diff --git a/channeldb/invoice_test.go b/channeldb/invoice_test.go
index 64e2dbe6..bb118f71 100644
--- a/channeldb/invoice_test.go
+++ b/channeldb/invoice_test.go
@@ -622,9 +622,9 @@ func TestInvoiceAddTimeSeries(t *testing.T) {
 	}
 }
 
-// Tests that FetchAllInvoicesWithPaymentHash returns all invoices with their
-// corresponding payment hashes.
-func TestFetchAllInvoicesWithPaymentHash(t *testing.T) {
+// TestScanInvoices tests that ScanInvoices scans trough all stored invoices
+// correctly.
+func TestScanInvoices(t *testing.T) {
 	t.Parallel()
 
 	db, cleanup, err := MakeTestDB()
@@ -633,97 +633,54 @@ func TestFetchAllInvoicesWithPaymentHash(t *testing.T) {
 		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)
+	var invoices map[lntypes.Hash]*Invoice
+	callCount := 0
+	resetCount := 0
+
+	// reset is used to reset/initialize results and is called once
+	// upon calling ScanInvoices and when the underlying transaction is
+	// retried.
+	reset := func() {
+		invoices = make(map[lntypes.Hash]*Invoice)
+		callCount = 0
+		resetCount++
+
 	}
 
-	if len(empty) != 0 {
-		t.Fatalf("expected empty list as a result, got: %v", empty)
+	scanFunc := func(paymentHash lntypes.Hash, invoice *Invoice) error {
+		invoices[paymentHash] = invoice
+		callCount++
+
+		return nil
 	}
 
-	states := []ContractState{
-		ContractOpen, ContractSettled, ContractCanceled, ContractAccepted,
-	}
+	// With an empty DB we expect to not scan any invoices.
+	require.NoError(t, db.ScanInvoices(scanFunc, reset))
+	require.Equal(t, 0, len(invoices))
+	require.Equal(t, 0, callCount)
+	require.Equal(t, 1, resetCount)
 
-	numInvoices := len(states) * 2
-	testPendingInvoices := make(map[lntypes.Hash]*Invoice)
-	testAllInvoices := make(map[lntypes.Hash]*Invoice)
+	numInvoices := 5
+	testInvoices := make(map[lntypes.Hash]*Invoice)
 
 	// Now populate the DB and check if we can get all invoices with their
 	// payment hashes as expected.
 	for i := 1; i <= numInvoices; i++ {
 		invoice, err := randInvoice(lnwire.MilliSatoshi(i))
-		if err != nil {
-			t.Fatalf("unable to create invoice: %v", err)
-		}
+		require.NoError(t, err)
 
-		// Set the contract state of the next invoice such that there's an equal
-		// number for all possbile states.
-		invoice.State = states[i%len(states)]
 		paymentHash := invoice.Terms.PaymentPreimage.Hash()
+		testInvoices[paymentHash] = invoice
 
-		if invoice.IsPending() {
-			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 require.Equal.
-		pendingInvoices[i].Invoice.AddIndex = 0
-		expected.AddIndex = 0
-
-		require.Equal(t, *expected, 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 require.Equal.
-		allInvoices[i].Invoice.AddIndex = 0
-		expected.AddIndex = 0
-
-		require.Equal(t, *expected, allInvoices[i].Invoice)
+		_, err = db.AddInvoice(invoice, paymentHash)
+		require.NoError(t, err)
 	}
 
+	resetCount = 0
+	require.NoError(t, db.ScanInvoices(scanFunc, reset))
+	require.Equal(t, numInvoices, callCount)
+	require.Equal(t, testInvoices, invoices)
+	require.Equal(t, 1, resetCount)
 }
 
