diff --git a/pkg/controller/doc.go b/pkg/controller/doc.go
index 1b67b41ca82..8a708ad5d1c 100644
--- a/pkg/controller/doc.go
+++ b/pkg/controller/doc.go
@@ -14,6 +14,6 @@ See the License for the specific language governing permissions and
 limitations under the License.
 */
 
-// Package controller contains logic for watching and syncronizing
+// Package controller contains logic for watching and synchronizing
 // replicationControllers.
 package controller
diff --git a/pkg/controller/replication_controller.go b/pkg/controller/replication_controller.go
index 90479489f01..39691cfbdc0 100644
--- a/pkg/controller/replication_controller.go
+++ b/pkg/controller/replication_controller.go
@@ -38,6 +38,9 @@ type ReplicationManager struct {
 	kubeClient client.ClientInterface
 	podControl PodControlInterface
 	syncTime   <-chan time.Time
+
+	// To allow injection of syncReplicationController for testing.
+	syncHandler func(controllerSpec api.ReplicationController) error
 }
 
 // An interface that knows how to add or delete pods
@@ -74,13 +77,17 @@ func (r RealPodControl) deletePod(podID string) error {
 }
 
 func MakeReplicationManager(etcdClient util.EtcdClient, kubeClient client.ClientInterface) *ReplicationManager {
-	return &ReplicationManager{
+	rm := &ReplicationManager{
 		kubeClient: kubeClient,
 		etcdClient: etcdClient,
 		podControl: RealPodControl{
 			kubeClient: kubeClient,
 		},
 	}
+	rm.syncHandler = func(controllerSpec api.ReplicationController) error {
+		return rm.syncReplicationController(controllerSpec)
+	}
+	return rm
 }
 
 // Begin watching and syncing.
@@ -91,35 +98,40 @@ func (rm *ReplicationManager) Run(period time.Duration) {
 
 func (rm *ReplicationManager) watchControllers() {
 	watchChannel := make(chan *etcd.Response)
+	stop := make(chan bool)
+	defer func() {
+		// Ensure that the call to watch ends.
+		close(stop)
+	}()
 	go func() {
 		defer util.HandleCrash()
 		defer func() {
 			close(watchChannel)
 		}()
-		rm.etcdClient.Watch("/registry/controllers", 0, true, watchChannel, nil)
+		_, err := rm.etcdClient.Watch("/registry/controllers", 0, true, watchChannel, stop)
+		if err != etcd.ErrWatchStoppedByUser {
+			log.Printf("etcd.Watch stopped unexpectedly: %v (%#v)", err, err)
+		}
 	}()
 
 	for {
 		select {
 		case <-rm.syncTime:
 			rm.synchronize()
-		case watchResponse, ok := <-watchChannel:
-			if !ok {
-				// watchChannel has been closed. Let the util.Forever() that
-				// called us call us again.
+		case watchResponse, open := <-watchChannel:
+			if !open || watchResponse == nil {
+				// watchChannel has been closed, or something else went
+				// wrong with our etcd watch call. Let the util.Forever()
+				// that called us call us again.
 				return
 			}
-			if watchResponse == nil {
-				time.Sleep(time.Second * 10)
-				continue
-			}
 			log.Printf("Got watch: %#v", watchResponse)
 			controller, err := rm.handleWatchResponse(watchResponse)
 			if err != nil {
 				log.Printf("Error handling data: %#v, %#v", err, watchResponse)
 				continue
 			}
-			rm.syncReplicationController(*controller)
+			rm.syncHandler(*controller)
 		}
 	}
 }
@@ -179,9 +191,10 @@ func (rm *ReplicationManager) synchronize() {
 	err := helper.ExtractList("/registry/controllers", &controllerSpecs)
 	if err != nil {
 		log.Printf("Synchronization error: %v (%#v)", err, err)
+		return
 	}
 	for _, controllerSpec := range controllerSpecs {
-		err = rm.syncReplicationController(controllerSpec)
+		err = rm.syncHandler(controllerSpec)
 		if err != nil {
 			log.Printf("Error synchronizing: %#v", err)
 		}
diff --git a/pkg/controller/replication_controller_test.go b/pkg/controller/replication_controller_test.go
index 696af15960a..a7e6f621b80 100644
--- a/pkg/controller/replication_controller_test.go
+++ b/pkg/controller/replication_controller_test.go
@@ -22,6 +22,7 @@ import (
 	"net/http/httptest"
 	"reflect"
 	"testing"
+	"time"
 
 	"github.com/GoogleCloudPlatform/kubernetes/pkg/api"
 	"github.com/GoogleCloudPlatform/kubernetes/pkg/client"
@@ -393,3 +394,76 @@ func TestSyncronize(t *testing.T) {
 
