queue.go
+++ b/queue/priority_queue.go
@@ -9,6 +9,8 @@ import (
 // PriorityQueue will be able to use that to build and restore an underlying
 // heap.
 type PriorityQueueItem interface {
+	// Less must return true if this item is ordered before other and false
+	// otherwise.
 	Less(other PriorityQueueItem) bool
 }
 
@@ -43,7 +45,7 @@ func (pq *priorityQueue) Pop() interface{} {
 	return item
 }
 
-// Priority wrap a standard heap in a more object-oriented structure.
+// PriorityQueue wraps a standard heap into a self contained class.
 type PriorityQueue struct {
 	queue priorityQueue
 }
diff --git a/server.go b/server.go
index 88dce9de4a9..320c3e68c9b 100644
--- a/server.go
+++ b/server.go
@@ -33,6 +33,7 @@ import (
 	"github.com/lightningnetwork/lnd/chanfitness"
 	"github.com/lightningnetwork/lnd/channeldb"
 	"github.com/lightningnetwork/lnd/channelnotifier"
+	"github.com/lightningnetwork/lnd/clock"
 	"github.com/lightningnetwork/lnd/contractcourt"
 	"github.com/lightningnetwork/lnd/discovery"
 	"github.com/lightningnetwork/lnd/feature"
@@ -381,8 +382,7 @@ func newServer(listenAddrs []net.Addr, chanDB *channeldb.DB,
 	registryConfig := invoices.RegistryConfig{
 		FinalCltvRejectDelta: defaultFinalCltvRejectDelta,
 		HtlcHoldDuration:     invoices.DefaultHtlcHoldDuration,
-		Now:                  time.Now,
-		TickAfter:            time.After,
+		Clock:                clock.NewDefaultClock(),
 	}
 
 	s := &server{
@@ -393,7 +393,10 @@ func newServer(listenAddrs []net.Addr, chanDB *channeldb.DB,
 		readPool:       readPool,
 		chansToRestore: chansToRestore,
 
-		invoices: invoices.NewRegistry(chanDB, &registryConfig),
+		invoices: invoices.NewRegistry(
+			chanDB, invoices.NewInvoiceExpiryWatcher(clock.NewDefaultClock()),
+			&registryConfig,
+		),
 
 		channelNotifier: channelnotifier.New(chanDB),
 
diff --git a/zpay32/invoice.go b/zpay32/invoice.go
index ab871125c5f..3afb4cda973 100644
--- a/zpay32/invoice.go
+++ b/zpay32/invoice.go
@@ -82,6 +82,10 @@ const (
 	// This is chosen to be the maximum number of bytes that can fit into a
 	// single QR code: https://en.wikipedia.org/wiki/QR_code#Storage
 	maxInvoiceLength = 7089
+
+	// DefaultInvoiceExpiry is the default expiry duration from the creation
+	// timestamp if expiry is set to zero.
+	DefaultInvoiceExpiry = time.Hour
 )
 
 var (