diff --git a/channeldb/db.go b/channeldb/db.go
index fa844a2d..4d6958a3 100644
--- a/channeldb/db.go
+++ b/channeldb/db.go
@@ -8,10 +8,10 @@ import (
 	"path/filepath"
 	"sync"
 
-	"github.com/coreos/bbolt"
-	"github.com/go-errors/errors"
 	"github.com/btcsuite/btcd/btcec"
 	"github.com/btcsuite/btcd/wire"
+	"github.com/coreos/bbolt"
+	"github.com/go-errors/errors"
 )
 
 const (
@@ -233,56 +233,70 @@ func fileExists(path string) bool {
 	return true
 }
 
-// FetchOpenChannels returns all stored currently active/open channels
-// associated with the target nodeID. In the case that no active channels are
-// known to have been created with this node, then a zero-length slice is
-// returned.
+// FetchOpenChannels starts a new database transaction and returns all stored
+// currently active/open channels associated with the target nodeID. In the case
+// that no active channels are known to have been created with this node, then a
+// zero-length slice is returned.
 func (d *DB) FetchOpenChannels(nodeID *btcec.PublicKey) ([]*OpenChannel, error) {
 	var channels []*OpenChannel
 	err := d.View(func(tx *bolt.Tx) error {
-		// Get the bucket dedicated to storing the metadata for open
-		// channels.
-		openChanBucket := tx.Bucket(openChannelBucket)
-		if openChanBucket == nil {
+		var err error
+		channels, err = d.fetchOpenChannels(tx, nodeID)
+		return err
+	})
+
+	return channels, err
+}
+
+// fetchOpenChannels uses and existing database transaction and returns all
+// stored currently active/open channels associated with the target nodeID. In
+// the case that no active channels are known to have been created with this
+// node, then a zero-length slice is returned.
+func (d *DB) fetchOpenChannels(tx *bolt.Tx,
+	nodeID *btcec.PublicKey) ([]*OpenChannel, error) {
+
+	// Get the bucket dedicated to storing the metadata for open channels.
+	openChanBucket := tx.Bucket(openChannelBucket)
+	if openChanBucket == nil {
+		return nil, nil
+	}
+
+	// Within this top level bucket, fetch the bucket dedicated to storing
+	// open channel data specific to the remote node.
+	pub := nodeID.SerializeCompressed()
+	nodeChanBucket := openChanBucket.Bucket(pub)
+	if nodeChanBucket == nil {
+		return nil, nil
+	}
+
+	// Next, we'll need to go down an additional layer in order to retrieve
+	// the channels for each chain the node knows of.
+	var channels []*OpenChannel
+	err := nodeChanBucket.ForEach(func(chainHash, v []byte) error {
+		// If there's a value, it's not a bucket so ignore it.
+		if v != nil {
 			return nil
 		}
 
-		// Within this top level bucket, fetch the bucket dedicated to
-		// storing open channel data specific to the remote node.
-		pub := nodeID.SerializeCompressed()
-		nodeChanBucket := openChanBucket.Bucket(pub)
-		if nodeChanBucket == nil {
-			return nil
+		// If we've found a valid chainhash bucket, then we'll retrieve
+		// that so we can extract all the channels.
+		chainBucket := nodeChanBucket.Bucket(chainHash)
+		if chainBucket == nil {
+			return fmt.Errorf("unable to read bucket for chain=%x",
+				chainHash[:])
 		}
 
-		// Next, we'll need to go down an additional layer in order to
-		// retrieve the channels for each chain the node knows of.
-		return nodeChanBucket.ForEach(func(chainHash, v []byte) error {
-			// If there's a value, it's not a bucket so ignore it.
-			if v != nil {
-				return nil
-			}
+		// Finally, we both of the necessary buckets retrieved, fetch
+		// all the active channels related to this node.
+		nodeChannels, err := d.fetchNodeChannels(chainBucket)
+		if err != nil {
+			return fmt.Errorf("unable to read channel for "+
+				"chain_hash=%x, node_key=%x: %v",
+				chainHash[:], pub, err)
+		}
 
-			// If we've found a valid chainhash bucket, then we'll
-			// retrieve that so we can extract all the channels.
-			chainBucket := nodeChanBucket.Bucket(chainHash)
-			if chainBucket == nil {
-				return fmt.Errorf("unable to read bucket for "+
-					"chain=%x", chainHash[:])
-			}
-
-			// Finally, we both of the necessary buckets retrieved,
-			// fetch all the active channels related to this node.
-			nodeChannels, err := d.fetchNodeChannels(chainBucket)
-			if err != nil {
-				return fmt.Errorf("unable to read channel for "+
-					"chain_hash=%x, node_key=%x: %v",
-					chainHash[:], pub, err)
-			}
-
-			channels = nodeChannels
-			return nil
-		})
+		channels = nodeChannels
+		return nil
 	})
 
 	return channels, err
@@ -583,7 +597,56 @@ func (d *DB) MarkChanFullyClosed(chanPoint *wire.OutPoint) error {
 			return err
 		}
 
