diff --git a/htlcswitch/interfaces.go b/htlcswitch/interfaces.go
index 8ca1d634..497d85aa 100644
--- a/htlcswitch/interfaces.go
+++ b/htlcswitch/interfaces.go
@@ -99,5 +99,5 @@ type Peer interface {
 
 	// Disconnect disconnects with peer if we have error which we can't
 	// properly handle.
-	Disconnect()
+	Disconnect(reason error)
 }
diff --git a/htlcswitch/link.go b/htlcswitch/link.go
index acfee55a..6efc7097 100644
--- a/htlcswitch/link.go
+++ b/htlcswitch/link.go
@@ -314,9 +314,7 @@ out:
 			}
 
 			if err := l.updateCommitTx(); err != nil {
-				log.Errorf("unable to update commitment: %v",
-					err)
-				l.cfg.Peer.Disconnect()
+				l.fail("unable to update commitment: %v", err)
 				break out
 			}
 
@@ -333,9 +331,7 @@ out:
 			// update, waiting for the revocation window to open
 			// up.
 			if err := l.updateCommitTx(); err != nil {
-				log.Errorf("unable to update "+
-					"commitment: %v", err)
-				l.cfg.Peer.Disconnect()
+				l.fail("unable to update commitment: %v", err)
 				break out
 			}
 
@@ -454,9 +450,7 @@ func (l *channelLink) handleDownStreamPkt(pkt *htlcPacket) {
 		logIndex, err := l.channel.SettleHTLC(pre)
 		if err != nil {
 			// TODO(roasbeef): broadcast on-chain
-			log.Errorf("settle for incoming HTLC "+
-				"rejected: %v", err)
-			l.cfg.Peer.Disconnect()
+			l.fail("unable to settle incoming HTLC: %v", err)
 			return
 		}
 
@@ -499,9 +493,7 @@ func (l *channelLink) handleDownStreamPkt(pkt *htlcPacket) {
 	// this is a settle request, then initiate an update.
 	if l.batchCounter >= 10 || isSettle {
 		if err := l.updateCommitTx(); err != nil {
-			log.Errorf("unable to update "+
-				"commitment: %v", err)
-			l.cfg.Peer.Disconnect()
+			l.fail("unable to update commitment: %v", err)
 			return
 		}
 	}
@@ -518,10 +510,7 @@ func (l *channelLink) handleUpstreamMsg(msg lnwire.Message) {
 		// "settle" list in the event that we know the preimage.
 		index, err := l.channel.ReceiveHTLC(msg)
 		if err != nil {
-			// TODO(roasbeef): fail channel
-			log.Errorf("unable to handle upstream add HTLC: %v",
-				err)
-			l.cfg.Peer.Disconnect()
+			l.fail("unable to handle upstream add HTLC: %v", err)
 			return
 		}
 		log.Tracef("Receive upstream htlc with payment hash(%x), "+
@@ -540,9 +529,7 @@ func (l *channelLink) handleUpstreamMsg(msg lnwire.Message) {
 		idx := msg.ID
 		if err := l.channel.ReceiveHTLCSettle(pre, idx); err != nil {
 			// TODO(roasbeef): broadcast on-chain
-			log.Errorf("unable to handle upstream settle "+
-				"HTLC: %v", err)
-			l.cfg.Peer.Disconnect()
+			l.fail("unable to handle upstream settle HTLC: %v", err)
 			return
 		}
 
@@ -551,9 +538,7 @@ func (l *channelLink) handleUpstreamMsg(msg lnwire.Message) {
 	case *lnwire.UpdateFailHTLC:
 		idx := msg.ID
 		if err := l.channel.ReceiveFailHTLC(idx); err != nil {
-			log.Errorf("unable to handle upstream fail HTLC: "+
-				"%v", err)
-			l.cfg.Peer.Disconnect()
+			l.fail("unable to handle upstream fail HTLC: %v", err)
 			return
 		}
 
