diff --git a/drivers/hv/hv_kvp.c b/drivers/hv/hv_kvp.c
index 14c62e2..a70d202 100644
--- a/drivers/hv/hv_kvp.c
+++ b/drivers/hv/hv_kvp.c
@@ -46,16 +46,21 @@
 #define WIN8_SRV_VERSION     (WIN8_SRV_MAJOR << 16 | WIN8_SRV_MINOR)
 
 /*
- * Global state maintained for transaction that is being processed.
- * Note that only one transaction can be active at any point in time.
+ * Global state maintained for transaction that is being processed. For a class
+ * of integration services, including the "KVP service", the specified protocol
+ * is a "request/response" protocol which means that there can only be single
+ * outstanding transaction from the host at any given point in time. We use
+ * this to simplify memory management in this driver - we cache and process
+ * only one message at a time.
  *
- * This state is set when we receive a request from the host; we
- * cleanup this state when the transaction is completed - when we respond
- * to the host with the key value.
+ * While the request/response protocol is guaranteed by the host, we further
+ * ensure this by serializing packet processing in this driver - we do not
+ * read additional packets from the VMBUs until the current packet is fully
+ * handled.
  */
 
 static struct {
-	bool active; /* transaction status - active or not */
+	int state;   /* hvutil_device_state */
 	int recv_len; /* number of bytes received. */
 	struct hv_kvp_msg  *kvp_msg; /* current message */
 	struct vmbus_channel *recv_channel; /* chn we got the request */
@@ -64,13 +69,6 @@
 } kvp_transaction;
 
 /*
- * Before we can accept KVP messages from the host, we need
- * to handshake with the user level daemon. This state tracks
- * if we are in the handshake phase.
- */
-static bool in_hand_shake = true;
-
-/*
  * This state maintains the version number registered by the daemon.
  */
 static int dm_reg_value;
@@ -126,6 +124,13 @@
 	 * process the pending transaction.
 	 */
 	kvp_respond_to_host(NULL, HV_E_FAIL);
+
+	/* Transaction is finished, reset the state. */
+	if (kvp_transaction.state > HVUTIL_READY)
+		kvp_transaction.state = HVUTIL_READY;
+
+	hv_poll_channel(kvp_transaction.kvp_context,
+			hv_kvp_onchannelcallback);
 }
 
 static int kvp_handle_handshake(struct hv_kvp_msg *msg)
@@ -154,9 +159,7 @@
 		 */
 		pr_info("KVP: user-mode registering done.\n");
 		kvp_register(dm_reg_value);
-		kvp_transaction.active = false;
-		hv_poll_channel(kvp_transaction.kvp_context,
-				hv_kvp_onchannelcallback);
+		kvp_transaction.state = HVUTIL_READY;
 	}
 	return ret;
 }
@@ -180,12 +183,16 @@
 	 * with the daemon; handle that first.
 	 */
 
-	if (in_hand_shake) {
-		if (kvp_handle_handshake(message))
-			in_hand_shake = false;
+	if (kvp_transaction.state < HVUTIL_READY) {
+		kvp_handle_handshake(message);
 		return;
 	}
 
+	/* We didn't send anything to userspace so the reply is spurious */
+	if (kvp_transaction.state < HVUTIL_USERSPACE_REQ)
+		return;
+	kvp_transaction.state = HVUTIL_USERSPACE_RECV;
+
 	/*
 	 * Based on the version of the daemon, we propagate errors from the
 	 * daemon differently.
@@ -215,8 +222,12 @@
 	 * Complete the transaction by forwarding the key value
 	 * to the host. But first, cancel the timeout.
 	 */
-	if (cancel_delayed_work_sync(&kvp_timeout_work))
+	if (cancel_delayed_work_sync(&kvp_timeout_work)) {
 		kvp_respond_to_host(message, error);
+		kvp_transaction.state = HVUTIL_READY;
+		hv_poll_channel(kvp_transaction.kvp_context,
+				hv_kvp_onchannelcallback);
+	}
 }
 
 
@@ -342,6 +353,10 @@
 	__u64 val64;
 	int rc;
 
+	/* The transaction state is wrong. */
+	if (kvp_transaction.state != HVUTIL_HOSTMSG_RECEIVED)
+		return;
+
 	msg = kzalloc(sizeof(*msg) + sizeof(struct hv_kvp_msg) , GFP_ATOMIC);
 	if (!msg)
 		return;
@@ -437,11 +452,14 @@
 	}
 
 	msg->len = sizeof(struct hv_kvp_msg);
+	kvp_transaction.state = HVUTIL_USERSPACE_REQ;
 	rc = cn_netlink_send(msg, 0, 0, GFP_ATOMIC);
 	if (rc) {
 		pr_debug("KVP: failed to communicate to the daemon: %d\n", rc);
-		if (cancel_delayed_work_sync(&kvp_timeout_work))
+		if (cancel_delayed_work_sync(&kvp_timeout_work)) {
 			kvp_respond_to_host(message, HV_E_FAIL);
+			kvp_transaction.state = HVUTIL_READY;
+		}
 	}
 
 	kfree(msg);
@@ -469,17 +487,6 @@
 	int ret;
 
 	/*
-	 * If a transaction is not active; log and return.
-	 */
-
-	if (!kvp_transaction.active) {
-		/*
-		 * This is a spurious call!
-		 */
-		pr_warn("KVP: Transaction not active\n");
-		return;
-	}
-	/*
 	 * Copy the global state for completing the transaction. Note that
 	 * only one transaction can be active at a time.
 	 */
@@ -488,8 +495,6 @@
 	channel = kvp_transaction.recv_channel;
 	req_id = kvp_transaction.recv_req_id;
 
-	kvp_transaction.active = false;
-
 	icmsghdrp = (struct icmsg_hdr *)
 			&recv_buffer[sizeof(struct vmbuspipe_hdr)];
 
@@ -576,7 +581,6 @@
 
 	vmbus_sendpacket(channel, recv_buffer, buf_len, req_id,
 				VM_PKT_DATA_INBAND, 0);
-	hv_poll_channel(channel, hv_kvp_onchannelcallback);
 }
 
 /*
@@ -602,7 +606,7 @@
 	int util_fw_version;
 	int kvp_srv_version;
 
-	if (kvp_transaction.active) {
+	if (kvp_transaction.state > HVUTIL_READY) {
 		/*
 		 * We will defer processing this callback once
 		 * the current transaction is complete.
@@ -655,9 +659,15 @@
 			kvp_transaction.recv_len = recvlen;
 			kvp_transaction.recv_channel = channel;
 			kvp_transaction.recv_req_id = requestid;
-			kvp_transaction.active = true;
 			kvp_transaction.kvp_msg = kvp_msg;
 
+			if (kvp_transaction.state < HVUTIL_READY) {
+				/* Userspace is not registered yet */
+				kvp_respond_to_host(NULL, HV_E_FAIL);
+				return;
+			}
+			kvp_transaction.state = HVUTIL_HOSTMSG_RECEIVED;
+
 			/*
 			 * Get the information from the
 			 * user-mode component.
@@ -700,13 +710,14 @@
 	 * Defer processing channel callbacks until the daemon
 	 * has registered.
 	 */
-	kvp_transaction.active = true;
+	kvp_transaction.state = HVUTIL_DEVICE_INIT;
 
 	return 0;
 }
 
 void hv_kvp_deinit(void)
 {
+	kvp_transaction.state = HVUTIL_DEVICE_DYING;
 	cn_del_callback(&kvp_id);
 	cancel_delayed_work_sync(&kvp_timeout_work);
 	cancel_work_sync(&kvp_sendkey_work);