diff --git a/crates/autopilot/src/arguments.rs b/crates/autopilot/src/arguments.rs
index 9ee8f1fd16..69e2aa8a66 100644
--- a/crates/autopilot/src/arguments.rs
+++ b/crates/autopilot/src/arguments.rs
@@ -51,6 +51,11 @@ pub struct Arguments {
     #[clap(long, env)]
     pub ethflow_indexing_start: Option<u64>,
 
+    /// Enable the transfer listener that cancels orders when tokens are
+    /// transferred away.
+    #[clap(long, env, action = clap::ArgAction::Set, default_value = "false")]
+    pub transfer_listener_enabled: bool,
+
     /// A tracing Ethereum node URL to connect to, allowing a separate node URL
     /// to be used exclusively for tracing calls.
     #[clap(long, env)]
@@ -369,6 +374,7 @@ impl std::fmt::Display for Arguments {
             tracing_node_url,
             ethflow_contracts,
             ethflow_indexing_start,
+            transfer_listener_enabled,
             metrics_address,
             skip_event_sync,
             allowed_tokens,
@@ -416,6 +422,7 @@ impl std::fmt::Display for Arguments {
         display_option(f, "tracing_node_url", tracing_node_url)?;
         writeln!(f, "ethflow_contracts: {ethflow_contracts:?}")?;
         writeln!(f, "ethflow_indexing_start: {ethflow_indexing_start:?}")?;
+        writeln!(f, "transfer_listener_enabled: {transfer_listener_enabled}")?;
         writeln!(f, "metrics_address: {metrics_address}")?;
         display_secret_option(f, "db_write_url", Some(&db_write_url))?;
         writeln!(f, "skip_event_sync: {skip_event_sync}")?;
diff --git a/crates/autopilot/src/database/mod.rs b/crates/autopilot/src/database/mod.rs
index 5f37629277..04bc972964 100644
--- a/crates/autopilot/src/database/mod.rs
+++ b/crates/autopilot/src/database/mod.rs
@@ -14,6 +14,7 @@ pub mod fee_policies;
 pub mod onchain_order_events;
 pub mod order_events;
 mod quotes;
+pub mod transfer_listener;
 
 #[derive(Debug, Clone)]
 pub struct Config {
diff --git a/crates/autopilot/src/database/transfer_listener/listener.rs b/crates/autopilot/src/database/transfer_listener/listener.rs
new file mode 100644
index 0000000000..75994fdd18
--- /dev/null
+++ b/crates/autopilot/src/database/transfer_listener/listener.rs
@@ -0,0 +1,337 @@
+//! Real-time Transfer event listener that cancels orders when tokens are
+//! transferred away.
+
+use {
+    crate::database::{Metrics, Postgres},
+    alloy::{
+        primitives::{Address, B256, b256},
+        providers::Provider,
+        rpc::types::Log,
+    },
+    anyhow::{Result, anyhow},
+    chrono::{DateTime, Utc},
+    database::{
+        OrderUid,
+        byte_array::ByteArray,
+        order_events::{OrderEvent, OrderEventLabel, insert_order_event},
+    },
+    shared::ethrpc::Web3,
+    sqlx::{PgConnection, QueryBuilder},
+};
+
+/// The ERC20 Transfer event signature hash:
+/// keccak256("Transfer(address,address,uint256)")
+const TRANSFER_SIGNATURE: B256 =
+    b256!("ddf252ad1be2c89b69c2b068fc378daa952ba7f163c4a11628f55a4df523b3ef");
+
+/// Represents a decoded Transfer event
+#[derive(Clone, Copy, Debug)]
+pub struct TransferEvent {
+    /// The address sending tokens
+    pub from: Address,
+    /// The address receiving tokens
+    pub to: Address,
+    /// The token contract address
+    pub token: Address,
+    /// Block number where the transfer occurred
+    pub block_number: u64,
+}
+
+impl TransferEvent {
+    /// Decode a Transfer event from a log
+    pub fn from_log(log: &Log) -> Option<Self> {
+        // Transfer event has 3 topics: [signature_hash, from (indexed), to (indexed)]
+        // and data contains the value (uint256)
+        let topics = log.topics();
+        if topics.len() < 3 {
+            return None;
+        }
+
+        // Verify it's a Transfer event
+        if topics[0].0 != TRANSFER_SIGNATURE {
+            return None;
+        }
+
+        // Extract addresses from topics. Topics are padded to 32 bytes (B256),
+        // so indexed address topics have the address in the last 20 bytes.
