diff --git a/watchtower/wtdb/mock.go b/watchtower/wtdb/mock.go
index c47fe2b1c..fa53d6cf7 100644
--- a/watchtower/wtdb/mock.go
+++ b/watchtower/wtdb/mock.go
@@ -70,6 +70,33 @@ func (db *MockDB) InsertSessionInfo(info *SessionInfo) error {
 	return nil
 }
 
+func (db *MockDB) DeleteSession(target SessionID) error {
+	db.mu.Lock()
+	defer db.mu.Unlock()
+
+	// Fail if the session doesn't exit.
+	if _, ok := db.sessions[target]; !ok {
+		return ErrSessionNotFound
+	}
+
+	// Remove the target session.
+	delete(db.sessions, target)
+
+	// Remove the state updates for any blobs stored under the target
+	// session identifier.
+	for hint, sessionUpdates := range db.blobs {
+		delete(sessionUpdates, target)
+
+		//If this was the last state update, we can also remove the hint
+		//that would map to an empty set.
+		if len(sessionUpdates) == 0 {
+			delete(db.blobs, hint)
+		}
+	}
+
+	return nil
+}
+
 func (db *MockDB) GetLookoutTip() (*chainntnfs.BlockEpoch, error) {
 	db.mu.Lock()
 	defer db.mu.Unlock()
diff --git a/watchtower/wtserver/create_session.go b/watchtower/wtserver/create_session.go
new file mode 100644
index 000000000..e948d8b9a
--- /dev/null
+++ b/watchtower/wtserver/create_session.go
@@ -0,0 +1,136 @@
+package wtserver
+
+import (
+	"github.com/btcsuite/btcd/txscript"
+	"github.com/lightningnetwork/lnd/watchtower/blob"
+	"github.com/lightningnetwork/lnd/watchtower/wtdb"
+	"github.com/lightningnetwork/lnd/watchtower/wtpolicy"
+	"github.com/lightningnetwork/lnd/watchtower/wtwire"
+)
+
+// handleCreateSession processes a CreateSession message from the peer, and returns
+// a CreateSessionReply in response. This method will only succeed if no existing
+// session info is known about the session id. If an existing session is found,
+// the reward address is returned in case the client lost our reply.
+func (s *Server) handleCreateSession(peer Peer, id *wtdb.SessionID,
+	req *wtwire.CreateSession) error {
+
+	// TODO(conner): validate accept against policy
+
+	// Query the db for session info belonging to the client's session id.
+	existingInfo, err := s.cfg.DB.GetSessionInfo(id)
+	switch {
+
+	// We already have a session corresponding to this session id, return an
+	// error signaling that it already exists in our database. We return the
+	// reward address to the client in case they were not able to process
+	// our reply earlier.
+	case err == nil:
+		log.Debugf("Already have session for %s", id)
+		return s.replyCreateSession(
+			peer, id, wtwire.CreateSessionCodeAlreadyExists,
+			existingInfo.RewardAddress,
+		)
+
+	// Some other database error occurred, return a temporary failure.
+	case err != wtdb.ErrSessionNotFound:
+		log.Errorf("unable to load session info for %s", id)
+		return s.replyCreateSession(
+			peer, id, wtwire.CodeTemporaryFailure, nil,
+		)
+	}
+
+	// Now that we've established that this session does not exist in the
+	// database, retrieve the sweep address that will be given to the
+	// client. This address is to be included by the client when signing
+	// sweep transactions destined for this tower, if its negotiated output
+	// is not dust.
+	rewardAddress, err := s.cfg.NewAddress()
+	if err != nil {
+		log.Errorf("unable to generate reward addr for %s", id)
+		return s.replyCreateSession(
+			peer, id, wtwire.CodeTemporaryFailure, nil,
+		)
+	}
+
+	// Construct the pkscript the client should pay to when signing justice
+	// transactions for this session.
+	rewardScript, err := txscript.PayToAddrScript(rewardAddress)
+	if err != nil {
+		log.Errorf("unable to generate reward script for %s", id)
+		return s.replyCreateSession(
+			peer, id, wtwire.CodeTemporaryFailure, nil,
+		)
+	}
+
+	// Ensure that the requested blob type is supported by our tower.
+	if !blob.IsSupportedType(req.BlobType) {
+		log.Debugf("Rejecting CreateSession from %s, unsupported blob "+
+			"type %s", id, req.BlobType)
+		return s.replyCreateSession(
+			peer, id, wtwire.CreateSessionCodeRejectBlobType, nil,
+		)
+	}
+
+	// TODO(conner): create invoice for upfront payment
+
+	// Assemble the session info using the agreed upon parameters, reward
+	// address, and session id.
+	info := wtdb.SessionInfo{
+		ID: *id,
+		Policy: wtpolicy.Policy{
+			BlobType:     req.BlobType,
+			MaxUpdates:   req.MaxUpdates,
+			RewardBase:   req.RewardBase,
+			RewardRate:   req.RewardRate,
+			SweepFeeRate: req.SweepFeeRate,
+		},
+		RewardAddress: rewardScript,
+	}
+
+	// Insert the session info into the watchtower's database. If
+	// successful, the session will now be ready for use.
+	err = s.cfg.DB.InsertSessionInfo(&info)
+	if err != nil {
+		log.Errorf("unable to create session for %s", id)
+		return s.replyCreateSession(
+			peer, id, wtwire.CodeTemporaryFailure, nil,
+		)
+	}
+
+	log.Infof("Accepted session for %s", id)
+
+	return s.replyCreateSession(
+		peer, id, wtwire.CodeOK, rewardScript,
+	)
+}
+
+// replyCreateSession sends a response to a CreateSession from a client. If the
+// status code in the reply is OK, the error from the write will be bubbled up.
+// Otherwise, this method returns a connection error to ensure we don't continue
+// communication with the client.
+func (s *Server) replyCreateSession(peer Peer, id *wtdb.SessionID,
+	code wtwire.ErrorCode, data []byte) error {
+
+	msg := &wtwire.CreateSessionReply{
+		Code: code,
+		Data: data,
+	}
+
+	err := s.sendMessage(peer, msg)
+	if err != nil {
+		log.Errorf("unable to send CreateSessionReply to %s", id)
+	}
+
+	// Return the write error if the request succeeded.
+	if code == wtwire.CodeOK {
+		return err
+	}
+
+	// Otherwise the request failed, return a connection failure to
+	// disconnect the client.
+	return &connFailure{
+		ID:   *id,
+		Code: uint16(code),
+	}
+}
diff --git a/watchtower/wtserver/delete_session.go b/watchtower/wtserver/delete_session.go
new file mode 100644
index 000000000..a5b517c12
--- /dev/null
+++ b/watchtower/wtserver/delete_session.go
@@ -0,0 +1,57 @@
+package wtserver
+
+import (
+	"github.com/lightningnetwork/lnd/watchtower/wtdb"
+	"github.com/lightningnetwork/lnd/watchtower/wtwire"
+)
+
+// handleDeleteSession processes a DeleteSession request for a client with given
+// SessionID. The id is assumed to have been previously authenticated by the
+// brontide connection.
+func (s *Server) handleDeleteSession(peer Peer, id *wtdb.SessionID) error {
+	var failCode wtwire.DeleteSessionCode
+
+	// Delete all session data associated with id.
+	err := s.cfg.DB.DeleteSession(*id)
+	switch {
+	case err == nil:
+		failCode = wtwire.CodeOK
+
+		log.Debugf("Session %s deleted", id)
+
+	case err == wtdb.ErrSessionNotFound:
+		failCode = wtwire.DeleteSessionCodeNotFound
+
+	default:
+		failCode = wtwire.CodeTemporaryFailure
+	}
+
+	return s.replyDeleteSession(peer, id, failCode)
+}
+
+// replyDeleteSession sends a DeleteSessionReply back to the peer containing the
+// error code resulting from processes a DeleteSession request.
+func (s *Server) replyDeleteSession(peer Peer, id *wtdb.SessionID,
+	code wtwire.DeleteSessionCode) error {
+
+	msg := &wtwire.DeleteSessionReply{
+		Code: code,
+	}
+
+	err := s.sendMessage(peer, msg)
+	if err != nil {
+		log.Errorf("Unable to send DeleteSessionReply to %s", id)
+	}
+
+	// Return the write error if the request succeeded.
+	if code == wtwire.CodeOK {
+		return err
+	}
+
+	// Otherwise the request failed, return a connection failure to
+	// disconnect the client.
+	return &connFailure{
+		ID:   *id,
+		Code: uint16(code),
+	}
+}
diff --git a/watchtower/wtserver/interface.go b/watchtower/wtserver/interface.go
index 69d4ec9cf..d23645431 100644
--- a/watchtower/wtserver/interface.go
+++ b/watchtower/wtserver/interface.go
@@ -63,4 +63,8 @@ type DB interface {
 	// validates the update against the current SessionInfo stored under the
 	// update's session id..
 	InsertStateUpdate(*wtdb.SessionStateUpdate) (uint16, error)
+
+	// DeleteSession removes all data associated with a particular session
+	// id from the tower's database.
+	DeleteSession(wtdb.SessionID) error
 }
diff --git a/watchtower/wtserver/server.go b/watchtower/wtserver/server.go
index b9d222757..4a49c3ad4 100644
--- a/watchtower/wtserver/server.go
+++ b/watchtower/wtserver/server.go
@@ -11,12 +11,9 @@ import (
 	"github.com/btcsuite/btcd/btcec"
 	"github.com/btcsuite/btcd/chaincfg/chainhash"
 	"github.com/btcsuite/btcd/connmgr"
-	"github.com/btcsuite/btcd/txscript"
 	"github.com/btcsuite/btcutil"
 	"github.com/lightningnetwork/lnd/lnwire"
-	"github.com/lightningnetwork/lnd/watchtower/blob"
 	"github.com/lightningnetwork/lnd/watchtower/wtdb"
-	"github.com/lightningnetwork/lnd/watchtower/wtpolicy"
 	"github.com/lightningnetwork/lnd/watchtower/wtwire"
 )
 
