diff --git a/core/src/main/java/com/google/bitcoin/core/Wallet.java b/core/src/main/java/com/google/bitcoin/core/Wallet.java
index 862a06d7..10e207c2 100644
--- a/core/src/main/java/com/google/bitcoin/core/Wallet.java
+++ b/core/src/main/java/com/google/bitcoin/core/Wallet.java
@@ -637,6 +637,33 @@ public class Wallet extends BaseTaggableObject implements Serializable, BlockCha
         return findKeyFromPubKey(pubkey) != null;
     }
 
+    /**
+     * Marks all keys used in the transaction output as used in the wallet.
+     * See {@link com.google.bitcoin.wallet.DeterministicKeyChain#markKeyAsUsed(DeterministicKey)} for more info on this.
+     */
+    private void markKeysAsUsed(Transaction tx) {
+        lock.lock();
+        try {
+            for (TransactionOutput o : tx.getOutputs()) {
+                try {
+                    Script script = o.getScriptPubKey();
+                    if (script.isSentToRawPubKey()) {
+                        byte[] pubkey = script.getPubKey();
+                        keychain.markPubKeyAsUsed(pubkey);
+                    } else if (script.isSentToAddress()) {
+                        byte[] pubkeyHash = script.getPubKeyHash();
+                        keychain.markPubKeyHashAsUsed(pubkeyHash);
+                    }
+                } catch (ScriptException e) {
+                    // Just means we didn't understand the output of this transaction: ignore it.
+                    log.warn("Could not parse tx output script: {}", e.toString());
+                }
+            }
+        } finally {
+            lock.unlock();
+        }
+    }
+
     /**
      * Returns the immutable seed for the current active HD chain.
      * @throws com.google.bitcoin.core.ECKey.MissingPrivateKeyException if the seed is unavailable (watching wallet)
@@ -1230,6 +1257,9 @@ public class Wallet extends BaseTaggableObject implements Serializable, BlockCha
                 bitcoinValueToFriendlyString(valueDifference), tx.getHashAsString(), relativityOffset,
                 block != null ? block.getHeader().getHash() : "(unit test)");
 
+        // mark the deterministic keys in this transaction as used
+        markKeysAsUsed(tx);
+
         onWalletChangedSuppressions++;
 
         // If this transaction is already in the wallet we may need to move it into a different pool. At the very
diff --git a/core/src/main/java/com/google/bitcoin/wallet/DeterministicKeyChain.java b/core/src/main/java/com/google/bitcoin/wallet/DeterministicKeyChain.java
index 6fb897eb..c83a77cc 100644
--- a/core/src/main/java/com/google/bitcoin/wallet/DeterministicKeyChain.java
+++ b/core/src/main/java/com/google/bitcoin/wallet/DeterministicKeyChain.java
@@ -295,6 +295,28 @@ public class DeterministicKeyChain implements EncryptableKeyChain {
         basicKeyChain.importKeys(ImmutableList.of(key));
     }
 
+    /**
+     * Mark the DeterministicKey as used.
+     * Also correct the issued{Internal|External}Keys counter, because all lower children seem to be requested already.
+     * If the counter was updated, we also might want to update the lookahead keys.
+     */
+    public DeterministicKey markKeyAsUsed(DeterministicKey k) {
+        int numchilds = k.getChildNumber().i() + 1;
+
+        if (k.getParent() == internalKey) {
+            if (issuedInternalKeys < numchilds) {
+                issuedInternalKeys = numchilds;
+                maybeLookAhead();
+            }
+        } else if (k.getParent() == externalKey) {
+            if (issuedExternalKeys < numchilds) {
+                issuedExternalKeys = numchilds;
+                maybeLookAhead();
+            }
+        }
+        return k;
+    }
+
     @Override
     public DeterministicKey findKeyFromPubHash(byte[] pubkeyHash) {
         lock.lock();
@@ -315,6 +337,38 @@ public class DeterministicKeyChain implements EncryptableKeyChain {
         }
     }
 
+    /**
+     * Mark the DeterministicKeys as used, if they match the pubkeyHash
+     * See {@link com.google.bitcoin.wallet.DeterministicKeyChain#markKeyAsUsed(DeterministicKey)} for more info on this.
+     */
+    public boolean markPubHashAsUsed(byte[] pubkeyHash) {
+        lock.lock();
+        try {
+            DeterministicKey k = (DeterministicKey) basicKeyChain.findKeyFromPubHash(pubkeyHash);
+            if (k != null)
+                markKeyAsUsed(k);
+            return k != null;
+        } finally {
+            lock.unlock();
+        }
+    }
+
+    /**
+     * Mark the DeterministicKeys as used, if they match the pubkey
+     * See {@link com.google.bitcoin.wallet.DeterministicKeyChain#markKeyAsUsed(DeterministicKey)} for more info on this.
+     */
+    public boolean markPubKeyAsUsed(byte[] pubkey) {
+        lock.lock();
+        try {
+            DeterministicKey k = (DeterministicKey) basicKeyChain.findKeyFromPubKey(pubkey);
+            if (k != null)
+                markKeyAsUsed(k);
+            return k != null;
+        } finally {
+            lock.unlock();
+        }
+    }
+
     @Override
     public boolean hasKey(ECKey key) {
         lock.lock();
diff --git a/core/src/main/java/com/google/bitcoin/wallet/KeyChainGroup.java b/core/src/main/java/com/google/bitcoin/wallet/KeyChainGroup.java
index 79ec433e..5a0465d1 100644
--- a/core/src/main/java/com/google/bitcoin/wallet/KeyChainGroup.java
+++ b/core/src/main/java/com/google/bitcoin/wallet/KeyChainGroup.java
@@ -227,6 +227,18 @@ public class KeyChainGroup {
         return null;
     }
 
+    /**
+     * Mark the DeterministicKeys as used, if they match the pubkeyHash
+     * See {@link com.google.bitcoin.wallet.DeterministicKeyChain#markKeyAsUsed(DeterministicKey)} for more info on this.
+     */
+    public void markPubKeyHashAsUsed(byte[] pubkeyHash) {
+        for (DeterministicKeyChain chain : chains) {
+            if (chain.markPubHashAsUsed(pubkeyHash))
+                return;
+        }
+    }
+
+
     public boolean hasKey(ECKey key) {
         if (basic.hasKey(key))
             return true;
@@ -248,6 +260,17 @@ public class KeyChainGroup {
         return null;
     }
 
+    /**
+     * Mark the DeterministicKeys as used, if they match the pubkey
+     * See {@link com.google.bitcoin.wallet.DeterministicKeyChain#markKeyAsUsed(DeterministicKey)} for more info on this.
+     */
+    public void markPubKeyAsUsed(byte[] pubkey) {
+        for (DeterministicKeyChain chain : chains) {
+            if (chain.markPubKeyAsUsed(pubkey))
+                return;
+        }
+    }
+
     /** Returns the number of keys managed by this group, including the lookahead buffers. */
     public int numKeys() {
         int result = basic.numKeys();