diff --git a/core/tx_list.go b/core/tx_list.go
index 08d7d80e81a7cd5427e547a75fa6267976401953..626d3a3b71de28288e1eb27e90c8561791d37db3 100644
--- a/core/tx_list.go
+++ b/core/tx_list.go
@@ -220,9 +220,11 @@ func (m *txSortedMap) Flatten() types.Transactions {
 // the executable/pending queue; and for storing gapped transactions for the non-
 // executable/future queue, with minor behavioral changes.
 type txList struct {
-	strict  bool         // Whether nonces are strictly continuous or not
-	txs     *txSortedMap // Heap indexed sorted hash map of the transactions
-	costcap *big.Int     // Price of the highest costing transaction (reset only if exceeds balance)
+	strict bool         // Whether nonces are strictly continuous or not
+	txs    *txSortedMap // Heap indexed sorted hash map of the transactions
+
+	costcap *big.Int // Price of the highest costing transaction (reset only if exceeds balance)
+	gascap  *big.Int // Gas limit of the highest spending transaction (reset only if exceeds block limit)
 }
 
 // newTxList create a new transaction list for maintaining nonce-indexable fast,
@@ -232,6 +234,7 @@ func newTxList(strict bool) *txList {
 		strict:  strict,
 		txs:     newTxSortedMap(),
 		costcap: new(big.Int),
+		gascap:  new(big.Int),
 	}
 }
 
@@ -244,8 +247,8 @@ func (l *txList) Overlaps(tx *types.Transaction) bool {
 // Add tries to insert a new transaction into the list, returning whether the
 // transaction was accepted, and if yes, any previous transaction it replaced.
 //
-// If the new transaction is accepted into the list, the lists' cost threshold
-// is also potentially updated.
+// If the new transaction is accepted into the list, the lists' cost and gas
+// thresholds are also potentially updated.
 func (l *txList) Add(tx *types.Transaction, priceBump uint64) (bool, *types.Transaction) {
 	// If there's an older better transaction, abort
 	old := l.txs.Get(tx.Nonce())
@@ -260,6 +263,9 @@ func (l *txList) Add(tx *types.Transaction, priceBump uint64) (bool, *types.Tran
 	if cost := tx.Cost(); l.costcap.Cmp(cost) < 0 {
 		l.costcap = cost
 	}
+	if gas := tx.Gas(); l.gascap.Cmp(gas) < 0 {
+		l.gascap = gas
+	}
 	return true, old
 }
 
@@ -270,23 +276,25 @@ func (l *txList) Forward(threshold uint64) types.Transactions {
 	return l.txs.Forward(threshold)
 }
 
-// Filter removes all transactions from the list with a cost higher than the
-// provided threshold. Every removed transaction is returned for any post-removal
-// maintenance. Strict-mode invalidated transactions are also returned.
+// Filter removes all transactions from the list with a cost or gas limit higher
+// than the provided thresholds. Every removed transaction is returned for any
+// post-removal maintenance. Strict-mode invalidated transactions are also
+// returned.
 //
-// This method uses the cached costcap to quickly decide if there's even a point
-// in calculating all the costs or if the balance covers all. If the threshold is
-// lower than the costcap, the costcap will be reset to a new high after removing
-// expensive the too transactions.
-func (l *txList) Filter(threshold *big.Int) (types.Transactions, types.Transactions) {
+// This method uses the cached costcap and gascap to quickly decide if there's even
+// a point in calculating all the costs or if the balance covers all. If the threshold
+// is lower than the costgas cap, the caps will be reset to a new high after removing
+// the newly invalidated transactions.
+func (l *txList) Filter(costLimit, gasLimit *big.Int) (types.Transactions, types.Transactions) {
 	// If all transactions are below the threshold, short circuit
-	if l.costcap.Cmp(threshold) <= 0 {
+	if l.costcap.Cmp(costLimit) <= 0 && l.gascap.Cmp(gasLimit) <= 0 {
 		return nil, nil
 	}
-	l.costcap = new(big.Int).Set(threshold) // Lower the cap to the threshold
+	l.costcap = new(big.Int).Set(costLimit) // Lower the caps to the thresholds
+	l.gascap = new(big.Int).Set(gasLimit)
 