@@ -24,6 +21,10 @@ var (
 	// ErrPeerAlreadyConnected signals that a peer with the same session id
 	// is already active within the server.
 	ErrPeerAlreadyConnected = errors.New("peer already connected")
+
+	// ErrServerExiting signals that a request could not be processed
+	// because the server has been requested to shut down.
+	ErrServerExiting = errors.New("server shutting down")
 )
 
 // Config abstracts the primary components and dependencies of the server.
@@ -242,241 +243,40 @@ func (s *Server) handleClient(peer Peer) {
 		return
 	}
 
-	// stateUpdateOnlyMode will become true if the client's first message is
-	// a StateUpdate. If instead, it is a CreateSession, this method will exit
-	// immediately after replying. We track this to ensure that the client
-	// can't send a CreateSession after having already sent a StateUpdate.
-	var stateUpdateOnlyMode bool
-	for {
-		select {
-		case <-s.quit:
-			return
-		default:
-		}
+	nextMsg, err := s.readMessage(peer)
+	if err != nil {
+		log.Errorf("Unable to read watchtower msg from %s: %v",
+			id, err)
+		return
+	}
 
-		nextMsg, err := s.readMessage(peer)
+	switch msg := nextMsg.(type) {
+	case *wtwire.CreateSession:
+		// Attempt to open a new session for this client.
+		err = s.handleCreateSession(peer, &id, msg)
 		if err != nil {
-			log.Errorf("Unable to read watchtower msg from %x: %v",
-				id[:], err)
-			return
+			log.Errorf("Unable to handle CreateSession "+
+				"from %s: %v", id, err)
 		}
 
