diff --git a/p2p/transport_memory.go b/p2p/transport_memory.go
new file mode 100644
index 000000000..bad025b28
--- /dev/null
+++ b/p2p/transport_memory.go
@@ -0,0 +1,394 @@
+package p2p
+
+import (
+	"context"
+	"errors"
+	"fmt"
+	"io"
+	"sync"
+
+	"github.com/tendermint/tendermint/crypto"
+	"github.com/tendermint/tendermint/crypto/ed25519"
+	"github.com/tendermint/tendermint/libs/log"
+	"github.com/tendermint/tendermint/p2p/conn"
+)
+
+const (
+	MemoryProtocol Protocol = "memory"
+)
+
+// MemoryNetwork is an in-memory "network" that uses Go channels to communicate
+// between endpoints. Transport endpoints are created with CreateTransport. It
+// is primarily used for testing.
+type MemoryNetwork struct {
+	logger log.Logger
+
+	mtx        sync.RWMutex
+	transports map[ID]*MemoryTransport
+}
+
+// NewMemoryNetwork creates a new in-memory network.
+func NewMemoryNetwork(logger log.Logger) *MemoryNetwork {
+	return &MemoryNetwork{
+		logger:     logger,
+		transports: map[ID]*MemoryTransport{},
+	}
+}
+
+// CreateTransport creates a new memory transport and endpoint for the given
+// NodeInfo and private key. Use GenerateTransport() to autogenerate a random
+// key and node info.
+//
+// The transport immediately begins listening on the endpoint "memory:<id>", and
+// can be accessed by other transports in the same memory network.
+func (n *MemoryNetwork) CreateTransport(
+	nodeInfo NodeInfo,
+	privKey crypto.PrivKey,
+) (*MemoryTransport, error) {
+	nodeID := nodeInfo.DefaultNodeID
+	if nodeID == "" {
+		return nil, errors.New("no node ID")
+	}
+	t := newMemoryTransport(n, nodeInfo, privKey)
+
+	n.mtx.Lock()
+	defer n.mtx.Unlock()
+	if _, ok := n.transports[nodeID]; ok {
+		return nil, fmt.Errorf("transport with node ID %q already exists", nodeID)
+	}
+	n.transports[nodeID] = t
+	return t, nil
+}
+
+// GenerateTransport generates a new transport endpoint by generating a random
+// private key and node info. The endpoint address can be obtained via
+// Transport.Endpoints().
+func (n *MemoryNetwork) GenerateTransport() *MemoryTransport {
+	privKey := ed25519.GenPrivKey()
+	nodeID := PubKeyToID(privKey.PubKey())
+	nodeInfo := NodeInfo{
+		DefaultNodeID: nodeID,
+		ListenAddr:    fmt.Sprintf("%v:%v", MemoryProtocol, nodeID),
+	}
+	t, err := n.CreateTransport(nodeInfo, privKey)
+	if err != nil {
+		// GenerateTransport is only used for testing, and the likelihood of
+		// generating a duplicate node ID is very low, so we'll panic.
+		panic(err)
+	}
+	return t
+}
+
+// GetTransport looks up a transport in the network, returning nil if not found.
+func (n *MemoryNetwork) GetTransport(id ID) *MemoryTransport {
+	n.mtx.RLock()
+	defer n.mtx.RUnlock()
+	return n.transports[id]
+}
+
+// RemoveTransport removes a transport from the network and closes it.
+func (n *MemoryNetwork) RemoveTransport(id ID) error {
+	n.mtx.Lock()
+	t, ok := n.transports[id]
+	delete(n.transports, id)
+	n.mtx.Unlock()
+
+	if ok {
+		// Close may recursively call RemoveTransport() again, but this is safe
+		// because we've already removed the transport from the map above.
+		return t.Close()
+	}
+	return nil
+}
+
+// MemoryTransport is an in-memory transport that's primarily meant for testing.
+// It communicates between endpoints using Go channels. To dial a different
+// endpoint, both endpoints/transports must be in the same MemoryNetwork.
+type MemoryTransport struct {
+	network  *MemoryNetwork
+	nodeInfo NodeInfo
+	privKey  crypto.PrivKey
+	logger   log.Logger
+
+	acceptCh  chan *MemoryConnection
+	closeCh   chan struct{}
+	closeOnce sync.Once
+}
+
+// newMemoryTransport creates a new in-memory transport in the given network.
+// Callers should use MemoryNetwork.CreateTransport() or GenerateTransport()
+// to create transports, this is for internal use by MemoryNetwork.
