diff --git a/instantout/actions.go b/instantout/actions.go
index 8353ee1e..6d3f403c 100644
--- a/instantout/actions.go
+++ b/instantout/actions.go
@@ -691,6 +691,21 @@ func (f *FSM) WaitForHtlcSweepConfirmedAction(ctx context.Context,
 	}
 }
 
+// unlockReservationsOnRecoverAction is the action of the
+// UnlockReservationsOnRecover state. It is entered via OnRecover from any
+// in-flight state where the reservations are already locked, and it unlocks
+// them before routing to Failed. Without this, a crash between
+// PollPaymentAcceptedAction's LockReservation and the swap reaching a
+// terminal state would leave the reservations permanently Locked in the
+// local store, blocking any future InstantOut that wants to spend them.
+func (f *FSM) unlockReservationsOnRecoverAction(ctx context.Context,
+	_ fsm.EventContext) fsm.EventType {
+
+	return f.handleErrorAndUnlockReservations(
+		ctx, errors.New("instant out recovered from in-flight state"),
+	)
+}
+
 // handleErrorAndUnlockReservations handles an error and unlocks the
 // reservations.
 func (f *FSM) handleErrorAndUnlockReservations(ctx context.Context,
diff --git a/instantout/fsm.go b/instantout/fsm.go
index c188b158..518bd34a 100644
--- a/instantout/fsm.go
+++ b/instantout/fsm.go
@@ -85,6 +85,14 @@ var (
 	// FailedHtlcSweep is the state where the htlc sweep failed.
 	FailedHtlcSweep = fsm.StateType("FailedHtlcSweep")
 
+	// UnlockReservationsOnRecover is a transient state entered via
+	// OnRecover from any in-flight state that had already locked the
+	// underlying reservations. Its action unlocks them and routes the
+	// FSM to Failed, so a crash mid-swap does not leave reservations
+	// stuck Locked in the local store.
+	UnlockReservationsOnRecover = fsm.StateType(
+		"UnlockReservationsOnRecover")
+
 	// Failed is the state where the swap failed.
 	Failed = fsm.StateType("InstantOutFailed")
 )
@@ -246,7 +254,11 @@ func (f *FSM) GetV1ReservationStates() fsm.States {
 			Transitions: fsm.Transitions{
 				OnPaymentAccepted: BuildHtlc,
 				fsm.OnError:       Failed,
-				OnRecover:         Failed,
+				// OnRecover must go through cleanup since
+				// PollPaymentAcceptedAction has already locked
+				// the reservations by the time the FSM can
+				// crash here.
+				OnRecover: UnlockReservationsOnRecover,
 			},
 			Action: f.PollPaymentAcceptedAction,
 		},
@@ -254,10 +266,18 @@ func (f *FSM) GetV1ReservationStates() fsm.States {
 			Transitions: fsm.Transitions{
 				OnHtlcSigReceived: PushPreimage,
 				fsm.OnError:       Failed,
-				OnRecover:         Failed,
+				// Same as SendPaymentAndPollAccepted -- the
+				// reservations are still locked at this point.
+				OnRecover: UnlockReservationsOnRecover,
 			},
 			Action: f.BuildHTLCAction,
 		},
+		UnlockReservationsOnRecover: fsm.State{
+			Transitions: fsm.Transitions{
+				fsm.OnError: Failed,
+			},
+			Action: f.unlockReservationsOnRecoverAction,
+		},
 		PushPreimage: fsm.State{
 			Transitions: fsm.Transitions{
 				OnSweeplessSweepPublished: WaitForSweeplessSweepConfirmed,