-		// Process the request according to the message's type.
-		switch msg := nextMsg.(type) {
-
-		// A CreateSession indicates a request to establish a new session
-		// with our watchtower.
-		case *wtwire.CreateSession:
-			// Ensure CreateSession can only be sent as the first
-			// message.
-			if stateUpdateOnlyMode {
-				log.Errorf("client %x sent CreateSession after "+
-					"StateUpdate", id)
-				return
-			}
-
-			// Attempt to open a new session for this client.
-			err := s.handleCreateSession(peer, &id, msg)
-			if err != nil {
-				log.Errorf("Unable to handle CreateSession "+
-					"from %s: %v", id, err)
-			}
-
-			// Exit after replying to CreateSession.
-			return
-
-		// A StateUpdate indicates an existing client attempting to
-		// back-up a revoked commitment state.
-		case *wtwire.StateUpdate:
-			// Try to accept the state update from the client.
-			err := s.handleStateUpdate(peer, &id, msg)
-			if err != nil {
-				log.Errorf("unable to handle StateUpdate "+
-					"from %s: %v", id, err)
-				return
-			}
-
-			// If the client signals that this is last StateUpdate
-			// message, we can disconnect the client.
-			if msg.IsComplete == 1 {
-				return
-			}
-
-			// The client has signaled that more StateUpdates are
-			// yet to come. Enter state-update-only mode to disallow
-			// future sends of CreateSession messages.
-			stateUpdateOnlyMode = true
-
-		default:
-			log.Errorf("received unsupported message type: %T "+
-				"from %s", nextMsg, id)
-			return
+	case *wtwire.DeleteSession:
+		err = s.handleDeleteSession(peer, &id)
+		if err != nil {
+			log.Errorf("Unable to handle DeleteSession "+
+				"from %s: %v", id, err)
 		}
-	}
-}
 
-// handleCreateSession processes a CreateSession message from the peer, and returns
-// a CreateSessionReply in response. This method will only succeed if no existing
-// session info is known about the session id. If an existing session is found,
-// the reward address is returned in case the client lost our reply.
-func (s *Server) handleCreateSession(peer Peer, id *wtdb.SessionID,
-	req *wtwire.CreateSession) error {
-
-	// TODO(conner): validate accept against policy
-
-	// Query the db for session info belonging to the client's session id.
-	existingInfo, err := s.cfg.DB.GetSessionInfo(id)
-	switch {
-
-	// We already have a session corresponding to this session id, return an
-	// error signaling that it already exists in our database. We return the
-	// reward address to the client in case they were not able to process
-	// our reply earlier.
-	case err == nil:
-		log.Debugf("Already have session for %s", id)
-		return s.replyCreateSession(
-			peer, id, wtwire.CreateSessionCodeAlreadyExists,
-			existingInfo.RewardAddress,
-		)
-
-	// Some other database error occurred, return a temporary failure.
-	case err != wtdb.ErrSessionNotFound:
-		log.Errorf("unable to load session info for %s", id)
-		return s.replyCreateSession(
-			peer, id, wtwire.CodeTemporaryFailure, nil,
-		)
-	}
-
-	// Now that we've established that this session does not exist in the
-	// database, retrieve the sweep address that will be given to the
-	// client. This address is to be included by the client when signing
-	// sweep transactions destined for this tower, if its negotiated output
-	// is not dust.
-	rewardAddress, err := s.cfg.NewAddress()
-	if err != nil {
-		log.Errorf("unable to generate reward addr for %s", id)
-		return s.replyCreateSession(
-			peer, id, wtwire.CodeTemporaryFailure, nil,
-		)
-	}
-
-	// Construct the pkscript the client should pay to when signing justice
-	// transactions for this session.
-	rewardScript, err := txscript.PayToAddrScript(rewardAddress)
-	if err != nil {
-		log.Errorf("unable to generate reward script for %s", id)
-		return s.replyCreateSession(
-			peer, id, wtwire.CodeTemporaryFailure, nil,
-		)
-	}
-
-	// Ensure that the requested blob type is supported by our tower.
-	if !blob.IsSupportedType(req.BlobType) {
-		log.Debugf("Rejecting CreateSession from %s, unsupported blob "+
-			"type %s", id, req.BlobType)
-		return s.replyCreateSession(
-			peer, id, wtwire.CreateSessionCodeRejectBlobType, nil,
-		)
-	}
-
-	// TODO(conner): create invoice for upfront payment
-
-	// Assemble the session info using the agreed upon parameters, reward
-	// address, and session id.
-	info := wtdb.SessionInfo{
-		ID: *id,
-		Policy: wtpolicy.Policy{
-			BlobType:     req.BlobType,
-			MaxUpdates:   req.MaxUpdates,
-			RewardBase:   req.RewardBase,
-			RewardRate:   req.RewardRate,
-			SweepFeeRate: req.SweepFeeRate,
-		},
-		RewardAddress: rewardScript,
-	}
-
-	// Insert the session info into the watchtower's database. If
-	// successful, the session will now be ready for use.
-	err = s.cfg.DB.InsertSessionInfo(&info)
-	if err != nil {
-		log.Errorf("unable to create session for %s", id)
-		return s.replyCreateSession(
-			peer, id, wtwire.CodeTemporaryFailure, nil,
-		)
-	}
-
-	log.Infof("Accepted session for %s", id)
-
-	return s.replyCreateSession(
-		peer, id, wtwire.CodeOK, rewardScript,
-	)
-}
-
-// handleStateUpdate processes a StateUpdate message request from a client. An
-// attempt will be made to insert the update into the db, where it is validated
-// against the client's session. The possible errors are then mapped back to
-// StateUpdateCodes specified by the watchtower wire protocol, and sent back
-// using a StateUpdateReply message.
-func (s *Server) handleStateUpdate(peer Peer, id *wtdb.SessionID,
-	update *wtwire.StateUpdate) error {
-
-	var (
-		lastApplied uint16
-		failCode    wtwire.ErrorCode
-		err         error
-	)
-
-	sessionUpdate := wtdb.SessionStateUpdate{
-		ID:            *id,
-		Hint:          update.Hint,
-		SeqNum:        update.SeqNum,
-		LastApplied:   update.LastApplied,
-		EncryptedBlob: update.EncryptedBlob,
-	}
-
-	lastApplied, err = s.cfg.DB.InsertStateUpdate(&sessionUpdate)
-	switch {
-	case err == nil:
-		log.Debugf("State update %d accepted for %s",
-			update.SeqNum, id)
-
-		failCode = wtwire.CodeOK
-
-	// Return a permanent failure if a client tries to send an update for
-	// which we have no session.
-	case err == wtdb.ErrSessionNotFound:
-		failCode = wtwire.CodePermanentFailure
-
-	case err == wtdb.ErrSeqNumAlreadyApplied:
-		failCode = wtwire.CodePermanentFailure
-
-		// TODO(conner): remove session state for protocol
-		// violation. Could also double as clean up method for
-		// session-related state.
-
-	case err == wtdb.ErrLastAppliedReversion:
-		failCode = wtwire.StateUpdateCodeClientBehind
-
-	case err == wtdb.ErrSessionConsumed:
-		failCode = wtwire.StateUpdateCodeMaxUpdatesExceeded
-
-	case err == wtdb.ErrUpdateOutOfOrder:
-		failCode = wtwire.StateUpdateCodeSeqNumOutOfOrder
+	case *wtwire.StateUpdate:
+		err = s.handleStateUpdates(peer, &id, msg)
+		if err != nil {
+			log.Errorf("Unable to handle StateUpdate "+
+				"from %s: %v", id, err)
+		}
 