 // TestDuplicateSettleInvoice tests that if we add a new invoice and settle it
@@ -1194,3 +1151,96 @@ func TestInvoiceRef(t *testing.T) {
 	require.Equal(t, payHash, refByHashAndAddr.PayHash())
 	require.Equal(t, &payAddr, refByHashAndAddr.PayAddr())
 }
+
+// TestDeleteInvoices tests that deleting a list of invoices will succeed
+// if all delete references are valid, or will fail otherwise.
+func TestDeleteInvoices(t *testing.T) {
+	t.Parallel()
+
+	db, cleanup, err := MakeTestDB()
+	defer cleanup()
+	require.NoError(t, err, "unable to make test db")
+
+	// Add some invoices to the test db.
+	numInvoices := 3
+	invoicesToDelete := make([]InvoiceDeleteRef, numInvoices)
+
+	for i := 0; i < numInvoices; i++ {
+		invoice, err := randInvoice(lnwire.MilliSatoshi(i + 1))
+		require.NoError(t, err)
+
+		paymentHash := invoice.Terms.PaymentPreimage.Hash()
+		addIndex, err := db.AddInvoice(invoice, paymentHash)
+		require.NoError(t, err)
+
+		// Settle the second invoice.
+		if i == 1 {
+			invoice, err = db.UpdateInvoice(
+				InvoiceRefByHash(paymentHash),
+				getUpdateInvoice(invoice.Terms.Value),
+			)
+			require.NoError(t, err, "unable to settle invoice")
+		}
+
+		// store the delete ref for later.
+		invoicesToDelete[i] = InvoiceDeleteRef{
+			PayHash:     paymentHash,
+			PayAddr:     &invoice.Terms.PaymentAddr,
+			AddIndex:    addIndex,
+			SettleIndex: invoice.SettleIndex,
+		}
+	}
+
+	// assertInvoiceCount asserts that the number of invoices equals
+	// to the passed count.
+	assertInvoiceCount := func(count int) {
+		// Query to collect all invoices.
+		query := InvoiceQuery{
+			IndexOffset:    0,
+			NumMaxInvoices: math.MaxUint64,
+		}
+
+		// Check that we really have 3 invoices.
+		response, err := db.QueryInvoices(query)
+		require.NoError(t, err)
+		require.Equal(t, count, len(response.Invoices))
+	}
+
+	// XOR one byte of one of the references' hash and attempt to delete.
+	invoicesToDelete[0].PayHash[2] ^= 3
+	require.Error(t, db.DeleteInvoice(invoicesToDelete))
+	assertInvoiceCount(3)
+
+	// Restore the hash.
+	invoicesToDelete[0].PayHash[2] ^= 3
+
+	// XOR one byte of one of the references' payment address and attempt
+	// to delete.
+	invoicesToDelete[1].PayAddr[5] ^= 7
+	require.Error(t, db.DeleteInvoice(invoicesToDelete))
+	assertInvoiceCount(3)
+
+	// Restore the payment address.
+	invoicesToDelete[1].PayAddr[5] ^= 7
+
+	// XOR the second invoice's payment settle index as it is settled, and
+	// attempt to delete.
+	invoicesToDelete[1].SettleIndex ^= 11
+	require.Error(t, db.DeleteInvoice(invoicesToDelete))
+	assertInvoiceCount(3)
+
+	// Restore the settle index.
+	invoicesToDelete[1].SettleIndex ^= 11
+
+	// XOR the add index for one of the references and attempt to delete.
+	invoicesToDelete[2].AddIndex ^= 13
+	require.Error(t, db.DeleteInvoice(invoicesToDelete))
+	assertInvoiceCount(3)
+
+	// Restore the add index.
+	invoicesToDelete[2].AddIndex ^= 13
+
+	// Delete should succeed with all the valid references.
+	require.NoError(t, db.DeleteInvoice(invoicesToDelete))
+	assertInvoiceCount(0)
+}
diff --git a/channeldb/invoices.go b/channeldb/invoices.go
index 436f194e..5f7b6462 100644
--- a/channeldb/invoices.go
+++ b/channeldb/invoices.go
@@ -723,28 +723,21 @@ func fetchInvoiceNumByRef(invoiceIndex, payAddrIndex kvdb.RBucket,
 	}
 }
 
-// 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
+// ScanInvoices scans trough all invoices and calls the passed scanFunc for
+// for each invoice with its respective payment hash. Additionally a reset()
+// closure is passed which is used to reset/initialize partial results and also
+// to signal if the kvdb.View transaction has been retried.
+func (d *DB) ScanInvoices(
+	scanFunc func(lntypes.Hash, *Invoice) error, reset func()) error {
 
-	// PaymentHash is the payment hash for the Invoice.
-	PaymentHash lntypes.Hash
-}
+	return kvdb.View(d, func(tx kvdb.RTx) error {
+		// Reset partial results. As transaction commit success is not
+		// guaranteed when using etcd, we need to be prepared to redo
+		// the whole view transaction. In order to be able to do that
+		// we need a way to reset existing results. This is also done
+		// upon first run for initialization.
+		reset()
 
