diff --git a/tools/xenstore/xs.c b/tools/xenstore/xs.c
index acd71108d9..e8a870e2a8 100644
--- a/tools/xenstore/xs.c
+++ b/tools/xenstore/xs.c
@@ -52,6 +52,7 @@ struct xs_handle {
          * signals waiters.
          */
 	pthread_t read_thr;
+	int read_thr_exists;
 
 	/*
          * A list of fired watch messages, protected by a mutex. Users can
@@ -77,6 +78,7 @@ struct xs_handle {
 	pthread_mutex_t request_mutex;
 };
 
+static int read_message(struct xs_handle *h);
 static void *read_thread(void *arg);
 
 int xs_fileno(struct xs_handle *h)
@@ -131,7 +133,7 @@ static struct xs_handle *get_handle(const char *connect_to)
 	int fd = -1, saved_errno;
 
 	if (stat(connect_to, &buf) != 0)
-		goto error;
+		return NULL;
 
 	if (S_ISSOCK(buf.st_mode))
 		fd = get_socket(connect_to);
@@ -139,11 +141,17 @@ static struct xs_handle *get_handle(const char *connect_to)
 		fd = get_dev(connect_to);
 
 	if (fd == -1)
-		goto error;
+		return NULL;
 
 	h = malloc(sizeof(*h));
-	if (h == NULL)
-		goto error;
+	if (h == NULL) {
+		saved_errno = errno;
+		close(fd);
+		errno = saved_errno;
+		return NULL;
+	}
+
+	memset(h, 0, sizeof(*h));
 
 	h->fd = fd;
 
@@ -160,19 +168,7 @@ static struct xs_handle *get_handle(const char *connect_to)
 
 	pthread_mutex_init(&h->request_mutex, NULL);
 
-	if (pthread_create(&h->read_thr, NULL, read_thread, h) != 0)
-		goto error;
-
 	return h;
-
- error:
-	saved_errno = errno;
-	if (h != NULL)
-		free(h);
-	if (fd != -1)
-		close(fd);
-	errno = saved_errno;
-	return NULL;
 }
 
 struct xs_handle *xs_daemon_open(void)
@@ -198,9 +194,11 @@ void xs_daemon_close(struct xs_handle *h)
 	pthread_mutex_lock(&h->reply_mutex);
 	pthread_mutex_lock(&h->watch_mutex);
 
-	/* XXX FIXME: May leak an unpublished message buffer. */
-	pthread_cancel(h->read_thr);
-	pthread_join(h->read_thr, NULL);
+	if (h->read_thr_exists) {
+		/* XXX FIXME: May leak an unpublished message buffer. */
+		pthread_cancel(h->read_thr);
+		pthread_join(h->read_thr, NULL);
+	}
 
 	list_for_each_entry_safe(msg, tmsg, &h->reply_list, list) {
 		free(msg->body);
@@ -271,6 +269,10 @@ static void *read_reply(
 	struct xs_stored_msg *msg;
 	char *body;
 
+	/* Read from comms channel ourselves if there is no reader thread. */
+	if (!h->read_thr_exists && (read_message(h) == -1))
+		return NULL;
+
 	pthread_mutex_lock(&h->reply_mutex);
 	while (list_empty(&h->reply_list))
 		pthread_cond_wait(&h->reply_condvar, &h->reply_mutex);
@@ -541,6 +543,17 @@ bool xs_watch(struct xs_handle *h, const char *path, const char *token)
 {
 	struct iovec iov[2];
 
+	/* We dynamically create a reader thread on demand. */
+	pthread_mutex_lock(&h->request_mutex);
+	if (!h->read_thr_exists) {
+		if (pthread_create(&h->read_thr, NULL, read_thread, h) != 0) {
+			pthread_mutex_unlock(&h->request_mutex);
+			return false;
+		}
+		h->read_thr_exists = 1;
+	}
+	pthread_mutex_unlock(&h->request_mutex);
+
 	iov[0].iov_base = (void *)path;
 	iov[0].iov_len = strlen(path) + 1;
 	iov[1].iov_base = (void *)token;
@@ -717,65 +730,72 @@ char *xs_debug_command(struct xs_handle *h, const char *cmd,
 			ARRAY_SIZE(iov), NULL);
 }
 