 	default:
-		failCode = wtwire.CodeTemporaryFailure
+		log.Errorf("Received unsupported message type: %T "+
+			"from %s", nextMsg, id)
 	}
-
-	if s.cfg.NoAckUpdates {
-		return &connFailure{
-			ID:   *id,
-			Code: uint16(failCode),
-		}
-	}
-
-	return s.replyStateUpdate(
-		peer, id, failCode, lastApplied,
-	)
 }
 
 // connFailure is a default error used when a request failed with a non-zero
@@ -493,66 +293,6 @@ func (f *connFailure) Error() string {
 	)
 }
 
-// replyCreateSession sends a response to a CreateSession from a client. If the
-// status code in the reply is OK, the error from the write will be bubbled up.
-// Otherwise, this method returns a connection error to ensure we don't continue
-// communication with the client.
-func (s *Server) replyCreateSession(peer Peer, id *wtdb.SessionID,
-	code wtwire.ErrorCode, data []byte) error {
-
-	msg := &wtwire.CreateSessionReply{
-		Code: code,
-		Data: data,
-	}
-
-	err := s.sendMessage(peer, msg)
-	if err != nil {
-		log.Errorf("unable to send CreateSessionReply to %s", id)
-	}
-
-	// Return the write error if the request succeeded.
-	if code == wtwire.CodeOK {
-		return err
-	}
-
-	// Otherwise the request failed, return a connection failure to
-	// disconnect the client.
-	return &connFailure{
-		ID:   *id,
-		Code: uint16(code),
-	}
-}
-
-// replyStateUpdate sends a response to a StateUpdate from a client. If the
-// status code in the reply is OK, the error from the write will be bubbled up.
-// Otherwise, this method returns a connection error to ensure we don't continue
-// communication with the client.
-func (s *Server) replyStateUpdate(peer Peer, id *wtdb.SessionID,
-	code wtwire.StateUpdateCode, lastApplied uint16) error {
-
-	msg := &wtwire.StateUpdateReply{
-		Code:        code,
-		LastApplied: lastApplied,
-	}
-
-	err := s.sendMessage(peer, msg)
-	if err != nil {
-		log.Errorf("unable to send StateUpdateReply to %s", id)
-	}
-
-	// Return the write error if the request succeeded.
-	if code == wtwire.CodeOK {
-		return err
-	}
-
-	// Otherwise the request failed, return a connection failure to
-	// disconnect the client.
-	return &connFailure{
-		ID:   *id,
-		Code: uint16(code),
-	}
-}
-
 // readMessage receives and parses the next message from the given Peer. An
 // error is returned if a message is not received before the server's read
 // timeout, the read off the wire failed, or the message could not be
diff --git a/watchtower/wtserver/server_test.go b/watchtower/wtserver/server_test.go
index cdbaa281c..d9e3bec50 100644
--- a/watchtower/wtserver/server_test.go
+++ b/watchtower/wtserver/server_test.go
@@ -226,13 +226,13 @@ func testServerCreateSession(t *testing.T, i int, test createSessionTestCase) {
 	// Create a new client and connect to server.
 	peerPub := randPubKey(t)
 	peer := wtmock.NewMockPeer(localPub, peerPub, nil, 0)
-	connect(t, i, s, peer, test.initMsg, timeoutDuration)
+	connect(t, s, peer, test.initMsg, timeoutDuration)
 
 	// Send the CreateSession message, and wait for a reply.
-	sendMsg(t, i, test.createMsg, peer, timeoutDuration)
+	sendMsg(t, test.createMsg, peer, timeoutDuration)
 
 	reply := recvReply(
-		t, i, "CreateSessionReply", peer, timeoutDuration,
+		t, "MsgCreateSessionReply", peer, timeoutDuration,
 	).(*wtwire.CreateSessionReply)
 
 	// Verify that the server's response matches our expectation.
@@ -254,13 +254,13 @@ func testServerCreateSession(t *testing.T, i int, test createSessionTestCase) {
 	// Simulate a peer with the same session id connection to the server
 	// again.
 	peer = wtmock.NewMockPeer(localPub, peerPub, nil, 0)
-	connect(t, i, s, peer, test.initMsg, timeoutDuration)
+	connect(t, s, peer, test.initMsg, timeoutDuration)
 
 	// Send the _same_ CreateSession message as the first attempt.
-	sendMsg(t, i, test.createMsg, peer, timeoutDuration)
+	sendMsg(t, test.createMsg, peer, timeoutDuration)
 
 	reply = recvReply(
-		t, i, "CreateSessionReply", peer, timeoutDuration,
+		t, "MsgCreateSessionReply", peer, timeoutDuration,
 	).(*wtwire.CreateSessionReply)
 
 	// Ensure that the server's reply matches our expected response for a
@@ -550,14 +550,14 @@ var stateUpdateTests = []stateUpdateTestCase{
 func TestServerStateUpdates(t *testing.T) {
 	t.Parallel()
 
