diff --git a/blockmanager.go b/blockmanager.go
index 0d51dde2..7b853bf8 100644
--- a/blockmanager.go
+++ b/blockmanager.go
@@ -66,6 +66,7 @@ type blockManager struct {
 	blockQueue        chan *blockMsg
 	invQueue          chan *invMsg
 	chainNotify       chan *btcchain.Notification
+	chainNotifySink   chan *btcchain.Notification
 	wg                sync.WaitGroup
 	quit              chan bool
 }
@@ -435,14 +436,50 @@ func (b *blockManager) handleNotifyMsg(notification *btcchain.Notification) {
 	}
 }
 
+// chainNotificationSinkHandler is the sink for the chain notification handler.
+// It actually responds to the notifications so the main chain notification
+// handler does not block chain while processing notifications.  It must be run
+// as a goroutine.
+func (b *blockManager) chainNotificationSinkHandler() {
+out:
+	for {
+		select {
+		case notification := <-b.chainNotifySink:
+			b.handleNotifyMsg(notification)
+
+		case <-b.quit:
+			break out
+		}
+	}
+	b.wg.Done()
+	log.Trace("[BMGR] Chain notification sink done")
+}
+
 // chainNotificationHandler is the handler for asynchronous notifications from
 // btcchain.  It must be run as a goroutine.
 func (b *blockManager) chainNotificationHandler() {
+
+	// pending is a list to queue notifications in order until the they can
+	// be processed by the sink.  This is used to prevent blocking chain
+	// when it sends notifications while retaining order.
+	pending := list.New()
 out:
 	for !b.shutdown {
+		// Sending on a nil channel always blocks and hence is ignored
+		// by select.  Thus enable send only when the list is non-empty.
+		var firstItem *btcchain.Notification
+		var chainNotifySink chan *btcchain.Notification
+		if pending.Len() > 0 {
+			firstItem = pending.Front().Value.(*btcchain.Notification)
+			chainNotifySink = b.chainNotifySink
+		}
+
 		select {
 		case notification := <-b.chainNotify:
-			go b.handleNotifyMsg(notification)
+			pending.PushBack(notification)
+
+		case chainNotifySink <- firstItem:
+			pending.Remove(pending.Front())
 
 		case <-b.quit:
 			break out
@@ -484,9 +521,10 @@ func (b *blockManager) Start() {
 	}
 
 	log.Trace("[BMGR] Starting block manager")
-	b.wg.Add(3)
+	b.wg.Add(4)
 	go b.syncHandler()
 	go b.blockHandler()
+	go b.chainNotificationSinkHandler()
 	go b.chainNotificationHandler()
 	b.started = true
 }
@@ -510,7 +548,7 @@ func (b *blockManager) Stop() error {
 // newBlockManager returns a new bitcoin block manager.
 // Use Start to begin processing asynchronous block and inv updates.
 func newBlockManager(s *server) *blockManager {
-	chainNotify := make(chan *btcchain.Notification, chanBufferSize)
+	chainNotify := make(chan *btcchain.Notification)
 	bm := blockManager{
 		server:           s,
 		blockChain:       btcchain.New(s.db, s.btcnet, chainNotify),
@@ -522,6 +560,7 @@ func newBlockManager(s *server) *blockManager {
 		blockQueue:       make(chan *blockMsg, chanBufferSize),
 		invQueue:         make(chan *invMsg, chanBufferSize),
 		chainNotify:      chainNotify,
+		chainNotifySink:  make(chan *btcchain.Notification),
 		quit:             make(chan bool),
 	}
 	bm.blockChain.DisableVerify(cfg.VerifyDisabled)