-		return closedChanBucket.Put(chanID, newSummary.Bytes())
+		err = closedChanBucket.Put(chanID, newSummary.Bytes())
+		if err != nil {
+			return err
+		}
+
+		// Now that the channel is closed, we'll check if we have any
+		// other open channels with this peer. If we don't we'll
+		// garbage collect it to ensure we don't establish persistent
+		// connections to peers without open channels.
+		return d.pruneLinkNode(tx, chanSummary.RemotePub)
+	})
+}
+
+// pruneLinkNode determines whether we should garbage collect a link node from
+// the database due to no longer having any open channels with it. If there are
+// any left, then this acts as a no-op.
+func (db *DB) pruneLinkNode(tx *bolt.Tx, remotePub *btcec.PublicKey) error {
+	openChannels, err := db.fetchOpenChannels(tx, remotePub)
+	if err != nil {
+		return fmt.Errorf("unable to fetch open channels for peer %x: "+
+			"%v", remotePub.SerializeCompressed(), err)
+	}
+
+	if len(openChannels) > 0 {
+		return nil
+	}
+
+	log.Infof("Pruning link node %x with zero open channels from database",
+		remotePub.SerializeCompressed())
+
+	return db.deleteLinkNode(tx, remotePub)
+}
+
+// PruneLinkNodes attempts to prune all link nodes found within the databse with
+// whom we no longer have any open channels with.
+func (db *DB) PruneLinkNodes() error {
+	return db.Update(func(tx *bolt.Tx) error {
+		linkNodes, err := db.fetchAllLinkNodes(tx)
+		if err != nil {
+			return err
+		}
+
+		for _, linkNode := range linkNodes {
+			err := db.pruneLinkNode(tx, linkNode.IdentityPub)
+			if err != nil {
+				return err
+			}
+		}
+
+		return nil
 	})
 }
 
diff --git a/channeldb/graph.go b/channeldb/graph.go
index 886ceee4..920193aa 100644
--- a/channeldb/graph.go
+++ b/channeldb/graph.go
@@ -259,27 +259,12 @@ func (c *ChannelGraph) ForEachNode(tx *bolt.Tx, cb func(*bolt.Tx, *LightningNode
 func (c *ChannelGraph) SourceNode() (*LightningNode, error) {
 	var source *LightningNode
 	err := c.db.View(func(tx *bolt.Tx) error {
-		// First grab the nodes bucket which stores the mapping from
-		// pubKey to node information.
-		nodes := tx.Bucket(nodeBucket)
-		if nodes == nil {
-			return ErrGraphNotFound
-		}
-
-		selfPub := nodes.Get(sourceKey)
-		if selfPub == nil {
-			return ErrSourceNodeNotSet
-		}
-
-		// With the pubKey of the source node retrieved, we're able to
-		// fetch the full node information.
-		node, err := fetchLightningNode(nodes, selfPub)
+		node, err := c.sourceNode(tx)
 		if err != nil {
 			return err
 		}
+		source = node
 
-		source = &node
-		source.db = c.db
 		return nil
 	})
 	if err != nil {
@@ -289,6 +274,34 @@ func (c *ChannelGraph) SourceNode() (*LightningNode, error) {
 	return source, nil
 }
 
+// sourceNode uses an existing database transaction and returns the source node
+// of the graph. The source node is treated as the center node within a
+// star-graph. This method may be used to kick off a path finding algorithm in
+// order to explore the reachability of another node based off the source node.
+func (c *ChannelGraph) sourceNode(tx *bolt.Tx) (*LightningNode, error) {
+	// First grab the nodes bucket which stores the mapping from
+	// pubKey to node information.
+	nodes := tx.Bucket(nodeBucket)
+	if nodes == nil {
+		return nil, ErrGraphNotFound
+	}
+
+	selfPub := nodes.Get(sourceKey)
+	if selfPub == nil {
+		return nil, ErrSourceNodeNotSet
+	}
+
+	// With the pubKey of the source node retrieved, we're able to
+	// fetch the full node information.
+	node, err := fetchLightningNode(nodes, selfPub)
+	if err != nil {
+		return nil, err
+	}
+	node.db = c.db
+
+	return &node, nil
+}
+
 // SetSourceNode sets the source node within the graph database. The source
 // node is to be used as the center of a star-graph within path finding
 // algorithms.
@@ -384,30 +397,36 @@ func (c *ChannelGraph) LookupAlias(pub *btcec.PublicKey) (string, error) {
 	return alias, nil
 }
 
-// DeleteLightningNode removes a vertex/node from the database according to the
-// node's public key.
+// DeleteLightningNode starts a new database transaction to remove a vertex/node
+// from the database according to the node's public key.
 func (c *ChannelGraph) DeleteLightningNode(nodePub *btcec.PublicKey) error {
-	pub := nodePub.SerializeCompressed()
-
 	// TODO(roasbeef): ensure dangling edges are removed...
 	return c.db.Update(func(tx *bolt.Tx) error {
-		nodes, err := tx.CreateBucketIfNotExists(nodeBucket)
-		if err != nil {
-			return err
-		}
-
-		aliases, err := tx.CreateBucketIfNotExists(aliasIndexBucket)
-		if err != nil {
-			return err
-		}
-
-		if err := aliases.Delete(pub); err != nil {
-			return err
-		}
-		return nodes.Delete(pub)
+		return c.deleteLightningNode(tx, nodePub.SerializeCompressed())
 	})
 }
 
+// deleteLightningNode uses an existing database transaction to remove a
+// vertex/node from the database according to the node's public key.
+func (c *ChannelGraph) deleteLightningNode(tx *bolt.Tx,
+	compressedPubKey []byte) error {
+
+	nodes := tx.Bucket(nodeBucket)
+	if nodes == nil {
+		return ErrGraphNodesNotFound
+	}
+
+	aliases := nodes.Bucket(aliasIndexBucket)
+	if aliases == nil {
+		return ErrGraphNodesNotFound
+	}
+
+	if err := aliases.Delete(compressedPubKey); err != nil {
+		return err
+	}
+	return nodes.Delete(compressedPubKey)
+}
+
 // AddChannelEdge adds a new (undirected, blank) edge to the graph database. An
 // undirected edge from the two target nodes are created. The information
 // stored denotes the static attributes of the channel, such as the channelID,
@@ -569,6 +588,13 @@ func (c *ChannelGraph) PruneGraph(spentOutputs []*wire.OutPoint,
 
 	var chansClosed []*ChannelEdgeInfo
 
+	// nodesWithChansClosed is the set of nodes, each identified by their
+	// compressed public key, who had a channel closed within the latest
+	// block. We'll use this later on to determine whether we should prune
+	// them from the channel graph due to no longer having any other open
+	// channels.
+	nodesWithChansClosed := make(map[[33]byte]struct{})
+
 	err := c.db.Update(func(tx *bolt.Tx) error {
 		// First grab the edges bucket which houses the information
 		// we'd like to delete
@@ -617,7 +643,6 @@ func (c *ChannelGraph) PruneGraph(spentOutputs []*wire.OutPoint,
 			if err != nil {
 				return err
 			}
-			chansClosed = append(chansClosed, &edgeInfo)
 
