diff --git a/zebrad/src/commands/start.rs b/zebrad/src/commands/start.rs
index ac0c93c525c..f44e090e40c 100644
--- a/zebrad/src/commands/start.rs
+++ b/zebrad/src/commands/start.rs
@@ -28,11 +28,15 @@ use color_eyre::eyre::{eyre, Report};
 use futures::{select, FutureExt};
 use tokio::sync::oneshot;
 use tower::builder::ServiceBuilder;
+use tower::util::BoxService;
 
-use crate::components::{tokio::RuntimeRun, Inbound};
-use crate::config::ZebradConfig;
 use crate::{
-    components::{mempool, tokio::TokioComponent, ChainSync},
+    components::{
+        mempool::{self, Mempool},
+        tokio::{RuntimeRun, TokioComponent},
+        ChainSync, Inbound,
+    },
+    config::ZebradConfig,
     prelude::*,
 };
 
@@ -65,7 +69,8 @@ impl StartCmd {
         .await;
 
         info!("initializing mempool");
-        let mempool = mempool::Mempool::new(config.network.network);
+        let mempool_service = BoxService::new(Mempool::new(config.network.network));
+        let mempool = ServiceBuilder::new().buffer(20).service(mempool_service);
 
         info!("initializing network");
         // The service that our node uses to respond to requests by peers. The
@@ -80,7 +85,7 @@ impl StartCmd {
                 state.clone(),
                 chain_verifier.clone(),
                 tx_verifier.clone(),
-                mempool,
+                mempool.clone(),
             ));
 
         let (peer_set, address_book) =
diff --git a/zebrad/src/components/inbound.rs b/zebrad/src/components/inbound.rs
index ece90903a11..2e54a4cf87f 100644
--- a/zebrad/src/components/inbound.rs
+++ b/zebrad/src/components/inbound.rs
@@ -21,8 +21,11 @@ use zebra_consensus::transaction;
 use zebra_consensus::{chain::VerifyChainError, error::TransactionError};
 use zebra_network::AddressBook;
 
-use super::mempool::downloads::{
-    Downloads as TxDownloads, TRANSACTION_DOWNLOAD_TIMEOUT, TRANSACTION_VERIFY_TIMEOUT,
+use super::mempool::{
+    self as mp,
+    downloads::{
+        Downloads as TxDownloads, TRANSACTION_DOWNLOAD_TIMEOUT, TRANSACTION_VERIFY_TIMEOUT,
+    },
 };
 // Re-use the syncer timeouts for consistency.
 use super::{
@@ -38,13 +41,14 @@ use downloads::Downloads as BlockDownloads;
 
 type Outbound = Buffer<BoxService<zn::Request, zn::Response, zn::BoxError>, zn::Request>;
 type State = Buffer<BoxService<zs::Request, zs::Response, zs::BoxError>, zs::Request>;
+type Mempool = Buffer<BoxService<mp::Request, mp::Response, mp::BoxError>, mp::Request>;
 type BlockVerifier = Buffer<BoxService<Arc<Block>, block::Hash, VerifyChainError>, Arc<Block>>;
 type TxVerifier = Buffer<
     BoxService<transaction::Request, transaction::Response, TransactionError>,
     transaction::Request,
 >;
 type InboundBlockDownloads = BlockDownloads<Timeout<Outbound>, Timeout<BlockVerifier>, State>;
-type InboundTxDownloads = TxDownloads<Timeout<Outbound>, Timeout<TxVerifier>, State>;
+type InboundTxDownloads = TxDownloads<Timeout<Outbound>, Timeout<TxVerifier>, State, Mempool>;
 
 pub type NetworkSetupData = (Outbound, Arc<std::sync::Mutex<AddressBook>>);
 