+func newMemoryTransport(
+	network *MemoryNetwork,
+	nodeInfo NodeInfo,
+	privKey crypto.PrivKey,
+) *MemoryTransport {
+	return &MemoryTransport{
+		network:  network,
+		nodeInfo: nodeInfo,
+		privKey:  privKey,
+		logger: network.logger.With("local",
+			fmt.Sprintf("%v:%v", MemoryProtocol, nodeInfo.DefaultNodeID)),
+
+		acceptCh: make(chan *MemoryConnection),
+		closeCh:  make(chan struct{}),
+	}
+}
+
+// Accept implements Transport.
+func (t *MemoryTransport) Accept(ctx context.Context) (Connection, error) {
+	select {
+	case conn := <-t.acceptCh:
+		t.logger.Info("accepted connection from peer", "remote", conn.RemoteEndpoint())
+		return conn, nil
+	case <-t.closeCh:
+		return nil, ErrTransportClosed{}
+	case <-ctx.Done():
+		return nil, ctx.Err()
+	}
+}
+
+// Dial implements Transport.
+func (t *MemoryTransport) Dial(ctx context.Context, endpoint Endpoint) (Connection, error) {
+	if endpoint.Protocol != MemoryProtocol {
+		return nil, fmt.Errorf("invalid protocol %q", endpoint.Protocol)
+	}
+	if endpoint.Path == "" {
+		return nil, errors.New("no path")
+	}
+	if endpoint.PeerID == "" {
+		return nil, errors.New("no peer ID")
+	}
+	t.logger.Info("dialing peer", "remote", endpoint)
+
+	peerTransport := t.network.GetTransport(ID(endpoint.Path))
+	if peerTransport == nil {
+		return nil, fmt.Errorf("unknown peer %q", endpoint.Path)
+	}
+	inCh := make(chan memoryMessage, 1)
+	outCh := make(chan memoryMessage, 1)
+	closeCh := make(chan struct{})
+	closeOnce := sync.Once{}
+	closer := func() bool {
+		closed := false
+		closeOnce.Do(func() {
+			close(closeCh)
+			closed = true
+		})
+		return closed
+	}
+
+	outConn := newMemoryConnection(t, peerTransport, inCh, outCh, closeCh, closer)
+	inConn := newMemoryConnection(peerTransport, t, outCh, inCh, closeCh, closer)
+
+	select {
+	case peerTransport.acceptCh <- inConn:
+		return outConn, nil
+	case <-peerTransport.closeCh:
+		return nil, ErrTransportClosed{}
+	case <-ctx.Done():
+		return nil, ctx.Err()
+	}
+}
+
+// DialAccept is a convenience function that dials a peer MemoryTransport and
+// returns both ends of the connection (A to B and B to A).
+func (t *MemoryTransport) DialAccept(
+	ctx context.Context,
+	peer *MemoryTransport,
+) (Connection, Connection, error) {
+	endpoints := peer.Endpoints()
+	if len(endpoints) == 0 {
+		return nil, nil, fmt.Errorf("peer %q not listening on any endpoints", peer.nodeInfo.DefaultNodeID)
+	}
+
+	acceptCh := make(chan Connection, 1)
+	errCh := make(chan error, 1)
+	go func() {
+		conn, err := peer.Accept(ctx)
+		errCh <- err
+		acceptCh <- conn
+	}()
+
+	outConn, err := t.Dial(ctx, endpoints[0])
+	if err != nil {
+		return nil, nil, err
+	}
+	if err = <-errCh; err != nil {
+		return nil, nil, err
+	}
+	inConn := <-acceptCh
+
+	return outConn, inConn, nil
+}
+
+// Close implements Transport.
+func (t *MemoryTransport) Close() error {
+	err := t.network.RemoveTransport(t.nodeInfo.DefaultNodeID)
+	t.closeOnce.Do(func() {
+		close(t.closeCh)
+	})
+	t.logger.Info("stopped accepting connections")
+	return err
+}
+
+// Endpoints implements Transport.
+func (t *MemoryTransport) Endpoints() []Endpoint {
+	select {
+	case <-t.closeCh:
+		return []Endpoint{}
+	default:
+		return []Endpoint{{
+			Protocol: MemoryProtocol,
+			PeerID:   t.nodeInfo.DefaultNodeID,
+			Path:     string(t.nodeInfo.DefaultNodeID),
+		}}
+	}
+}
+
+// SetChannelDescriptors implements Transport.
+func (t *MemoryTransport) SetChannelDescriptors(chDescs []*conn.ChannelDescriptor) {
+}
+
+// MemoryConnection is an in-memory connection between two transports (nodes).
