diff --git a/nova/tests/unit/virt/libvirt/test_driver.py b/nova/tests/unit/virt/libvirt/test_driver.py
index d8f67dbdf3..8ef70a069a 100644
--- a/nova/tests/unit/virt/libvirt/test_driver.py
+++ b/nova/tests/unit/virt/libvirt/test_driver.py
@@ -11096,6 +11096,7 @@ class LibvirtConnTestCase(test.NoDBTestCase):
 
             drvr.init_host("wibble")
             drvr.get_num_instances()
+            drvr._host._dispatch_conn_event()
             self.assertFalse(service_mock.disabled)
             self.assertIsNone(service_mock.disabled_reason)
 
diff --git a/nova/tests/unit/virt/libvirt/test_host.py b/nova/tests/unit/virt/libvirt/test_host.py
index a1627ac1c0..456560dc81 100644
--- a/nova/tests/unit/virt/libvirt/test_host.py
+++ b/nova/tests/unit/virt/libvirt/test_host.py
@@ -33,6 +33,11 @@ from nova.virt.libvirt import guest as libvirt_guest
 from nova.virt.libvirt import host
 
 
+class StringMatcher(object):
+    def __eq__(self, other):
+        return isinstance(other, six.string_types)
+
+
 class FakeVirtDomain(object):
 
     def __init__(self, id=-1, name=None):
@@ -301,6 +306,69 @@ class HostTestCase(test.NoDBTestCase):
         self.assertEqual(self.connect_calls, 1)
         self.assertEqual(self.register_calls, 1)
 
+    @mock.patch.object(host.Host, "_connect")
+    def test_conn_event(self, mock_conn):
+        handler = mock.MagicMock()
+        h = host.Host("qemu:///system", conn_event_handler=handler)
+
+        h.get_connection()
+        h._dispatch_conn_event()
+
+        handler.assert_called_once_with(True, None)
+
+    @mock.patch.object(host.Host, "_connect")
+    def test_conn_event_fail(self, mock_conn):
+        handler = mock.MagicMock()
+        h = host.Host("qemu:///system", conn_event_handler=handler)
+        mock_conn.side_effect = fakelibvirt.libvirtError('test')
+
+        self.assertRaises(exception.HypervisorUnavailable, h.get_connection)
+        h._dispatch_conn_event()
+
+        handler.assert_called_once_with(False, StringMatcher())
+
+        # Attempt to get a second connection, and assert that we don't add
+        # queue a second callback. Note that we can't call
+        # _dispatch_conn_event() and assert no additional call to the handler
+        # here as above. This is because we haven't added an event, so it would
+        # block. We mock the helper method which queues an event for callback
+        # instead.
+        with mock.patch.object(h, '_queue_conn_event_handler') as mock_queue:
+            self.assertRaises(exception.HypervisorUnavailable,
+                              h.get_connection)
+            mock_queue.assert_not_called()
+
+    @mock.patch.object(host.Host, "_test_connection")
+    @mock.patch.object(host.Host, "_connect")
+    def test_conn_event_up_down(self, mock_conn, mock_test_conn):
+        handler = mock.MagicMock()
+        h = host.Host("qemu:///system", conn_event_handler=handler)
+        mock_conn.side_effect = (mock.MagicMock(),
+                                 fakelibvirt.libvirtError('test'))
+        mock_test_conn.return_value = False
+
+        h.get_connection()
+        self.assertRaises(exception.HypervisorUnavailable, h.get_connection)
+        h._dispatch_conn_event()
+        h._dispatch_conn_event()
+
+        handler.assert_has_calls([
+            mock.call(True, None),
+            mock.call(False, StringMatcher())
+        ])
+
+    @mock.patch.object(host.Host, "_connect")
+    def test_conn_event_thread(self, mock_conn):
+        event = eventlet.event.Event()
+        h = host.Host("qemu:///system", conn_event_handler=event.send)
+        h.initialize()
+
+        h.get_connection()
+        event.wait()
+        # This test will timeout if it fails. Success is implicit in a
+        # timely return from wait(), indicating that the connection event
+        # handler was called.
+
     @mock.patch.object(fakelibvirt.virConnect, "getLibVersion")
     @mock.patch.object(fakelibvirt.virConnect, "getVersion")
     @mock.patch.object(fakelibvirt.virConnect, "getType")
diff --git a/nova/tests/unit/virt/test_virt_drivers.py b/nova/tests/unit/virt/test_virt_drivers.py
index d8d2883237..a071a85f27 100644
--- a/nova/tests/unit/virt/test_virt_drivers.py
+++ b/nova/tests/unit/virt/test_virt_drivers.py
@@ -104,6 +104,10 @@ class _FakeDriverBackendTestCase(object):
             'nova.virt.libvirt.driver.connector',
             fake_os_brick_connector))
 
