diff --git a/modules/ibc/handler.go b/modules/ibc/handler.go
index 380fd88dd..91eb3478a 100644
--- a/modules/ibc/handler.go
+++ b/modules/ibc/handler.go
@@ -173,7 +173,7 @@ func (h Handler) createPacket(ctx basecoin.Context, store state.KVStore,
 
 	// start making the packet to send
 	packet := Packet{
-		DestChain:   t.DestChain,
+		DestChain:   dest,
 		Tx:          t.Tx,
 		Permissions: make([]basecoin.Actor, len(t.Permissions)),
 	}
@@ -188,6 +188,9 @@ func (h Handler) createPacket(ctx basecoin.Context, store state.KVStore,
 	}
 
 	// now add it to the output queue....
-	// TODO: where to store, also set the sequence....
+	q := OutputQueue(store, dest)
+	packet.Sequence = q.Tail()
+	q.Push(packet.Bytes())
+
 	return res, nil
 }
diff --git a/modules/ibc/store.go b/modules/ibc/store.go
index 2aa34c492..810377d89 100644
--- a/modules/ibc/store.go
+++ b/modules/ibc/store.go
@@ -12,8 +12,12 @@ const (
 	// we otherwise use the chainid as prefix, so this must not be an
 	// alpha-numeric byte
 	prefixChains = "**"
+
+	prefixInput  = "i"
+	prefixOutput = "o"
 )
 
+// this is used for the global handler info
 var (
 	handlerKey = []byte{0x2}
 )
@@ -77,7 +81,7 @@ func (c ChainSet) Register(chainID string, ourHeight uint64, theirHeight int) er
 // send off to another chain.
 type Packet struct {
 	DestChain   string           `json:"dest_chain"`
-	Sequence    int              `json:"sequence"`
+	Sequence    uint64           `json:"sequence"`
 	Permissions []basecoin.Actor `json:"permissions"`
 	Tx          basecoin.Tx      `json:"tx"`
 }
@@ -86,3 +90,17 @@ type Packet struct {
 func (p Packet) Bytes() []byte {
 	return wire.BinaryBytes(p)
 }
+
+// InputQueue returns the queue of input packets from this chain
+func InputQueue(store state.KVStore, chainID string) *state.Queue {
+	ch := stack.PrefixedStore(chainID, store)
+	space := stack.PrefixedStore(prefixInput, ch)
+	return state.NewQueue(space)
+}
+
+// OutputQueue returns the queue of output packets destined for this chain
+func OutputQueue(store state.KVStore, chainID string) *state.Queue {
+	ch := stack.PrefixedStore(chainID, store)
+	space := stack.PrefixedStore(prefixOutput, ch)
+	return state.NewQueue(space)
+}