-// FetchAllInvoicesWithPaymentHash returns all invoices and their payment hashes
-// currently stored within the database. If the pendingOnly param is true, then
-// only open or accepted 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 := kvdb.View(d, func(tx kvdb.RTx) error {
 		invoices := tx.ReadBucket(invoiceBucket)
 		if invoices == nil {
 			return ErrNoInvoicesCreated
@@ -775,26 +768,12 @@ func (d *DB) FetchAllInvoicesWithPaymentHash(pendingOnly bool) (
 				return err
 			}
 
-			if pendingOnly && !invoice.IsPending() {
-				return nil
-			}
+			var paymentHash lntypes.Hash
+			copy(paymentHash[:], k)
 
-			invoiceWithPaymentHash := InvoiceWithPaymentHash{
-				Invoice: invoice,
-			}
-
-			copy(invoiceWithPaymentHash.PaymentHash[:], k)
-			result = append(result, invoiceWithPaymentHash)
-
-			return nil
+			return scanFunc(paymentHash, &invoice)
 		})
 	})
-
-	if err != nil {
-		return nil, err
-	}
-
-	return result, nil
 }
 
 // InvoiceQuery represents a query to the invoice database. The query allows a
@@ -1761,3 +1740,134 @@ func setSettleMetaFields(settleIndex kvdb.RwBucket, invoiceNum []byte,
 
 	return nil
 }
+
+// InvoiceDeleteRef holds a refererence to an invoice to be deleted.
+type InvoiceDeleteRef struct {
+	// PayHash is the payment hash of the target invoice. All invoices are
+	// currently indexed by payment hash.
+	PayHash lntypes.Hash
+
+	// PayAddr is the payment addr of the target invoice. Newer invoices
+	// (0.11 and up) are indexed by payment address in addition to payment
+	// hash, but pre 0.8 invoices do not have one at all.
+	PayAddr *[32]byte
+
+	// AddIndex is the add index of the invoice.
+	AddIndex uint64
+
+	// SettleIndex is the settle index of the invoice.
+	SettleIndex uint64
+}
+
+// DeleteInvoice attempts to delete the passed invoices from the database in
+// one transaction. The passed delete references hold all keys required to
+// delete the invoices without also needing to deserialze them.
+func (d *DB) DeleteInvoice(invoicesToDelete []InvoiceDeleteRef) error {
+	err := kvdb.Update(d, func(tx kvdb.RwTx) error {
+		invoices := tx.ReadWriteBucket(invoiceBucket)
+		if invoices == nil {
+			return ErrNoInvoicesCreated
+		}
+
+		invoiceIndex := invoices.NestedReadWriteBucket(
+			invoiceIndexBucket,
+		)
+		if invoiceIndex == nil {
+			return ErrNoInvoicesCreated
+		}
+
+		invoiceAddIndex := invoices.NestedReadWriteBucket(
+			addIndexBucket,
+		)
+		if invoiceAddIndex == nil {
+			return ErrNoInvoicesCreated
+		}
+		// settleIndex can be nil, as the bucket is created lazily
+		// when the first invoice is settled.
+		settleIndex := invoices.NestedReadWriteBucket(settleIndexBucket)
+
+		payAddrIndex := tx.ReadWriteBucket(payAddrIndexBucket)
+
+		for _, ref := range invoicesToDelete {
+			// Fetch the invoice key for using it to check for
+			// consistency and also to delete from the invoice index.
+			invoiceKey := invoiceIndex.Get(ref.PayHash[:])
+			if invoiceKey == nil {
+				return ErrInvoiceNotFound
+			}
+
+			err := invoiceIndex.Delete(ref.PayHash[:])
+			if err != nil {
+				return err
+			}
+
+			// Delete payment address index reference if there's a
+			// valid payment address passed.
+			if ref.PayAddr != nil {
+				// To ensure consistency check that the already
+				// fetched invoice key matches the one in the
+				// payment address index.
+				key := payAddrIndex.Get(ref.PayAddr[:])
+				if !bytes.Equal(key, invoiceKey) {
+					return fmt.Errorf("unknown invoice")
+				}
+
+				// Delete from the payment address index.
+				err := payAddrIndex.Delete(ref.PayAddr[:])
+				if err != nil {
+					return err
+				}
+			}
+
+			var addIndexKey [8]byte
+			byteOrder.PutUint64(addIndexKey[:], ref.AddIndex)
+
+			// To ensure consistency check that the key stored in
+			// the add index also matches the previously fetched
+			// invoice key.
+			key := invoiceAddIndex.Get(addIndexKey[:])
+			if !bytes.Equal(key, invoiceKey) {
+				return fmt.Errorf("unknown invoice")
+			}
+
+			// Remove from the add index.
+			err = invoiceAddIndex.Delete(addIndexKey[:])
+			if err != nil {
+				return err
+			}
+
+			// Remove from the settle index if available and
+			// if the invoice is settled.
+			if settleIndex != nil && ref.SettleIndex > 0 {
+				var settleIndexKey [8]byte
+				byteOrder.PutUint64(
+					settleIndexKey[:], ref.SettleIndex,
+				)
+
+				// To ensure consistency check that the already
+				// fetched invoice key matches the one in the
+				// settle index
+				key := settleIndex.Get(settleIndexKey[:])
+				if !bytes.Equal(key, invoiceKey) {
+					return fmt.Errorf("unknown invoice")
+				}
+
+				err = settleIndex.Delete(settleIndexKey[:])
+				if err != nil {
+					return err
+				}
+			}
+
+			// Finally remove the serialized invoice from the
+			// invoice bucket.
+			err = invoices.Delete(invoiceKey)
+			if err != nil {
+				return err
+			}
+		}
+
+		return nil
+	})
+
+	return err
+}
diff --git a/config.go b/config.go
index 78f76589..06f74979 100644
--- a/config.go
+++ b/config.go
@@ -245,6 +245,10 @@ type Config struct {
 
