diff --git a/src/blockencodings.cpp b/src/blockencodings.cpp
index 93d3fa372..737102f16 100644
--- a/src/blockencodings.cpp
+++ b/src/blockencodings.cpp
@@ -167,7 +167,7 @@ ReadStatus PartiallyDownloadedBlock::FillBlock(CBlock& block, const std::vector<
         // check its own merkle root and cache that check.
         if (state.CorruptionPossible())
             return READ_STATUS_FAILED; // Possible Short ID collision
-        return READ_STATUS_INVALID;
+        return READ_STATUS_CHECKBLOCK_FAILED;
     }
 
     LogPrint("cmpctblock", "Successfully reconstructed block %s with %lu txn prefilled, %lu txn from mempool and %lu txn requested\n", header.GetHash().ToString(), prefilled_count, mempool_count, vtx_missing.size());
diff --git a/src/blockencodings.h b/src/blockencodings.h
index 2f87c6d31..cab847ee3 100644
--- a/src/blockencodings.h
+++ b/src/blockencodings.h
@@ -124,6 +124,8 @@ typedef enum ReadStatus_t
     READ_STATUS_OK,
     READ_STATUS_INVALID, // Invalid object, peer is sending bogus crap
     READ_STATUS_FAILED, // Failed to process object
+    READ_STATUS_CHECKBLOCK_FAILED, // Used only by FillBlock to indicate a
+                                   // failure in CheckBlock.
 } ReadStatus;
 
 class CBlockHeaderAndShortTxIDs {
diff --git a/src/main.cpp b/src/main.cpp
index 61d0aaf0b..850380abb 100644
--- a/src/main.cpp
+++ b/src/main.cpp
@@ -178,8 +178,10 @@ namespace {
      * Sources of received blocks, saved to be able to send them reject
      * messages or ban them when processing happens afterwards. Protected by
      * cs_main.
+     * Set mapBlockSource[hash].second to false if the node should not be
+     * punished if the block is invalid.
      */
-    map<uint256, NodeId> mapBlockSource;
+    map<uint256, std::pair<NodeId, bool>> mapBlockSource;
 
     /**
      * Filter for transactions that were recently rejected by
@@ -1885,13 +1887,13 @@ void static InvalidChainFound(CBlockIndex* pindexNew)
 void static InvalidBlockFound(CBlockIndex *pindex, const CValidationState &state) {
     int nDoS = 0;
     if (state.IsInvalid(nDoS)) {
-        std::map<uint256, NodeId>::iterator it = mapBlockSource.find(pindex->GetBlockHash());
-        if (it != mapBlockSource.end() && State(it->second)) {
+        std::map<uint256, std::pair<NodeId, bool>>::iterator it = mapBlockSource.find(pindex->GetBlockHash());
+        if (it != mapBlockSource.end() && State(it->second.first)) {
             assert (state.GetRejectCode() < REJECT_INTERNAL); // Blocks are never rejected with internal reject codes
             CBlockReject reject = {(unsigned char)state.GetRejectCode(), state.GetRejectReason().substr(0, MAX_REJECT_MESSAGE_LENGTH), pindex->GetBlockHash()};
-            State(it->second)->rejects.push_back(reject);
-            if (nDoS > 0)
-                Misbehaving(it->second, nDoS);
+            State(it->second.first)->rejects.push_back(reject);
+            if (nDoS > 0 && it->second.second)
+                Misbehaving(it->second.first, nDoS);
         }
     }
     if (!state.CorruptionPossible()) {
@@ -3761,7 +3763,7 @@ static bool IsSuperMajority(int minVersion, const CBlockIndex* pstart, unsigned
 }
 