+static int read_message(struct xs_handle *h)
+{
+	struct xs_stored_msg *msg = NULL;
+	char *body = NULL;
+	int saved_errno;
+
+	/* Allocate message structure and read the message header. */
+	msg = malloc(sizeof(*msg));
+	if (msg == NULL)
+		goto error;
+	if (!read_all(h->fd, &msg->hdr, sizeof(msg->hdr)))
+		goto error;
+
+	/* Allocate and read the message body. */
+	body = msg->body = malloc(msg->hdr.len + 1);
+	if (body == NULL)
+		goto error;
+	if (!read_all(h->fd, body, msg->hdr.len))
+		goto error;
+	body[msg->hdr.len] = '\0';
+
+	if (msg->hdr.type == XS_WATCH_EVENT) {
+		pthread_mutex_lock(&h->watch_mutex);
+
+		/* Kick users out of their select() loop. */
+		if (list_empty(&h->watch_list) &&
+		    (h->watch_pipe[1] != -1))
+			while (write(h->watch_pipe[1], body, 1) != 1)
+				continue;
+
+		list_add_tail(&msg->list, &h->watch_list);
+		pthread_cond_signal(&h->watch_condvar);
+
+		pthread_mutex_unlock(&h->watch_mutex);
+	} else {
+		pthread_mutex_lock(&h->reply_mutex);
+
+		/* There should only ever be one response pending! */
+		if (!list_empty(&h->reply_list)) {
+			pthread_mutex_unlock(&h->reply_mutex);
+			goto error;
+		}
+
+		list_add_tail(&msg->list, &h->reply_list);
+		pthread_cond_signal(&h->reply_condvar);
+
+		pthread_mutex_unlock(&h->reply_mutex);
+	}
+
+	return 0;
+
+ error:
+	saved_errno = errno;
+	free(msg);
+	free(body);
+	errno = saved_errno;
+	return -1;
+}
+
 static void *read_thread(void *arg)
 {
 	struct xs_handle *h = arg;
-	struct xs_stored_msg *msg = NULL;
-	char *body = NULL;
 
-	for (;;) {
-		msg = NULL;
-		body = NULL;
+	while (read_message(h) != -1)
+		continue;
 
-		/* Allocate message structure and read the message header. */
-		msg = malloc(sizeof(*msg));
-		if (msg == NULL)
-			goto error;
-		if (!read_all(h->fd, &msg->hdr, sizeof(msg->hdr)))
-			goto error;
-
-		/* Allocate and read the message body. */
-		body = msg->body = malloc(msg->hdr.len + 1);
-		if (body == NULL)
-			goto error;
-		if (!read_all(h->fd, body, msg->hdr.len))
-			goto error;
-		body[msg->hdr.len] = '\0';
-
-		if (msg->hdr.type == XS_WATCH_EVENT) {
-			pthread_mutex_lock(&h->watch_mutex);
-
-			/* Kick users out of their select() loop. */
-			if (list_empty(&h->watch_list) &&
-			    (h->watch_pipe[1] != -1))
-				while (write(h->watch_pipe[1], body, 1) != 1)
-					continue;
-
-			list_add_tail(&msg->list, &h->watch_list);
-			pthread_cond_signal(&h->watch_condvar);
-
-			pthread_mutex_unlock(&h->watch_mutex);
-		} else {
-			pthread_mutex_lock(&h->reply_mutex);
-
-			/* There should only ever be one response pending! */
-			if (!list_empty(&h->reply_list)) {
-				pthread_mutex_unlock(&h->reply_mutex);
-				goto error;
-			}
-
-			list_add_tail(&msg->list, &h->reply_list);
-			pthread_cond_signal(&h->reply_condvar);
-
-			pthread_mutex_unlock(&h->reply_mutex);
-		}
-	}
-
- error:
-	if (body != NULL)
-		free(body);
-	if (msg != NULL)
-		free(msg);
 	return NULL;
 }