diff --git a/zebra-state/src/lib.rs b/zebra-state/src/lib.rs
index 9708c849..39e8c6f9 100644
--- a/zebra-state/src/lib.rs
+++ b/zebra-state/src/lib.rs
@@ -14,6 +14,7 @@
 #![doc(html_root_url = "https://doc.zebra.zfnd.org/zebra_state")]
 #![warn(missing_docs)]
 #![allow(clippy::try_err)]
+
 use color_eyre::eyre::{eyre, Report};
 use serde::{Deserialize, Serialize};
 use std::path::PathBuf;
@@ -23,34 +24,44 @@ use tower::{Service, ServiceExt};
 use zebra_chain::{
     block::{Block, BlockHeaderHash},
     types::BlockHeight,
+    Network,
+    Network::*,
 };
 
 pub mod in_memory;
 pub mod on_disk;
 
-/// Configuration for networking code.
+/// Configuration for the state service.
 #[derive(Clone, Debug, Deserialize, Serialize)]
 #[serde(deny_unknown_fields)]
 pub struct Config {
-    /// The root directory for the state storage
+    /// The root directory for storing cached data.
+    ///
+    /// Each network has a separate state, which is stored in "mainnet/state"
+    /// and "testnet/state" subdirectories.
     pub cache_dir: Option<PathBuf>,
 }
 
 impl Config {
-    /// Generate the appropriate `sled::Config` based on the provided
-    /// `zebra_state::Config`.
+    /// Generate the appropriate `sled::Config` for `network`, based on the
+    /// provided `zebra_state::Config`.
     ///
     /// # Details
     ///
     /// This function should panic if the user of `zebra-state` doesn't configure
     /// a directory to store the state.
-    pub(crate) fn sled_config(&self) -> sled::Config {
+    pub(crate) fn sled_config(&self, network: Network) -> sled::Config {
+        let net_dir = match network {
+            Mainnet => "mainnet",
+            Testnet => "testnet",
+        };
         let path = self
             .cache_dir
             .as_ref()
             .unwrap_or_else(|| {
-                todo!("create a nice user facing error explaining how to set the cache directory")
+                todo!("create a nice user facing error explaining how to set the cache directory in zebrad.toml:\n[state]\ncache_dir = '/path/to/cache-or-tmp'")
             })
+            .join(net_dir)
             .join("state");
 
         sled::Config::default().path(path)
@@ -185,12 +196,45 @@ where
 mod tests {
     use super::*;
 
+    use std::ffi::OsStr;
+
+    #[test]
+    fn test_path_mainnet() {
+        test_path(Mainnet);
+    }
+
+    #[test]
+    fn test_path_testnet() {
+        test_path(Testnet);
+    }
+
+    /// Check the sled path for `network`.
+    fn test_path(network: Network) {
+        zebra_test::init();
+
+        let config = Config::default();
+        // we can't do many useful tests on this value, because it depends on the
+        // local environment and OS.
+        let sled_config = config.sled_config(network);
+        let mut path = sled_config.get_path();
+        assert_eq!(path.file_name(), Some(OsStr::new("state")));
+        assert!(path.pop());
+        match network {
+            Mainnet => assert_eq!(path.file_name(), Some(OsStr::new("mainnet"))),
+            Testnet => assert_eq!(path.file_name(), Some(OsStr::new("testnet"))),
+        }
+    }
+
+    /// Check what happens when the config is invalid.
     #[test]
     #[should_panic]
     fn test_no_path() {
-        zebra_test::init();
-
+        // We don't call `zebra_test::init` here, to silence the expected panic log
+        // TODO:
+        //  - implement test log levels in #760
+        //  - call `zebra_test::init`
+        //  - disable all log output from this test
         let bad_config = Config { cache_dir: None };
-        let _unreachable = bad_config.sled_config();
+        let _unreachable = bad_config.sled_config(Mainnet);
     }
 }
diff --git a/zebra-state/src/on_disk.rs b/zebra-state/src/on_disk.rs
index 1192882e..a68291d8 100644
--- a/zebra-state/src/on_disk.rs
+++ b/zebra-state/src/on_disk.rs
@@ -14,6 +14,7 @@ use zebra_chain::serialization::{ZcashDeserialize, ZcashSerialize};
 use zebra_chain::{
     block::{Block, BlockHeaderHash},
     types::BlockHeight,
+    Network,
 };
 