 	KeysendHoldTime time.Duration `long:"keysend-hold-time" description:"If non-zero, keysend payments are accepted but not immediately settled. If the payment isn't settled manually after the specified time, it is canceled automatically. [experimental]"`
 
+	GcCanceledInvoicesOnStartup bool `long:"gc-canceled-invoices-on-startup" description:"If true, we'll attempt to garbage collect canceled invoices upon start."`
+
+	GcCanceledInvoicesOnTheFly bool `long:"gc-canceled-invoices-on-the-fly" description:"If true, we'll delete newly canceled invoices on the fly."`
+
 	Routing *routing.Conf `group:"routing" namespace:"routing"`
 
 	Workers *lncfg.Workers `group:"workers" namespace:"workers"`
diff --git a/invoices/invoice_expiry_watcher.go b/invoices/invoice_expiry_watcher.go
index f0db08d1..a46f27f5 100644
--- a/invoices/invoice_expiry_watcher.go
+++ b/invoices/invoice_expiry_watcher.go
@@ -48,8 +48,8 @@ type InvoiceExpiryWatcher struct {
 	// invoice to expire.
 	expiryQueue queue.PriorityQueue
 
-	// newInvoices channel is used to wake up the main loop when a new invoices
-	// is added.
+	// newInvoices channel is used to wake up the main loop when a new
+	// invoices is added.
 	newInvoices chan []*invoiceExpiry
 
 	wg sync.WaitGroup
@@ -109,7 +109,8 @@ func (ew *InvoiceExpiryWatcher) prepareInvoice(
 	paymentHash lntypes.Hash, invoice *channeldb.Invoice) *invoiceExpiry {
 
 	if invoice.State != channeldb.ContractOpen {
-		log.Debugf("Invoice not added to expiry watcher: %v", paymentHash)
+		log.Debugf("Invoice not added to expiry watcher: %v",
+			paymentHash)
 		return nil
 	}
 
