diff --git a/apps/smp-server/Main.hs b/apps/smp-server/Main.hs
index 05161bde1..0f14d7ca0 100644
--- a/apps/smp-server/Main.hs
+++ b/apps/smp-server/Main.hs
@@ -37,6 +37,7 @@ serverConfig :: ServerConfig
 serverConfig =
   ServerConfig
     { tbqSize = 16,
+      msgQueueQuota = 256,
       queueIdBytes = 12,
       msgIdBytes = 6,
       -- below parameters are set based on ini file /etc/opt/simplex/smp-server.ini
diff --git a/src/Simplex/Messaging/Agent.hs b/src/Simplex/Messaging/Agent.hs
index 77fd5f622..a3be20c1f 100644
--- a/src/Simplex/Messaging/Agent.hs
+++ b/src/Simplex/Messaging/Agent.hs
@@ -412,6 +412,7 @@ runSrvMsgDelivery c@AgentClient {subQ} srv = do
         withRetryInterval ri $ \loop -> do
           sendAgentMessage c sq msgBody
             `catchError` \case
+              SMP SMP.QUOTA -> loop
               e@SMP {} -> notify connId $ MERR mId e
               _ -> loop
           notify connId $ SENT mId
diff --git a/src/Simplex/Messaging/Protocol.hs b/src/Simplex/Messaging/Protocol.hs
index 3d438d540..85d6e8369 100644
--- a/src/Simplex/Messaging/Protocol.hs
+++ b/src/Simplex/Messaging/Protocol.hs
@@ -192,6 +192,8 @@ data ErrorType
     CMD CommandError
   | -- | command authorization error - bad signature or non-existing SMP queue
     AUTH
+  | -- | SMP queue capacity is exceeded on the server
+    QUOTA
   | -- | ACK command is sent without message to be acknowledged
     NO_MSG
   | -- | internal server error
diff --git a/src/Simplex/Messaging/Server.hs b/src/Simplex/Messaging/Server.hs
index 221793d2f..85eb66447 100644
--- a/src/Simplex/Messaging/Server.hs
+++ b/src/Simplex/Messaging/Server.hs
@@ -296,16 +296,19 @@ client clnt@Client {subscriptions, rcvQ, sndQ} Server {subscribedQ} =
               QueueActive -> do
                 ms <- asks msgStore
                 msg <- mkMessage
+                quota <- asks $ msgQueueQuota . config
                 atomically $ do
-                  q <- getMsgQueue ms (recipientId qr)
-                  writeMsg q msg
-                  return ok
+                  q <- getMsgQueue ms (recipientId qr) quota
+                  isFull q >>= \case
+                    False -> writeMsg q msg $> ok
+                    True -> pure $ err QUOTA
 
         deliverMessage :: (MsgQueue -> STM (Maybe Message)) -> RecipientId -> Sub -> m Transmission
         deliverMessage tryPeek rId = \case
           Sub {subThread = NoSub} -> do
             ms <- asks msgStore
-            q <- atomically $ getMsgQueue ms rId
+            quota <- asks $ msgQueueQuota . config
+            q <- atomically $ getMsgQueue ms rId quota
             atomically (tryPeek q) >>= \case
               Nothing -> forkSub q $> ok
               Just msg -> atomically setDelivered $> mkResp corrId rId (msgCmd msg)
diff --git a/src/Simplex/Messaging/Server/Env/STM.hs b/src/Simplex/Messaging/Server/Env/STM.hs
index 83282f03f..5b640db7d 100644
--- a/src/Simplex/Messaging/Server/Env/STM.hs
+++ b/src/Simplex/Messaging/Server/Env/STM.hs
@@ -25,6 +25,7 @@ import UnliftIO.STM
 data ServerConfig = ServerConfig
   { transports :: [(ServiceName, ATransport)],
     tbqSize :: Natural,
+    msgQueueQuota :: Natural,
     queueIdBytes :: Int,
     msgIdBytes :: Int,
     storeLog :: Maybe (StoreLog 'ReadMode),
diff --git a/src/Simplex/Messaging/Server/MsgStore.hs b/src/Simplex/Messaging/Server/MsgStore.hs
index e2cb8791a..3d729af60 100644
--- a/src/Simplex/Messaging/Server/MsgStore.hs
+++ b/src/Simplex/Messaging/Server/MsgStore.hs
@@ -3,6 +3,7 @@
 module Simplex.Messaging.Server.MsgStore where
 
