diff --git a/synapse/app/homeserver.py b/synapse/app/homeserver.py
index ff6680e7da..f5681fac20 100755
--- a/synapse/app/homeserver.py
+++ b/synapse/app/homeserver.py
@@ -274,6 +274,7 @@ def setup():
 
     hs.get_pusherpool().start()
 
+    hs.get_state_handler().start_caching()
     hs.get_datastore().start_profiling()
 
     if config.daemonize:
diff --git a/synapse/state.py b/synapse/state.py
index 54380b9e5c..98aaa2be53 100644
--- a/synapse/state.py
+++ b/synapse/state.py
@@ -43,14 +43,39 @@ AuthEventTypes = (
 )
 
 
+SIZE_OF_CACHE = 1000
+EVICTION_TIMEOUT_SECONDS = 20
+
+
+class _StateCacheEntry(object):
+    def __init__(self, state, state_group, ts):
+        self.state = state
+        self.state_group = state_group
+        self.ts = ts
+
+
 class StateHandler(object):
     """ Responsible for doing state conflict resolution.
     """
 
     def __init__(self, hs):
+        self.clock = hs.get_clock()
         self.store = hs.get_datastore()
         self.hs = hs
 
+        # dict of set of event_ids -> _StateCacheEntry.
+        self._state_cache = None
+
+    def start_caching(self):
+        logger.debug("start_caching")
+
+        self._state_cache = {}
+
+        def f():
+            self._prune_cache()
+
+        self.clock.looping_call(f, 5*1000)
+
     @defer.inlineCallbacks
     def get_current_state(self, room_id, event_type=None, state_key=""):
         """ Returns the current state for the room as a list. This is done by
@@ -70,13 +95,22 @@ class StateHandler(object):
             for e_id, _, _ in events
         ]
 
-        res = yield self.resolve_state_groups(event_ids)
+        cache = None
+        if self._state_cache is not None:
+            cache = self._state_cache.get(frozenset(event_ids), None)
+
+        if cache:
+            cache.ts = self.clock.time_msec()
+            state = cache.state
+        else:
+            res = yield self.resolve_state_groups(event_ids)
+            state = res[1]
 
         if event_type:
-            defer.returnValue(res[1].get((event_type, state_key)))
+            defer.returnValue(state.get((event_type, state_key)))
             return
 
-        defer.returnValue(res[1])
+        defer.returnValue(state)
 
     @defer.inlineCallbacks
     def compute_event_context(self, event, old_state=None):
@@ -177,6 +211,20 @@ class StateHandler(object):
         """
         logger.debug("resolve_state_groups event_ids %s", event_ids)
 
+        if self._state_cache is not None:
+            cache = self._state_cache.get(frozenset(event_ids), None)
+            if cache and cache.state_group:
+                cache.ts = self.clock.time_msec()
+                prev_state = cache.state.get((event_type, state_key), None)
+                if prev_state:
+                    prev_state = prev_state.event_id
+                    prev_states = [prev_state]
+                else:
+                    prev_states = []
+                defer.returnValue(
+                    (cache.state_group, cache.state, prev_states)
+                )
+
         state_groups = yield self.store.get_state_groups(
             event_ids
         )
@@ -200,6 +248,15 @@ class StateHandler(object):
             else:
                 prev_states = []
 
+            if self._state_cache is not None:
+                cache = _StateCacheEntry(
+                    state=state,
+                    state_group=name,
+                    ts=self.clock.time_msec()
+                )
+
+                self._state_cache[frozenset(event_ids)] = cache
+
             defer.returnValue((name, state, prev_states))
 
         state = {}
@@ -245,6 +302,15 @@ class StateHandler(object):
         new_state = unconflicted_state
         new_state.update(resolved_state)
 
+        if self._state_cache is not None:
+            cache = _StateCacheEntry(
+                state=new_state,
+                state_group=None,
+                ts=self.clock.time_msec()
+            )
+
+            self._state_cache[frozenset(event_ids)] = cache
+
         defer.returnValue((None, new_state, prev_states))
 
     @log_function
@@ -328,3 +394,34 @@ class StateHandler(object):
             return -int(e.depth), hashlib.sha1(e.event_id).hexdigest()
 
         return sorted(events, key=key_func)
+
+    def _prune_cache(self):
+        logger.debug(
+            "_prune_cache. before len: %d",
+            len(self._state_cache.keys())
+        )
+
+        now = self.clock.time_msec()
+
+        if len(self._state_cache.keys()) > SIZE_OF_CACHE:
+            sorted_entries = sorted(
+                self._state_cache.items(),
+                key=lambda k, v: v.ts,
+            )
+
+            for k, _ in sorted_entries[SIZE_OF_CACHE:]:
+                self._state_cache.pop(k)
+
+        keys_to_delete = set()
+
+        for key, cache_entry in self._state_cache.items():
+            if now - cache_entry.ts > EVICTION_TIMEOUT_SECONDS*1000:
+                keys_to_delete.add(key)
+
+        for k in keys_to_delete:
+            self._state_cache.pop(k)
+
+        logger.debug(
+            "_prune_cache. after len: %d",
+            len(self._state_cache.keys())
+        )
diff --git a/tests/test_state.py b/tests/test_state.py
index 019e794aa2..fea25f7021 100644
--- a/tests/test_state.py
+++ b/tests/test_state.py
@@ -21,6 +21,8 @@ from synapse.api.auth import Auth
 from synapse.api.constants import EventTypes, Membership
 from synapse.state import StateHandler
 
+from .utils import MockClock
+
 from mock import Mock
 
 
@@ -138,10 +140,13 @@ class StateTestCase(unittest.TestCase):
                 "add_event_hashes",
             ]
         )
-        hs = Mock(spec=["get_datastore", "get_auth", "get_state_handler"])
+        hs = Mock(spec=[
+            "get_datastore", "get_auth", "get_state_handler", "get_clock",
+        ])
         hs.get_datastore.return_value = self.store
         hs.get_state_handler.return_value = None
         hs.get_auth.return_value = Auth(hs)
+        hs.get_clock.return_value = MockClock()
 
         self.state = StateHandler(hs)
         self.event_id = 0