diff --git a/components/client/src/main/java/com/hotels/styx/client/connectionpool/SimpleConnectionPool.java b/components/client/src/main/java/com/hotels/styx/client/connectionpool/SimpleConnectionPool.java
index fb3d4f5922..4239249039 100644
--- a/components/client/src/main/java/com/hotels/styx/client/connectionpool/SimpleConnectionPool.java
+++ b/components/client/src/main/java/com/hotels/styx/client/connectionpool/SimpleConnectionPool.java
@@ -76,11 +76,11 @@ public Publisher<Connection> borrowConnection() {
         return Mono.<Connection>create(sink -> {
             Connection connection = dequeue();
             if (connection != null) {
-                borrowedCount.incrementAndGet();
-                sink.success(connection);
+                attemptBorrowConnection(sink, connection);
             } else {
                 if (waitingSubscribers.size() < poolSettings.maxPendingConnectionsPerHost()) {
-                    this.waitingSubscribers.add(sink.onDispose(() -> waitingSubscribers.remove(sink)));
+                    this.waitingSubscribers.add(sink);
+                    sink.onDispose(() -> waitingSubscribers.remove(sink));
                     newConnection();
                 } else {
                     sink.error(new MaxPendingConnectionsExceededException(
@@ -127,7 +127,8 @@ private Mono<Connection> newConnection(int attempts) {
         }
     }
 
-    private Connection dequeue() {
+    @VisibleForTesting
+    Connection dequeue() {
         Connection connection = availableConnections.poll();
 
         while (nonNull(connection) && !connection.isConnected()) {
@@ -142,11 +143,18 @@ private void queueNewConnection(Connection connection) {
         if (subscriber == null) {
             availableConnections.add(connection);
         } else {
-            borrowedCount.incrementAndGet();
-            subscriber.success(connection);
+            attemptBorrowConnection(subscriber, connection);
         }
     }
 
+    private void attemptBorrowConnection(MonoSink<Connection> sink, Connection connection) {
+        borrowedCount.incrementAndGet();
+        sink.onCancel(() -> {
+            returnConnection(connection);
+        });
+        sink.success(connection);
+    }
+
     public boolean returnConnection(Connection connection) {
         borrowedCount.decrementAndGet();
         if (connection.isConnected()) {
diff --git a/components/client/src/test/unit/java/com/hotels/styx/client/connectionpool/SimpleConnectionPoolTest.java b/components/client/src/test/unit/java/com/hotels/styx/client/connectionpool/SimpleConnectionPoolTest.java
index f8587c6bc2..db90125208 100644
--- a/components/client/src/test/unit/java/com/hotels/styx/client/connectionpool/SimpleConnectionPoolTest.java
+++ b/components/client/src/test/unit/java/com/hotels/styx/client/connectionpool/SimpleConnectionPoolTest.java
@@ -21,6 +21,9 @@
 import com.hotels.styx.client.Connection;
 import com.hotels.styx.client.ConnectionSettings;
 import org.mockito.Mockito;
+import org.mockito.internal.stubbing.answers.AnswersWithDelay;
+import org.mockito.invocation.InvocationOnMock;
+import org.mockito.stubbing.Answer;
 import org.reactivestreams.Publisher;
 import org.testng.annotations.BeforeMethod;
 import org.testng.annotations.Test;
@@ -39,6 +42,7 @@
 import static java.util.concurrent.TimeUnit.MILLISECONDS;
 import static org.mockito.Matchers.any;
 import static org.mockito.Mockito.mock;
+import static org.mockito.Mockito.spy;
 import static org.mockito.Mockito.verify;
 import static org.mockito.Mockito.when;
 import static org.testng.Assert.assertEquals;
@@ -718,6 +722,88 @@ public void emitsExceptionWhenPendingConnectionTimesOut() {
         assertEquals(pool.stats().connectionAttempts(), 1);
     }
 
