diff --git a/channeldb/graph_test.go b/channeldb/graph_test.go
index 27ed7ba5..378391ec 100644
--- a/channeldb/graph_test.go
+++ b/channeldb/graph_test.go
@@ -729,6 +729,14 @@ func TestEdgeInfoUpdates(t *testing.T) {
 
 	// Create an edge and add it to the db.
 	edgeInfo, edge1, edge2 := createChannelEdge(db, node1, node2)
+
+	// Make sure inserting the policy at this point, before the edge info
+	// is added, will fail.
+	if err := graph.UpdateEdgePolicy(edge1); err != ErrEdgeNotFound {
+		t.Fatalf("expected ErrEdgeNotFound, got: %v", err)
+	}
+
+	// Add the edge info.
 	if err := graph.AddChannelEdge(edgeInfo); err != nil {
 		t.Fatalf("unable to create channel edge: %v", err)
 	}
diff --git a/routing/router.go b/routing/router.go
index c33f3ff1..cdb8d53a 100644
--- a/routing/router.go
+++ b/routing/router.go
@@ -1125,8 +1125,6 @@ func (r *ChannelRouter) processUpdate(msg interface{}) error {
 		}
 		r.rejectMtx.RUnlock()
 
-		channelID := lnwire.NewShortChanIDFromInt(msg.ChannelID)
-
 		// We make sure to hold the mutex for this channel ID,
 		// such that no other goroutine is concurrently doing
 		// database accesses for the same channel ID.
@@ -1142,6 +1140,15 @@ func (r *ChannelRouter) processUpdate(msg interface{}) error {
 
 		}
 
+		// If the channel doesn't exist in our database, we cannot
+		// apply the updated policy.
+		if !exists {
+			return newErrf(ErrIgnored, "Ignoring update "+
+				"(flags=%v|%v) for unknown chan_id=%v",
+				msg.MessageFlags, msg.ChannelFlags,
+				msg.ChannelID)
+		}
+
 		// As edges are directional edge node has a unique policy for
 		// the direction of the edge they control. Therefore we first
 		// check if we already have the most up to date information for
@@ -1174,36 +1181,6 @@ func (r *ChannelRouter) processUpdate(msg interface{}) error {
 			}
 		}
 
-		if !exists && !r.cfg.AssumeChannelValid {
-			// Before we can update the channel information, we'll
-			// ensure that the target channel is still open by
-			// querying the utxo-set for its existence.
-			chanPoint, fundingTxOut, err := r.fetchChanPoint(
-				&channelID,
-			)
-			if err != nil {
-				r.rejectMtx.Lock()
-				r.rejectCache[msg.ChannelID] = struct{}{}
-				r.rejectMtx.Unlock()
-
-				return errors.Errorf("unable to fetch chan "+
-					"point for chan_id=%v: %v",
-					msg.ChannelID, err)
-			}
-			_, err = r.cfg.Chain.GetUtxo(
-				chanPoint, fundingTxOut.PkScript,
-				channelID.BlockHeight,
-			)
-			if err != nil {
-				r.rejectMtx.Lock()
-				r.rejectCache[msg.ChannelID] = struct{}{}
-				r.rejectMtx.Unlock()
-
-				return errors.Errorf("unable to fetch utxo for "+
-					"chan_id=%v: %v", msg.ChannelID, err)
-			}
-		}
-
 		// Now that we know this isn't a stale update, we'll apply the
 		// new edge policy to the proper directional edge within the
 		// channel graph.
diff --git a/routing/router_test.go b/routing/router_test.go
index e39ed313..c79af2b2 100644
--- a/routing/router_test.go
+++ b/routing/router_test.go
@@ -14,7 +14,7 @@ import (
 	"github.com/btcsuite/btcd/wire"
 	"github.com/davecgh/go-spew/spew"
 
-	"github.com/lightningnetwork/lightning-onion"
+	sphinx "github.com/lightningnetwork/lightning-onion"
 	"github.com/lightningnetwork/lnd/channeldb"
 	"github.com/lightningnetwork/lnd/htlcswitch"
 	"github.com/lightningnetwork/lnd/lnwire"
@@ -1025,6 +1025,86 @@ func TestIgnoreNodeAnnouncement(t *testing.T) {
 	}
 }
 
+// TestIgnoreChannelEdgePolicyForUnknownChannel checks that a router will
+// ignore a channel policy for a channel not in the graph.
+func TestIgnoreChannelEdgePolicyForUnknownChannel(t *testing.T) {
+	t.Parallel()
+
+	const startingBlockHeight = 101
+
+	// Setup an initially empty network.
+	testChannels := []*testChannel{}
+	testGraph, err := createTestGraphFromChannels(testChannels)
+	if err != nil {
+		t.Fatalf("unable to create graph: %v", err)
+	}
+	defer testGraph.cleanUp()
+
+	ctx, cleanUp, err := createTestCtxFromGraphInstance(
+		startingBlockHeight, testGraph,
+	)
+	if err != nil {
+		t.Fatalf("unable to create router: %v", err)
+	}
+	defer cleanUp()
+
+	var pub1 [33]byte
+	copy(pub1[:], priv1.PubKey().SerializeCompressed())
+
+	var pub2 [33]byte
+	copy(pub2[:], priv2.PubKey().SerializeCompressed())
+
+	// Add the edge between the two unknown nodes to the graph, and check
+	// that the nodes are found after the fact.
+	fundingTx, _, chanID, err := createChannelEdge(
+		ctx, bitcoinKey1.SerializeCompressed(),
+		bitcoinKey2.SerializeCompressed(), 10000, 500,
+	)
+	if err != nil {
+		t.Fatalf("unable to create channel edge: %v", err)
+	}
+	fundingBlock := &wire.MsgBlock{
+		Transactions: []*wire.MsgTx{fundingTx},
+	}
+	ctx.chain.addBlock(fundingBlock, chanID.BlockHeight, chanID.BlockHeight)
+
+	edge := &channeldb.ChannelEdgeInfo{
+		ChannelID:        chanID.ToUint64(),
+		NodeKey1Bytes:    pub1,
+		NodeKey2Bytes:    pub2,
+		BitcoinKey1Bytes: pub1,
+		BitcoinKey2Bytes: pub2,
+		AuthProof:        nil,
+	}
+	edgePolicy := &channeldb.ChannelEdgePolicy{
+		SigBytes:                  testSig.Serialize(),
+		ChannelID:                 edge.ChannelID,
+		LastUpdate:                testTime,
+		TimeLockDelta:             10,
+		MinHTLC:                   1,
+		FeeBaseMSat:               10,
+		FeeProportionalMillionths: 10000,
+	}
+
+	// Attempt to update the edge. This should be ignored, since the edge
+	// is not yet added to the router.
+	err = ctx.router.UpdateEdge(edgePolicy)
+	if !IsError(err, ErrIgnored) {
+		t.Fatalf("expected to get ErrIgnore, instead got: %v", err)
+	}
+
+	// Add the edge.
+	if err := ctx.router.AddEdge(edge); err != nil {
+		t.Fatalf("expected to be able to add edge to the channel graph,"+
+			" even though the vertexes were unknown: %v.", err)
+	}
+
+	// Now updating the edge policy should succeed.
+	if err := ctx.router.UpdateEdge(edgePolicy); err != nil {
+		t.Fatalf("unable to update edge policy: %v", err)
+	}
+}
+
 // TestAddEdgeUnknownVertexes tests that if an edge is added that contains two
 // vertexes which we don't know of, the edge should be available for use
 // regardless. This is due to the fact that we don't actually need node