+        // Use from_word which handles the conversion from a 32-byte word to address.
+        let from = Address::from_word(topics[1]);
+        let to = Address::from_word(topics[2]);
+        let token = log.address();
+        let block_number = log.block_number?;
+
+        Some(TransferEvent {
+            from,
+            to,
+            token,
+            block_number,
+        })
+    }
+}
+
+pub struct TransferListener {
+    db: Postgres,
+    web3: Web3,
+    /// Addresses to ignore/exclude from transfer event processing
+    /// (e.g., settlement contract, vault relayer)
+    ignored_addresses: std::collections::HashSet<Address>,
+}
+
+impl TransferListener {
+    pub fn new(db: Postgres, web3: Web3, ignored_addresses: Vec<Address>) -> Self {
+        Self {
+            db,
+            web3,
+            ignored_addresses: ignored_addresses.into_iter().collect(),
+        }
+    }
+
+    /// Fetch and process Transfer events from a specific block
+    pub async fn process_block(&self, block_number: u64) -> Result<()> {
+        // Fetch all receipts for this block (includes all logs)
+        // This is more efficient than filtering on the RPC side
+        let receipts = self
+            .web3
+            .alloy
+            .get_block_receipts(block_number.into())
+            .await?;
+
+        // Collect all logs from receipts and manually filter for Transfer events that
+        // are *NOT* related to our ignored contracts (settlement, vault
+        // relayer, etc.)
+        let logs: Vec<Log> = receipts
+            .into_iter()
+            .flat_map(|receipt| {
+                receipt.into_iter().flat_map(|r| {
+                    r.logs()
+                        .iter()
+                        .filter_map(|l| {
+                            if l.topic0().eq(&Some(&TRANSFER_SIGNATURE)) {
+                                // Extract the from and to addresses from topics
+                                let topics = l.topics();
+                                if topics.len() < 3 {
+                                    return None;
+                                }
+
+                                let from = Address::from_word(topics[1]);
+                                let to = Address::from_word(topics[2]);
+
+                                // Exclude transfers involving any ignored addresses
+                                if self.ignored_addresses.contains(&from)
+                                    || self.ignored_addresses.contains(&to)
+                                {
+                                    return None;
+                                }
+
+                                Some(l.clone())
+                            } else {
+                                None
+                            }
+                        })
+                        .collect::<Vec<_>>()
+                })
+            })
+            .collect();
+
+        tracing::debug!(logs_count = ?logs.len(), "Cancelling orders matching transfer events");
+
+        if !logs.is_empty() {
+            self.process_transfer_events(logs).await
+        } else {
+            Ok(())
+        }
+    }
+
+    /// Process Transfer events and cancel matching orders
+    /// All transfers from a block are processed in a single batch transaction
+    pub async fn process_transfer_events(&self, logs: Vec<Log>) -> Result<()> {
+        // Decode all transfer events
+        let transfers: Vec<TransferEvent> =
+            logs.iter().filter_map(TransferEvent::from_log).collect();
+
+        if transfers.is_empty() {
+            tracing::warn!("transfers empty after parsing logs");
+            return Ok(());
+        }
+
+        tracing::debug!(
+            transfers_count = transfers.len(),
+            "processing transfer events"
+        );
+
+        // Find and cancel all matching live orders in a single transaction
+        let mut ex = self.db.pool.begin().await?;
+        let cancelled_count = cancel_matching_orders(&mut ex, &transfers).await?;
+        ex.commit().await?;
+
+        if cancelled_count > 0 {
+            let _timer = Metrics::get()
+                .database_queries
+                .with_label_values(&["transfer_listener_cancel_orders"])
+                .start_timer();
+
+            tracing::debug!(
+                "Transfer listener: cancelled {} orders from {} transfer events",
+                cancelled_count,
+                transfers.len()
+            );
+        } else {
+            tracing::debug!("no orders were cancelled for {} transfers", transfers.len());
+        }
+
+        Ok(())
+    }
+}
+
+/// Cancel all live orders matching the given transfers in a single batch
+/// transaction. Uses the same `live_orders` logic as `solvable_orders` to
+/// ensure we only cancel truly active orders (not expired, not invalidated,
+/// etc).