+        self.useFixture(fixtures.MonkeyPatch(
+            'nova.virt.libvirt.host.Host._conn_event_thread',
+            lambda *args: None))
+
         self.flags(rescue_image_id="2",
                    rescue_kernel_id="3",
                    rescue_ramdisk_id=None,
diff --git a/nova/virt/libvirt/host.py b/nova/virt/libvirt/host.py
index 1e737902c1..5ccdc20855 100644
--- a/nova/virt/libvirt/host.py
+++ b/nova/virt/libvirt/host.py
@@ -86,7 +86,9 @@ class Host(object):
 
         self._uri = uri
         self._read_only = read_only
+        self._initial_connection = True
         self._conn_event_handler = conn_event_handler
+        self._conn_event_handler_queue = six.moves.queue.Queue()
         self._lifecycle_event_handler = lifecycle_event_handler
         self._skip_list_all_domains = False
         self._caps = None
@@ -130,6 +132,26 @@ class Host(object):
         while True:
             self._dispatch_events()
 
+    def _conn_event_thread(self):
+        """Dispatches async connection events"""
+        # NOTE(mdbooth): This thread doesn't need to jump through the same
+        # hoops as _dispatch_thread because it doesn't interact directly
+        # with the libvirt native thread.
+        while True:
+            self._dispatch_conn_event()
+
+    def _dispatch_conn_event(self):
+        # NOTE(mdbooth): Splitting out this loop looks redundant, but it
+        # means we can easily dispatch events synchronously from tests and
+        # it isn't completely awful.
+        handler = self._conn_event_handler_queue.get()
+        try:
+            handler()
+        except Exception:
+            LOG.exception(_LE('Exception handling connection event'))
+        finally:
+            self._conn_event_handler_queue.task_done()
+
     @staticmethod
     def _event_lifecycle_callback(conn, dom, event, detail, opaque):
         """Receives lifecycle events from libvirt.
@@ -261,8 +283,7 @@ class Host(object):
                 reason = str(last_close_event['reason'])
                 msg = _("Connection to libvirt lost: %s") % reason
                 self._wrapped_conn = None
-                if self._conn_event_handler is not None:
-                    self._conn_event_handler(False, msg)
+                self._queue_conn_event_handler(False, msg)
 
     def _event_emit_delayed(self, event):
         """Emit events - possibly delayed."""
@@ -344,21 +365,9 @@ class Host(object):
     def _get_new_connection(self):
         # call with _wrapped_conn_lock held
         LOG.debug('Connecting to libvirt: %s', self._uri)
-        wrapped_conn = None
 
-        try:
-            wrapped_conn = self._connect(self._uri, self._read_only)
-        finally:
-            # Enabling the compute service, in case it was disabled
-            # since the connection was successful.
-            disable_reason = None
-            if not wrapped_conn:
-                disable_reason = 'Failed to connect to libvirt'
-
-            if self._conn_event_handler is not None:
-                self._conn_event_handler(bool(wrapped_conn), disable_reason)
-
-        self._wrapped_conn = wrapped_conn
+        # This will raise an exception on failure
+        wrapped_conn = self._connect(self._uri, self._read_only)
 
         try:
             LOG.debug("Registering for lifecycle events %s", self)
@@ -390,14 +399,47 @@ class Host(object):
 
         return wrapped_conn
 
+    def _queue_conn_event_handler(self, *args, **kwargs):
+        if self._conn_event_handler is None:
+            return
+
+        def handler():
+            return self._conn_event_handler(*args, **kwargs)
+
+        self._conn_event_handler_queue.put(handler)
+
     def _get_connection(self):
         # multiple concurrent connections are protected by _wrapped_conn_lock
         with self._wrapped_conn_lock:
-            wrapped_conn = self._wrapped_conn
-            if not wrapped_conn or not self._test_connection(wrapped_conn):
-                wrapped_conn = self._get_new_connection()
+            # Drop the existing connection if it is not usable
+            if (self._wrapped_conn is not None and
+                    not self._test_connection(self._wrapped_conn)):
+                self._wrapped_conn = None
+                # Connection was previously up, and went down
+                self._queue_conn_event_handler(
+                    False, _('Connection to libvirt lost'))
 
-        return wrapped_conn
+            if self._wrapped_conn is None:
+                try:
+                    # This will raise if it fails to get a connection
+                    self._wrapped_conn = self._get_new_connection()
+                except Exception as ex:
+                    with excutils.save_and_reraise_exception():
+                        # If we previously had a connection and it went down,
+                        # we generated a down event for that above.
+                        # We also want to generate a down event for an initial
+                        # failure, which won't be handled above.
+                        if self._initial_connection:
+                            self._queue_conn_event_handler(
+                                False,
+                                _('Failed to connect to libvirt: %(msg)s') %
+                                {'msg': ex})
+                finally:
+                    self._initial_connection = False
+
+                self._queue_conn_event_handler(True, None)
+
+        return self._wrapped_conn
 
     def get_connection(self):
         """Returns a connection to the hypervisor
@@ -433,6 +475,10 @@ class Host(object):
         libvirt.registerErrorHandler(self._libvirt_error_handler, None)
         libvirt.virEventRegisterDefaultImpl()
         self._init_events()
+
+        LOG.debug("Starting connection event dispatch thread")
+        utils.spawn(self._conn_event_thread)
+
         self._initialized = True
 
     def _version_check(self, lv_ver=None, hv_ver=None, hv_type=None,