diff --git a/lbry/wallet/constants.py b/lbry/wallet/constants.py
index 34b8baa88..775ba4bbc 100644
--- a/lbry/wallet/constants.py
+++ b/lbry/wallet/constants.py
@@ -2,6 +2,7 @@ NULL_HASH32 = b'\x00'*32
 
 CENT = 1000000
 COIN = 100*CENT
+DUST = 1000
 
 TIMEOUT = 30.0
 
diff --git a/lbry/wallet/transaction.py b/lbry/wallet/transaction.py
index a6f3bf376..120482c55 100644
--- a/lbry/wallet/transaction.py
+++ b/lbry/wallet/transaction.py
@@ -14,7 +14,7 @@ from lbry.schema.purchase import Purchase
 from lbry.schema.support import Support
 
 from .script import InputScript, OutputScript
-from .constants import COIN, NULL_HASH32
+from .constants import COIN, DUST, NULL_HASH32
 from .bcd_data_stream import BCDataStream
 from .hash import TXRef, TXRefImmutable
 from .util import ReadOnlyList
@@ -818,10 +818,10 @@ class Transaction:
                 )
                 if payment > cost:
                     change = payment - cost
-                    if change > cost_of_change:
+                    change_amount = change - cost_of_change
+                    if change_amount > DUST:
                         change_address = await change_account.change.get_or_create_usable_address()
                         change_hash160 = change_account.ledger.address_to_hash160(change_address)
-                        change_amount = change - cost_of_change
                         change_output = Output.pay_pubkey_hash(change_amount, change_hash160)
                         change_output.is_internal_transfer = True
                         tx.add_outputs([Output.pay_pubkey_hash(change_amount, change_hash160)])
diff --git a/tests/integration/transactions/test_transaction_commands.py b/tests/integration/transactions/test_transaction_commands.py
index 66810b30f..d85641847 100644
--- a/tests/integration/transactions/test_transaction_commands.py
+++ b/tests/integration/transactions/test_transaction_commands.py
@@ -3,6 +3,17 @@ from lbry.testcase import CommandTestCase
 
 class TransactionCommandsTestCase(CommandTestCase):
 
+    async def test_txo_dust_prevention(self):
+        address = await self.daemon.jsonrpc_address_unused(self.account.id)
+        tx = await self.account_send('9.9997758', address)
+        # dust prevention threshold not reached, small txo created
+        self.assertEqual(2, len(tx['outputs']))
+        self.assertEqual(tx['outputs'][1]['amount'], '0.0001002')
+        tx = await self.account_send('9.999706', address)
+        # dust prevention prevented dust
+        self.assertEqual(1, len(tx['outputs']))
+        self.assertEqual(tx['outputs'][0]['amount'], '9.999706')
+
     async def test_transaction_show(self):
         # local tx
         result = await self.out(self.daemon.jsonrpc_account_send(