@@ -134,7 +138,7 @@ pub struct Inbound {
     state: State,
 
     /// A service that manages transactions in the memory pool.
-    mempool: mempool::Mempool,
+    mempool: Mempool,
 }
 
 impl Inbound {
@@ -143,7 +147,7 @@ impl Inbound {
         state: State,
         block_verifier: BlockVerifier,
         tx_verifier: TxVerifier,
-        mempool: mempool::Mempool,
+        mempool: Mempool,
     ) -> Self {
         Self {
             network_setup: Setup::AwaitingNetwork {
@@ -195,6 +199,7 @@ impl Service<zn::Request> for Inbound {
                         Timeout::new(outbound, TRANSACTION_DOWNLOAD_TIMEOUT),
                         Timeout::new(tx_verifier, TRANSACTION_VERIFY_TIMEOUT),
                         self.state.clone(),
+                        self.mempool.clone(),
                     ));
                     result = Ok(());
                     Setup::Initialized {
@@ -350,6 +355,7 @@ impl Service<zn::Request> for Inbound {
             zn::Request::PushTransaction(_transaction) => {
                 debug!("ignoring unimplemented request");
                 // TODO: send to Tx Download & Verify Stream
+                // https://github.com/ZcashFoundation/zebra/issues/2692
                 async { Ok(zn::Response::Nil) }.boxed()
             }
             zn::Request::AdvertiseTransactionIds(transactions) => {
diff --git a/zebrad/src/components/inbound/tests.rs b/zebrad/src/components/inbound/tests.rs
index bced22afb58..857cdf285e7 100644
--- a/zebrad/src/components/inbound/tests.rs
+++ b/zebrad/src/components/inbound/tests.rs
@@ -3,7 +3,7 @@ use std::collections::HashSet;
 use super::mempool::{unmined_transactions_in_blocks, Mempool};
 
 use tokio::sync::oneshot;
-use tower::{builder::ServiceBuilder, ServiceExt};
+use tower::{builder::ServiceBuilder, util::BoxService, ServiceExt};
 
 use zebra_chain::{
     parameters::Network,
@@ -26,6 +26,9 @@ async fn mempool_requests_for_transactions() {
     let added_transactions = add_some_stuff_to_mempool(&mut mempool_service, network);
     let added_transaction_ids: Vec<UnminedTxId> = added_transactions.iter().map(|t| t.id).collect();
 
+    let mempool_service = BoxService::new(mempool_service);
+    let mempool = ServiceBuilder::new().buffer(1).service(mempool_service);
+
     let (block_verifier, transaction_verifier) =
         zebra_consensus::chain::init(consensus_config.clone(), network, state_service.clone())
             .await;
@@ -39,7 +42,7 @@ async fn mempool_requests_for_transactions() {
             state_service,
             block_verifier.clone(),
             transaction_verifier.clone(),
-            mempool_service,
+            mempool,
         ));
 
     // Test `Request::MempoolTransactionIds`
diff --git a/zebrad/src/components/mempool.rs b/zebrad/src/components/mempool.rs
index b1d3f0e323c..7bec123aebe 100644
--- a/zebrad/src/components/mempool.rs
+++ b/zebrad/src/components/mempool.rs
@@ -15,7 +15,7 @@ use zebra_chain::{
     transaction::{UnminedTx, UnminedTxId},
 };
 
-use crate::BoxError;
+pub use crate::BoxError;
 
 mod crawler;
 pub mod downloads;
@@ -35,12 +35,14 @@ pub use self::storage::tests::unmined_transactions_in_blocks;
 pub enum Request {
     TransactionIds,
     TransactionsById(HashSet<UnminedTxId>),
+    RejectedTransactionIds(HashSet<UnminedTxId>),
 }
 
 #[derive(Debug)]
 pub enum Response {
     Transactions(Vec<UnminedTx>),
     TransactionIds(Vec<UnminedTxId>),
+    RejectedTransactionIds(Vec<UnminedTxId>),
 }
 