 
-bool ProcessNewBlock(CValidationState& state, const CChainParams& chainparams, CNode* pfrom, const CBlock* pblock, bool fForceProcessing, const CDiskBlockPos* dbp)
+bool ProcessNewBlock(CValidationState& state, const CChainParams& chainparams, CNode* pfrom, const CBlock* pblock, bool fForceProcessing, const CDiskBlockPos* dbp, bool fMayBanPeerIfInvalid)
 {
     {
         LOCK(cs_main);
@@ -3773,7 +3775,7 @@ bool ProcessNewBlock(CValidationState& state, const CChainParams& chainparams, C
         bool fNewBlock = false;
         bool ret = AcceptBlock(*pblock, state, chainparams, &pindex, fRequested, dbp, &fNewBlock);
         if (pindex && pfrom) {
-            mapBlockSource[pindex->GetBlockHash()] = pfrom->GetId();
+            mapBlockSource[pindex->GetBlockHash()] = std::make_pair(pfrom->GetId(), fMayBanPeerIfInvalid);
             if (fNewBlock) pfrom->nLastBlockTime = GetTime();
         }
         CheckBlockIndex(chainparams.GetConsensus());
@@ -4717,7 +4719,6 @@ std::string GetWarnings(const std::string& strFor)
 
 
 //////////////////////////////////////////////////////////////////////////////
-//
 // Messages
 //
 