@@ -128,15 +129,15 @@ func (ew *InvoiceExpiryWatcher) prepareInvoice(
 
 // AddInvoices adds multiple invoices to the InvoiceExpiryWatcher.
 func (ew *InvoiceExpiryWatcher) AddInvoices(
-	invoices []channeldb.InvoiceWithPaymentHash) {
+	invoices map[lntypes.Hash]*channeldb.Invoice) {
 
 	invoicesWithExpiry := make([]*invoiceExpiry, 0, len(invoices))
-	for _, invoiceWithPaymentHash := range invoices {
-		newInvoiceExpiry := ew.prepareInvoice(
-			invoiceWithPaymentHash.PaymentHash, &invoiceWithPaymentHash.Invoice,
-		)
+	for paymentHash, invoice := range invoices {
+		newInvoiceExpiry := ew.prepareInvoice(paymentHash, invoice)
 		if newInvoiceExpiry != nil {
-			invoicesWithExpiry = append(invoicesWithExpiry, newInvoiceExpiry)
+			invoicesWithExpiry = append(
+				invoicesWithExpiry, newInvoiceExpiry,
+			)
 		}
 	}
 
@@ -160,8 +161,8 @@ func (ew *InvoiceExpiryWatcher) AddInvoice(
 
 	newInvoiceExpiry := ew.prepareInvoice(paymentHash, invoice)
 	if newInvoiceExpiry != nil {
-		log.Debugf("Adding invoice '%v' to expiry watcher, expiration: %v",
-			paymentHash, newInvoiceExpiry.Expiry)
+		log.Debugf("Adding invoice '%v' to expiry watcher,"+
+			"expiration: %v", paymentHash, newInvoiceExpiry.Expiry)
 
 		select {
 		case ew.newInvoices <- []*invoiceExpiry{newInvoiceExpiry}:
@@ -202,7 +203,8 @@ func (ew *InvoiceExpiryWatcher) cancelNextExpiredInvoice() {
 		if err != nil && err != channeldb.ErrInvoiceAlreadySettled &&
 			err != channeldb.ErrInvoiceAlreadyCanceled {
 
-			log.Errorf("Unable to cancel invoice: %v", top.PaymentHash)
+			log.Errorf("Unable to cancel invoice: %v",
+				top.PaymentHash)
 		}
 
 		ew.expiryQueue.Pop()
@@ -236,8 +238,8 @@ func (ew *InvoiceExpiryWatcher) mainLoop() {
 				continue
 
 			case invoicesWithExpiry := <-ew.newInvoices:
-				for _, invoiceWithExpiry := range invoicesWithExpiry {
-					ew.expiryQueue.Push(invoiceWithExpiry)
+				for _, invoice := range invoicesWithExpiry {
+					ew.expiryQueue.Push(invoice)
 				}
 
 			case <-ew.quit:
diff --git a/invoices/invoice_expiry_watcher_test.go b/invoices/invoice_expiry_watcher_test.go
index 2aa0f87b..67ea2525 100644
--- a/invoices/invoice_expiry_watcher_test.go
+++ b/invoices/invoice_expiry_watcher_test.go
@@ -37,7 +37,9 @@ func newInvoiceExpiryWatcherTest(t *testing.T, now time.Time,
 	err := test.watcher.Start(func(paymentHash lntypes.Hash,
 		force bool) error {
 
-		test.canceledInvoices = append(test.canceledInvoices, paymentHash)
+		test.canceledInvoices = append(
+			test.canceledInvoices, paymentHash,
+		)
 		test.wg.Done()
 		return nil
 	})
@@ -70,7 +72,8 @@ func (t *invoiceExpiryWatcherTest) checkExpectations() {
 	// 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))
+			len(t.testData.expiredInvoices),
+			len(t.canceledInvoices))
 	}
 
 	for i := range t.canceledInvoices {
@@ -155,24 +158,14 @@ func TestInvoiceExpiryWhenAddingMultipleInvoices(t *testing.T) {
 	t.Parallel()
 
 	test := newInvoiceExpiryWatcherTest(t, testTime, 5, 5)
-	var invoices []channeldb.InvoiceWithPaymentHash
+	invoices := make(map[lntypes.Hash]*channeldb.Invoice)
 
 	for hash, invoice := range test.testData.expiredInvoices {
-		invoices = append(invoices,
-			channeldb.InvoiceWithPaymentHash{
-				Invoice:     *invoice,
-				PaymentHash: hash,
-			},
-		)
+		invoices[hash] = invoice
 	}
 
 	for hash, invoice := range test.testData.pendingInvoices {
-		invoices = append(invoices,
-			channeldb.InvoiceWithPaymentHash{
-				Invoice:     *invoice,
-				PaymentHash: hash,
-			},
-		)
+		invoices[hash] = invoice
 	}
 
 	test.watcher.AddInvoices(invoices)
diff --git a/invoices/invoiceregistry.go b/invoices/invoiceregistry.go
index 84d64617..c827f144 100644
--- a/invoices/invoiceregistry.go
+++ b/invoices/invoiceregistry.go
@@ -57,6 +57,14 @@ type RegistryConfig struct {
 	// send payments.
 	AcceptKeySend bool
 
