diff --git a/lib/excache/command/transaction.ex b/lib/excache/command/transaction.ex
new file mode 100644
index 0000000..451097b
--- /dev/null
+++ b/lib/excache/command/transaction.ex
@@ -0,0 +1,98 @@
+defmodule Excache.Command.Transaction do
+  @moduledoc false
+
+  alias Excache.Store
+
+  def initial_state, do: %{in_multi: false, queued: [], multi_error: false, watches: %{}}
+
+  def execute(command, args, state, dispatch_and_log) do
+    cond do
+      command == "MULTI" -> handle_multi(state)
+      command == "EXEC" -> handle_exec(state, dispatch_and_log)
+      command == "DISCARD" -> handle_discard(state)
+      command == "WATCH" -> handle_watch(args, state)
+      command == "UNWATCH" -> handle_unwatch(state)
+      state.in_multi -> queue(command, args, state)
+      true -> dispatch_and_log.(command, args, state)
+    end
+  end
+
+  def known?(command), do: command in Excache.Command.known_commands()
+
+  defp handle_multi(%{in_multi: true} = state) do
+    {[{:error, "ERR MULTI calls can not be nested"}], state}
+  end
+
+  defp handle_multi(state) do
+    {[{:simple, "OK"}], %{state | in_multi: true, queued: [], multi_error: false}}
+  end
+
+  defp handle_exec(%{in_multi: false} = state, _dispatch_and_log) do
+    {[{:error, "ERR EXEC without MULTI"}], state}
+  end
+
+  defp handle_exec(%{multi_error: true} = state, _dispatch_and_log) do
+    {[{:error, "ERR EXECABORT Transaction discarded because of previous errors."}], reset(state)}
+  end
+
+  defp handle_exec(state, dispatch_and_log) do
+    if watches_intact?(state.watches) do
+      {replies, executed} =
+        Enum.reduce(Enum.reverse(state.queued), {[], state}, fn {command, args}, {acc, current} ->
+          {[term], updated} = dispatch_and_log.(command, args, current)
+          {[term | acc], updated}
+        end)
+
+      {[{:array, Enum.reverse(replies)}], reset(executed)}
+    else
+      {[{:array, nil}], reset(state)}
+    end
+  end
+
+  defp handle_discard(%{in_multi: false} = state) do
+    {[{:error, "ERR DISCARD without MULTI"}], state}
+  end
+
+  defp handle_discard(state), do: {[{:simple, "OK"}], reset(state)}
+
+  defp handle_watch([], state) do
+    {[{:error, "ERR wrong number of arguments for 'watch' command"}], state}
+  end
+
+  defp handle_watch(_keys, %{in_multi: true} = state) do
+    {[{:error, "ERR WATCH inside MULTI is not allowed"}], state}
+  end
+
+  defp handle_watch(keys, state) do
+    updated =
+      Enum.reduce(keys, state, fn key, current ->
+        snapshot = Store.watch_snapshot(key)
+        %{current | watches: Map.put(current.watches, key, snapshot)}
+      end)
+
+    {[{:simple, "OK"}], updated}
+  end
+
+  defp handle_unwatch(state), do: {[{:simple, "OK"}], %{state | watches: %{}}}
+
+  defp queue(command, args, state) do
+    cond do
+      command in ["SUBSCRIBE", "UNSUBSCRIBE"] ->
+        {[{:error, "ERR #{command} is not allowed in transactions"}], mark_dirty(state)}
+
+      not known?(command) ->
+        {[{:error, "ERR unknown command '#{command}'"}], mark_dirty(state)}
+
+      true ->
+        {[{:simple, "QUEUED"}], %{state | queued: [{command, args} | state.queued]}}
+    end
+  end
+
+  defp watches_intact?(watches) do
+    Enum.all?(watches, fn {key, snapshot} -> Store.unchanged?(key, snapshot) end)
+  end
+
+  defp mark_dirty(state), do: %{state | multi_error: true}
+
+  defp reset(state), do: %{state | in_multi: false, queued: [], multi_error: false, watches: %{}}
+end