 	// Filter out all the transactions above the account's funds
-	removed := l.txs.Filter(func(tx *types.Transaction) bool { return tx.Cost().Cmp(threshold) > 0 })
+	removed := l.txs.Filter(func(tx *types.Transaction) bool { return tx.Cost().Cmp(costLimit) > 0 || tx.Gas().Cmp(gasLimit) > 0 })
 
 	// If the list was strict, filter anything above the lowest nonce
 	var invalids types.Transactions
diff --git a/core/tx_pool.go b/core/tx_pool.go
index 7aea02101fa2d619f555d8f917557e0af62bb5db..1f5b46d4b6157e7fe84276809fffd018ba8460f8 100644
--- a/core/tx_pool.go
+++ b/core/tx_pool.go
@@ -663,6 +663,8 @@ func (pool *TxPool) removeTx(hash common.Hash) {
 // future queue to the set of pending transactions. During this process, all
 // invalidated transactions (low nonce, low balance) are deleted.
 func (pool *TxPool) promoteExecutables(state *state.StateDB) {
+	gaslimit := pool.gasLimit()
+
 	// Iterate over all accounts and promote any executable transactions
 	queued := uint64(0)
 	for addr, list := range pool.queue {
@@ -673,8 +675,8 @@ func (pool *TxPool) promoteExecutables(state *state.StateDB) {
 			delete(pool.all, hash)
 			pool.priced.Removed()
 		}
-		// Drop all transactions that are too costly (low balance)
-		drops, _ := list.Filter(state.GetBalance(addr))
+		// Drop all transactions that are too costly (low balance or out of gas)
+		drops, _ := list.Filter(state.GetBalance(addr), gaslimit)
 		for _, tx := range drops {
 			hash := tx.Hash()
 			log.Trace("Removed unpayable queued transaction", "hash", hash)
@@ -798,6 +800,8 @@ func (pool *TxPool) promoteExecutables(state *state.StateDB) {
 // executable/pending queue and any subsequent transactions that become unexecutable
 // are moved back into the future queue.
 func (pool *TxPool) demoteUnexecutables(state *state.StateDB) {
+	gaslimit := pool.gasLimit()
+
 	// Iterate over all accounts and demote any non-executable transactions
 	for addr, list := range pool.pending {
 		nonce := state.GetNonce(addr)
@@ -809,8 +813,8 @@ func (pool *TxPool) demoteUnexecutables(state *state.StateDB) {
 			delete(pool.all, hash)
 			pool.priced.Removed()
 		}
-		// Drop all transactions that are too costly (low balance), and queue any invalids back for later
-		drops, invalids := list.Filter(state.GetBalance(addr))
+		// Drop all transactions that are too costly (low balance or out of gas), and queue any invalids back for later
+		drops, invalids := list.Filter(state.GetBalance(addr), gaslimit)
 		for _, tx := range drops {
 			hash := tx.Hash()
 			log.Trace("Removed unpayable pending transaction", "hash", hash)
diff --git a/core/tx_pool_test.go b/core/tx_pool_test.go
index 63e0144bdb71d898af1d004935a112c7f9c90d2f..c12bd20a16b322d061e4467c60f52ea77ff1b19f 100644
--- a/core/tx_pool_test.go
+++ b/core/tx_pool_test.go
@@ -397,50 +397,79 @@ func TestTransactionDropping(t *testing.T) {
 	var (
 		tx0  = transaction(0, big.NewInt(100), key)
 		tx1  = transaction(1, big.NewInt(200), key)
+		tx2  = transaction(2, big.NewInt(300), key)
 		tx10 = transaction(10, big.NewInt(100), key)
 		tx11 = transaction(11, big.NewInt(200), key)
+		tx12 = transaction(12, big.NewInt(300), key)
 	)
 	pool.promoteTx(account, tx0.Hash(), tx0)
 	pool.promoteTx(account, tx1.Hash(), tx1)
+	pool.promoteTx(account, tx1.Hash(), tx2)
 	pool.enqueueTx(tx10.Hash(), tx10)
 	pool.enqueueTx(tx11.Hash(), tx11)
+	pool.enqueueTx(tx11.Hash(), tx12)
 