@@ -5791,17 +5792,33 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
             invs.push_back(CInv(MSG_BLOCK | GetFetchFlags(pfrom, chainActive.Tip(), chainparams.GetConsensus()), resp.blockhash));
             pfrom->PushMessage(NetMsgType::GETDATA, invs);
         } else {
+            // Block is either okay, or possibly we received
+            // READ_STATUS_CHECKBLOCK_FAILED.
+            // Note that CheckBlock can only fail for one of a few reasons:
+            // 1. bad-proof-of-work (impossible here, because we've already
+            //    accepted the header)
+            // 2. merkleroot doesn't match the transactions given (already
+            //    caught in FillBlock with READ_STATUS_FAILED, so
+            //    impossible here)
+            // 3. the block is otherwise invalid (eg invalid coinbase,
+            //    block is too big, too many legacy sigops, etc).
+            // So if CheckBlock failed, #3 is the only possibility.
+            // Under BIP 152, we don't DoS-ban unless proof of work is
+            // invalid (we don't require all the stateless checks to have
+            // been run).  This is handled below, so just treat this as
+            // though the block was successfully read, and rely on the
+            // handling in ProcessNewBlock to ensure the block index is
+            // updated, reject messages go out, etc.
             CValidationState state;
-            ProcessNewBlock(state, chainparams, pfrom, &block, false, NULL);
+            // BIP 152 permits peers to relay compact blocks after validating
+            // the header only; we should not punish peers if the block turns
+            // out to be invalid.
+            ProcessNewBlock(state, chainparams, pfrom, &block, false, NULL, false);
             int nDoS;
             if (state.IsInvalid(nDoS)) {
                 assert (state.GetRejectCode() < REJECT_INTERNAL); // Blocks are never rejected with internal reject codes
                 pfrom->PushMessage(NetMsgType::REJECT, strCommand, (unsigned char)state.GetRejectCode(),
                                    state.GetRejectReason().substr(0, MAX_REJECT_MESSAGE_LENGTH), block.GetHash());
-                if (nDoS > 0) {
-                    LOCK(cs_main);
-                    Misbehaving(pfrom->GetId(), nDoS);
-                }
             }
         }
     }
@@ -5968,7 +5985,7 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
         // Such an unrequested block may still be processed, subject to the
         // conditions in AcceptBlock().
         bool forceProcessing = pfrom->fWhitelisted && !IsInitialBlockDownload();
-        ProcessNewBlock(state, chainparams, pfrom, &block, forceProcessing, NULL);
+        ProcessNewBlock(state, chainparams, pfrom, &block, forceProcessing, NULL, true);
         int nDoS;
         if (state.IsInvalid(nDoS)) {
             assert (state.GetRejectCode() < REJECT_INTERNAL); // Blocks are never rejected with internal reject codes
diff --git a/src/main.h b/src/main.h
index 0ca13d82d..daf884337 100644
--- a/src/main.h
+++ b/src/main.h
@@ -222,7 +222,7 @@ void UnregisterNodeSignals(CNodeSignals& nodeSignals);
  * @param[out]  dbp     The already known disk position of pblock, or NULL if not yet stored.
  * @return True if state.IsValid()
  */
-bool ProcessNewBlock(CValidationState& state, const CChainParams& chainparams, CNode* pfrom, const CBlock* pblock, bool fForceProcessing, const CDiskBlockPos* dbp);
+bool ProcessNewBlock(CValidationState& state, const CChainParams& chainparams, CNode* pfrom, const CBlock* pblock, bool fForceProcessing, const CDiskBlockPos* dbp, bool fMayBanPeerIfInvalid);
 /** Check whether enough disk space is available for an incoming block */
 bool CheckDiskSpace(uint64_t nAdditionalBytes = 0);
 /** Open a block file (blk?????.dat) */
diff --git a/src/rpc/mining.cpp b/src/rpc/mining.cpp
index 14a61a55d..e6901bc77 100644
--- a/src/rpc/mining.cpp
+++ b/src/rpc/mining.cpp
@@ -131,7 +131,7 @@ UniValue generateBlocks(boost::shared_ptr<CReserveScript> coinbaseScript, int nG
             continue;
         }
         CValidationState state;
-        if (!ProcessNewBlock(state, Params(), NULL, pblock, true, NULL))
+        if (!ProcessNewBlock(state, Params(), NULL, pblock, true, NULL, false))
             throw JSONRPCError(RPC_INTERNAL_ERROR, "ProcessNewBlock, block not accepted");
         ++nHeight;
         blockHashes.push_back(pblock->GetHash().GetHex());
@@ -760,7 +760,7 @@ UniValue submitblock(const UniValue& params, bool fHelp)
     CValidationState state;
     submitblock_StateCatcher sc(block.GetHash());
     RegisterValidationInterface(&sc);
-    bool fAccepted = ProcessNewBlock(state, Params(), NULL, &block, true, NULL);
+    bool fAccepted = ProcessNewBlock(state, Params(), NULL, &block, true, NULL, false);
     UnregisterValidationInterface(&sc);
     if (fBlockPresent)
     {
diff --git a/src/test/miner_tests.cpp b/src/test/miner_tests.cpp
index 15fceb963..70ba70779 100644
--- a/src/test/miner_tests.cpp
+++ b/src/test/miner_tests.cpp
@@ -222,7 +222,7 @@ BOOST_AUTO_TEST_CASE(CreateNewBlock_validity)
         pblock->hashMerkleRoot = BlockMerkleRoot(*pblock);
         pblock->nNonce = blockinfo[i].nonce;
         CValidationState state;
-        BOOST_CHECK(ProcessNewBlock(state, chainparams, NULL, pblock, true, NULL));
+        BOOST_CHECK(ProcessNewBlock(state, chainparams, NULL, pblock, true, NULL, false));
         BOOST_CHECK(state.IsValid());
         pblock->hashPrevBlock = pblock->GetHash();
     }
diff --git a/src/test/test_bitcoin.cpp b/src/test/test_bitcoin.cpp
index 056f2982c..09f9a362d 100644
--- a/src/test/test_bitcoin.cpp
+++ b/src/test/test_bitcoin.cpp
@@ -118,7 +118,7 @@ TestChain100Setup::CreateAndProcessBlock(const std::vector<CMutableTransaction>&
     while (!CheckProofOfWork(block.GetHash(), block.nBits, chainparams.GetConsensus())) ++block.nNonce;
 
     CValidationState state;
-    ProcessNewBlock(state, chainparams, NULL, &block, true, NULL);
+    ProcessNewBlock(state, chainparams, NULL, &block, true, NULL, false);
 
     CBlock result = block;
     delete pblocktemplate;