 			// Attempt to delete the channel, an ErrEdgeNotFound
 			// will be returned if that outpoint isn't known to be
@@ -629,6 +654,12 @@ func (c *ChannelGraph) PruneGraph(spentOutputs []*wire.OutPoint,
 			if err != nil && err != ErrEdgeNotFound {
 				return err
 			}
+
+			// Include this channel in our list of closed channels
+			// and collect the node public keys at each end.
+			chansClosed = append(chansClosed, &edgeInfo)
+			nodesWithChansClosed[edgeInfo.NodeKey1Bytes] = struct{}{}
+			nodesWithChansClosed[edgeInfo.NodeKey2Bytes] = struct{}{}
 		}
 
 		metaBucket, err := tx.CreateBucketIfNotExists(graphMetaBucket)
@@ -650,7 +681,15 @@ func (c *ChannelGraph) PruneGraph(spentOutputs []*wire.OutPoint,
 		var newTip [pruneTipBytes]byte
 		copy(newTip[:], blockHash[:])
 
-		return pruneBucket.Put(blockHeightBytes[:], newTip[:])
+		err = pruneBucket.Put(blockHeightBytes[:], newTip[:])
+		if err != nil {
+			return err
+		}
+
+		// Now that the graph has been pruned, we'll also attempt to
+		// prune any nodes that have had a channel closed within the
+		// latest block.
+		return c.pruneGraphNodes(tx, nodes, nodesWithChansClosed)
 	})
 	if err != nil {
 		return nil, err
@@ -659,6 +698,58 @@ func (c *ChannelGraph) PruneGraph(spentOutputs []*wire.OutPoint,
 	return chansClosed, nil
 }
 
+// pruneGraphNodes attempts to remove any nodes from the graph who have had a
+// channel closed within the current block. If the node still has existing
+// channels in the graph, this will act as a no-op.
+func (c *ChannelGraph) pruneGraphNodes(tx *bolt.Tx, nodes *bolt.Bucket,
+	nodePubKeys map[[33]byte]struct{}) error {
+
+	log.Trace("Pruning nodes from graph with no open channels")
+
+	// We'll retrieve the graph's source node to ensure we don't remove it
+	// even if it no longer has any open channels.
+	sourceNode, err := c.sourceNode(tx)
+	if err != nil {
+		return err
+	}
+
+	// We'll now iterate over every node which had a channel closed and
+	// check whether they have any other open channels left within the
+	// graph. If they don't, they'll be pruned from the channel graph.
+	for nodePubKey := range nodePubKeys {
+		if bytes.Equal(nodePubKey[:], sourceNode.PubKeyBytes[:]) {
+			continue
+		}
+
+		node, err := fetchLightningNode(nodes, nodePubKey[:])
+		if err != nil {
+			continue
+		}
+		node.db = c.db
+
+		numChansLeft := 0
+		err = node.ForEachChannel(tx, func(*bolt.Tx, *ChannelEdgeInfo,
+			*ChannelEdgePolicy, *ChannelEdgePolicy) error {
+
+			numChansLeft++
+			return nil
+		})
+		if err != nil {
+			continue
+		}
+
+		if numChansLeft == 0 {
+			err := c.deleteLightningNode(tx, nodePubKey[:])
+			if err != nil {
+				log.Tracef("Unable to prune node %x from the "+
+					"graph: %v", nodePubKey, err)
+			}
+		}
+	}
+
+	return nil
+}
+
 // DisconnectBlockAtHeight is used to indicate that the block specified
 // by the passed height has been disconnected from the main chain. This
 // will "rewind" the graph back to the height below, deleting channels
diff --git a/channeldb/graph_test.go b/channeldb/graph_test.go
index 4f7756fb..2533a66a 100644
--- a/channeldb/graph_test.go
+++ b/channeldb/graph_test.go
@@ -421,6 +421,13 @@ func TestDisconnectBlockAtHeight(t *testing.T) {
 	}
 
 	graph := db.ChannelGraph()
+	sourceNode, err := createTestVertex(db)
+	if err != nil {
+		t.Fatalf("unable to create source node: %v", err)
+	}
+	if err := graph.SetSourceNode(sourceNode); err != nil {
+		t.Fatalf("unable to set source node: %v", err)
+	}
 
 	// We'd like to test the insertion/deletion of edges, so we create two
 	// vertexes to connect.
@@ -964,7 +971,7 @@ func assertNumChans(t *testing.T, graph *ChannelGraph, n int) {
 		return nil
 	}); err != nil {
 		_, _, line, _ := runtime.Caller(1)
-		t.Fatalf("line %v:unable to scan channels: %v", line, err)
+		t.Fatalf("line %v: unable to scan channels: %v", line, err)
 	}
 	if numChans != n {
 		_, _, line, _ := runtime.Caller(1)
@@ -973,6 +980,23 @@ func assertNumChans(t *testing.T, graph *ChannelGraph, n int) {
 	}
 }
 
