diff --git a/tlv/stream.go b/tlv/stream.go
index d716d7d07..3d353ad22 100644
--- a/tlv/stream.go
+++ b/tlv/stream.go
@@ -111,11 +111,11 @@ func (s *Stream) Encode(w io.Writer) error {
 	return nil
 }
 
-// Decode deserializes TLV Stream from the passed io.Reader. The Stream will
-// inspect each record that is parsed and check to see if it has a corresponding
-// Record to facilitate deserialization of that field. If the record is unknown,
-// the Stream will discard the record's bytes and proceed to the subsequent
-// record.
+// Decode deserializes TLV Stream from the passed io.Reader for non-P2P
+// settings. The Stream will inspect each record that is parsed and check to
+// see if it has a corresponding Record to facilitate deserialization of that
+// field. If the record is unknown, the Stream will discard the record's bytes
+// and proceed to the subsequent record.
 //
 // Each record has the following format:
 //
@@ -137,7 +137,14 @@ func (s *Stream) Encode(w io.Writer) error {
 // the last record was read cleanly and we should stop parsing. All other io.EOF
 // or io.ErrUnexpectedEOF errors are returned.
 func (s *Stream) Decode(r io.Reader) error {
-	_, err := s.decode(r, nil)
+	_, err := s.decode(r, nil, false)
+	return err
+}
+
+// DecodeP2P is identical to Decode except that the maximum record size is
+// capped at 65535.
+func (s *Stream) DecodeP2P(r io.Reader) error {
+	_, err := s.decode(r, nil, true)
 	return err
 }
 
@@ -145,13 +152,23 @@ func (s *Stream) Decode(r io.Reader) error {
 // TypeMap containing the types of all records that were decoded or ignored from
 // the stream.
 func (s *Stream) DecodeWithParsedTypes(r io.Reader) (TypeMap, error) {
-	return s.decode(r, make(TypeMap))
+	return s.decode(r, make(TypeMap), false)
+}
+
+// DecodeWithParsedTypesP2P is identical to DecodeWithParsedTypes except that
+// the record size is capped at 65535. This should only be called from a p2p
+// setting where untrusted input is being deserialized.
+func (s *Stream) DecodeWithParsedTypesP2P(r io.Reader) (TypeMap, error) {
+	return s.decode(r, make(TypeMap), true)
 }
 
 // decode is a helper function that performs the basis of stream decoding. If
 // the caller needs the set of parsed types, it must provide an initialized
-// parsedTypes, otherwise the returned TypeMap will be nil.
-func (s *Stream) decode(r io.Reader, parsedTypes TypeMap) (TypeMap, error) {
+// parsedTypes, otherwise the returned TypeMap will be nil. If the p2p bool is
+// true, then the record size is capped at 65535. Otherwise, it is not capped.
+func (s *Stream) decode(r io.Reader, parsedTypes TypeMap, p2p bool) (TypeMap,
+	error) {
+
 	var (
 		typ       Type
 		min       Type
@@ -204,8 +221,8 @@ func (s *Stream) decode(r io.Reader, parsedTypes TypeMap) (TypeMap, error) {
 		// Place a soft limit on the size of a sane record, which
 		// prevents malicious encoders from causing us to allocate an
 		// unbounded amount of memory when decoding variable-sized
-		// fields.
-		if length > MaxRecordSize {
+		// fields. This is only checked when the p2p bool is true.
+		if p2p && length > MaxRecordSize {
 			return nil, ErrRecordTooLarge
 		}
 
diff --git a/tlv/stream_test.go b/tlv/stream_test.go
index 60a3db73b..0a74bbf60 100644
--- a/tlv/stream_test.go
+++ b/tlv/stream_test.go
@@ -248,3 +248,64 @@ func makeBigSizeFormatTlvStream(t *testing.T, vUint32 *uint32,
 
 	return ts
 }
+
+// TestDecodeP2P tests that the p2p variants of the stream decode functions
+// work with small records and fail with large records.
+func TestDecodeP2P(t *testing.T) {
+	t.Parallel()
+
+	const (
+		smallType tlv.Type = 8
+		largeType tlv.Type = 10
+	)
+
+	var (
+		smallBytes = []byte{
+			0x08, // tlv type = 8
+			0x10, // length = 16
+			0x00, 0x00, 0x00, 0x00, 0x00, 0x00, 0x00, 0x00,
+			0x00, 0x00, 0x00, 0x00, 0x00, 0x00, 0x00, 0x01,
+		}
+
+		largeBytes = []byte{
+			0x0a,                         // tlv type = 10
+			0xfe, 0x00, 0x01, 0x00, 0x00, // length = 65536
+		}
+	)
+
+	// Verify the expected behavior for the large type.
+	s, err := tlv.NewStream(tlv.MakePrimitiveRecord(largeType, &[]byte{}))
+	require.NoError(t, err)
+
+	// Decoding with either of the p2p stream decoders should fail with the
+	// record too large error.
+	buf := bytes.NewBuffer(largeBytes)
+	require.Equal(t, s.DecodeP2P(buf), tlv.ErrRecordTooLarge)
+
+	buf2 := bytes.NewBuffer(largeBytes)
+	_, err = s.DecodeWithParsedTypesP2P(buf2)
+	require.Equal(t, err, tlv.ErrRecordTooLarge)
+
+	// Extend largeBytes with a payload of 65536 bytes so that the non-p2p
+	// decoders can successfully decode it.
+	largeSlice := make([]byte, 65542)
+	copy(largeSlice[:6], largeBytes)
+	buf3 := bytes.NewBuffer(largeSlice)
+	require.NoError(t, s.Decode(buf3))
+
+	buf4 := bytes.NewBuffer(largeSlice)
+	_, err = s.DecodeWithParsedTypes(buf4)
+	require.NoError(t, err)
+
+	// Now create a new stream and assert that the p2p-variants can decode
+	// small types.
+	s2, err := tlv.NewStream(tlv.MakePrimitiveRecord(smallType, &[]byte{}))
+	require.NoError(t, err)
+
+	buf5 := bytes.NewBuffer(smallBytes)
+	require.NoError(t, s2.DecodeP2P(buf5))
+
+	buf6 := bytes.NewBuffer(smallBytes)
+	_, err = s2.DecodeWithParsedTypesP2P(buf6)
+	require.NoError(t, err)
+}
diff --git a/tlv/tlv_test.go b/tlv/tlv_test.go
index 3dd520b32..35e23cab7 100644
--- a/tlv/tlv_test.go
+++ b/tlv/tlv_test.go
@@ -370,12 +370,6 @@ var tlvDecodingFailureTests = []struct {
 		bytes:  []byte{0xff, 0xff, 0xff, 0xff, 0xff, 0xff, 0xff, 0xff, 0xff, 0x00, 0x00},
 		expErr: tlv.ErrStreamNotCanonical,
 	},
-	{
-		name:   "absurd record length",
-		bytes:  []byte{0xfd, 0x01, 0x91, 0xfe, 0xff, 0xff, 0xff, 0xff},
-		expErr: tlv.ErrRecordTooLarge,
-		skipN2: true,
-	},
 }
 
 // TestTLVDecodingSuccess asserts that the TLV parser fails to decode invalid