+	// GcCanceledInvoicesOnStartup if set, we'll attempt to garbage collect
+	// all canceled invoices upon start.
+	GcCanceledInvoicesOnStartup bool
+
+	// GcCanceledInvoicesOnTheFly if set, we'll garbage collect all newly
+	// canceled invoices on the fly.
+	GcCanceledInvoicesOnTheFly bool
+
 	// KeysendHoldTime indicates for how long we want to accept and hold
 	// spontaneous keysend payments.
 	KeysendHoldTime time.Duration
@@ -147,21 +155,65 @@ func NewRegistry(cdb *channeldb.DB, expiryWatcher *InvoiceExpiryWatcher,
 	}
 }
 
-// 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,
-		)
+// scanInvoicesOnStart will scan all invoices on start and add active invoices
+// to the invoice expirt watcher while also attempting to delete all canceled
+// invoices.
+func (i *InvoiceRegistry) scanInvoicesOnStart() error {
+	var (
+		pending   map[lntypes.Hash]*channeldb.Invoice
+		removable []channeldb.InvoiceDeleteRef
+	)
+
+	reset := func() {
+		// Zero out our results on start and if the scan is ever run
+		// more than once. This latter case can happen if the kvdb
+		// layer needs to retry the View transaction underneath (eg.
+		// using the etcd driver, where all transactions are allowed
+		// to retry for serializability).
+		pending = make(map[lntypes.Hash]*channeldb.Invoice)
+		removable = make([]channeldb.InvoiceDeleteRef, 0)
+	}
+
+	scanFunc := func(
+		paymentHash lntypes.Hash, invoice *channeldb.Invoice) error {
+
+		if invoice.IsPending() {
+			pending[paymentHash] = invoice
+		} else if i.cfg.GcCanceledInvoicesOnStartup &&
+			invoice.State == channeldb.ContractCanceled {
+
+			// Consider invoice for removal if it is already
+			// canceled. Invoices that are expired but not yet
+			// canceled, will be queued up for cancellation after
+			// startup and will be deleted afterwards.
+			ref := channeldb.InvoiceDeleteRef{
+				PayHash:     paymentHash,
+				AddIndex:    invoice.AddIndex,
+				SettleIndex: invoice.SettleIndex,
+			}
+
+			if invoice.Terms.PaymentAddr != channeldb.BlankPayAddr {
+				ref.PayAddr = &invoice.Terms.PaymentAddr
+			}
+
+			removable = append(removable, ref)
+		}
+		return nil
+	}
+
+	err := i.cdb.ScanInvoices(scanFunc, reset)
+	if err != nil {
 		return err
 	}
 
 	log.Debugf("Adding %d pending invoices to the expiry watcher",
-		len(pendingInvoices))
-	i.expiryWatcher.AddInvoices(pendingInvoices)
+		len(pending))
+	i.expiryWatcher.AddInvoices(pending)
+
+	if err := i.cdb.DeleteInvoice(removable); err != nil {
+		log.Warnf("Deleting old invoices failed: %v", err)
+	}
+
 	return nil
 }
 
@@ -178,8 +230,9 @@ func (i *InvoiceRegistry) Start() error {
 	i.wg.Add(1)
 	go i.invoiceEventLoop()
 
-	// Now prefetch all pending invoices to the expiry watcher.
-	err = i.populateExpiryWatcher()
+	// Now scan all pending and removable invoices to the expiry watcher or
+	// delete them.
+	err = i.scanInvoicesOnStart()
 	if err != nil {
 		i.Stop()
 		return err
@@ -1075,6 +1128,32 @@ func (i *InvoiceRegistry) cancelInvoiceImpl(payHash lntypes.Hash,
 	}
 	i.notifyClients(payHash, invoice, channeldb.ContractCanceled)
 