+func assertNumNodes(t *testing.T, graph *ChannelGraph, n int) {
+	numNodes := 0
+	err := graph.ForEachNode(nil, func(_ *bolt.Tx, _ *LightningNode) error {
+		numNodes++
+		return nil
+	})
+	if err != nil {
+		_, _, line, _ := runtime.Caller(1)
+		t.Fatalf("line %v: unable to scan nodes: %v", line, err)
+	}
+
+	if numNodes != n {
+		_, _, line, _ := runtime.Caller(1)
+		t.Fatalf("line %v: expected %v nodes, got %v", line, n, numNodes)
+	}
+}
+
 func assertChanViewEqual(t *testing.T, a []wire.OutPoint, b []*wire.OutPoint) {
 	if len(a) != len(b) {
 		_, _, line, _ := runtime.Caller(1)
@@ -1003,6 +1027,13 @@ func TestGraphPruning(t *testing.T) {
 	}
 
 	graph := db.ChannelGraph()
+	sourceNode, err := createTestVertex(db)
+	if err != nil {
+		t.Fatalf("unable to create source node: %v", err)
+	}
+	if err := graph.SetSourceNode(sourceNode); err != nil {
+		t.Fatalf("unable to set source node: %v", err)
+	}
 
 	// As initial set up for the test, we'll create a graph with 5 vertexes
 	// and enough edges to create a fully connected graph. The graph will
@@ -1137,9 +1168,11 @@ func TestGraphPruning(t *testing.T) {
 		t.Fatalf("channels were pruned but shouldn't have been")
 	}
 
-	// Once again, the prune tip should have been updated.
+	// Once again, the prune tip should have been updated. We should still
+	// see both channels and their participants, along with the source node.
 	assertPruneTip(t, graph, &blockHash, blockHeight)
 	assertNumChans(t, graph, 2)
+	assertNumNodes(t, graph, 4)
 
 	// Finally, create a block that prunes the remainder of the channels
 	// from the graph.
@@ -1159,10 +1192,11 @@ func TestGraphPruning(t *testing.T) {
 			"expected %v, got %v", 2, len(prunedChans))
 	}
 
-	// The prune tip should be updated, and no channels should be found
-	// within the current graph.
+	// The prune tip should be updated, no channels should be found, and
+	// only the source node should remain within the current graph.
 	assertPruneTip(t, graph, &blockHash, blockHeight)
 	assertNumChans(t, graph, 0)
+	assertNumNodes(t, graph, 1)
 
 	// Finally, the channel view at this point in the graph should now be
 	// completely empty.  Those channels should also be missing from the
@@ -1888,6 +1922,13 @@ func TestChannelEdgePruningUpdateIndexDeletion(t *testing.T) {
 	}
 
 	graph := db.ChannelGraph()
+	sourceNode, err := createTestVertex(db)
+	if err != nil {
+		t.Fatalf("unable to create source node: %v", err)
+	}
+	if err := graph.SetSourceNode(sourceNode); err != nil {
+		t.Fatalf("unable to set source node: %v", err)
+	}
 
 	// We'll first populate our graph with two nodes. All channels created
 	// below will be made between these two nodes.
diff --git a/channeldb/nodes.go b/channeldb/nodes.go
index 3b1e7fee..59c67d41 100644
--- a/channeldb/nodes.go
+++ b/channeldb/nodes.go
@@ -6,9 +6,9 @@ import (
 	"net"
 	"time"
 
-	"github.com/coreos/bbolt"
 	"github.com/btcsuite/btcd/btcec"
 	"github.com/btcsuite/btcd/wire"
+	"github.com/coreos/bbolt"
 )
 
 var (
@@ -127,6 +127,24 @@ func putLinkNode(nodeMetaBucket *bolt.Bucket, l *LinkNode) error {
 	return nodeMetaBucket.Put(nodePub, b.Bytes())
 }
 
+// DeleteLinkNode removes the link node with the given identity from the
+// database.
+func (d *DB) DeleteLinkNode(identity *btcec.PublicKey) error {
+	return d.Update(func(tx *bolt.Tx) error {
+		return d.deleteLinkNode(tx, identity)
+	})
+}
+
+func (d *DB) deleteLinkNode(tx *bolt.Tx, identity *btcec.PublicKey) error {
+	nodeMetaBucket := tx.Bucket(nodeInfoBucket)
+	if nodeMetaBucket == nil {
+		return ErrLinkNodesNotFound
+	}
+
+	pubKey := identity.SerializeCompressed()
+	return nodeMetaBucket.Delete(pubKey)
+}
+
 // FetchLinkNode attempts to lookup the data for a LinkNode based on a target
 // identity public key. If a particular LinkNode for the passed identity public
 // key cannot be found, then ErrNodeNotFound if returned.
@@ -165,32 +183,48 @@ func (db *DB) FetchLinkNode(identity *btcec.PublicKey) (*LinkNode, error) {
 	return node, nil
 }
 
-// FetchAllLinkNodes attempts to fetch all active LinkNodes from the database.
-// If there haven't been any channels explicitly linked to LinkNodes written to
-// the database, then this function will return an empty slice.
+// FetchAllLinkNodes starts a new database transaction to fetch all nodes with
+// whom we have active channels with.
 func (db *DB) FetchAllLinkNodes() ([]*LinkNode, error) {
 	var linkNodes []*LinkNode
-
 	err := db.View(func(tx *bolt.Tx) error {
-		nodeMetaBucket := tx.Bucket(nodeInfoBucket)
-		if nodeMetaBucket == nil {
-			return ErrLinkNodesNotFound
+		nodes, err := db.fetchAllLinkNodes(tx)
+		if err != nil {
+			return err
 		}
 
-		return nodeMetaBucket.ForEach(func(k, v []byte) error {
-			if v == nil {
-				return nil
-			}
+		linkNodes = nodes
+		return nil
+	})
+	if err != nil {
+		return nil, err
+	}
 
