diff --git a/invoices/invoiceregistry_test.go b/invoices/invoiceregistry_test.go
new file mode 100644
index 00000000..f261467a
--- /dev/null
+++ b/invoices/invoiceregistry_test.go
@@ -0,0 +1,176 @@
+package invoices
+
+import (
+	"io/ioutil"
+	"os"
+	"testing"
+	"time"
+
+	"github.com/btcsuite/btcd/chaincfg"
+	"github.com/lightningnetwork/lnd/channeldb"
+	"github.com/lightningnetwork/lnd/lntypes"
+	"github.com/lightningnetwork/lnd/lnwire"
+)
+
+var (
+	testTimeout = 5 * time.Second
+
+	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()
+
+	// testPayReq is a dummy payment request that does parse properly. It
+	// has no relation with the real invoice parameters and isn't asserted
+	// on in this test. LookupInvoice requires this to have a valid value.
+	testPayReq = "lnbc500u1pwywxzwpp5nd2u9xzq02t0tuf2654as7vma42lwkcjptx4yzfq0umq4swpa7cqdqqcqzysmlpc9ewnydr8rr8dnltyxphdyf6mcqrsd6dml8zajtyhwe6a45d807kxtmzayuf0hh2d9tn478ecxkecdg7c5g85pntupug5kakm7xcpn63zqk"
+)
+
+// TestSettleInvoice tests settling of an invoice and related notifications.
+func TestSettleInvoice(t *testing.T) {
+	cdb, cleanup, err := newDB()
+	if err != nil {
+		t.Fatal(err)
+	}
+	defer cleanup()
+
+	// Instantiate and start the invoice registry.
+	registry := NewRegistry(cdb, &chaincfg.MainNetParams)
+
+	err = registry.Start()
+	if err != nil {
+		t.Fatal(err)
+	}
+	defer registry.Stop()
+
+	allSubscriptions := registry.SubscribeNotifications(0, 0)
+	defer allSubscriptions.Cancel()
+
+	// Subscribe to the not yet existing invoice.
+	subscription := registry.SubscribeSingleInvoice(hash)
+	defer subscription.Cancel()
+
+	if subscription.hash != hash {
+		t.Fatalf("expected subscription for provided hash")
+	}
+
+	// Add the invoice.
+	invoice := &channeldb.Invoice{
+		Terms: channeldb.ContractTerm{
+			PaymentPreimage: preimage,
+			Value:           lnwire.MilliSatoshi(100000),
+		},
+		PaymentRequest: []byte(testPayReq),
+	}
+
+	addIdx, err := registry.AddInvoice(invoice, hash)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	if addIdx != 1 {
+		t.Fatalf("expected addIndex to start with 1, but got %v",
+			addIdx)
+	}
+
+	// We expect the open state to be sent to the single invoice subscriber.
+	select {
+	case update := <-subscription.Updates:
+		if update.Terms.State != channeldb.ContractOpen {
+			t.Fatalf("expected state ContractOpen, but got %v",
+				update.Terms.State)
+		}
+	case <-time.After(testTimeout):
+		t.Fatal("no update received")
+	}
+
+	// We expect a new invoice notification to be sent out.
+	select {
+	case newInvoice := <-allSubscriptions.NewInvoices:
+		if newInvoice.Terms.State != channeldb.ContractOpen {
+			t.Fatalf("expected state ContractOpen, but got %v",
+				newInvoice.Terms.State)
+		}
+	case <-time.After(testTimeout):
+		t.Fatal("no update received")
+	}
+
+	// Settle invoice with a slightly higher amount.
+	amtPaid := lnwire.MilliSatoshi(100500)
+	err = registry.SettleInvoice(hash, amtPaid)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	// We expect the settled state to be sent to the single invoice
+	// subscriber.
+	select {
+	case update := <-subscription.Updates:
+		if update.Terms.State != channeldb.ContractSettled {
+			t.Fatalf("expected state ContractOpen, but got %v",
+				update.Terms.State)
+		}
+		if update.AmtPaid != amtPaid {
+			t.Fatal("invoice AmtPaid incorrect")
+		}
+	case <-time.After(testTimeout):
+		t.Fatal("no update received")
+	}
+
+	// We expect a settled notification to be sent out.
+	select {
+	case settledInvoice := <-allSubscriptions.SettledInvoices:
+		if settledInvoice.Terms.State != channeldb.ContractSettled {
+			t.Fatalf("expected state ContractOpen, but got %v",
+				settledInvoice.Terms.State)
+		}
+	case <-time.After(testTimeout):
+		t.Fatal("no update received")
+	}
+
+	// Try to settle again.
+	err = registry.SettleInvoice(hash, amtPaid)
+	if err != nil {
+		t.Fatal("expected duplicate settle to succeed")
+	}
+
+	// Try to settle again with a different amount.
+	err = registry.SettleInvoice(hash, amtPaid+600)
+	if err != nil {
+		t.Fatal("expected duplicate settle to succeed")
+	}
+
+	// Check that settled amount remains unchanged.
+	inv, _, err := registry.LookupInvoice(hash)
+	if err != nil {
+		t.Fatal(err)
+	}
+	if inv.AmtPaid != amtPaid {
+		t.Fatal("expected amount to be unchanged")
+	}
+}
+
+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
+}