+	// Attempt to also delete the invoice if requested through the registry
+	// config.
+	if i.cfg.GcCanceledInvoicesOnTheFly {
+		// Assemble the delete reference and attempt to delete through
+		// the invocice from the DB.
+		deleteRef := channeldb.InvoiceDeleteRef{
+			PayHash:     payHash,
+			AddIndex:    invoice.AddIndex,
+			SettleIndex: invoice.SettleIndex,
+		}
+		if invoice.Terms.PaymentAddr != channeldb.BlankPayAddr {
+			deleteRef.PayAddr = &invoice.Terms.PaymentAddr
+		}
+
+		err = i.cdb.DeleteInvoice(
+			[]channeldb.InvoiceDeleteRef{deleteRef},
+		)
+		// If by any chance deletion failed, then log it instead of
+		// returning the error, as the invoice itsels has already been
+		// canceled.
+		if err != nil {
+			log.Warnf("Invoice%v could not be deleted: %v",
+				ref, err)
+		}
+	}
+
 	return nil
 }
 
diff --git a/invoices/invoiceregistry_test.go b/invoices/invoiceregistry_test.go
index c77b38ed..cb916aea 100644
--- a/invoices/invoiceregistry_test.go
+++ b/invoices/invoiceregistry_test.go
@@ -1,6 +1,7 @@
 package invoices
 
 import (
+	"math"
 	"testing"
 	"time"
 
@@ -219,11 +220,14 @@ func TestSettleInvoice(t *testing.T) {
 	}
 }
 
-// TestCancelInvoice tests cancelation of an invoice and related notifications.
-func TestCancelInvoice(t *testing.T) {
+func testCancelInvoice(t *testing.T, gc bool) {
 	ctx := newTestContext(t)
 	defer ctx.cleanup()
 
+	// If set to true, then also delete the invoice from the DB after
+	// cancellation.
+	ctx.registry.cfg.GcCanceledInvoicesOnTheFly = gc
+
 	allSubscriptions, err := ctx.registry.SubscribeNotifications(0, 0)
 	assert.Nil(t, err)
 	defer allSubscriptions.Cancel()
@@ -298,13 +302,26 @@ func TestCancelInvoice(t *testing.T) {
 		t.Fatal("no update received")
 	}
 
+	if gc {
+		// Check that the invoice has been deleted from the db.
+		_, err = ctx.cdb.LookupInvoice(
+			channeldb.InvoiceRefByHash(testInvoicePaymentHash),
+		)
+		require.Error(t, err)
+	}
+
 	// We expect no cancel notification to be sent to all invoice
 	// subscribers (backwards compatibility).
 
-	// Try to cancel again.
+	// Try to cancel again. Expect that we report ErrInvoiceNotFound if the
+	// invoice has been garbage collected (since the invoice has been
+	// deleted when it was canceled), and no error otherwise.
 	err = ctx.registry.CancelInvoice(testInvoicePaymentHash)
-	if err != nil {
-		t.Fatal("expected cancelation of a canceled invoice to succeed")
+
+	if gc {
+		require.Error(t, err, channeldb.ErrInvoiceNotFound)
+	} else {
+		require.NoError(t, err)
 	}
 
 	// Notify arrival of a new htlc paying to this invoice. This should
@@ -326,12 +343,33 @@ func TestCancelInvoice(t *testing.T) {
 		t.Fatalf("expected acceptHeight %v, but got %v",
 			testCurrentHeight, failResolution.AcceptHeight)
 	}
-	if failResolution.Outcome != ResultInvoiceAlreadyCanceled {
-		t.Fatalf("expected expiry too soon, got: %v",
-			failResolution.Outcome)
+
+	// If the invoice has been deleted (or not present) then we expect the
+	// outcome to be ResultInvoiceNotFound instead of when the invoice is
+	// in our database in which case we expect ResultInvoiceAlreadyCanceled.
+	if gc {
+		require.Equal(t, failResolution.Outcome, ResultInvoiceNotFound)
+	} else {
+		require.Equal(t,
+			failResolution.Outcome,
+			ResultInvoiceAlreadyCanceled,
+		)
 	}
 }
 