 /// Mempool async management and query service.
@@ -93,6 +95,11 @@ impl Service<Request> for Mempool {
                 let rsp = Ok(self.storage.clone().transactions(ids)).map(Response::Transactions);
                 async move { rsp }.boxed()
             }
+            Request::RejectedTransactionIds(ids) => {
+                let rsp = Ok(self.storage.clone().rejected_transactions(ids))
+                    .map(Response::RejectedTransactionIds);
+                async move { rsp }.boxed()
+            }
         }
     }
 }
diff --git a/zebrad/src/components/mempool/downloads.rs b/zebrad/src/components/mempool/downloads.rs
index 56b51bd2daa..14b5f3ba21a 100644
--- a/zebrad/src/components/mempool/downloads.rs
+++ b/zebrad/src/components/mempool/downloads.rs
@@ -21,6 +21,7 @@ use zebra_consensus::transaction as tx;
 use zebra_network as zn;
 use zebra_state as zs;
 
+use crate::components::mempool as mp;
 use crate::components::sync::{BLOCK_DOWNLOAD_TIMEOUT, BLOCK_VERIFY_TIMEOUT};
 
 type BoxError = Box<dyn std::error::Error + Send + Sync + 'static>;
@@ -85,7 +86,7 @@ pub enum DownloadAction {
 /// Represents a [`Stream`] of download and verification tasks.
 #[pin_project]
 #[derive(Debug)]
-pub struct Downloads<ZN, ZV, ZS>
+pub struct Downloads<ZN, ZV, ZS, ZM>
 where
     ZN: Service<zn::Request, Response = zn::Response, Error = BoxError> + Send + 'static,
     ZN::Future: Send,
@@ -93,6 +94,8 @@ where
     ZV::Future: Send,
     ZS: Service<zs::Request, Response = zs::Response, Error = BoxError> + Send + Clone + 'static,
     ZS::Future: Send,
+    ZM: Service<mp::Request, Response = mp::Response, Error = BoxError> + Send + Clone + 'static,
+    ZM::Future: Send,
 {
     // Services
     /// A service that forwards requests to connected peers, and returns their
@@ -105,6 +108,9 @@ where
     /// A service that manages cached blockchain state.
     state: ZS,
 
+    /// A service that manages the mempool.
+    mempool: ZM,
+
     // Internal downloads state
     /// A list of pending transaction download and verify tasks.
     #[pin]
@@ -115,7 +121,7 @@ where
     cancel_handles: HashMap<UnminedTxId, oneshot::Sender<()>>,
 }
 
-impl<ZN, ZV, ZS> Stream for Downloads<ZN, ZV, ZS>
+impl<ZN, ZV, ZS, ZM> Stream for Downloads<ZN, ZV, ZS, ZM>
 where
     ZN: Service<zn::Request, Response = zn::Response, Error = BoxError> + Send + Clone + 'static,
     ZN::Future: Send,
@@ -123,6 +129,8 @@ where
     ZV::Future: Send,
     ZS: Service<zs::Request, Response = zs::Response, Error = BoxError> + Send + Clone + 'static,
     ZS::Future: Send,
+    ZM: Service<mp::Request, Response = mp::Response, Error = BoxError> + Send + Clone + 'static,
+    ZM::Future: Send,
 {
     type Item = Result<UnminedTxId, BoxError>;
 
@@ -158,7 +166,7 @@ where
     }
 }
 
-impl<ZN, ZV, ZS> Downloads<ZN, ZV, ZS>
+impl<ZN, ZV, ZS, ZM> Downloads<ZN, ZV, ZS, ZM>
 where
     ZN: Service<zn::Request, Response = zn::Response, Error = BoxError> + Send + Clone + 'static,
     ZN::Future: Send,
@@ -166,6 +174,8 @@ where
     ZV::Future: Send,
     ZS: Service<zs::Request, Response = zs::Response, Error = BoxError> + Send + Clone + 'static,
     ZS::Future: Send,
+    ZM: Service<mp::Request, Response = mp::Response, Error = BoxError> + Send + Clone + 'static,
+    ZM::Future: Send,
 {
     /// Initialize a new download stream with the provided `network` and
     /// `verifier` services.
@@ -173,11 +183,12 @@ where
     /// The [`Downloads`] stream is agnostic to the network policy, so retry and
     /// timeout limits should be applied to the `network` service passed into
     /// this constructor.
-    pub fn new(network: ZN, verifier: ZV, state: ZS) -> Self {
+    pub fn new(network: ZN, verifier: ZV, state: ZS, mempool: ZM) -> Self {
         Self {
             network,
             verifier,
             state,
+            mempool,
             pending: FuturesUnordered::new(),
             cancel_handles: HashMap::new(),
         }
@@ -213,19 +224,11 @@ where
 