-	for i, test := range stateUpdateTests {
+	for _, test := range stateUpdateTests {
 		t.Run(test.name, func(t *testing.T) {
-			testServerStateUpdates(t, i, test)
+			testServerStateUpdates(t, test)
 		})
 	}
 }
 
-func testServerStateUpdates(t *testing.T, i int, test stateUpdateTestCase) {
+func testServerStateUpdates(t *testing.T, test stateUpdateTestCase) {
 	const timeoutDuration = 100 * time.Millisecond
 
 	s := initServer(t, nil, timeoutDuration)
@@ -568,17 +568,17 @@ func testServerStateUpdates(t *testing.T, i int, test stateUpdateTestCase) {
 	// Create a new client and connect to the server.
 	peerPub := randPubKey(t)
 	peer := wtmock.NewMockPeer(localPub, peerPub, nil, 0)
-	connect(t, i, s, peer, test.initMsg, timeoutDuration)
+	connect(t, s, peer, test.initMsg, timeoutDuration)
 
 	// Register a session for this client to use in the subsequent tests.
-	sendMsg(t, i, test.createMsg, peer, timeoutDuration)
+	sendMsg(t, test.createMsg, peer, timeoutDuration)
 	initReply := recvReply(
-		t, i, "CreateSessionReply", peer, timeoutDuration,
+		t, "MsgCreateSessionReply", peer, timeoutDuration,
 	).(*wtwire.CreateSessionReply)
 
 	// Fail if the server rejected our proposed CreateSession message.
 	if initReply.Code != wtwire.CodeOK {
-		t.Fatalf("[test %d] server rejected session init", i)
+		t.Fatalf("server rejected session init")
 	}
 
 	// Check that the server closed the connection used to register the
@@ -588,7 +588,7 @@ func testServerStateUpdates(t *testing.T, i int, test stateUpdateTestCase) {
 	// Now that the original connection has been closed, connect a new
 	// client with the same session id.
 	peer = wtmock.NewMockPeer(localPub, peerPub, nil, 0)
-	connect(t, i, s, peer, test.initMsg, timeoutDuration)
+	connect(t, s, peer, test.initMsg, timeoutDuration)
 
 	// Send the intended StateUpdate messages in series.
 	for j, update := range test.updates {
@@ -599,21 +599,21 @@ func testServerStateUpdates(t *testing.T, i int, test stateUpdateTestCase) {
 			assertConnClosed(t, peer, 2*timeoutDuration)
 
 			peer = wtmock.NewMockPeer(localPub, peerPub, nil, 0)
-			connect(t, i, s, peer, test.initMsg, timeoutDuration)
+			connect(t, s, peer, test.initMsg, timeoutDuration)
 
 			continue
 		}
 
 		// Send the state update and verify it against our expected
 		// response.
-		sendMsg(t, i, update, peer, timeoutDuration)
+		sendMsg(t, update, peer, timeoutDuration)
 		reply := recvReply(
-			t, i, "StateUpdateReply", peer, timeoutDuration,
+			t, "MsgStateUpdateReply", peer, timeoutDuration,
 		).(*wtwire.StateUpdateReply)
 
 		if !reflect.DeepEqual(reply, test.replies[j]) {
-			t.Fatalf("[test %d, update %d] expected reply "+
-				"%v, got %d", i, j,
+			t.Fatalf("[update %d] expected reply "+
+				"%v, got %d", j,
 				test.replies[j], reply)
 		}
 	}
@@ -622,16 +622,148 @@ func testServerStateUpdates(t *testing.T, i int, test stateUpdateTestCase) {
 	assertConnClosed(t, peer, 2*timeoutDuration)
 }
 