+type MemoryConnection struct {
+	logger log.Logger
+	local  *MemoryTransport
+	remote *MemoryTransport
+
+	receiveCh <-chan memoryMessage
+	sendCh    chan<- memoryMessage
+	closeCh   <-chan struct{}
+	close     func() bool
+}
+
+// memoryMessage is used to pass messages internally in the connection.
+type memoryMessage struct {
+	channel byte
+	message []byte
+}
+
+// newMemoryConnection creates a new MemoryConnection. It takes all channels
+// (including the closeCh signal channel) on construction, such that they can be
+// shared between both ends of the connection.
+func newMemoryConnection(
+	local *MemoryTransport,
+	remote *MemoryTransport,
+	receiveCh <-chan memoryMessage,
+	sendCh chan<- memoryMessage,
+	closeCh <-chan struct{},
+	close func() bool,
+) *MemoryConnection {
+	c := &MemoryConnection{
+		local:     local,
+		remote:    remote,
+		receiveCh: receiveCh,
+		sendCh:    sendCh,
+		closeCh:   closeCh,
+		close:     close,
+	}
+	c.logger = c.local.logger.With("remote", c.RemoteEndpoint())
+	return c
+}
+
+// ReceiveMessage implements Connection.
+func (c *MemoryConnection) ReceiveMessage() (chID byte, msg []byte, err error) {
+	// check close first, since channels are buffered
+	select {
+	case <-c.closeCh:
+		return 0, nil, io.EOF
+	default:
+	}
+
+	select {
+	case msg := <-c.receiveCh:
+		c.logger.Debug("received message", "channel", msg.channel, "message", msg.message)
+		return msg.channel, msg.message, nil
+	case <-c.closeCh:
+		return 0, nil, io.EOF
+	}
+}
+
+// SendMessage implements Connection.
+func (c *MemoryConnection) SendMessage(chID byte, msg []byte) (bool, error) {
+	// check close first, since channels are buffered
+	select {
+	case <-c.closeCh:
+		return false, io.EOF
+	default:
+	}
+
+	select {
+	case c.sendCh <- memoryMessage{channel: chID, message: msg}:
+		c.logger.Debug("sent message", "channel", chID, "message", msg)
+		return true, nil
+	case <-c.closeCh:
+		return false, io.EOF
+	}
+}
+
+// TrySendMessage implements Connection.
+func (c *MemoryConnection) TrySendMessage(chID byte, msg []byte) (bool, error) {
+	// check close first, since channels are buffered
+	select {
+	case <-c.closeCh:
+		return false, io.EOF
+	default:
+	}
+
+	select {
+	case c.sendCh <- memoryMessage{channel: chID, message: msg}:
+		c.logger.Debug("sent message", "channel", chID, "message", msg)
+		return true, nil
+	case <-c.closeCh:
+		return false, io.EOF
+	default:
+		return false, nil
+	}
+}
+
+// Close closes the connection.
+func (c *MemoryConnection) Close() error {
+	if c.close() {
+		c.logger.Info("closed connection")
+	}
+	return nil
+}
+
+// FlushClose flushes all pending sends and then closes the connection.
+func (c *MemoryConnection) FlushClose() error {
+	return c.Close()
+}
+
+// LocalEndpoint returns the local endpoint for the connection.
+func (c *MemoryConnection) LocalEndpoint() Endpoint {
+	return Endpoint{
+		PeerID:   c.local.nodeInfo.DefaultNodeID,
+		Protocol: MemoryProtocol,
+		Path:     string(c.local.nodeInfo.DefaultNodeID),
+	}
+}
+
+// RemoteEndpoint returns the remote endpoint for the connection.
+func (c *MemoryConnection) RemoteEndpoint() Endpoint {
+	return Endpoint{
+		PeerID:   c.remote.nodeInfo.DefaultNodeID,
+		Protocol: MemoryProtocol,
+		Path:     string(c.remote.nodeInfo.DefaultNodeID),
+	}
+}
+
+// PubKey returns the remote peer's public key.
+func (c *MemoryConnection) PubKey() crypto.PubKey {
+	return c.remote.privKey.PubKey()
+}
+
+// NodeInfo returns the remote peer's node info.
+func (c *MemoryConnection) NodeInfo() NodeInfo {
+	return c.remote.nodeInfo
+}
+
+// Status returns the current connection status.