 	// Check that pre and post validations leave the pool as is
-	if pool.pending[account].Len() != 2 {
-		t.Errorf("pending transaction mismatch: have %d, want %d", pool.pending[account].Len(), 2)
+	if pool.pending[account].Len() != 3 {
+		t.Errorf("pending transaction mismatch: have %d, want %d", pool.pending[account].Len(), 3)
 	}
-	if pool.queue[account].Len() != 2 {
-		t.Errorf("queued transaction mismatch: have %d, want %d", pool.queue[account].Len(), 2)
+	if pool.queue[account].Len() != 3 {
+		t.Errorf("queued transaction mismatch: have %d, want %d", pool.queue[account].Len(), 3)
 	}
 	if len(pool.all) != 4 {
 		t.Errorf("total transaction mismatch: have %d, want %d", len(pool.all), 4)
 	}
 	pool.resetState()
-	if pool.pending[account].Len() != 2 {
-		t.Errorf("pending transaction mismatch: have %d, want %d", pool.pending[account].Len(), 2)
+	if pool.pending[account].Len() != 3 {
+		t.Errorf("pending transaction mismatch: have %d, want %d", pool.pending[account].Len(), 3)
 	}
-	if pool.queue[account].Len() != 2 {
-		t.Errorf("queued transaction mismatch: have %d, want %d", pool.queue[account].Len(), 2)
+	if pool.queue[account].Len() != 3 {
+		t.Errorf("queued transaction mismatch: have %d, want %d", pool.queue[account].Len(), 3)
 	}
 	if len(pool.all) != 4 {
 		t.Errorf("total transaction mismatch: have %d, want %d", len(pool.all), 4)
 	}
 	// Reduce the balance of the account, and check that invalidated transactions are dropped
-	state.AddBalance(account, big.NewInt(-750))
+	state.AddBalance(account, big.NewInt(-650))
 	pool.resetState()
 
 	if _, ok := pool.pending[account].txs.items[tx0.Nonce()]; !ok {
 		t.Errorf("funded pending transaction missing: %v", tx0)
 	}
-	if _, ok := pool.pending[account].txs.items[tx1.Nonce()]; ok {
+	if _, ok := pool.pending[account].txs.items[tx1.Nonce()]; !ok {
+		t.Errorf("funded pending transaction missing: %v", tx0)
+	}
+	if _, ok := pool.pending[account].txs.items[tx2.Nonce()]; ok {
 		t.Errorf("out-of-fund pending transaction present: %v", tx1)
 	}
 	if _, ok := pool.queue[account].txs.items[tx10.Nonce()]; !ok {
 		t.Errorf("funded queued transaction missing: %v", tx10)
 	}
-	if _, ok := pool.queue[account].txs.items[tx11.Nonce()]; ok {
+	if _, ok := pool.queue[account].txs.items[tx11.Nonce()]; !ok {
+		t.Errorf("funded queued transaction missing: %v", tx10)
+	}
+	if _, ok := pool.queue[account].txs.items[tx12.Nonce()]; ok {
 		t.Errorf("out-of-fund queued transaction present: %v", tx11)
 	}
+	if len(pool.all) != 4 {
+		t.Errorf("total transaction mismatch: have %d, want %d", len(pool.all), 4)
+	}
+	// Reduce the block gas limit, check that invalidated transactions are dropped
+	pool.gasLimit = func() *big.Int { return big.NewInt(100) }
+	pool.resetState()
+
+	if _, ok := pool.pending[account].txs.items[tx0.Nonce()]; !ok {
+		t.Errorf("funded pending transaction missing: %v", tx0)
+	}
+	if _, ok := pool.pending[account].txs.items[tx1.Nonce()]; ok {
+		t.Errorf("over-gased pending transaction present: %v", tx1)
+	}
+	if _, ok := pool.queue[account].txs.items[tx10.Nonce()]; !ok {
+		t.Errorf("funded queued transaction missing: %v", tx10)
+	}
+	if _, ok := pool.queue[account].txs.items[tx11.Nonce()]; ok {
+		t.Errorf("over-gased queued transaction present: %v", tx11)
+	}
 	if len(pool.all) != 2 {
 		t.Errorf("total transaction mismatch: have %d, want %d", len(pool.all), 2)
 	}