diff --git a/pkg/controller/service/servicecontroller.go b/pkg/controller/service/servicecontroller.go
index ffe5972c562..8f238657487 100644
--- a/pkg/controller/service/servicecontroller.go
+++ b/pkg/controller/service/servicecontroller.go
@@ -581,13 +581,40 @@ func stringSlicesEqual(x, y []string) bool {
 }
 
 func hostsFromNodeList(list *api.NodeList) []string {
-	result := make([]string, len(list.Items))
+	result := []string{}
 	for ix := range list.Items {
-		result[ix] = list.Items[ix].Name
+		if list.Items[ix].Spec.Unschedulable {
+			continue
+		}
+		result = append(result, list.Items[ix].Name)
 	}
 	return result
 }
 
+func getNodeConditionPredicate() cache.NodeConditionPredicate {
+	return func(node api.Node) bool {
+		// We add the master to the node list, but its unschedulable.  So we use this to filter
+		// the master.
+		// TODO: Use a node annotation to indicate the master
+		if node.Spec.Unschedulable {
+			return false
+		}
+		// If we have no info, don't accept
+		if len(node.Status.Conditions) == 0 {
+			return false
+		}
+		for _, cond := range node.Status.Conditions {
+			// We consider the node for load balancing only when its NodeReady condition status
+			// is ConditionTrue
+			if cond.Type == api.NodeReady && cond.Status != api.ConditionTrue {
+				glog.V(4).Infof("Ignoring node %v with %v condition status %v", node.Name, cond.Type, cond.Status)
+				return false
+			}
+		}
+		return true
+	}
+}
+
 // nodeSyncLoop handles updating the hosts pointed to by all load
 // balancers whenever the set of nodes in the cluster changes.
 func (s *ServiceController) nodeSyncLoop(period time.Duration) {
@@ -598,7 +625,7 @@ func (s *ServiceController) nodeSyncLoop(period time.Duration) {
 	// something to compile, and gofmt1.4 complains about using `_ = range`.
 	for now := range time.Tick(period) {
 		_ = now
-		nodes, err := s.nodeLister.List()
+		nodes, err := s.nodeLister.NodeCondition(getNodeConditionPredicate()).List()
 		if err != nil {
 			glog.Errorf("Failed to retrieve current set of nodes from node lister: %v", err)
 			continue
diff --git a/pkg/controller/service/servicecontroller_test.go b/pkg/controller/service/servicecontroller_test.go
index 4a03096b41b..54e7a119073 100644
--- a/pkg/controller/service/servicecontroller_test.go
+++ b/pkg/controller/service/servicecontroller_test.go
@@ -228,4 +228,102 @@ func TestUpdateNodesInExternalLoadBalancer(t *testing.T) {
 	}
 }
 
+func TestHostsFromNodeList(t *testing.T) {
+	tests := []struct {
+		nodes         *api.NodeList
+		expectedHosts []string
+	}{
+		{
+			nodes:         &api.NodeList{},
+			expectedHosts: []string{},
+		},
+		{
+			nodes: &api.NodeList{
+				Items: []api.Node{
+					{
+						ObjectMeta: api.ObjectMeta{Name: "foo"},
+						Status:     api.NodeStatus{Phase: api.NodeRunning},
+					},
+					{
+						ObjectMeta: api.ObjectMeta{Name: "bar"},
+						Status:     api.NodeStatus{Phase: api.NodeRunning},
+					},
+				},
+			},
+			expectedHosts: []string{"foo", "bar"},
+		},
+		{
+			nodes: &api.NodeList{
+				Items: []api.Node{
+					{
+						ObjectMeta: api.ObjectMeta{Name: "foo"},
+						Status:     api.NodeStatus{Phase: api.NodeRunning},
+					},
+					{
+						ObjectMeta: api.ObjectMeta{Name: "bar"},
+						Status:     api.NodeStatus{Phase: api.NodeRunning},
+					},
+					{
+						ObjectMeta: api.ObjectMeta{Name: "unschedulable"},
+						Spec:       api.NodeSpec{Unschedulable: true},
+						Status:     api.NodeStatus{Phase: api.NodeRunning},
+					},
+				},
+			},
+			expectedHosts: []string{"foo", "bar"},
+		},
+	}
+
+	for _, test := range tests {
+		hosts := hostsFromNodeList(test.nodes)
+		if !reflect.DeepEqual(hosts, test.expectedHosts) {
+			t.Errorf("expected: %v, saw: %v", test.expectedHosts, hosts)
+		}
+	}
+}
+
+func TestGetNodeConditionPredicate(t *testing.T) {
+	tests := []struct {
+		node         api.Node
+		expectAccept bool
+		name         string
+	}{
+		{
+			node:         api.Node{},
+			expectAccept: false,
+			name:         "empty",
+		},
+		{
+			node: api.Node{
+				Status: api.NodeStatus{
+					Conditions: []api.NodeCondition{
+						{Type: api.NodeReady, Status: api.ConditionTrue},
+					},
+				},
+			},
+			expectAccept: true,
+			name:         "basic",
+		},
+		{
+			node: api.Node{
+				Spec: api.NodeSpec{Unschedulable: true},
+				Status: api.NodeStatus{
+					Conditions: []api.NodeCondition{
+						{Type: api.NodeReady, Status: api.ConditionTrue},
+					},
+				},
+			},
+			expectAccept: false,
+			name:         "unschedulable",
+		},
+	}
+	pred := getNodeConditionPredicate()
+	for _, test := range tests {
+		accept := pred(test.node)
+		if accept != test.expectAccept {
+			t.Errorf("Test failed for %s, expected %v, saw %v", test.name, test.expectAccept, accept)
+		}
+	}
+}
+
 // TODO(a-robinson): Add tests for update/sync/delete.