@@ -566,8 +551,7 @@ func (l *channelLink) handleUpstreamMsg(msg lnwire.Message) {
 		// TODO(roasbeef): redundant re-serialization
 		sig := msg.CommitSig.Serialize()
 		if err := l.channel.ReceiveNewCommitment(sig); err != nil {
-			log.Errorf("unable to accept new commitment: %v", err)
-			l.cfg.Peer.Disconnect()
+			l.fail("unable to accept new commitment: %v", err)
 			return
 		}
 
@@ -607,8 +591,7 @@ func (l *channelLink) handleUpstreamMsg(msg lnwire.Message) {
 		// so we'll reply with a signature to provide them with their
 		// version of the latest commitment l.
 		if err := l.updateCommitTx(); err != nil {
-			log.Errorf("unable to update commitment: %v", err)
-			l.cfg.Peer.Disconnect()
+			l.fail("unable to update commitment: %v", err)
 			return
 		}
 
@@ -618,8 +601,7 @@ func (l *channelLink) handleUpstreamMsg(msg lnwire.Message) {
 		// revocation window.
 		htlcs, err := l.channel.ReceiveRevocation(msg)
 		if err != nil {
-			log.Errorf("unable to accept revocation: %v", err)
-			l.cfg.Peer.Disconnect()
+			l.fail("unable to accept revocation: %v", err)
 			return
 		}
 
@@ -643,8 +625,7 @@ func (l *channelLink) handleUpstreamMsg(msg lnwire.Message) {
 		// channel, if not we will apply the update.
 		fee := msg.FeePerKw
 		if err := l.channel.ReceiveUpdateFee(fee); err != nil {
-			log.Errorf("error receiving fee update: %v", err)
-			l.cfg.Peer.Disconnect()
+			l.fail("error receiving fee update: %v", err)
 			return
 		}
 	}
@@ -999,8 +980,7 @@ func (l *channelLink) processLockedInHtlcs(
 				preimage := invoice.Terms.PaymentPreimage
 				logIndex, err := l.channel.SettleHTLC(preimage)
 				if err != nil {
-					log.Errorf("unable to settle htlc: %v", err)
-					l.cfg.Peer.Disconnect()
+					l.fail("unable to settle htlc: %v", err)
 					return nil
 				}
 
@@ -1009,8 +989,7 @@ func (l *channelLink) processLockedInHtlcs(
 				// update.
 				err = l.cfg.Registry.SettleInvoice(invoiceHash)
 				if err != nil {
-					log.Errorf("unable to settle invoice: %v", err)
-					l.cfg.Peer.Disconnect()
+					l.fail("unable to settle invoice: %v", err)
 					return nil
 				}
 
@@ -1133,8 +1112,7 @@ func (l *channelLink) processLockedInHtlcs(
 		// remote htlc logs, initiate a state transition by updating
 		// the remote commitment chain.
 		if err := l.updateCommitTx(); err != nil {
-			log.Errorf("unable to update commitment: %v", err)
-			l.cfg.Peer.Disconnect()
+			l.fail("unable to update commitment: %v", err)
 			return nil
 		}
 	}
@@ -1159,3 +1137,11 @@ func (l *channelLink) sendHTLCError(rHash [32]byte,
 		Reason: reason,
 	})
 }
+
+// fail helper function which is used to encapsulate the action neccessary
+// for proper disconnect.
+func (l *channelLink) fail(format string, a ...interface{}) {
+	reason := errors.Errorf(format, a...)
+	log.Error(reason)
+	l.cfg.Peer.Disconnect(reason)
+}
\ No newline at end of file
diff --git a/htlcswitch/mock.go b/htlcswitch/mock.go
index 48bf3d8f..e7cd6688 100644
--- a/htlcswitch/mock.go
+++ b/htlcswitch/mock.go
@@ -260,7 +260,7 @@ func (s *mockServer) PubKey() [33]byte {
 	return s.id
 }
 
