diff --git a/core/src/main/java/com/google/bitcoin/core/Block.java b/core/src/main/java/com/google/bitcoin/core/Block.java
index 84bb0325..cf2a2465 100644
--- a/core/src/main/java/com/google/bitcoin/core/Block.java
+++ b/core/src/main/java/com/google/bitcoin/core/Block.java
@@ -90,6 +90,11 @@ public class Block extends Message {
 
     private transient boolean headerBytesValid;
     private transient boolean transactionBytesValid;
+    
+    // Blocks can be encoded in a way that will use more bytes than is optimal (due to VarInts having multiple encodings)
+    // MAX_BLOCK_SIZE must be compared to the optimal encoding, not the actual encoding, so when parsing, we keep track
+    // of the size of the ideal encoding in addition to the actual message size (which Message needs)
+    private transient int optimalEncodingMessageSize;
 
     /** Special case constructor, used for the genesis node, cloneAsHeader and unit tests. */
     Block(NetworkParameters params) {
@@ -167,6 +172,7 @@ public class Block extends Message {
             return;
 
         cursor = offset + HEADER_SIZE;
+        optimalEncodingMessageSize = HEADER_SIZE;
         if (bytes.length == cursor) {
             // This message is just a header, it has no transactions.
             transactionsParsed = true;
@@ -175,11 +181,13 @@ public class Block extends Message {
         }
 
         int numTransactions = (int) readVarInt();
+        optimalEncodingMessageSize += VarInt.sizeOf(numTransactions);
         transactions = new ArrayList<Transaction>(numTransactions);
         for (int i = 0; i < numTransactions; i++) {
             Transaction tx = new Transaction(params, bytes, cursor, this, parseLazy, parseRetain, UNKNOWN_LENGTH);
             transactions.add(tx);
             cursor += tx.getMessageSize();
+            optimalEncodingMessageSize += tx.getOptimalEncodingMessageSize();
         }
         // No need to set length here. If length was not provided then it should be set at the end of parseLight().
         // If this is a genuine lazy parse then length must have been provided to the constructor.
@@ -192,6 +200,16 @@ public class Block extends Message {
         parseTransactions();
         length = cursor - offset;
     }
+    
+    public int getOptimalEncodingMessageSize() {
+        if (optimalEncodingMessageSize != 0)
+            return optimalEncodingMessageSize;
+        maybeParseTransactions();
+        if (optimalEncodingMessageSize != 0)
+            return optimalEncodingMessageSize;
+        optimalEncodingMessageSize = getMessageSize();
+        return optimalEncodingMessageSize;
+    }
 
     protected void parseLite() throws ProtocolException {
         // Ignore the header since it has fixed length. If length is not provided we will have to
@@ -716,7 +734,7 @@ public class Block extends Message {
         if (transactions.isEmpty())
             throw new VerificationException("Block had no transactions");
         maybeParseTransactions();
-        if (this.getMessageSize() > MAX_BLOCK_SIZE)
+        if (this.getOptimalEncodingMessageSize() > MAX_BLOCK_SIZE)
             throw new VerificationException("Block larger than MAX_BLOCK_SIZE");
         checkTransactions();
         checkMerkleRoot();
diff --git a/core/src/main/java/com/google/bitcoin/core/Transaction.java b/core/src/main/java/com/google/bitcoin/core/Transaction.java
index a7878da9..5662b300 100644
--- a/core/src/main/java/com/google/bitcoin/core/Transaction.java
+++ b/core/src/main/java/com/google/bitcoin/core/Transaction.java
@@ -79,6 +79,13 @@ public class Transaction extends ChildMessage implements Serializable {
     //
     // If this transaction is not stored in the wallet, appearsInHashes is null.
     private Set<Sha256Hash> appearsInHashes;
+    
+    // Transactions can be encoded in a way that will use more bytes than is optimal
+    // (due to VarInts having multiple encodings)
+    // MAX_BLOCK_SIZE must be compared to the optimal encoding, not the actual encoding, so when parsing, we keep track
+    // of the size of the ideal encoding in addition to the actual message size (which Message needs) so that Blocks
+    // can properly keep track of optimal encoded size
+    private transient int optimalEncodingMessageSize;
 
     public Transaction(NetworkParameters params) {
         super(params);
@@ -478,26 +485,44 @@ public class Transaction extends ChildMessage implements Serializable {
         cursor = offset;
 
         version = readUint32();
+        optimalEncodingMessageSize = 4;
 
         // First come the inputs.
         long numInputs = readVarInt();
+        optimalEncodingMessageSize += VarInt.sizeOf(numInputs);
         inputs = new ArrayList<TransactionInput>((int) numInputs);
         for (long i = 0; i < numInputs; i++) {
             TransactionInput input = new TransactionInput(params, this, bytes, cursor, parseLazy, parseRetain);
             inputs.add(input);
-            cursor += input.getMessageSize();
+            long scriptLen = readVarInt(TransactionOutPoint.MESSAGE_LENGTH);
+            optimalEncodingMessageSize += TransactionOutPoint.MESSAGE_LENGTH + VarInt.sizeOf(scriptLen) + scriptLen + 4;
+            cursor += scriptLen + 4;
         }
         // Now the outputs
         long numOutputs = readVarInt();
+        optimalEncodingMessageSize += VarInt.sizeOf(numOutputs);
         outputs = new ArrayList<TransactionOutput>((int) numOutputs);
         for (long i = 0; i < numOutputs; i++) {
             TransactionOutput output = new TransactionOutput(params, this, bytes, cursor, parseLazy, parseRetain);
             outputs.add(output);
-            cursor += output.getMessageSize();
+            long scriptLen = readVarInt(8);
+            optimalEncodingMessageSize += 8 + VarInt.sizeOf(scriptLen) + scriptLen;
+            cursor += scriptLen;
         }
         lockTime = readUint32();
+        optimalEncodingMessageSize += 4;
         length = cursor - offset;
     }
+    
+    public int getOptimalEncodingMessageSize() {
+        if (optimalEncodingMessageSize != 0)
+            return optimalEncodingMessageSize;
+        maybeParse();
+        if (optimalEncodingMessageSize != 0)
+            return optimalEncodingMessageSize;
+        optimalEncodingMessageSize = getMessageSize();
+        return optimalEncodingMessageSize;
+    }
 
     /**
      * A coinbase transaction is one that creates a new coin. They are the first transaction in each block and their