 #[derive(Clone)]
@@ -22,8 +23,8 @@ struct SledState {
 }
 
 impl SledState {
-    pub(crate) fn new(config: &Config) -> Self {
-        let config = config.sled_config();
+    pub(crate) fn new(config: &Config, network: Network) -> Self {
+        let config = config.sled_config(network);
 
         Self {
             storage: config.open().unwrap(),
@@ -94,13 +95,6 @@ impl SledState {
     }
 }
 
-impl Default for SledState {
-    fn default() -> Self {
-        let config = crate::Config::default();
-        Self::new(&config)
-    }
-}
-
 impl Service<Request> for SledState {
     type Response = Response;
     type Error = Error;
@@ -232,9 +226,12 @@ impl From<BlockHeight> for BlockQuery {
     }
 }
 
-/// Return's a type that implement's the `zebra_state::Service` using `sled`
+/// Returns a type that implements the `zebra_state::Service` using `sled`.
+///
+/// Each `network` has its own separate sled database.
 pub fn init(
     config: Config,
+    network: Network,
 ) -> impl Service<
     Request,
     Response = Response,
@@ -243,7 +240,7 @@ pub fn init(
 > + Send
        + Clone
        + 'static {
-    Buffer::new(SledState::new(&config), 1)
+    Buffer::new(SledState::new(&config, network), 1)
 }
 
 type Error = Box<dyn error::Error + Send + Sync + 'static>;
diff --git a/zebra-state/tests/basic.rs b/zebra-state/tests/basic.rs
index b5fa735b..29344044 100644
--- a/zebra-state/tests/basic.rs
+++ b/zebra-state/tests/basic.rs
@@ -2,7 +2,8 @@ use color_eyre::eyre::Report;
 use once_cell::sync::Lazy;
 use std::sync::Arc;
 use tempdir::TempDir;
-use zebra_chain::{block::Block, serialization::ZcashDeserialize};
+
+use zebra_chain::{block::Block, serialization::ZcashDeserialize, Network, Network::*};
 use zebra_test::transcript::Transcript;
 
 use zebra_state::*;
@@ -49,12 +50,17 @@ static GET_TIP_TRANSCRIPT: Lazy<Vec<(Request, Response)>> = Lazy::new(|| {
 });
 
 #[tokio::test]
-async fn check_transcripts_test() -> Result<(), Report> {
-    check_transcripts().await
+async fn check_transcripts_mainnet() -> Result<(), Report> {
+    check_transcripts(Mainnet).await
+}
+
+#[tokio::test]
+async fn check_transcripts_testnet() -> Result<(), Report> {
+    check_transcripts(Testnet).await
 }
 
 #[spandoc::spandoc]
-async fn check_transcripts() -> Result<(), Report> {
+async fn check_transcripts(network: Network) -> Result<(), Report> {
     zebra_test::init();
 
     for transcript_data in &[&ADD_BLOCK_TRANSCRIPT, &GET_TIP_TRANSCRIPT] {
@@ -64,9 +70,12 @@ async fn check_transcripts() -> Result<(), Report> {
         transcript.check(service).await?;
 
         let storage_guard = TempDir::new("")?;
-        let service = on_disk::init(Config {
-            cache_dir: Some(storage_guard.path().to_owned()),
-        });
+        let service = on_disk::init(
+            Config {
+                cache_dir: Some(storage_guard.path().to_owned()),
+            },
+            network,
+        );
         let transcript = Transcript::from(transcript_data.iter().cloned());
         /// SPANDOC: check the on disk service against the transcript
         transcript.check(service).await?;
diff --git a/zebrad/src/commands/start.rs b/zebrad/src/commands/start.rs
index 15fe410e..d5940890 100644
--- a/zebrad/src/commands/start.rs
+++ b/zebrad/src/commands/start.rs
@@ -41,7 +41,7 @@ impl StartCmd {
         info!(?self, "starting to connect to the network");
 
         let config = app_config();
-        let state = zebra_state::on_disk::init(config.state.clone());
+        let state = zebra_state::on_disk::init(config.state.clone(), config.network.network);
         let verifier = zebra_consensus::chain::init(config.network.network, state.clone()).await;
 
         // The service that our node uses to respond to requests by peers