diff --git a/node/node.go b/node/node.go
index a4ea193b8..cf78a8aaa 100644
--- a/node/node.go
+++ b/node/node.go
@@ -8,7 +8,6 @@ import (
 	"net"
 	"net/http"
 	"strings"
-	"time"
 
 	abci "github.com/tendermint/abci/types"
 	crypto "github.com/tendermint/go-crypto"
@@ -256,7 +255,8 @@ func NewNode(config *cfg.Config,
 		trustMetricStore = trust.NewTrustMetricStore(trustHistoryDB, trust.DefaultConfig())
 		trustMetricStore.SetLogger(p2pLogger)
 
-		pexReactor := p2p.NewPEXReactor(addrBook)
+		pexReactor := p2p.NewPEXReactor(addrBook,
+			&p2p.PEXReactorConfig{Seeds: strings.Split(config.P2P.Seeds, ",")})
 		pexReactor.SetLogger(p2pLogger)
 		sw.AddReactor("PEX", pexReactor)
 	}
@@ -388,38 +388,10 @@ func (n *Node) OnStart() error {
 		}
 	}
 
-	if n.config.P2P.Seeds != "" {
-		err = n.dialSeedsIfAddrBookIsEmptyOrPEXFailedToConnect(strings.Split(n.config.P2P.Seeds, ","))
-		if err != nil {
-			return err
-		}
-	}
-
 	// start tx indexer
 	return n.indexerService.Start()
 }
 
-func (n *Node) dialSeedsIfAddrBookIsEmptyOrPEXFailedToConnect(seeds []string) error {
-	// prefer peers from address book
-	if n.config.P2P.PexReactor && n.addrBook.Size() > 0 {
-		// give some time for PexReactor to connect us to other peers
-		const fallbackToSeedsAfter = 30 * time.Second
-		go func() {
-			time.Sleep(fallbackToSeedsAfter)
-			// fallback to dialing seeds if for some reason we can't connect to any
-			// peers
-			outbound, inbound, _ := n.sw.NumPeers()
-			if n.IsRunning() && outbound+inbound == 0 {
-				// TODO: ignore error?
-				n.sw.DialPeersAsync(n.addrBook, seeds, false)
-			}
-		}()
-		return nil
-	}
-
-	return n.sw.DialPeersAsync(n.addrBook, seeds, false)
-}
-
 // OnStop stops the Node. It implements cmn.Service.
 func (n *Node) OnStop() {
 	n.BaseService.OnStop()
diff --git a/p2p/pex_reactor.go b/p2p/pex_reactor.go
index 64e7dafb9..9e67a6c2f 100644
--- a/p2p/pex_reactor.go
+++ b/p2p/pex_reactor.go
@@ -45,6 +45,7 @@ type PEXReactor struct {
 	BaseReactor
 
 	book              *AddrBook
+	config            *PEXReactorConfig
 	ensurePeersPeriod time.Duration
 
 	// tracks message count by peer, so we can prevent abuse
@@ -52,10 +53,18 @@ type PEXReactor struct {
 	maxMsgCountByPeer uint16
 }
 