+// TestCancelInvoice tests cancelation of an invoice and related notifications.
+func TestCancelInvoice(t *testing.T) {
+	// Test cancellation both with garbage collection (meaning that canceled
+	// invoice will be deleted) and without (meain it'll be kept).
+	t.Run("garbage collect", func(t *testing.T) {
+		testCancelInvoice(t, true)
+	})
+
+	t.Run("no garbage collect", func(t *testing.T) {
+		testCancelInvoice(t, false)
+	})
+}
+
 // TestSettleHoldInvoice tests settling of a hold invoice and related
 // notifications.
 func TestSettleHoldInvoice(t *testing.T) {
@@ -1077,3 +1115,78 @@ func TestInvoiceExpiryWithRegistry(t *testing.T) {
 		}
 	}
 }
+
+// TestOldInvoiceRemovalOnStart tests that we'll attempt to remove old canceled
+// invoices upon start while keeping all settled ones.
+func TestOldInvoiceRemovalOnStart(t *testing.T) {
+	t.Parallel()
+
+	testClock := clock.NewTestClock(testTime)
+	cdb, cleanup, err := newTestChannelDB(testClock)
+	defer cleanup()
+
+	require.NoError(t, err)
+
+	cfg := RegistryConfig{
+		FinalCltvRejectDelta:        testFinalCltvRejectDelta,
+		Clock:                       testClock,
+		GcCanceledInvoicesOnStartup: true,
+	}
+
+	expiryWatcher := NewInvoiceExpiryWatcher(cfg.Clock)
+	registry := NewRegistry(cdb, expiryWatcher, &cfg)
+
+	// First prefill the Channel DB with some pre-existing expired invoices.
+	const numExpired = 5
+	const numPending = 0
+	existingInvoices := generateInvoiceExpiryTestData(
+		t, testTime, 0, numExpired, numPending,
+	)
+
+	i := 0
+	for paymentHash, invoice := range existingInvoices.expiredInvoices {
+		// Mark half of the invoices as settled, the other hald as
+		// canceled.
+		if i%2 == 0 {
+			invoice.State = channeldb.ContractSettled
+		} else {
+			invoice.State = channeldb.ContractCanceled
+		}
+
+		_, err := cdb.AddInvoice(invoice, paymentHash)
+		require.NoError(t, err)
+		i++
+	}
+
+	// Collect all settled invoices for our expectation set.
+	var expected []channeldb.Invoice
+
+	// Perform a scan query to collect all invoices.
+	query := channeldb.InvoiceQuery{
+		IndexOffset:    0,
+		NumMaxInvoices: math.MaxUint64,
+	}
+
+	response, err := cdb.QueryInvoices(query)
+	require.NoError(t, err)
+
+	// Save all settled invoices for our expectation set.
+	for _, invoice := range response.Invoices {
+		if invoice.State == channeldb.ContractSettled {
+			expected = append(expected, invoice)
+		}
+	}
+
+	// Start the registry which should collect and delete all canceled
+	// invoices upon start.
+	err = registry.Start()
+	require.NoError(t, err, "cannot start the registry")
+
+	// Perform a scan query to collect all invoices.
+	response, err = cdb.QueryInvoices(query)
+	require.NoError(t, err)
+
+	// Check that we really only kept the settled invoices after the
+	// registry start.
+	require.Equal(t, expected, response.Invoices)
+}
diff --git a/server.go b/server.go
index b8c54ef2..5db6e7be 100644
--- a/server.go
+++ b/server.go
@@ -402,11 +402,13 @@ func newServer(cfg *Config, listenAddrs []net.Addr,
 	}
 
 	registryConfig := invoices.RegistryConfig{
-		FinalCltvRejectDelta: lncfg.DefaultFinalCltvRejectDelta,
-		HtlcHoldDuration:     invoices.DefaultHtlcHoldDuration,
-		Clock:                clock.NewDefaultClock(),
-		AcceptKeySend:        cfg.AcceptKeySend,
-		KeysendHoldTime:      cfg.KeysendHoldTime,
+		FinalCltvRejectDelta:        lncfg.DefaultFinalCltvRejectDelta,
+		HtlcHoldDuration:            invoices.DefaultHtlcHoldDuration,
+		Clock:                       clock.NewDefaultClock(),
+		AcceptKeySend:               cfg.AcceptKeySend,
+		GcCanceledInvoicesOnStartup: cfg.GcCanceledInvoicesOnStartup,
+		GcCanceledInvoicesOnTheFly:  cfg.GcCanceledInvoicesOnTheFly,
+		KeysendHoldTime:             cfg.KeysendHoldTime,
 	}
 
 	s := &server{