-func connect(t *testing.T, i int, s wtserver.Interface, peer *wtmock.MockPeer,
+// TestServerDeleteSession asserts the response to a DeleteSession request, and
+// checking that the proper error is returned when the session doesn't exist and
+// that a successful deletion does not disrupt other sessions.
+func TestServerDeleteSession(t *testing.T) {
+	db := wtdb.NewMockDB()
+
+	localPub := randPubKey(t)
+
+	// Initialize two distinct peers with different session ids.
+	peerPub1 := randPubKey(t)
+	peerPub2 := randPubKey(t)
+
+	id1 := wtdb.NewSessionIDFromPubKey(peerPub1)
+	id2 := wtdb.NewSessionIDFromPubKey(peerPub2)
+
+	// Create closure to simplify assertions on session existence with the
+	// server's database.
+	hasSession := func(t *testing.T, id *wtdb.SessionID, shouldHave bool) {
+		t.Helper()
+
+		_, err := db.GetSessionInfo(id)
+		switch {
+		case shouldHave && err != nil:
+			t.Fatalf("expected server to have session %s, got: %v",
+				id, err)
+		case !shouldHave && err != wtdb.ErrSessionNotFound:
+			t.Fatalf("expected ErrSessionNotFound for session %s, "+
+				"got: %v", id, err)
+		}
+	}
+
+	initMsg := wtwire.NewInitMessage(
+		lnwire.NewRawFeatureVector(),
+		testnetChainHash,
+	)
+
+	createSession := &wtwire.CreateSession{
+		BlobType:     blob.TypeDefault,
+		MaxUpdates:   1000,
+		RewardBase:   0,
+		RewardRate:   0,
+		SweepFeeRate: 1,
+	}
+
+	const timeoutDuration = 100 * time.Millisecond
+
+	s := initServer(t, db, timeoutDuration)
+	defer s.Stop()
+
+	// Create a session for peer2 so that the server's db isn't completely
+	// empty.
+	peer2 := wtmock.NewMockPeer(localPub, peerPub2, nil, 0)
+	connect(t, s, peer2, initMsg, timeoutDuration)
+	sendMsg(t, createSession, peer2, timeoutDuration)
+	assertConnClosed(t, peer2, 2*timeoutDuration)
+
+	// Our initial assertions are that peer2 has a valid session, but peer1
+	// has not created one.
+	hasSession(t, &id1, false)
+	hasSession(t, &id2, true)
+
+	peer1Msgs := []struct {
+		send   wtwire.Message
+		recv   wtwire.Message
+		assert func(t *testing.T)
+	}{
+		{
+			// Deleting unknown session should fail.
+			send: &wtwire.DeleteSession{},
+			recv: &wtwire.DeleteSessionReply{
+				Code: wtwire.DeleteSessionCodeNotFound,
+			},
+			assert: func(t *testing.T) {
+				// Peer2 should still be only session.
+				hasSession(t, &id1, false)
+				hasSession(t, &id2, true)
+			},
+		},
+		{
+			// Create session for peer1.
+			send: createSession,
+			recv: &wtwire.CreateSessionReply{
+				Code: wtwire.CodeOK,
+				Data: addrScript,
+			},
+			assert: func(t *testing.T) {
+				// Both peers should have sessions.
+				hasSession(t, &id1, true)
+				hasSession(t, &id2, true)
+			},
+		},
+
+		{
+			// Delete peer1's session.
+			send: &wtwire.DeleteSession{},
+			recv: &wtwire.DeleteSessionReply{
+				Code: wtwire.CodeOK,
+			},
+			assert: func(t *testing.T) {
+				// Peer1's session should have been removed.
+				hasSession(t, &id1, false)
+				hasSession(t, &id2, true)
+			},
+		},
+	}
+
+	// Now as peer1, process the canned messages defined above. This will:
+	// 1. Try to delete an unknown session and get a not found error code.
+	// 2. Create a new session using the same parameters as peer2.
+	// 3. Delete the newly created session and get an OK.
+	for _, msg := range peer1Msgs {
+		peer1 := wtmock.NewMockPeer(localPub, peerPub1, nil, 0)
+		connect(t, s, peer1, initMsg, timeoutDuration)
+		sendMsg(t, msg.send, peer1, timeoutDuration)
+		reply := recvReply(
+			t, msg.recv.MsgType().String(), peer1, timeoutDuration,
+		)
+
+		if !reflect.DeepEqual(reply, msg.recv) {
+			t.Fatalf("expected reply: %v, got: %v", msg.recv, reply)
+		}
+
+		assertConnClosed(t, peer1, 2*timeoutDuration)
+
+		// Invoke assertions after completing the request/response
+		// dance.
+		msg.assert(t)
+	}
+}
+
+func connect(t *testing.T, s wtserver.Interface, peer *wtmock.MockPeer,
 	initMsg *wtwire.Init, timeout time.Duration) {
 
+	t.Helper()
+
 	s.InboundPeerConnected(peer)
-	sendMsg(t, i, initMsg, peer, timeout)
-	recvReply(t, i, "Init", peer, timeout)
+	sendMsg(t, initMsg, peer, timeout)
+	recvReply(t, "MsgInit", peer, timeout)
 }
 
 // sendMsg sends a wtwire.Message message via a wtmock.MockPeer.
-func sendMsg(t *testing.T, i int, msg wtwire.Message,
+func sendMsg(t *testing.T, msg wtwire.Message,
 	peer *wtmock.MockPeer, timeout time.Duration) {
 
 	t.Helper()
@@ -639,22 +771,22 @@ func sendMsg(t *testing.T, i int, msg wtwire.Message,
 	var b bytes.Buffer
 	_, err := wtwire.WriteMessage(&b, msg, 0)
 	if err != nil {
-		t.Fatalf("[test %d] unable to encode %T message: %v",
-			i, msg, err)
+		t.Fatalf("unable to encode %T message: %v",
+			msg, err)
 	}
 
 	select {
 	case peer.IncomingMsgs <- b.Bytes():
 	case <-time.After(2 * timeout):
-		t.Fatalf("[test %d] unable to send %T message", i, msg)
+		t.Fatalf("unable to send %T message", msg)
 	}
 }
 
 // recvReply receives a message from the server, and parses it according to
 // expected reply type. The supported replies are CreateSessionReply and
 // StateUpdateReply.
-func recvReply(t *testing.T, i int, name string,
-	peer *wtmock.MockPeer, timeout time.Duration) wtwire.Message {
+func recvReply(t *testing.T, name string, peer *wtmock.MockPeer,
+	timeout time.Duration) wtwire.Message {
 
 	t.Helper()
 
@@ -667,29 +799,34 @@ func recvReply(t *testing.T, i int, name string,
 	case b := <-peer.OutgoingMsgs:
 		msg, err = wtwire.ReadMessage(bytes.NewReader(b), 0)
 		if err != nil {
-			t.Fatalf("[test %d] unable to decode server "+
-				"reply: %v", i, err)
+			t.Fatalf("unable to decode server "+
+				"reply: %v", err)
 		}
 
 	case <-time.After(2 * timeout):
-		t.Fatalf("[test %d] server did not reply", i)
+		t.Fatalf("server did not reply")
 	}
 
 	switch name {
-	case "Init":
+	case "MsgInit":
 		if _, ok := msg.(*wtwire.Init); !ok {
-			t.Fatalf("[test %d] expected %s reply "+
-				"message, got %T", i, name, msg)
+			t.Fatalf("expected %s reply message, "+
+				"got %T", name, msg)
 		}
-	case "CreateSessionReply":
+	case "MsgCreateSessionReply":
 		if _, ok := msg.(*wtwire.CreateSessionReply); !ok {
-			t.Fatalf("[test %d] expected %s reply "+
-				"message, got %T", i, name, msg)
+			t.Fatalf("expected %s reply message, "+
+				"got %T", name, msg)
 		}
-	case "StateUpdateReply":
+	case "MsgStateUpdateReply":
 		if _, ok := msg.(*wtwire.StateUpdateReply); !ok {
-			t.Fatalf("[test %d] expected %s reply "+
-				"message, got %T", i, name, msg)
+			t.Fatalf("expected %s reply message, "+
+				"got %T", name, msg)
+		}
+	case "MsgDeleteSessionReply":
+		if _, ok := msg.(*wtwire.DeleteSessionReply); !ok {
+			t.Fatalf("expected %s reply message, "+
+				"got %T", name, msg)
 		}
 	}
 