-			nodeReader := bytes.NewReader(v)
-			linkNode, err := deserializeLinkNode(nodeReader)
-			if err != nil {
-				return err
-			}
+	return linkNodes, nil
+}
 
-			linkNodes = append(linkNodes, linkNode)
+// fetchAllLinkNodes uses an existing database transaction to fetch all nodes
+// with whom we have active channels with.
+func (db *DB) fetchAllLinkNodes(tx *bolt.Tx) ([]*LinkNode, error) {
+	nodeMetaBucket := tx.Bucket(nodeInfoBucket)
+	if nodeMetaBucket == nil {
+		return nil, ErrLinkNodesNotFound
+	}
+
+	var linkNodes []*LinkNode
+	err := nodeMetaBucket.ForEach(func(k, v []byte) error {
+		if v == nil {
 			return nil
-		})
+		}
+
+		nodeReader := bytes.NewReader(v)
+		linkNode, err := deserializeLinkNode(nodeReader)
+		if err != nil {
+			return err
+		}
+
+		linkNodes = append(linkNodes, linkNode)
+		return nil
 	})
 	if err != nil {
 		return nil, err
diff --git a/channeldb/nodes_test.go b/channeldb/nodes_test.go
index 7f968efe..755177aa 100644
--- a/channeldb/nodes_test.go
+++ b/channeldb/nodes_test.go
@@ -106,3 +106,35 @@ func TestLinkNodeEncodeDecode(t *testing.T) {
 			addr2.String(), node1DB.Addresses[1].String())
 	}
 }
+
+func TestDeleteLinkNode(t *testing.T) {
+	t.Parallel()
+
+	cdb, cleanUp, err := makeTestDB()
+	if err != nil {
+		t.Fatalf("unable to make test database: %v", err)
+	}
+	defer cleanUp()
+
+	_, pubKey := btcec.PrivKeyFromBytes(btcec.S256(), key[:])
+	addr := &net.TCPAddr{
+		IP:   net.ParseIP("127.0.0.1"),
+		Port: 1337,
+	}
+	linkNode := cdb.NewLinkNode(wire.TestNet3, pubKey, addr)
+	if err := linkNode.Sync(); err != nil {
+		t.Fatalf("unable to write link node to db: %v", err)
+	}
+
+	if _, err := cdb.FetchLinkNode(pubKey); err != nil {
+		t.Fatalf("unable to find link node: %v", err)
+	}
+
+	if err := cdb.DeleteLinkNode(pubKey); err != nil {
+		t.Fatalf("unable to delete link node from db: %v", err)
+	}
+
+	if _, err := cdb.FetchLinkNode(pubKey); err == nil {
+		t.Fatal("should not have found link node in db, but did")
+	}
+}
diff --git a/contractcourt/chain_arbitrator.go b/contractcourt/chain_arbitrator.go
index 0d8b6b5d..fb5f1c97 100644
--- a/contractcourt/chain_arbitrator.go
+++ b/contractcourt/chain_arbitrator.go
@@ -342,23 +342,6 @@ func (c *ChainArbitrator) Start() error {
 				pCache:    c.cfg.PreimageDB,
 				signer:    c.cfg.Signer,
 				isOurAddr: c.cfg.IsOurAddress,
-				notifyChanClosed: func() error {
-					c.Lock()
-					delete(c.activeChannels, chanPoint)
-
-					chainWatcher, ok := c.activeWatchers[chanPoint]
-					if ok {
-						// Since the chainWatcher is
-						// calling notifyChanClosed, we
-						// must stop it in a goroutine
-						// to not deadlock.
-						go chainWatcher.Stop()
-					}
-					delete(c.activeWatchers, chanPoint)
-					c.Unlock()
-
-					return nil
-				},
 				contractBreach: func(retInfo *lnwallet.BreachRetribution) error {
 					return c.cfg.ContractBreach(chanPoint, retInfo)
 				},
@@ -697,22 +680,6 @@ func (c *ChainArbitrator) WatchNewChannel(newChan *channeldb.OpenChannel) error
 			pCache:    c.cfg.PreimageDB,
 			signer:    c.cfg.Signer,
 			isOurAddr: c.cfg.IsOurAddress,
-			notifyChanClosed: func() error {
-				c.Lock()
-				delete(c.activeChannels, chanPoint)
-
-				chainWatcher, ok := c.activeWatchers[chanPoint]
-				if ok {
-					// Since the chainWatcher is calling
-					// notifyChanClosed, we must stop it in
-					// a goroutine to not deadlock.
-					go chainWatcher.Stop()
-				}
-				delete(c.activeWatchers, chanPoint)
-				c.Unlock()
-
-				return nil
-			},
 			contractBreach: func(retInfo *lnwallet.BreachRetribution) error {
 				return c.cfg.ContractBreach(chanPoint, retInfo)
 			},
diff --git a/contractcourt/chain_watcher.go b/contractcourt/chain_watcher.go
index 8333b52f..1ab959cb 100644
--- a/contractcourt/chain_watcher.go
+++ b/contractcourt/chain_watcher.go
@@ -78,13 +78,6 @@ type chainWatcherConfig struct {
 	// machine.
 	signer lnwallet.Signer
 
-	// notifyChanClosed is a method that will be called by the watcher when
-	// it has detected a close on-chain and performed all necessary
-	// actions, like marking the channel closed in the database and
-	// notified all its subcribers. It lets the chain arbitrator know that
-	// the chain watcher chan be stopped.
-	notifyChanClosed func() error
-
 	// contractBreach is a method that will be called by the watcher if it
 	// detects that a contract breach transaction has been confirmed. Only
 	// when this method returns with a non-nil error it will be safe to mark
@@ -492,16 +485,7 @@ func (c *chainWatcher) dispatchCooperativeClose(commitSpend *chainntnfs.SpendDet
 	}
 	c.Unlock()
 
