diff --git a/blockmanager.go b/blockmanager.go
index 08d7fb40..5e211ad2 100644
--- a/blockmanager.go
+++ b/blockmanager.go
@@ -545,7 +545,7 @@ 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 {
+func newBlockManager(s *server) (*blockManager, error) {
 	chainNotify := make(chan *btcchain.Notification)
 	bm := blockManager{
 		server:           s,
@@ -562,7 +562,16 @@ func newBlockManager(s *server) *blockManager {
 		quit:             make(chan bool),
 	}
 	bm.blockChain.DisableVerify(cfg.VerifyDisabled)
-	return &bm
+
+	log.Infof("[BMGR] Generating initial block node index.  This may " +
+		"take a while...")
+	err := bm.blockChain.GenerateInitialIndex()
+	if err != nil {
+		return nil, err
+	}
+	log.Infof("[BMGR] Block index generation complete")
+
+	return &bm, nil
 }
 
 // removeRegressionDB removes the existing regression test database if running
diff --git a/server.go b/server.go
index 95bfab2e..b9e0458d 100644
--- a/server.go
+++ b/server.go
@@ -608,15 +608,11 @@ func newServer(addr string, db btcdb.Db, btcnet btcwire.BitcoinNet) (*server, er
 		quit:        make(chan bool),
 		db:          db,
 	}
-	s.blockManager = newBlockManager(&s)
-
-	log.Infof("[BMGR] Generating initial block node index.  This may " +
-		"take a while...")
-	err = s.blockManager.blockChain.GenerateInitialIndex()
+	bm, err := newBlockManager(&s)
 	if err != nil {
 		return nil, err
 	}
-	log.Infof("[BMGR] Block index generation complete")
+	s.blockManager = bm
 
 	if !cfg.DisableRPC {
 		s.rpcServer, err = newRPCServer(&s)