-func (s *mockServer) Disconnect() {
+func (s *mockServer) Disconnect(reason error) {
 	s.Stop()
 	s.t.Fatalf("server %v was disconnected", s.name)
 }
diff --git a/peer.go b/peer.go
index 6c37423d..bcf2a1ac 100644
--- a/peer.go
+++ b/peer.go
@@ -338,12 +338,12 @@ func (p *peer) WaitForDisconnect() {
 // Disconnect terminates the connection with the remote peer. Additionally, a
 // signal is sent to the server and htlcSwitch indicating the resources
 // allocated to the peer can now be cleaned up.
-func (p *peer) Disconnect() {
+func (p *peer) Disconnect(reason error) {
 	if !atomic.CompareAndSwapInt32(&p.disconnect, 0, 1) {
 		return
 	}
 
-	peerLog.Tracef("Disconnecting %s", p)
+	peerLog.Tracef("Disconnecting %s, reason: %v", p, reason)
 
 	// Ensure that the TCP connection is properly closed before continuing.
 	p.conn.Close()
@@ -534,7 +534,7 @@ out:
 		}
 	}
 
-	p.Disconnect()
+	p.Disconnect(errors.New("read handler closed"))
 
 	p.wg.Done()
 	peerLog.Tracef("readHandler for peer %v done", p)
@@ -641,9 +641,8 @@ func (p *peer) writeHandler() {
 			}
 
 			if err != nil {
-				peerLog.Errorf("unable to write message: %v",
-					err)
-				p.Disconnect()
+				p.Disconnect(errors.Errorf("unable to write message: %v",
+					err))
 				return
 			}
 
diff --git a/server.go b/server.go
index 99d678fd..2588b097 100644
--- a/server.go
+++ b/server.go
@@ -682,8 +682,7 @@ func (s *server) peerConnected(conn net.Conn, connReq *connmgr.ConnReq, inbound
 	// Attempt to start the peer, if we're unable to do so, then disconnect
 	// this peer.
 	if err := p.Start(); err != nil {
-		srvrLog.Errorf("unable to start peer: %v", err)
-		p.Disconnect()
+		p.Disconnect(errors.Errorf("unable to start peer: %v", err))
 		return
 	}
 
@@ -746,7 +745,7 @@ func (s *server) inboundPeerConnected(conn net.Conn) {
 		// peer to the peer garbage collection goroutine.
 		srvrLog.Debugf("Disconnecting stale connection to %v",
 			connectedPeer)
-		connectedPeer.Disconnect()
+		connectedPeer.Disconnect(errors.New("remove stale connection"))
 		s.donePeers <- connectedPeer
 	}
 
@@ -825,7 +824,7 @@ func (s *server) outboundPeerConnected(connReq *connmgr.ConnReq, conn net.Conn)
 		// server for garbage collection.
 		srvrLog.Debugf("Disconnecting stale connection to %v",
 			connectedPeer)
-		connectedPeer.Disconnect()
+		connectedPeer.Disconnect(errors.New("remove stale connection"))
 		s.donePeers <- connectedPeer
 	}
 
@@ -841,7 +840,7 @@ func (s *server) addPeer(p *peer) {
 
 	// Ignore new peers if we're shutting down.
 	if atomic.LoadInt32(&s.shutdown) != 0 {
-		p.Disconnect()
+		p.Disconnect(errors.New("server is shutting down"))
 		return
 	}
 
@@ -889,7 +888,7 @@ func (s *server) removePeer(p *peer) {
 
 	// As the peer is now finished, ensure that the TCP connection is
 	// closed and all of its related goroutines have exited.
-	p.Disconnect()
+	p.Disconnect(errors.New("remove peer"))
 
 	// Ignore deleting peers if we're shutting down.
 	if atomic.LoadInt32(&s.shutdown) != 0 {
@@ -1144,7 +1143,7 @@ func (s *server) handleDisconnectPeer(msg *disconnectPeerMsg) {
 	// Now that we know the peer is actually connected, we'll disconnect
 	// from the peer.
 	srvrLog.Infof("Disconnecting from %v", peer)
-	peer.Disconnect()
+	peer.Disconnect(errors.New("received user command to disconnect the peer"))
 
 	msg.err <- nil
 }