         let network = self.network.clone();
         let verifier = self.verifier.clone();
-        let state = self.state.clone();
+        let mut state = self.state.clone();
+        let mut mempool = self.mempool.clone();
 
         let fut = async move {
-            // TODO: adapt this for transaction / mempool
-            // // Check if the block is already in the state.
-            // // BUG: check if the hash is in any chain (#862).
-            // // Depth only checks the main chain.
-            // match state.oneshot(zs::Request::Depth(hash)).await {
-            //     Ok(zs::Response::Depth(None)) => Ok(()),
-            //     Ok(zs::Response::Depth(Some(_))) => Err("already present".into()),
-            //     Ok(_) => unreachable!("wrong response"),
-            //     Err(e) => Err(e),
-            // }?;
+            Self::should_download(&mut state, &mut mempool, txid).await?;
 
             let height = match state.oneshot(zs::Request::Tip).await {
                 Ok(zs::Response::Tip(None)) => Err("no block at the tip".into()),
@@ -298,4 +301,67 @@ where
 
         DownloadAction::AddedToQueue
     }
+
+    /// Check if transaction should be downloaded and verified.
+    ///
+    /// If it is already in the mempool (or in its rejected list)
+    /// or in state, then it shouldn't be downloaded (and an error is returned).
+    async fn should_download(
+        state: &mut ZS,
+        mempool: &mut ZM,
+        txid: UnminedTxId,
+    ) -> Result<(), BoxError> {
+        // Check if the transaction is already in the mempool.
+        match mempool
+            .ready_and()
+            .await?
+            .call(mp::Request::TransactionsById(
+                [txid].iter().cloned().collect(),
+            ))
+            .await
+        {
+            Ok(mp::Response::Transactions(txs)) => {
+                if txs.is_empty() {
+                    Ok(())
+                } else {
+                    Err("already present in mempool".into())
+                }
+            }
+            Ok(_) => unreachable!("wrong response"),
+            Err(e) => Err(e),
+        }?;
+
+        // Check if the transaction is in the mempool rejected list.
+        match mempool
+            .oneshot(mp::Request::RejectedTransactionIds(
+                [txid].iter().cloned().collect(),
+            ))
+            .await
+        {
+            Ok(mp::Response::RejectedTransactionIds(txs)) => {
+                if txs.is_empty() {
+                    Ok(())
+                } else {
+                    Err("in mempool rejected list".into())
+                }
+            }
+            Ok(_) => unreachable!("wrong response"),
+            Err(e) => Err(e),
+        }?;
+
+        // Check if the transaction is already in the state.
+        match state
+            .ready_and()
+            .await?
+            .call(zs::Request::Transaction(txid.mined_id()))
+            .await
+        {
+            Ok(zs::Response::Transaction(None)) => Ok(()),
+            Ok(zs::Response::Transaction(Some(_))) => Err("already present in state".into()),
+            Ok(_) => unreachable!("wrong response"),
+            Err(e) => Err(e),
+        }?;
+
+        Ok(())
+    }
 }
diff --git a/zebrad/src/components/mempool/storage.rs b/zebrad/src/components/mempool/storage.rs
index 0aa3727b754..08f9e1b4478 100644
--- a/zebrad/src/components/mempool/storage.rs
+++ b/zebrad/src/components/mempool/storage.rs
@@ -103,4 +103,12 @@ impl Storage {
             .filter(|tx| tx_ids.contains(&tx.id))
             .collect()
     }
+
+    /// Returns the set of [`UnminedTxId`]s matching ids in the rejected list.
+    pub fn rejected_transactions(self, tx_ids: HashSet<UnminedTxId>) -> Vec<UnminedTxId> {
+        tx_ids
+            .into_iter()
+            .filter(|tx| self.rejected.contains_key(tx))
+            .collect()
+    }
 }
diff --git a/zebrad/src/components/mempool/storage/tests.rs b/zebrad/src/components/mempool/storage/tests.rs
index 332dc059948..803c40b5db8 100644
--- a/zebrad/src/components/mempool/storage/tests.rs
+++ b/zebrad/src/components/mempool/storage/tests.rs
@@ -47,6 +47,19 @@ fn mempool_storage_basic_for_network(network: Network) -> Result<()> {
         assert!(!storage.clone().contains(&tx.id));
     }
 
