diff --git a/lightningd/build_utxos.c b/lightningd/build_utxos.c
index 50ff442d1..0e0f41ef0 100644
--- a/lightningd/build_utxos.c
+++ b/lightningd/build_utxos.c
@@ -179,7 +179,12 @@ static void unreserve_utxo(struct lightningd *ld, const struct utxo *unres)
 {
 	struct tracked_utxo *utxo;
 
-	list_for_each(&ld->utxos, utxo, list) {
+	assert(wallet_update_output_status(ld->wallet, &unres->txid,
+					   unres->outnum, output_state_reserved,
+					   output_state_available));
+
+	list_for_each(&ld->utxos, utxo, list)
+	{
 		if (unres != &utxo->utxo)
 			continue;
 		assert(utxo->reserved);
@@ -225,6 +230,10 @@ const struct utxo **build_utxos(const tal_t *ctx,
 		utxos[i] = &utxo->utxo;
 		utxo->reserved = true;
 
+		assert(wallet_update_output_status(
+		    ld->wallet, &utxo->utxo.txid, utxo->utxo.outnum,
+		    output_state_available, output_state_reserved));
+
 		/* Add this input's weight. */
 		weight += (32 + 4 + 4) * 4;
 		if (utxos[i]->is_p2sh)
diff --git a/wallet/wallet.c b/wallet/wallet.c
index d593d4e7c..a59e673eb 100644
--- a/wallet/wallet.c
+++ b/wallet/wallet.c
@@ -25,3 +25,27 @@ bool wallet_add_utxo(struct wallet *w, struct utxo *utxo,
 	tal_free(tmpctx);
 	return result;
 }
+
+bool wallet_update_output_status(struct wallet *w,
+				 const struct sha256_double *txid,
+				 const u32 outnum, enum output_status oldstatus,
+				 enum output_status newstatus)
+{
+	tal_t *tmpctx = tal_tmpctx(w);
+	char *hextxid = tal_hexstr(tmpctx, txid, sizeof(*txid));
+	if (oldstatus != output_state_any) {
+		db_exec(__func__, w->db,
+			"UPDATE outputs SET status=%d WHERE status=%d "
+			"AND prev_out_tx = '%s' AND prev_out_index = "
+			"%d;",
+			newstatus, oldstatus, hextxid, outnum);
+	} else {
+		db_exec(__func__, w->db,
+			"UPDATE outputs SET status=%d WHERE "
+			"AND prev_out_tx = '%s' AND prev_out_index = "
+			"%d;",
+			newstatus, hextxid, outnum);
+	}
+	tal_free(tmpctx);
+	return sqlite3_changes(w->db->sql) > 0;
+}
diff --git a/wallet/wallet.h b/wallet/wallet.h
index d2630bd54..82b25f2ab 100644
--- a/wallet/wallet.h
+++ b/wallet/wallet.h
@@ -50,4 +50,19 @@ struct wallet *wallet_new(const tal_t *ctx, struct log *log);
 bool wallet_add_utxo(struct wallet *w, struct utxo *utxo,
 		     enum wallet_output_type type);
 
+/**
+ * wallet_update_output_status - Perform an output state transition
+ *
+ * Change the current status of an output we are tracking in the
+ * database. Returns true if the output exists with the @oldstatus and
+ * was successfully updated to @newstatus. May fail if either the
+ * output does not exist, or it does not have the expected
+ * @oldstatus. In case we don't care about the previous state use
+ * `output_state_any` as @oldstatus.
+ */
+bool wallet_update_output_status(struct wallet *w,
+				 const struct sha256_double *txid,
+				 const u32 outnum, enum output_status oldstatus,
+				 enum output_status newstatus);
+
 #endif /* WALLET_WALLET_H */
diff --git a/wallet/wallet_tests.c b/wallet/wallet_tests.c
index 84bcab134..dccb160f8 100644
--- a/wallet/wallet_tests.c
+++ b/wallet/wallet_tests.c
@@ -6,7 +6,7 @@
 #include <stdio.h>
 #include <unistd.h>
 
-static bool test_wallet_add_utxo(void)
+static bool test_wallet_outputs(void)
 {
 	char filename[] = "/tmp/ldb-XXXXXX";
 	struct utxo u;
@@ -16,26 +16,52 @@ static bool test_wallet_add_utxo(void)
 	close(fd);
 
 	w->db = db_open(w, filename);
-	CHECK_MSG(w->db,"Failed opening the db");
+	CHECK_MSG(w->db, "Failed opening the db");
 	CHECK_MSG(db_migrate(w->db), "DB migration failed");
-		
+
 	memset(&u, 0, sizeof(u));
 
 	/* Should work, it's the first time we add it */
-	CHECK_MSG(wallet_add_utxo(w, &u, p2sh_wpkh), "wallet_add_utxo failed on first add");
+	CHECK_MSG(wallet_add_utxo(w, &u, p2sh_wpkh),
+		  "wallet_add_utxo failed on first add");
 
 	/* Should fail, we already have that UTXO */
-	CHECK_MSG(!wallet_add_utxo(w, &u, p2sh_wpkh), "wallet_add_utxo succeeded on second add");
+	CHECK_MSG(!wallet_add_utxo(w, &u, p2sh_wpkh),
+		  "wallet_add_utxo succeeded on second add");
+
+	/* Attempt to reserve the utxo */
+	CHECK_MSG(wallet_update_output_status(w, &u.txid, u.outnum,
+					      output_state_available,
+					      output_state_reserved),
+		  "could not reserve available output");
+
+	/* Reserving twice should fail */
+	CHECK_MSG(!wallet_update_output_status(w, &u.txid, u.outnum,
+					       output_state_available,
+					       output_state_reserved),
+		  "could reserve already reserved output");
+
+	/* Un-reserving should work */
+	CHECK_MSG(wallet_update_output_status(w, &u.txid, u.outnum,
+					      output_state_reserved,
+					      output_state_available),
+		  "could not unreserve reserved output");
+
+	/* Switching from any to something else */
+	CHECK_MSG(wallet_update_output_status(w, &u.txid, u.outnum,
+					      output_state_any,
+					      output_state_spent),
+		  "could not change output state ignoring oldstate");
+
 	tal_free(w);
 	return true;
-
 }
 
 int main(void)
 {
 	bool ok = true;
 
-	ok &= test_wallet_add_utxo();
+	ok &= test_wallet_outputs();
 
 	return !ok;
 }