-	// Now notify the ChainArbitrator that the watcher's job is done, such
-	// that it can shut it down and clean up.
-	if err := c.cfg.notifyChanClosed(); err != nil {
-		log.Errorf("unable to notify channel closed for "+
-			"ChannelPoint(%v): %v",
-			c.cfg.chanState.FundingOutpoint, err)
-	}
-
 	return nil
-
 }
 
 // dispatchLocalForceClose processes a unilateral close by us being confirmed.
diff --git a/contractcourt/channel_arbitrator.go b/contractcourt/channel_arbitrator.go
index b80995b9..3d96d51b 100644
--- a/contractcourt/channel_arbitrator.go
+++ b/contractcourt/channel_arbitrator.go
@@ -1364,10 +1364,16 @@ func (c *ChannelArbitrator) channelAttendant(bestHeight int32) {
 			)
 
 		// We've cooperatively closed the channel, so we're no longer
-		// needed.
+		// needed. We'll mark the channel as resolved and exit.
 		case <-c.cfg.ChainEvents.CooperativeClosure:
 			log.Infof("ChannelArbitrator(%v) closing due to co-op "+
 				"closure", c.cfg.ChanPoint)
+
+			if err := c.cfg.MarkChannelResolved(); err != nil {
+				log.Errorf("Unable to mark contract "+
+					"resolved: %v", err)
+			}
+
 			return
 
 		// We have broadcasted our commitment, and it is now confirmed
diff --git a/lnd_test.go b/lnd_test.go
index 8f2a9beb..f3a34503 100644
--- a/lnd_test.go
+++ b/lnd_test.go
@@ -22,18 +22,18 @@ import (
 	"crypto/sha256"
 	prand "math/rand"
 
-	"github.com/btcsuite/btclog"
-	"github.com/davecgh/go-spew/spew"
-	"github.com/go-errors/errors"
-	"github.com/lightningnetwork/lnd/lnrpc"
-	"github.com/lightningnetwork/lnd/lntest"
-	"github.com/lightningnetwork/lnd/lnwire"
 	"github.com/btcsuite/btcd/chaincfg"
 	"github.com/btcsuite/btcd/chaincfg/chainhash"
 	"github.com/btcsuite/btcd/integration/rpctest"
 	"github.com/btcsuite/btcd/rpcclient"
 	"github.com/btcsuite/btcd/wire"
+	"github.com/btcsuite/btclog"
 	"github.com/btcsuite/btcutil"
+	"github.com/davecgh/go-spew/spew"
+	"github.com/go-errors/errors"
+	"github.com/lightningnetwork/lnd/lnrpc"
+	"github.com/lightningnetwork/lnd/lntest"
+	"github.com/lightningnetwork/lnd/lnwire"
 	"golang.org/x/net/context"
 	"google.golang.org/grpc"
 )
@@ -2809,7 +2809,7 @@ func updateChannelPolicy(t *harnessTest, node *lntest.HarnessNode,
 
 	// Wait for listener node to receive the channel update from node.
 	ctxt, _ = context.WithTimeout(ctxb, timeout)
-	listenerUpdates, aQuit := subscribeGraphNotifications(t, ctxt, 
+	listenerUpdates, aQuit := subscribeGraphNotifications(t, ctxt,
 		listenerNode)
 	defer close(aQuit)
 
@@ -2980,8 +2980,8 @@ func testMultiHopPayments(net *lntest.NetworkHarness, t *harnessTest) {
 
 	time.Sleep(time.Millisecond * 50)
 
-	// Set the fee policies of the Alice -> Bob and the Dave -> Alice 
-	// channel edges to relatively large non default values. This makes it 
+	// Set the fee policies of the Alice -> Bob and the Dave -> Alice
+	// channel edges to relatively large non default values. This makes it
 	// possible to pick up more subtle fee calculation errors.
 	updateChannelPolicy(t, net.Alice, chanPointAlice, 1000, 100000,
 		144, carol)
@@ -3017,10 +3017,10 @@ func testMultiHopPayments(net *lntest.NetworkHarness, t *harnessTest) {
 	assertAmountPaid(t, ctxb, "Alice(local) => Bob(remote)", net.Alice,
 		aliceFundPoint, expectedAmountPaidAtoB, int64(0))
 
-	// To forward a payment of 1000 sat, Alice is charging a fee of 
+	// To forward a payment of 1000 sat, Alice is charging a fee of
 	// 1 sat + 10% = 101 sat.
 	const expectedFeeAlice = 5 * 101
-	
+
 	// Dave needs to pay what Alice pays plus Alice's fee.
 	expectedAmountPaidDtoA := expectedAmountPaidAtoB + expectedFeeAlice
 
@@ -3029,7 +3029,7 @@ func testMultiHopPayments(net *lntest.NetworkHarness, t *harnessTest) {
 	assertAmountPaid(t, ctxb, "Dave(local) => Alice(remote)", dave,
 		daveFundPoint, expectedAmountPaidDtoA, int64(0))
 
-	// To forward a payment of 1101 sat, Dave is charging a fee of 
+	// To forward a payment of 1101 sat, Dave is charging a fee of
 	// 5 sat + 15% = 170.15 sat. This is rounded down in rpcserver to 170.
 	const expectedFeeDave = 5 * 170
 
@@ -4900,6 +4900,191 @@ func testFailingChannel(net *lntest.NetworkHarness, t *harnessTest) {
 	}
 }
 