+    @Test
+    public void shouldNotHandoutConnectionToCancelledSubscriberWhenCreatingNewConnection() throws Exception {
+        when(connectionFactory.createConnection(any(Origin.class), any(ConnectionSettings.class)))
+                .thenReturn(Mono.just(connection1));
+
+        ConnectionPoolSettings poolSettings = new ConnectionPoolSettings.Builder()
+                .pendingConnectionTimeout(100, MILLISECONDS)
+                .build();
+
+        SimpleConnectionPool simpleConnectionPool = new SimpleConnectionPool(origin, poolSettings, connectionFactory);
+        SimpleConnectionPool pool = spy(simpleConnectionPool);
+        when(pool.dequeue())
+                .thenAnswer(new AnswersWithDelay(200, new Answer<Object>() {
+                    @Override
+                    public Object answer(InvocationOnMock invocation) throws Throwable {
+                        return invocation.callRealMethod();
+                    }
+                }));
+        StepVerifier.create(pool.borrowConnection())
+                .expectError(MaxPendingConnectionTimeoutException.class)
+                .verify();
+
+        assertEquals(pool.stats().availableConnectionCount(), 1);
+        assertEquals(pool.stats().pendingConnectionCount(), 0); // Waiting subscribers
+        assertEquals(pool.stats().busyConnectionCount(), 0);    // Borrowed count
+   }
+
+    @Test
+    public void shouldNotHandoutConnectionToCancelledSubscriberWhenConnectionIsReturned() throws Exception {
+        EmitterProcessor<Connection> processor = EmitterProcessor.create();
+        when(connectionFactory.createConnection(any(Origin.class), any(ConnectionSettings.class)))
+                .thenReturn(Mono.from(processor));
+        ConnectionPoolSettings poolSettings = new ConnectionPoolSettings.Builder()
+                .pendingConnectionTimeout(100, MILLISECONDS)
+                .build();
+
+        SimpleConnectionPool simpleConnectionPool = new SimpleConnectionPool(origin, poolSettings, connectionFactory);
+        SimpleConnectionPool pool = spy(simpleConnectionPool);
+        when(pool.dequeue())
+                .thenAnswer(new AnswersWithDelay(200, new Answer<Object>() {
+                    @Override
+                    public Object answer(InvocationOnMock invocation) throws Throwable {
+                        return invocation.callRealMethod();
+                    }
+                }));
+
+        StepVerifier.create(pool.borrowConnection())
+                .expectError(MaxPendingConnectionTimeoutException.class)
+                .verify();
+
+        pool.returnConnection(connection1);
+
+        assertEquals(pool.stats().availableConnectionCount(), 1);
+        assertEquals(pool.stats().pendingConnectionCount(), 0); // Waiting subscribers
+        assertEquals(pool.stats().busyConnectionCount(), -1);    // Borrowed count
+    }
+
+    @Test
+    public void shouldNotHandoutConnectionToCancelledSubscriberWhenConnectionAlreadyInPool() throws Exception {
+        ConnectionPoolSettings poolSettings = new ConnectionPoolSettings.Builder()
+                .pendingConnectionTimeout(100, MILLISECONDS)
+                .build();
+
+        SimpleConnectionPool simpleConnectionPool = new SimpleConnectionPool(origin, poolSettings, connectionFactory);
+        SimpleConnectionPool pool = spy(simpleConnectionPool);
+        when(pool.dequeue())
+                .thenAnswer(new AnswersWithDelay(200, new Answer<Object>() {
+                    @Override
+                    public Object answer(InvocationOnMock invocation) throws Throwable {
+                        return connection1;
+                    }
+                }));
+
+        StepVerifier.create(pool.borrowConnection())
+                .expectError(MaxPendingConnectionTimeoutException.class)
+                .verify();
+
+        assertEquals(pool.stats().availableConnectionCount(), 1);
+        assertEquals(pool.stats().pendingConnectionCount(), 0); // Waiting subscribers
+        assertEquals(pool.stats().busyConnectionCount(), 0);    // Borrowed count
+    }
+
     @Test
     public void registersAsConnectionListener() {
         when(connectionFactory.createConnection(any(Origin.class), any(ConnectionSettings.class)))
diff --git a/components/proxy/src/main/java/com/hotels/styx/proxy/StyxBackendServiceClientFactory.java b/components/proxy/src/main/java/com/hotels/styx/proxy/StyxBackendServiceClientFactory.java
index a9b5303e87..29c1652318 100644
--- a/components/proxy/src/main/java/com/hotels/styx/proxy/StyxBackendServiceClientFactory.java
+++ b/components/proxy/src/main/java/com/hotels/styx/proxy/StyxBackendServiceClientFactory.java
@@ -1,5 +1,5 @@
 /*
-  Copyright (C) 2013-2018 Expedia Inc.
+  Copyright (C) 2013-2019 Expedia Inc.
 
   Licensed under the Apache License, Version 2.0 (the "License");
   you may not use this file except in compliance with the License.
diff --git a/pom.xml b/pom.xml
index 36c639822a..b154632d57 100755
--- a/pom.xml
+++ b/pom.xml
@@ -105,7 +105,7 @@
     <netty-tcnative.version>2.0.26.Final</netty-tcnative.version>
     <rxjava.version>1.1.6</rxjava.version>
     <reactive-streams.version>1.0.2</reactive-streams.version>
-    <reactor.version>3.2.0.RELEASE</reactor.version>
+    <reactor.version>3.3.0.RELEASE</reactor.version>
     <pcollections.version>3.0.3</pcollections.version>
 
     <!--Kotlin -->