diff --git a/watchtower/wtserver/state_update.go b/watchtower/wtserver/state_update.go
new file mode 100644
index 000000000..7b3e0941b
--- /dev/null
+++ b/watchtower/wtserver/state_update.go
@@ -0,0 +1,157 @@
+package wtserver
+
+import (
+	"fmt"
+
+	"github.com/lightningnetwork/lnd/watchtower/wtdb"
+	"github.com/lightningnetwork/lnd/watchtower/wtwire"
+)
+
+// handleStateUpdates processes a stream of StateUpdate requests from the
+// client. The provided update should be the first such update read, subsequent
+// updates will be consumed if the peer does not signal IsComplete on a
+// particular update.
+func (s *Server) handleStateUpdates(peer Peer, id *wtdb.SessionID,
+	update *wtwire.StateUpdate) error {
+
+	// Set the current update to the first update read off the wire.
+	// Additional updates will be read if this value is set to nil after
+	// processing the first.
+	var curUpdate = update
+	for {
+		// If this is not the first update, read the next state update
+		// from the peer.
+		if curUpdate == nil {
+			nextMsg, err := s.readMessage(peer)
+			if err != nil {
+				return err
+			}
+
+			var ok bool
+			curUpdate, ok = nextMsg.(*wtwire.StateUpdate)
+			if !ok {
+				return fmt.Errorf("client sent %T after "+
+					"StateUpdate", nextMsg)
+			}
+		}
+
+		// Try to accept the state update from the client.
+		err := s.handleStateUpdate(peer, id, curUpdate)
+		if err != nil {
+			return err
+		}
+
+		// If the client signals that this is last StateUpdate
+		// message, we can disconnect the client.
+		if curUpdate.IsComplete == 1 {
+			return nil
+		}
+
+		// Reset the current update to read subsequent updates in the
+		// stream.
+		curUpdate = nil
+
+		select {
+		case <-s.quit:
+			return ErrServerExiting
+		default:
+		}
+	}
+}
+
+// handleStateUpdate processes a StateUpdate message request from a client. An
+// attempt will be made to insert the update into the db, where it is validated
+// against the client's session. The possible errors are then mapped back to
+// StateUpdateCodes specified by the watchtower wire protocol, and sent back
+// using a StateUpdateReply message.
+func (s *Server) handleStateUpdate(peer Peer, id *wtdb.SessionID,
+	update *wtwire.StateUpdate) error {
+
+	var (
+		lastApplied uint16
+		failCode    wtwire.ErrorCode
+		err         error
+	)
+
+	sessionUpdate := wtdb.SessionStateUpdate{
+		ID:            *id,
+		Hint:          update.Hint,
+		SeqNum:        update.SeqNum,
+		LastApplied:   update.LastApplied,
+		EncryptedBlob: update.EncryptedBlob,
+	}
+
+	lastApplied, err = s.cfg.DB.InsertStateUpdate(&sessionUpdate)
+	switch {
+	case err == nil:
+		log.Debugf("State update %d accepted for %s",
+			update.SeqNum, id)
+
+		failCode = wtwire.CodeOK
+
+	// Return a permanent failure if a client tries to send an update for
+	// which we have no session.
+	case err == wtdb.ErrSessionNotFound:
+		failCode = wtwire.CodePermanentFailure
+
+	case err == wtdb.ErrSeqNumAlreadyApplied:
+		failCode = wtwire.CodePermanentFailure
+
+		// TODO(conner): remove session state for protocol
+		// violation. Could also double as clean up method for
+		// session-related state.
+
+	case err == wtdb.ErrLastAppliedReversion:
+		failCode = wtwire.StateUpdateCodeClientBehind
+
+	case err == wtdb.ErrSessionConsumed:
+		failCode = wtwire.StateUpdateCodeMaxUpdatesExceeded
+
+	case err == wtdb.ErrUpdateOutOfOrder:
+		failCode = wtwire.StateUpdateCodeSeqNumOutOfOrder
+
+	default:
+		failCode = wtwire.CodeTemporaryFailure
+	}
+
+	if s.cfg.NoAckUpdates {
+		return &connFailure{
+			ID:   *id,
+			Code: uint16(failCode),
+		}
+	}
+
+	return s.replyStateUpdate(
+		peer, id, failCode, lastApplied,
+	)
+}
+
+// replyStateUpdate sends a response to a StateUpdate from a client. If the
+// status code in the reply is OK, the error from the write will be bubbled up.
+// Otherwise, this method returns a connection error to ensure we don't continue
+// communication with the client.
+func (s *Server) replyStateUpdate(peer Peer, id *wtdb.SessionID,
+	code wtwire.StateUpdateCode, lastApplied uint16) error {
+
+	msg := &wtwire.StateUpdateReply{
+		Code:        code,
+		LastApplied: lastApplied,
+	}
+
+	err := s.sendMessage(peer, msg)
+	if err != nil {
+		log.Errorf("unable to send StateUpdateReply to %s", id)
+	}
+
+	// Return the write error if the request succeeded.
+	if code == wtwire.CodeOK {
+		return err
+	}
+
+	// Otherwise the request failed, return a connection failure to
+	// disconnect the client.
+	return &connFailure{
+		ID:   *id,
+		Code: uint16(code),
+	}
+}
diff --git a/watchtower/wtwire/delete_session.go b/watchtower/wtwire/delete_session.go
new file mode 100644
index 000000000..fbe8cfb01
--- /dev/null
+++ b/watchtower/wtwire/delete_session.go
@@ -0,0 +1,45 @@
+package wtwire
+
+import "io"
+
+// DeleteSession is sent from the client to the tower to signal that the tower
+// can delete all session state for the session key used to authenticate the
+// brontide connection. This should be done by the client once all channels that
+// have state updates in the session have been resolved on-chain.
+type DeleteSession struct{}
+
+// Compile-time constraint to ensure DeleteSession implements the wtwire.Message
+// interface.
+var _ Message = (*DeleteSession)(nil)
+
+// Decode deserializes a serialized DeleteSession message stored in the passed
+// io.Reader observing the specified protocol version.
+//
+// This is part of the wtwire.Message interface.
+func (m *DeleteSession) Decode(r io.Reader, pver uint32) error {
+	return nil
+}
+
+// Encode serializes the target DeleteSession message into the passed io.Writer
+// observing the specified protocol version.
+//
+// This is part of the wtwire.Message interface.
+func (m *DeleteSession) Encode(w io.Writer, pver uint32) error {
+	return nil
+}
+
+// MsgType returns the integer uniquely identifying this message type on the
+// wire.
+//
+// This is part of the wtwire.Message interface.
+func (m *DeleteSession) MsgType() MessageType {
+	return MsgDeleteSession
+}
+
+// MaxPayloadLength returns the maximum allowed payload size for a DeleteSession
+// message observing the specified protocol version.
+//
+// This is part of the wtwire.Message interface.
+func (m *DeleteSession) MaxPayloadLength(uint32) uint32 {
+	return 0
+}
diff --git a/watchtower/wtwire/delete_session_reply.go b/watchtower/wtwire/delete_session_reply.go
new file mode 100644
index 000000000..059d189e8
--- /dev/null
+++ b/watchtower/wtwire/delete_session_reply.go
@@ -0,0 +1,66 @@
+package wtwire
+
+import "io"
+
+// DeleteSessionCode is an error code returned by a watchtower in response to a
+// DeleteSession message.
+type DeleteSessionCode = ErrorCode
+
+const (
+	// DeleteSessionCodeNotFound is returned when the watchtower does not
+	// know of the requested session. This may indicate an error on the
+	// client side, or that the tower had already deleted the session in a
+	// prior request that the client may not have received.
+	DeleteSessionCodeNotFound DeleteSessionCode = 80
+
+	// TODO(conner): add String method after wtclient is merged
+)
+
+// DeleteSessionReply is a message sent in response to a client's DeleteSession
+// request. The message indicates whether or not the deletion was a success or
+// failure.
+type DeleteSessionReply struct {
+	// Code will be non-zero if the watchtower was not able to delete the
+	// requested session.
+	Code DeleteSessionCode
+}
+
+// A compile time check to ensure DeleteSessionReply implements the
+// wtwire.Message interface.
+var _ Message = (*DeleteSessionReply)(nil)
+
+// Decode deserializes a serialized DeleteSessionReply message stored in the
+// passed io.Reader observing the specified protocol version.
+//
+// This is part of the wtwire.Message interface.
+func (m *DeleteSessionReply) Decode(r io.Reader, pver uint32) error {
+	return ReadElements(r,
+		&m.Code,
+	)
+}
+
+// Encode serializes the target DeleteSessionReply into the passed io.Writer
+// observing the protocol version specified.
+//
+// This is part of the wtwire.Message interface.
+func (m *DeleteSessionReply) Encode(w io.Writer, pver uint32) error {
+	return WriteElements(w,
+		m.Code,
+	)
+}
+
+// MsgType returns the integer uniquely identifying this message type on the
+// wire.
+//
+// This is part of the wtwire.Message interface.
+func (m *DeleteSessionReply) MsgType() MessageType {
+	return MsgDeleteSessionReply
+}
+
+// MaxPayloadLength returns the maximum allowed payload size for a
+// DeleteSessionReply complete message observing the specified protocol version.
+//
+// This is part of the wtwire.Message interface.
+func (m *DeleteSessionReply) MaxPayloadLength(uint32) uint32 {
+	return 2
+}
diff --git a/watchtower/wtwire/message.go b/watchtower/wtwire/message.go
index 364a2dab5..192a397c2 100644
--- a/watchtower/wtwire/message.go
+++ b/watchtower/wtwire/message.go
@@ -40,6 +40,13 @@ const (
 