+// testGarbageCollectLinkNodes tests that we properly garbase collect link nodes
+// from the database and the set of persistent connections within the server.
+func testGarbageCollectLinkNodes(net *lntest.NetworkHarness, t *harnessTest) {
+	const (
+		timeout = time.Second * 10
+		chanAmt = 1000000
+	)
+
+	// Open a channel between Alice and Bob which will later be
+	// cooperatively closed.
+	ctxb := context.Background()
+	ctxt, _ := context.WithTimeout(ctxb, timeout)
+	coopChanPoint := openChannelAndAssert(
+		ctxt, t, net, net.Alice, net.Bob, chanAmt, 0, false,
+	)
+
+	// Create Carol's node and connect Alice to her.
+	carol, err := net.NewNode("Carol", nil)
+	if err != nil {
+		t.Fatalf("unable to create carol's node: %v", err)
+	}
+	defer shutdownAndAssert(net, t, carol)
+	ctxt, _ = context.WithTimeout(ctxb, timeout)
+	if err := net.ConnectNodes(ctxt, net.Alice, carol); err != nil {
+		t.Fatalf("unable to connect alice and carol: %v", err)
+	}
+
+	// Open a channel between Alice and Carol which will later be force
+	// closed.
+	ctxt, _ = context.WithTimeout(ctxb, timeout)
+	forceCloseChanPoint := openChannelAndAssert(
+		ctxt, t, net, net.Alice, carol, chanAmt, 0, false,
+	)
+
+	// Now, create Dave's a node and also open a channel between Alice and
+	// him. This link will serve as the only persistent link throughout
+	// restarts in this test.
+	dave, err := net.NewNode("Dave", nil)
+	if err != nil {
+		t.Fatalf("unable to create dave's node: %v", err)
+	}
+	defer shutdownAndAssert(net, t, dave)
+	if err := net.ConnectNodes(ctxt, net.Alice, dave); err != nil {
+		t.Fatalf("unable to connect alice to dave: %v", err)
+	}
+	ctxt, _ = context.WithTimeout(ctxb, timeout)
+	persistentChanPoint := openChannelAndAssert(
+		ctxt, t, net, net.Alice, dave, chanAmt, 0, false,
+	)
+
+	// isConnected is a helper closure that checks if a peer is connected to
+	// Alice.
+	isConnected := func(pubKey string) bool {
+		req := &lnrpc.ListPeersRequest{}
+		resp, err := net.Alice.ListPeers(ctxb, req)
+		if err != nil {
+			t.Fatalf("unable to retrieve alice's peers: %v", err)
+		}
+
+		for _, peer := range resp.Peers {
+			if peer.PubKey == pubKey {
+				return true
+			}
+		}
+
+		return false
+	}
+
+	// Restart both Bob and Carol to ensure Alice is able to reconnect to
+	// them.
+	if err := net.RestartNode(net.Bob, nil); err != nil {
+		t.Fatalf("unable to restart bob's node: %v", err)
+	}
+	if err := net.RestartNode(carol, nil); err != nil {
+		t.Fatalf("unable to restart carol's node: %v", err)
+	}
+
+	err = lntest.WaitPredicate(func() bool {
+		return isConnected(net.Bob.PubKeyStr)
+	}, 15*time.Second)
+	if err != nil {
+		t.Fatalf("alice did not reconnect to bob")
+	}
+	err = lntest.WaitPredicate(func() bool {
+		return isConnected(carol.PubKeyStr)
+	}, 15*time.Second)
+	if err != nil {
+		t.Fatalf("alice did not reconnect to carol")
+	}
+
+	// We'll also restart Alice to ensure she can reconnect to her peers
+	// with open channels.
+	if err := net.RestartNode(net.Alice, nil); err != nil {
+		t.Fatalf("unable to restart alice's node: %v", err)
+	}
+
+	err = lntest.WaitPredicate(func() bool {
+		return isConnected(net.Bob.PubKeyStr)
+	}, 15*time.Second)
+	if err != nil {
+		t.Fatalf("alice did not reconnect to bob")
+	}
+	err = lntest.WaitPredicate(func() bool {
+		return isConnected(carol.PubKeyStr)
+	}, 15*time.Second)
+	if err != nil {
+		t.Fatalf("alice did not reconnect to carol")
+	}
+
+	// testReconnection is a helper closure that restarts the nodes at both
+	// ends of a channel to ensure they do not reconnect after restarting.
+	// When restarting Alice, we'll first need to ensure she has
+	// reestablished her connection with Dave, as they still have an open
+	// channel together.
+	testReconnection := func(node *lntest.HarnessNode) {
+		if err := net.RestartNode(node, nil); err != nil {
+			t.Fatalf("unable to restart %v's node: %v", node.Name(),
+				err)
+		}
+		err = lntest.WaitPredicate(func() bool {
+			return !isConnected(node.PubKeyStr)
+		}, 20*time.Second)
+		if err != nil {
+			t.Fatalf("alice reconnected to %v", node.Name())
+		}
+
+		if err := net.RestartNode(net.Alice, nil); err != nil {
+			t.Fatalf("unable to restart alice's node: %v", err)
+		}
+		err = lntest.WaitPredicate(func() bool {
+			if !isConnected(dave.PubKeyStr) {
+				return false
+			}
+			return !isConnected(node.PubKeyStr)
+		}, 20*time.Second)
+		if err != nil {
+			t.Fatalf("alice reconnected to %v", node.Name())
+		}
+	}
+
+	// Now, we'll close the channel between Alice and Bob and ensure there
+	// is no reconnection logic between the both once the channel is fully
+	// closed.
+	ctxt, _ = context.WithTimeout(ctxb, timeout)
+	closeChannelAndAssert(ctxt, t, net, net.Alice, coopChanPoint, false)
+
+	testReconnection(net.Bob)
+
+	// We'll do the same with Alice and Carol, but this time we'll force
+	// close the channel instead.
+	ctxt, _ = context.WithTimeout(ctxb, timeout)
+	closeChannelAndAssert(ctxt, t, net, net.Alice, forceCloseChanPoint, true)
+
+	// We'll need to mine some blocks in order to mark the channel fully
+	// closed.
+	_, err = net.Miner.Node.Generate(defaultBitcoinTimeLockDelta)
+	if err != nil {
+		t.Fatalf("unable to generate blocks: %v", err)
+	}
+
+	testReconnection(carol)
+
+	// Finally, we'll ensure that Bob and Carol no longer show in Alice's
+	// channel graph.
+	describeGraphReq := &lnrpc.ChannelGraphRequest{}
+	channelGraph, err := net.Alice.DescribeGraph(ctxb, describeGraphReq)
+	if err != nil {
+		t.Fatalf("unable to query for alice's channel graph: %v", err)
+	}
+	for _, node := range channelGraph.Nodes {
+		if node.PubKey == net.Bob.PubKeyStr {
+			t.Fatalf("did not expect to find bob in the channel " +
+				"graph, but did")
+		}
+		if node.PubKey == carol.PubKeyStr {
+			t.Fatalf("did not expect to find carol in the channel " +
+				"graph, but did")
+		}
+	}
+
+	// Now that the test is done, we can also close the persistent link.
+	ctxt, _ = context.WithTimeout(ctxb, timeout)
+	closeChannelAndAssert(ctxt, t, net, net.Alice, persistentChanPoint, false)
+}
+
 // testRevokedCloseRetribution tests that Alice is able carry out
 // retribution in the event that she fails immediately after detecting Bob's
 // breach txn in the mempool.
@@ -10324,6 +10509,10 @@ var testsCases = []*testCase{
 		name: "failing link",
 		test: testFailingChannel,
 	},
+	{
+		name: "garbage collect link nodes",
+		test: testGarbageCollectLinkNodes,
+	},
 	{
 		name: "revoked uncooperative close retribution zero value remote output",
 		test: testRevokedCloseRetributionZeroValueRemoteOutput,
@@ -10422,6 +10611,14 @@ func TestLightningNetworkDaemon(t *testing.T) {
 	for _, testCase := range testsCases {
 		logLine := fmt.Sprintf("STARTING ============ %v ============\n",
 			testCase.name)
+
+		err := lndHarness.EnsureConnected(
+			context.Background(), lndHarness.Alice, lndHarness.Bob,
+		)
+		if err != nil {
+			t.Fatalf("unable to connect alice to bob: %v", err)
+		}
+
 		if err := lndHarness.Alice.AddToLog(logLine); err != nil {
 			t.Fatalf("unable to add to log: %v", err)
 		}
diff --git a/peer.go b/peer.go
index e1113c24..3b92cc8c 100644
--- a/peer.go
+++ b/peer.go
@@ -1697,9 +1697,6 @@ func (p *peer) fetchActiveChanCloser(chanID lnwire.ChannelID) (*channelCloser, e
 
