diff --git a/src/init.cpp b/src/init.cpp
index 02fbf5f802f..bac50302055 100644
--- a/src/init.cpp
+++ b/src/init.cpp
@@ -492,7 +492,7 @@ std::string HelpMessage(HelpMessageMode mode)
 
     strUsage += HelpMessageGroup(_("Block creation options:"));
     strUsage += HelpMessageOpt("-blockminsize=<n>", strprintf(_("Set minimum block size in bytes (default: %u)"), DEFAULT_BLOCK_MIN_SIZE));
-    strUsage += HelpMessageOpt("-blockmaxsize=<n>", strprintf(_("Set maximum block size in bytes (default: %d)"), DEFAULT_BLOCK_MAX_SIZE));
+    strUsage += HelpMessageOpt("-blockmaxsize=<n>", _("Set maximum block size in bytes (default is equal to network max-block-size)"));
     strUsage += HelpMessageOpt("-blockprioritysize=<n>", strprintf(_("Set maximum size of high-priority/low-fee transactions in bytes (default: %d)"), DEFAULT_BLOCK_PRIORITY_SIZE));
     if (showDebug)
         strUsage += HelpMessageOpt("-blockversion=<n>", strprintf("Override block version to test forking scenarios (default: %d)", (int)CBlock::CURRENT_VERSION));
diff --git a/src/miner.cpp b/src/miner.cpp
index 3b17b0157fa..f956a284f04 100644
--- a/src/miner.cpp
+++ b/src/miner.cpp
@@ -111,6 +111,7 @@ CBlockTemplate* CreateNewBlock(const CChainParams& chainparams, const CScript& s
     unsigned int nBlockSigOps = 100;
     int lastFewTxs = 0;
     CAmount nFees = 0;
+    bool fCreatedValidBlock = false;
 
     {
         LOCK2(cs_main, mempool.cs);
@@ -303,11 +304,31 @@ CBlockTemplate* CreateNewBlock(const CChainParams& chainparams, const CScript& s
         pblocktemplate->vTxSigOps[0] = GetLegacySigOpCount(pblock->vtx[0]);
 
         CValidationState state;
-        if (!TestBlockValidity(state, chainparams, *pblock, pindexPrev, false, false)) {
-            throw std::runtime_error(strprintf("%s: TestBlockValidity failed: %s", __func__, FormatStateMessage(state)));
+        fCreatedValidBlock = TestBlockValidity(state, chainparams, *pblock, pindexPrev, false, false);
+        if (!fCreatedValidBlock) {
+            if (pblock->vtx.size() <= 1) {
+                // This should REALLY never happen! Empty block that is invalid.
+                throw std::runtime_error(strprintf("%s: TestBlockValidity failed: %s", 
+                                                   __func__, FormatStateMessage(state)));
+            }
+            // This should also never happen... but if an invalid transaction somehow entered
+            // the mempool due to a bug, remove all the transactions in the block
+            // and try again (it is not worth trying to figure out which transaction(s)
+            // are causing the block to be invalid).
+            LogPrintf("%s: TestBlockValidity failed: %s, retrying with smaller mempool",
+                      __func__, FormatStateMessage(state));
+            std::list<CTransaction> unused;
+            BOOST_REVERSE_FOREACH(const CTransaction& tx, pblock->vtx) {
+                mempool.remove(tx, unused, true);
+            }
         }
     }
 
+    if (!fCreatedValidBlock) {
+        pblocktemplate.reset();
+        return CreateNewBlock(chainparams, scriptPubKeyIn); // recurse with smaller mempool
+    }
+
     return pblocktemplate.release();
 }
 
diff --git a/src/test/miner_tests.cpp b/src/test/miner_tests.cpp
index 71b52409b33..816e67c4c96 100644
--- a/src/test/miner_tests.cpp
+++ b/src/test/miner_tests.cpp
@@ -124,7 +124,10 @@ BOOST_AUTO_TEST_CASE(CreateNewBlock_validity)
         mempool.addUnchecked(hash, entry.Fee(1000000).Time(GetTime()).SpendsCoinbase(spendsCoinbase).FromTx(tx));
         tx.vin[0].prevout.hash = hash;
     }
-    BOOST_CHECK_THROW(CreateNewBlock(chainparams, scriptPubKey), std::runtime_error);
+    BOOST_CHECK(pblocktemplate = CreateNewBlock(chainparams, scriptPubKey));
+    BOOST_CHECK(!mempool.exists(hash));
+    BOOST_CHECK_EQUAL(pblocktemplate->block.vtx.size(), 1);
+    delete pblocktemplate;
     mempool.clear();
 