 	// MsgStateUpdateReply identifies an encoded StateUpdateReply message.
 	MsgStateUpdateReply MessageType = 305
+
+	// MsgDeleteSession identifies an encoded DeleteSession message.
+	MsgDeleteSession MessageType = 306
+
+	// MsgDeleteSessionReply identifies an encoded DeleteSessionReply
+	// message.
+	MsgDeleteSessionReply MessageType = 307
 )
 
 // String returns a human readable description of the message type.
@@ -55,6 +62,10 @@ func (m MessageType) String() string {
 		return "MsgStateUpdate"
 	case MsgStateUpdateReply:
 		return "MsgStateUpdateReply"
+	case MsgDeleteSession:
+		return "MsgDeleteSession"
+	case MsgDeleteSessionReply:
+		return "MsgDeleteSessionReply"
 	case MsgError:
 		return "Error"
 	default:
@@ -97,6 +108,10 @@ func makeEmptyMessage(msgType MessageType) (Message, error) {
 		msg = &StateUpdate{}
 	case MsgStateUpdateReply:
 		msg = &StateUpdateReply{}
+	case MsgDeleteSession:
+		msg = &DeleteSession{}
+	case MsgDeleteSessionReply:
+		msg = &DeleteSessionReply{}
 	case MsgError:
 		msg = &Error{}
 	default:
diff --git a/watchtower/wtwire/wtwire_test.go b/watchtower/wtwire/wtwire_test.go
index 1dfef1a26..e9b37a559 100644
--- a/watchtower/wtwire/wtwire_test.go
+++ b/watchtower/wtwire/wtwire_test.go
@@ -126,6 +126,18 @@ func TestWatchtowerWireProtocol(t *testing.T) {
 				return mainScenario(&m)
 			},
 		},
+		{
+			msgType: wtwire.MsgDeleteSession,
+			scenario: func(m wtwire.DeleteSession) bool {
+				return mainScenario(&m)
+			},
+		},
+		{
+			msgType: wtwire.MsgDeleteSessionReply,
+			scenario: func(m wtwire.DeleteSessionReply) bool {
+				return mainScenario(&m)
+			},
+		},
 		{
 			msgType: wtwire.MsgError,
 			scenario: func(m wtwire.Error) bool {