+    // Query all the ids we have for rejected, get back `total - MEMPOOL_SIZE`
+    let all_ids: HashSet<UnminedTxId> = unmined_transactions.iter().map(|tx| tx.id).collect();
+    let rejected_ids: HashSet<UnminedTxId> = unmined_transactions
+        .iter()
+        .take(total_transactions - MEMPOOL_SIZE)
+        .map(|tx| tx.id)
+        .collect();
+    // Convert response to a `HashSet` as we need a fixed order to compare.
+    let rejected_response: HashSet<UnminedTxId> =
+        storage.rejected_transactions(all_ids).into_iter().collect();
+
+    assert_eq!(rejected_response, rejected_ids);
+
     Ok(())
 }
 
diff --git a/zebrad/src/components/mempool/tests.rs b/zebrad/src/components/mempool/tests.rs
index 57c8070457a..a8634d5169b 100644
--- a/zebrad/src/components/mempool/tests.rs
+++ b/zebrad/src/components/mempool/tests.rs
@@ -22,15 +22,21 @@ async fn mempool_service_basic() -> Result<(), Report> {
         .oneshot(Request::TransactionIds)
         .await
         .unwrap();
-    let transaction_ids = match response {
+    let genesis_transaction_ids = match response {
         Response::TransactionIds(ids) => ids,
         _ => unreachable!("will never happen in this test"),
     };
 
     // Test `Request::TransactionsById`
-    let hash_set = transaction_ids.iter().copied().collect::<HashSet<_>>();
+    let genesis_transactions_hash_set = genesis_transaction_ids
+        .iter()
+        .copied()
+        .collect::<HashSet<_>>();
     let response = service
-        .oneshot(Request::TransactionsById(hash_set))
+        .clone()
+        .oneshot(Request::TransactionsById(
+            genesis_transactions_hash_set.clone(),
+        ))
         .await
         .unwrap();
     let transactions = match response {
@@ -42,5 +48,26 @@ async fn mempool_service_basic() -> Result<(), Report> {
     // response of `Request::TransactionsById`
     assert_eq!(genesis_transactions.1[0], transactions[0]);
 
+    // Insert more transactions into the mempool storage.
+    // This will cause the genesis transaction to be moved into rejected.
+    let more_transactions = unmined_transactions_in_blocks(10, network);
+    for tx in more_transactions.1.iter().skip(1) {
+        service.storage.insert(tx.clone())?;
+    }
+
+    // Test `Request::RejectedTransactionIds`
+    let response = service
+        .oneshot(Request::RejectedTransactionIds(
+            genesis_transactions_hash_set,
+        ))
+        .await
+        .unwrap();
+    let rejected_ids = match response {
+        Response::RejectedTransactionIds(ids) => ids,
+        _ => unreachable!("will never happen in this test"),
+    };
+
+    assert_eq!(rejected_ids, genesis_transaction_ids);
+
     Ok(())
 }