 	validateSyncReplication(t, &fakePodControl, 7, 0)
 }
+
+type asyncTimeout struct {
+	doneChan chan bool
+}
+
+func beginTimeout(d time.Duration) *asyncTimeout {
+	a := &asyncTimeout{doneChan: make(chan bool)}
+	go func() {
+		select {
+		case <-a.doneChan:
+			return
+		case <-time.After(d):
+			panic("Timeout expired!")
+		}
+	}()
+	return a
+}
+
+func (a *asyncTimeout) done() {
+	close(a.doneChan)
+}
+
+func TestWatchControllers(t *testing.T) {
+	defer beginTimeout(20 * time.Second).done()
+	fakeEtcd := util.MakeFakeEtcdClient(t)
+	manager := MakeReplicationManager(fakeEtcd, nil)
+	var testControllerSpec api.ReplicationController
+	receivedCount := 0
+	manager.syncHandler = func(controllerSpec api.ReplicationController) error {
+		if !reflect.DeepEqual(controllerSpec, testControllerSpec) {
+			t.Errorf("Expected %#v, but got %#v", testControllerSpec, controllerSpec)
+		}
+		receivedCount++
+		return nil
+	}
+
+	go manager.watchControllers()
+	time.Sleep(10 * time.Millisecond)
+
+	// Test normal case
+	testControllerSpec.ID = "foo"
+	fakeEtcd.WatchResponse <- &etcd.Response{
+		Action: "set",
+		Node: &etcd.Node{
+			Value: util.MakeJSONString(testControllerSpec),
+		},
+	}
+
+	time.Sleep(10 * time.Millisecond)
+	if receivedCount != 1 {
+		t.Errorf("Expected 1 call but got %v", receivedCount)
+	}
+
+	// Test error case
+	fakeEtcd.WatchInjectError <- fmt.Errorf("Injected error")
+	time.Sleep(10 * time.Millisecond)
+
+	// Did everything shut down?
+	if _, open := <-fakeEtcd.WatchResponse; open {
+		t.Errorf("An injected error did not cause a graceful shutdown")
+	}
+
+	// Test purposeful shutdown
+	go manager.watchControllers()
+	time.Sleep(10 * time.Millisecond)
+	fakeEtcd.WatchStop <- true
+	time.Sleep(10 * time.Millisecond)
+
+	// Did everything shut down?
+	if _, open := <-fakeEtcd.WatchResponse; open {
+		t.Errorf("A stop did not cause a graceful shutdown")
+	}
+}
diff --git a/pkg/util/etcd_tools.go b/pkg/util/etcd_tools.go
index 55a4dd897b1..e97903c4aec 100644
--- a/pkg/util/etcd_tools.go
+++ b/pkg/util/etcd_tools.go
@@ -94,25 +94,19 @@ func (h *EtcdHelper) ExtractList(key string, slicePtr interface{}) error {
 // empty responses and nil response nodes exactly like a not found error.
 func (h *EtcdHelper) ExtractObj(key string, objPtr interface{}, ignoreNotFound bool) error {
 	response, err := h.Client.Get(key, false, false)
-	returnZero := false
-	if err != nil {
-		if ignoreNotFound && IsEtcdNotFound(err) {
-			returnZero = true
-		} else {
+
+	if err != nil && !IsEtcdNotFound(err) {
+		return err
+	}
+	if err != nil || response.Node == nil || len(response.Node.Value) == 0 {
+		if ignoreNotFound {
+			pv := reflect.ValueOf(objPtr)
+			pv.Elem().Set(reflect.Zero(pv.Type().Elem()))
+			return nil
+		} else if err != nil {
 			return err
 		}
-	}
-	if !returnZero && (response.Node == nil || len(response.Node.Value) == 0) {
-		if ignoreNotFound {
-			returnZero = true
-		} else {
-			return fmt.Errorf("key '%v' found no nodes field: %#v", key, response)
-		}
-	}
-	if returnZero {
-		pv := reflect.ValueOf(objPtr)
-		pv.Elem().Set(reflect.Zero(pv.Type().Elem()))
-		return nil
+		return fmt.Errorf("key '%v' found no nodes field: %#v", key, response)
 	}
 	return json.Unmarshal([]byte(response.Node.Value), objPtr)
 }
diff --git a/pkg/util/fake_etcd_client.go b/pkg/util/fake_etcd_client.go
index d98bb500c24..56e023fa859 100644
--- a/pkg/util/fake_etcd_client.go
+++ b/pkg/util/fake_etcd_client.go
@@ -45,6 +45,13 @@ type FakeEtcdClient struct {
 	Err         error
 	t           *testing.T
 	Ix          int
+
+	// Will become valid after Watch is called; tester may write to it. Tester may
+	// also read from it to verify that it's closed after injecting an error.
+	WatchResponse chan *etcd.Response
+	// Write to this to prematurely stop a Watch that is running in a goroutine.
+	WatchInjectError chan<- error
+	WatchStop        chan<- bool
 }
 
 func MakeFakeEtcdClient(t *testing.T) *FakeEtcdClient {
@@ -88,5 +95,17 @@ func (f *FakeEtcdClient) Delete(key string, recursive bool) (*etcd.Response, err
 }
 
 func (f *FakeEtcdClient) Watch(prefix string, waitIndex uint64, recursive bool, receiver chan *etcd.Response, stop chan bool) (*etcd.Response, error) {
-	return nil, fmt.Errorf("unimplemented")
+	f.WatchResponse = receiver
+	f.WatchStop = stop
+	injectedError := make(chan error)
+	defer close(injectedError)
+	f.WatchInjectError = injectedError
+	select {
+	case <-stop:
+		return nil, etcd.ErrWatchStoppedByUser
+	case err := <-injectedError:
+		return nil, err
+	}
+	// Never get here.
+	return nil, nil
 }