     tx.vin[0].prevout.hash = txFirst[0]->GetHash();
@@ -139,6 +142,7 @@ BOOST_AUTO_TEST_CASE(CreateNewBlock_validity)
         tx.vin[0].prevout.hash = hash;
     }
     BOOST_CHECK(pblocktemplate = CreateNewBlock(chainparams, scriptPubKey));
+    BOOST_CHECK(pblocktemplate->block.vtx.size() > 1);
     delete pblocktemplate;
     mempool.clear();
 
@@ -163,10 +167,12 @@ BOOST_AUTO_TEST_CASE(CreateNewBlock_validity)
     delete pblocktemplate;
     mempool.clear();
 
-    // orphan in mempool, template creation fails
+    // orphan in mempool not mined
     hash = tx.GetHash();
     mempool.addUnchecked(hash, entry.Fee(1000000).Time(GetTime()).FromTx(tx));
-    BOOST_CHECK_THROW(CreateNewBlock(chainparams, scriptPubKey), std::runtime_error);
+    BOOST_CHECK(pblocktemplate = CreateNewBlock(chainparams, scriptPubKey));
+    BOOST_CHECK_EQUAL(pblocktemplate->block.vtx.size(), 1);
+    delete pblocktemplate;
     mempool.clear();
 
     // child with higher priority than parent
@@ -195,10 +201,12 @@ BOOST_AUTO_TEST_CASE(CreateNewBlock_validity)
     hash = tx.GetHash();
     // give it a fee so it'll get mined
     mempool.addUnchecked(hash, entry.Fee(100000).Time(GetTime()).SpendsCoinbase(false).FromTx(tx));
-    BOOST_CHECK_THROW(CreateNewBlock(chainparams, scriptPubKey), std::runtime_error);
+    BOOST_CHECK(pblocktemplate = CreateNewBlock(chainparams, scriptPubKey));
+    BOOST_CHECK_EQUAL(pblocktemplate->block.vtx.size(), 1);
+    delete pblocktemplate;
     mempool.clear();
 
-    // invalid (pre-p2sh) txn in mempool, template creation fails
+    // invalid (pre-p2sh) txn in mempool, don't mine
     tx.vin[0].prevout.hash = txFirst[0]->GetHash();
     tx.vin[0].prevout.n = 0;
     tx.vin[0].scriptSig = CScript() << OP_1;
@@ -212,10 +220,11 @@ BOOST_AUTO_TEST_CASE(CreateNewBlock_validity)
     tx.vout[0].nValue -= 1000000;
     hash = tx.GetHash();
     mempool.addUnchecked(hash, entry.Fee(1000000).Time(GetTime()).SpendsCoinbase(false).FromTx(tx));
-    BOOST_CHECK_THROW(CreateNewBlock(chainparams, scriptPubKey), std::runtime_error);
+    BOOST_CHECK(pblocktemplate = CreateNewBlock(chainparams, scriptPubKey));
+    BOOST_CHECK_EQUAL(pblocktemplate->block.vtx.size(), 1); // Just coinbase
     mempool.clear();
 
-    // double spend txn pair in mempool, template creation fails
+    // double spend txn pair in mempool, don't mine
     tx.vin[0].prevout.hash = txFirst[0]->GetHash();
     tx.vin[0].scriptSig = CScript() << OP_1;
     tx.vout[0].nValue = 4900000000LL;
@@ -225,7 +234,9 @@ BOOST_AUTO_TEST_CASE(CreateNewBlock_validity)
     tx.vout[0].scriptPubKey = CScript() << OP_2;
     hash = tx.GetHash();
     mempool.addUnchecked(hash, entry.Fee(100000000L).Time(GetTime()).SpendsCoinbase(true).FromTx(tx));
-    BOOST_CHECK_THROW(CreateNewBlock(chainparams, scriptPubKey), std::runtime_error);
+    BOOST_CHECK(pblocktemplate = CreateNewBlock(chainparams, scriptPubKey));
+    BOOST_CHECK_EQUAL(pblocktemplate->block.vtx.size(), 1); // Just coinbase
+    delete pblocktemplate;
     mempool.clear();
 
     // subsidy changing