 // handleLocalCloseReq kicks-off the workflow to execute a cooperative or
 // forced unilateral closure of the channel initiated by a local subsystem.
-//
-// TODO(roasbeef): if no more active channels with peer call Remove on connMgr
-// with peerID
 func (p *peer) handleLocalCloseReq(req *htlcswitch.ChanClose) {
 	chanID := lnwire.NewChanIDFromOutPoint(req.ChanPoint)
 
@@ -1852,6 +1849,18 @@ func (p *peer) finalizeChanClosure(chanCloser *channelCloser) {
 					},
 				}
 			}
+
+			// Remove the persistent connection to this peer if we
+			// no longer have open channels with them.
+			p.activeChanMtx.Lock()
+			numActiveChans := len(p.activeChannels)
+			p.activeChanMtx.Unlock()
+
+			if numActiveChans == 0 {
+				p.server.prunePersistentPeerConnection(
+					p.pubKeyBytes,
+				)
+			}
 		})
 }
 
@@ -1905,6 +1914,9 @@ func (p *peer) WipeChannel(chanPoint *wire.OutPoint) error {
 	if channel, ok := p.activeChannels[chanID]; ok {
 		channel.Stop()
 		delete(p.activeChannels, chanID)
+		if len(p.activeChannels) == 0 {
+			p.server.prunePersistentPeerConnection(p.pubKeyBytes)
+		}
 	}
 	p.activeChanMtx.Unlock()
 
diff --git a/server.go b/server.go
index cd979aa5..805d3788 100644
--- a/server.go
+++ b/server.go
@@ -759,7 +759,12 @@ func (s *server) Start() error {
 
 	// With all the relevant sub-systems started, we'll now attempt to
 	// establish persistent connections to our direct channel collaborators
-	// within the network.
+	// within the network. Before doing so however, we'll prune our set of
+	// link nodes found within the database to ensure we don't reconnect to
+	// any nodes we no longer have open channels with.
+	if err := s.chanDB.PruneLinkNodes(); err != nil {
+		return err
+	}
 	if err := s.establishPersistentConnections(); err != nil {
 		return err
 	}
@@ -1476,6 +1481,22 @@ func (s *server) establishPersistentConnections() error {
 	return nil
 }
 
+// prunePersistentPeerConnection removes all internal state related to
+// persistent connections to a peer within the server. This is used to avoid
+// persistent connection retries to peers we do not have any open channels with.
+func (s *server) prunePersistentPeerConnection(compressedPubKey [33]byte) {
+	srvrLog.Infof("Pruning peer %x from persistent connections, number of "+
+		"open channels is now zero", compressedPubKey)
+
+	pubKeyStr := string(compressedPubKey[:])
+
+	s.mu.Lock()
+	delete(s.persistentPeers, pubKeyStr)
+	delete(s.persistentPeersBackoff, pubKeyStr)
+	s.cancelConnReqs(pubKeyStr, nil)
+	s.mu.Unlock()
+}
+
 // BroadcastMessage sends a request to the server to broadcast a set of
 // messages to all peers other than the one specified by the `skips` parameter.
 //