+// PEXReactorConfig holds reactor specific configuration data.
+type PEXReactorConfig struct {
+	// Seeds is a list of addresses reactor may use if it can't connect to peers
+	// in the addrbook.
+	Seeds []string
+}
+
 // NewPEXReactor creates new PEX reactor.
-func NewPEXReactor(b *AddrBook) *PEXReactor {
+func NewPEXReactor(b *AddrBook, config *PEXReactorConfig) *PEXReactor {
 	r := &PEXReactor{
 		book:              b,
+		config:            config,
 		ensurePeersPeriod: defaultEnsurePeersPeriod,
 		msgCountByPeer:    cmn.NewCMap(),
 		maxMsgCountByPeer: defaultMaxMsgCountByPeer,
@@ -238,7 +247,7 @@ func (r *PEXReactor) ensurePeersRoutine() {
 // placeholder. It should not be the case that an address becomes old/vetted
 // upon a single successful connection.
 func (r *PEXReactor) ensurePeers() {
-	numOutPeers, _, numDialing := r.Switch.NumPeers()
+	numOutPeers, numInPeers, numDialing := r.Switch.NumPeers()
 	numToDial := minNumOutboundPeers - (numOutPeers + numDialing)
 	r.Logger.Info("Ensure peers", "numOutPeers", numOutPeers, "numDialing", numDialing, "numToDial", numToDial)
 	if numToDial <= 0 {
@@ -291,6 +300,12 @@ func (r *PEXReactor) ensurePeers() {
 			r.RequestPEX(peer)
 		}
 	}
+
+	// If we can't connect to any known address, fallback to dialing seeds
+	if numOutPeers+numInPeers+numDialing == 0 {
+		r.Logger.Info("No addresses to dial nor connected peers. Will dial seeds", "seeds", r.config.Seeds)
+		r.Switch.DialPeersAsync(r.book, r.config.Seeds, false)
+	}
 }
 
 func (r *PEXReactor) flushMsgCountByPeer() {
diff --git a/p2p/pex_reactor_test.go b/p2p/pex_reactor_test.go
index a14f0eb2a..b37f66411 100644
--- a/p2p/pex_reactor_test.go
+++ b/p2p/pex_reactor_test.go
@@ -24,7 +24,7 @@ func TestPEXReactorBasic(t *testing.T) {
 	book := NewAddrBook(dir+"addrbook.json", true)
 	book.SetLogger(log.TestingLogger())
 
-	r := NewPEXReactor(book)
+	r := NewPEXReactor(book, &PEXReactorConfig{})
 	r.SetLogger(log.TestingLogger())
 
 	assert.NotNil(r)
@@ -40,7 +40,7 @@ func TestPEXReactorAddRemovePeer(t *testing.T) {
 	book := NewAddrBook(dir+"addrbook.json", true)
 	book.SetLogger(log.TestingLogger())
 
-	r := NewPEXReactor(book)
+	r := NewPEXReactor(book, &PEXReactorConfig{})
 	r.SetLogger(log.TestingLogger())
 
 	size := book.Size()
@@ -76,7 +76,7 @@ func TestPEXReactorRunning(t *testing.T) {
 		switches[i] = makeSwitch(config, i, "127.0.0.1", "123.123.123", func(i int, sw *Switch) *Switch {
 			sw.SetLogger(log.TestingLogger().With("switch", i))
 
-			r := NewPEXReactor(book)
+			r := NewPEXReactor(book, &PEXReactorConfig{})
 			r.SetLogger(log.TestingLogger())
 			r.SetEnsurePeersPeriod(250 * time.Millisecond)
 			sw.AddReactor("pex", r)
@@ -141,7 +141,7 @@ func TestPEXReactorReceive(t *testing.T) {
 	book := NewAddrBook(dir+"addrbook.json", false)
 	book.SetLogger(log.TestingLogger())
 
-	r := NewPEXReactor(book)
+	r := NewPEXReactor(book, &PEXReactorConfig{})
 	r.SetLogger(log.TestingLogger())
 
 	peer := createRandomPeer(false)
@@ -166,7 +166,7 @@ func TestPEXReactorAbuseFromPeer(t *testing.T) {
 	book := NewAddrBook(dir+"addrbook.json", true)
 	book.SetLogger(log.TestingLogger())
 
-	r := NewPEXReactor(book)
+	r := NewPEXReactor(book, &PEXReactorConfig{})
 	r.SetLogger(log.TestingLogger())
 	r.SetMaxMsgCountByPeer(5)
 
diff --git a/test/p2p/manual_peers.sh b/test/p2p/persistent_peers.sh
similarity index 100%
rename from test/p2p/manual_peers.sh
rename to test/p2p/persistent_peers.sh