 import Data.Time.Clock
+import Numeric.Natural
 import Simplex.Messaging.Protocol (Encoded, MsgBody, RecipientId)
 
 data Message = Message
@@ -12,10 +13,11 @@ data Message = Message
   }
 
 class MonadMsgStore s q m | s -> q where
-  getMsgQueue :: s -> RecipientId -> m q
+  getMsgQueue :: s -> RecipientId -> Natural -> m q
   delMsgQueue :: s -> RecipientId -> m ()
 
 class MonadMsgQueue q m where
+  isFull :: q -> m Bool
   writeMsg :: q -> Message -> m () -- non blocking
   tryPeekMsg :: q -> m (Maybe Message) -- non blocking
   peekMsg :: q -> m Message -- blocking
diff --git a/src/Simplex/Messaging/Server/MsgStore/STM.hs b/src/Simplex/Messaging/Server/MsgStore/STM.hs
index f5b0e670f..6d0fb63a0 100644
--- a/src/Simplex/Messaging/Server/MsgStore/STM.hs
+++ b/src/Simplex/Messaging/Server/MsgStore/STM.hs
@@ -8,11 +8,12 @@ module Simplex.Messaging.Server.MsgStore.STM where
 
 import Data.Map.Strict (Map)
 import qualified Data.Map.Strict as M
+import Numeric.Natural
 import Simplex.Messaging.Protocol (RecipientId)
 import Simplex.Messaging.Server.MsgStore
 import UnliftIO.STM
 
-newtype MsgQueue = MsgQueue {msgQueue :: TQueue Message}
+newtype MsgQueue = MsgQueue {msgQueue :: TBQueue Message}
 
 newtype MsgStoreData = MsgStoreData {messages :: Map RecipientId MsgQueue}
 
@@ -22,13 +23,13 @@ newMsgStore :: STM STMMsgStore
 newMsgStore = newTVar $ MsgStoreData M.empty
 
 instance MonadMsgStore STMMsgStore MsgQueue STM where
-  getMsgQueue :: STMMsgStore -> RecipientId -> STM MsgQueue
-  getMsgQueue store rId = do
+  getMsgQueue :: STMMsgStore -> RecipientId -> Natural -> STM MsgQueue
+  getMsgQueue store rId quota = do
     m <- messages <$> readTVar store
     maybe (newQ m) return $ M.lookup rId m
     where
       newQ m' = do
-        q <- MsgQueue <$> newTQueue
+        q <- MsgQueue <$> newTBQueue quota
         writeTVar store . MsgStoreData $ M.insert rId q m'
         return q
 
@@ -37,15 +38,18 @@ instance MonadMsgStore STMMsgStore MsgQueue STM where
     modifyTVar store $ MsgStoreData . M.delete rId . messages
 
 instance MonadMsgQueue MsgQueue STM where
+  isFull :: MsgQueue -> STM Bool
+  isFull = isFullTBQueue . msgQueue
+
   writeMsg :: MsgQueue -> Message -> STM ()
-  writeMsg = writeTQueue . msgQueue
+  writeMsg = writeTBQueue . msgQueue
 
   tryPeekMsg :: MsgQueue -> STM (Maybe Message)
-  tryPeekMsg = tryPeekTQueue . msgQueue
+  tryPeekMsg = tryPeekTBQueue . msgQueue
 
   peekMsg :: MsgQueue -> STM Message
-  peekMsg = peekTQueue . msgQueue
+  peekMsg = peekTBQueue . msgQueue
 
   -- atomic delete (== read) last and peek next message if available
   tryDelPeekMsg :: MsgQueue -> STM (Maybe Message)
-  tryDelPeekMsg (MsgQueue q) = tryReadTQueue q >> tryPeekTQueue q
+  tryDelPeekMsg (MsgQueue q) = tryReadTBQueue q >> tryPeekTBQueue q
diff --git a/tests/SMPClient.hs b/tests/SMPClient.hs
index 5b7dad9c2..5bd38d61e 100644
--- a/tests/SMPClient.hs
+++ b/tests/SMPClient.hs
@@ -57,6 +57,7 @@ cfg =
   ServerConfig
     { transports = undefined,
       tbqSize = 1,
+      msgQueueQuota = 4,
       queueIdBytes = 12,
       msgIdBytes = 6,
       storeLog = Nothing,