diff --git a/zpay32/decode.go b/zpay32/decode.go
index 07929b45..7077bfcb 100644
--- a/zpay32/decode.go
+++ b/zpay32/decode.go
@@ -45,8 +45,17 @@ func Decode(invoice string, net *chaincfg.Params) (*Invoice, error) {
 	}
 
 	// The next characters should be a valid prefix for a segwit BIP173
-	// address that match the active network.
-	if !strings.HasPrefix(hrp[2:], net.Bech32HRPSegwit) {
+	// address that match the active network except for signet where we add
+	// an additional "s" to differentiate it from the older testnet3 (Core
+	// devs decided to use the same hrp for signet as for testnet3 which is
+	// not optimal for LN). See
+	// https://github.com/lightningnetwork/lightning-rfc/pull/844 for more
+	// information.
+	expectedPrefix := net.Bech32HRPSegwit
+	if net.Name == chaincfg.SigNetParams.Name {
+		expectedPrefix = "tbs"
+	}
+	if !strings.HasPrefix(hrp[2:], expectedPrefix) {
 		return nil, fmt.Errorf(
 			"invoice not for current active network '%s'", net.Name)
 	}
@@ -54,7 +63,7 @@ func Decode(invoice string, net *chaincfg.Params) (*Invoice, error) {
 
 	// Optionally, if there's anything left of the HRP after ln + the segwit
 	// prefix, we try to decode this as the payment amount.
-	var netPrefixLength = len(net.Bech32HRPSegwit) + 2
+	var netPrefixLength = len(expectedPrefix) + 2
 	if len(hrp) > netPrefixLength {
 		amount, err := decodeAmount(hrp[netPrefixLength:])
 		if err != nil {
@@ -378,7 +387,7 @@ func parseMinFinalCLTVExpiry(data []byte) (*uint64, error) {
 
 // parseFallbackAddr converts the data (encoded in base32) into a fallback
 // on-chain address.
-func parseFallbackAddr(data []byte, net *chaincfg.Params) (btcutil.Address, error) {
+func parseFallbackAddr(data []byte, net *chaincfg.Params) (btcutil.Address, error) { // nolint:dupl
 	// Checks if the data is empty or contains a version without an address.
 	if len(data) < 2 {
 		return nil, fmt.Errorf("empty fallback address field")
diff --git a/zpay32/encode.go b/zpay32/encode.go
index 92783f65..847d2811 100644
--- a/zpay32/encode.go
+++ b/zpay32/encode.go
@@ -5,6 +5,7 @@ import (
 	"encoding/binary"
 	"fmt"
 
+	"github.com/btcsuite/btcd/chaincfg"
 	"github.com/btcsuite/btcd/chaincfg/chainhash"
 	"github.com/btcsuite/btcutil"
 	"github.com/btcsuite/btcutil/bech32"
@@ -51,8 +52,16 @@ func (invoice *Invoice) Encode(signer MessageSigner) (string, error) {
 		return "", err
 	}
 
-	// The human-readable part (hrp) is "ln" + net hrp + optional amount.
+	// The human-readable part (hrp) is "ln" + net hrp + optional amount,
+	// except for signet where we add an additional "s" to differentiate it
+	// from the older testnet3 (Core devs decided to use the same hrp for
+	// signet as for testnet3 which is not optimal for LN). See
+	// https://github.com/lightningnetwork/lightning-rfc/pull/844 for more
+	// information.
 	hrp := "ln" + invoice.Net.Bech32HRPSegwit
+	if invoice.Net.Name == chaincfg.SigNetParams.Name {
+		hrp = "lntbs"
+	}
 	if invoice.MilliSat != nil {
 		// Encode the amount using the fewest possible characters.
 		am, err := encodeAmount(*invoice.MilliSat)