diff --git a/distribution/xfer/transfer.go b/distribution/xfer/transfer.go
index 7f323c1df5..6852225488 100644
--- a/distribution/xfer/transfer.go
+++ b/distribution/xfer/transfer.go
@@ -1,6 +1,7 @@
 package xfer
 
 import (
+	"runtime"
 	"sync"
 
 	"github.com/docker/docker/pkg/progress"
@@ -38,7 +39,7 @@ type Transfer interface {
 	Watch(progressOutput progress.Output) *Watcher
 	Release(*Watcher)
 	Context() context.Context
-	Cancel()
+	Close()
 	Done() <-chan struct{}
 	Released() <-chan struct{}
 	Broadcast(masterProgressChan <-chan progress.Progress)
@@ -61,11 +62,14 @@ type transfer struct {
 
 	// running remains open as long as the transfer is in progress.
 	running chan struct{}
-	// hasWatchers stays open until all watchers release the transfer.
-	hasWatchers chan struct{}
+	// released stays open until all watchers release the transfer and
+	// the transfer is no longer tracked by the transfer manager.
+	released chan struct{}
 
 	// broadcastDone is true if the master progress channel has closed.
 	broadcastDone bool
+	// closed is true if Close has been called
+	closed bool
 	// broadcastSyncChan allows watchers to "ping" the broadcasting
 	// goroutine to wait for it for deplete its input channel. This ensures
 	// a detaching watcher won't miss an event that was sent before it
@@ -78,7 +82,7 @@ func NewTransfer() Transfer {
 	t := &transfer{
 		watchers:          make(map[chan struct{}]*Watcher),
 		running:           make(chan struct{}),
-		hasWatchers:       make(chan struct{}),
+		released:          make(chan struct{}),
 		broadcastSyncChan: make(chan struct{}),
 	}
 
@@ -144,13 +148,13 @@ func (t *transfer) Watch(progressOutput progress.Output) *Watcher {
 		running:     make(chan struct{}),
 	}
 
+	t.watchers[w.releaseChan] = w
+
 	if t.broadcastDone {
 		close(w.running)
 		return w
 	}
 
-	t.watchers[w.releaseChan] = w
-
 	go func() {
 		defer func() {
 			close(w.running)
@@ -202,8 +206,19 @@ func (t *transfer) Release(watcher *Watcher) {
 	delete(t.watchers, watcher.releaseChan)
 
 	if len(t.watchers) == 0 {
-		close(t.hasWatchers)
-		t.cancel()
+		if t.closed {
+			// released may have been closed already if all
+			// watchers were released, then another one was added
+			// while waiting for a previous watcher goroutine to
+			// finish.
+			select {
+			case <-t.released:
+			default:
+				close(t.released)
+			}
+		} else {
+			t.cancel()
+		}
 	}
 	t.mu.Unlock()
 
@@ -223,9 +238,9 @@ func (t *transfer) Done() <-chan struct{} {
 }
 
 // Released returns a channel which is closed once all watchers release the
-// transfer.
+// transfer AND the transfer is no longer tracked by the transfer manager.
 func (t *transfer) Released() <-chan struct{} {
-	return t.hasWatchers
+	return t.released
 }
 
 // Context returns the context associated with the transfer.
@@ -233,9 +248,15 @@ func (t *transfer) Context() context.Context {
 	return t.ctx
 }
 
-// Cancel cancels the context associated with the transfer.
-func (t *transfer) Cancel() {
-	t.cancel()
+// Close is called by the transfer manager when the transfer is no longer
+// being tracked.
+func (t *transfer) Close() {
+	t.mu.Lock()
+	t.closed = true
+	if len(t.watchers) == 0 {
+		close(t.released)
+	}
+	t.mu.Unlock()
 }
 
 // DoFunc is a function called by the transfer manager to actually perform
@@ -280,10 +301,33 @@ func (tm *transferManager) Transfer(key string, xferFunc DoFunc, progressOutput
 	tm.mu.Lock()
 	defer tm.mu.Unlock()
 
-	if xfer, present := tm.transfers[key]; present {
+	for {
+		xfer, present := tm.transfers[key]
+		if !present {
+			break
+		}
 		// Transfer is already in progress.
 		watcher := xfer.Watch(progressOutput)
-		return xfer, watcher
+
+		select {
+		case <-xfer.Context().Done():
+			// We don't want to watch a transfer that has been cancelled.
+			// Wait for it to be removed from the map and try again.
+			xfer.Release(watcher)
+			tm.mu.Unlock()
+			// The goroutine that removes this transfer from the
+			// map is also waiting for xfer.Done(), so yield to it.
+			// This could be avoided by adding a Closed method
+			// to Transfer to allow explicitly waiting for it to be
+			// removed the map, but forcing a scheduling round in
+			// this very rare case seems better than bloating the
+			// interface definition.
+			runtime.Gosched()
+			<-xfer.Done()
+			tm.mu.Lock()
+		default:
+			return xfer, watcher
+		}
 	}
 
 	start := make(chan struct{})
@@ -318,6 +362,7 @@ func (tm *transferManager) Transfer(key string, xferFunc DoFunc, progressOutput
 				}
 				delete(tm.transfers, key)
 				tm.mu.Unlock()
+				xfer.Close()
 				return
 			}
 		}
diff --git a/distribution/xfer/transfer_test.go b/distribution/xfer/transfer_test.go
index 7eeb304033..8fe24661bc 100644
--- a/distribution/xfer/transfer_test.go
+++ b/distribution/xfer/transfer_test.go
@@ -291,6 +291,44 @@ func TestWatchRelease(t *testing.T) {
 	}
 }
 
+func TestWatchFinishedTransfer(t *testing.T) {
+	makeXferFunc := func(id string) DoFunc {
+		return func(progressChan chan<- progress.Progress, start <-chan struct{}, inactive chan<- struct{}) Transfer {
+			xfer := NewTransfer()
+			go func() {
+				// Finish immediately
+				close(progressChan)
+			}()
+			return xfer
+		}
+	}
+
+	tm := NewTransferManager(5)
+
+	// Start a transfer
+	watchers := make([]*Watcher, 3)
+	var xfer Transfer
+	xfer, watchers[0] = tm.Transfer("id1", makeXferFunc("id1"), progress.ChanOutput(make(chan progress.Progress)))
+
+	// Give it a watcher immediately
+	watchers[1] = xfer.Watch(progress.ChanOutput(make(chan progress.Progress)))
+
+	// Wait for the transfer to complete
+	<-xfer.Done()
+
+	// Set up another watcher
+	watchers[2] = xfer.Watch(progress.ChanOutput(make(chan progress.Progress)))
+
+	// Release the watchers
+	for _, w := range watchers {
+		xfer.Release(w)
+	}
+
+	// Now that all watchers have been released, Released() should
+	// return a closed channel.
+	<-xfer.Released()
+}
+
 func TestDuplicateTransfer(t *testing.T) {
 	ready := make(chan struct{})