+func (c *MemoryConnection) Status() conn.ConnectionStatus {
+	return conn.ConnectionStatus{}
+}
diff --git a/p2p/transport_memory_test.go b/p2p/transport_memory_test.go
new file mode 100644
index 000000000..e882f8690
--- /dev/null
+++ b/p2p/transport_memory_test.go
@@ -0,0 +1,121 @@
+package p2p_test
+
+import (
+	"context"
+	"io"
+	"testing"
+
+	"github.com/stretchr/testify/require"
+	"github.com/tendermint/tendermint/libs/log"
+	"github.com/tendermint/tendermint/p2p"
+)
+
+func TestMemoryTransport(t *testing.T) {
+	ctx := context.Background()
+	network := p2p.NewMemoryNetwork(log.TestingLogger())
+	a := network.GenerateTransport()
+	b := network.GenerateTransport()
+	c := network.GenerateTransport()
+
+	// Dialing a missing endpoint should fail.
+	_, err := a.Dial(ctx, p2p.Endpoint{
+		Protocol: p2p.MemoryProtocol,
+		PeerID:   p2p.ID("foo"),
+		Path:     "foo",
+	})
+	require.Error(t, err)
+
+	// Dialing and accepting a→b and a→c should work.
+	aToB, bToA, err := a.DialAccept(ctx, b)
+	require.NoError(t, err)
+	defer aToB.Close()
+	defer bToA.Close()
+
+	aToC, cToA, err := a.DialAccept(ctx, c)
+	require.NoError(t, err)
+	defer aToC.Close()
+	defer cToA.Close()
+
+	// Send and receive a message both ways a→b and b→a
+	sent, err := aToB.SendMessage(1, []byte("hi!"))
+	require.NoError(t, err)
+	require.True(t, sent)
+
+	ch, msg, err := bToA.ReceiveMessage()
+	require.NoError(t, err)
+	require.EqualValues(t, 1, ch)
+	require.EqualValues(t, "hi!", msg)
+
+	sent, err = bToA.SendMessage(1, []byte("hello"))
+	require.NoError(t, err)
+	require.True(t, sent)
+
+	ch, msg, err = aToB.ReceiveMessage()
+	require.NoError(t, err)
+	require.EqualValues(t, 1, ch)
+	require.EqualValues(t, "hello", msg)
+
+	// Send and receive a message both ways a→c and c→a
+	sent, err = aToC.SendMessage(1, []byte("foo"))
+	require.NoError(t, err)
+	require.True(t, sent)
+
+	ch, msg, err = cToA.ReceiveMessage()
+	require.NoError(t, err)
+	require.EqualValues(t, 1, ch)
+	require.EqualValues(t, "foo", msg)
+
+	sent, err = cToA.SendMessage(1, []byte("bar"))
+	require.NoError(t, err)
+	require.True(t, sent)
+
+	ch, msg, err = aToC.ReceiveMessage()
+	require.NoError(t, err)
+	require.EqualValues(t, 1, ch)
+	require.EqualValues(t, "bar", msg)
+
+	// If we close aToB, sending and receiving on either end will error.
+	err = aToB.Close()
+	require.NoError(t, err)
+
+	_, err = aToB.SendMessage(1, []byte("foo"))
+	require.Equal(t, io.EOF, err)
+
+	_, _, err = aToB.ReceiveMessage()
+	require.Equal(t, io.EOF, err)
+
+	_, err = bToA.SendMessage(1, []byte("foo"))
+	require.Equal(t, io.EOF, err)
+
+	_, _, err = bToA.ReceiveMessage()
+	require.Equal(t, io.EOF, err)
+
+	// We can still send aToC.
+	sent, err = aToC.SendMessage(1, []byte("foo"))
+	require.NoError(t, err)
+	require.True(t, sent)
+
+	ch, msg, err = cToA.ReceiveMessage()
+	require.NoError(t, err)
+	require.EqualValues(t, 1, ch)
+	require.EqualValues(t, "foo", msg)
+
+	// If we close the c transport, it will no longer accept connections,
+	// but we can still use the open connection.
+	endpoint := c.Endpoints()[0]
+	err = c.Close()
+	require.NoError(t, err)
+	require.Empty(t, c.Endpoints())
+
+	_, err = a.Dial(ctx, endpoint)
+	require.Error(t, err)
+
+	sent, err = aToC.SendMessage(1, []byte("bar"))
+	require.NoError(t, err)
+	require.True(t, sent)
+
+	ch, msg, err = cToA.ReceiveMessage()
+	require.NoError(t, err)
+	require.EqualValues(t, 1, ch)
+	require.EqualValues(t, "bar", msg)
+}