+async fn cancel_matching_orders(ex: &mut PgConnection, transfers: &[TransferEvent]) -> Result<u64> {
+    if transfers.is_empty() {
+        return Ok(0);
+    }
+
+    let now = Utc::now();
+
+    // Build a dynamic query with all the (owner, sell_token) pairs
+    let mut owner_tokens = Vec::new();
+    for transfer in transfers {
+        owner_tokens.push((transfer.from, transfer.token));
+    }
+
+    // Find all live orders matching any of the (owner, sell_token) pairs
+    let order_uids = find_live_orders_to_cancel(ex, &owner_tokens).await?;
+
+    if order_uids.is_empty() {
+        tracing::debug!("no live orders matched any transfer events");
+        return Ok(0);
+    }
+
+    // Update all orders' cancellation_timestamp in a single query
+    update_cancellation_timestamps(ex, &order_uids, now).await?;
+
+    // Insert cancellation events in a single batch
+    insert_cancellation_events(ex, &order_uids, now).await?;
+
+    Ok(order_uids.len() as u64)
+}
+
+/// Find all live orders that match any of the (owner, sell_token) pairs.
+/// A live order is one that:
+/// - Has NOT been cancelled via the API (cancellation_timestamp IS NULL)
+/// - Has NOT been invalidated (various invalidation tables)
+/// - For ethflow orders, has NOT been invalidated by ethflow-specific logic
+async fn find_live_orders_to_cancel(
+    ex: &mut PgConnection,
+    owner_token_pairs: &[(Address, Address)],
+) -> Result<Vec<OrderUid>> {
+    // Collect all owners and tokens into separate vectors explicitly typed as bytea
+    let owners: Vec<Vec<u8>> = owner_token_pairs
+        .iter()
+        .map(|(o, _)| o.0.to_vec())
+        .collect();
+    let tokens: Vec<Vec<u8>> = owner_token_pairs
+        .iter()
+        .map(|(_, t)| t.0.to_vec())
+        .collect();
+
+    // Note: We don't filter by valid_to here because transfers can happen at any
+    // time, and an expired order should still be cancelled to reflect the
+    // user's intent
+    const QUERY: &str = r#"
+SELECT o.uid
+FROM orders o
+WHERE o.cancellation_timestamp IS NULL
+  AND (o.owner, o.sell_token) IN (
+    SELECT DISTINCT sp.owner, sp.sell_token
+    FROM (
+        SELECT UNNEST($1::bytea[]) as owner, UNNEST($2::bytea[]) as sell_token
+    ) sp
+  )
+  AND NOT EXISTS (SELECT 1 FROM invalidations i WHERE i.order_uid = o.uid)
+  AND NOT EXISTS (SELECT 1 FROM onchain_order_invalidations oi WHERE oi.uid = o.uid)
+  AND NOT EXISTS (SELECT 1 FROM onchain_placed_orders op WHERE op.uid = o.uid AND op.placement_error IS NOT NULL)
+  AND (
+    NOT EXISTS (SELECT 1 FROM ethflow_orders e WHERE e.uid = o.uid)
+    OR EXISTS (
+        SELECT 1 FROM ethflow_orders e
+        WHERE e.uid = o.uid
+        AND (e.valid_to IS NULL OR e.valid_to >= EXTRACT(EPOCH FROM NOW())::bigint)
+    )
+  )
+    "#;
+
+    let rows: Vec<(Vec<u8>,)> = sqlx::query_as(QUERY)
+        .bind(&owners as &[Vec<u8>])
+        .bind(&tokens as &[Vec<u8>])
+        .fetch_all(ex)
+        .await?;
+
+    rows.into_iter()
+        .map(|(uid_bytes,)| {
+            let array: [u8; 56] = uid_bytes
+                .try_into()
+                .map_err(|_| anyhow!("Invalid order UID length"))?;
+            Ok(ByteArray(array))
+        })
+        .collect()
+}
+
+/// Update the cancellation timestamp for all given orders
+async fn update_cancellation_timestamps(
+    ex: &mut PgConnection,
+    order_uids: &[OrderUid],
+    timestamp: DateTime<Utc>,
+) -> Result<()> {
+    if order_uids.is_empty() {
+        return Ok(());
+    }
+
+    let mut query_builder: QueryBuilder<sqlx::Postgres> =
+        QueryBuilder::new("UPDATE orders SET cancellation_timestamp = ");
+    query_builder.push_bind(timestamp);
+    query_builder.push(" WHERE uid IN (");
+
+    let mut separated = query_builder.separated(", ");
+    for order_uid in order_uids {
+        separated.push_bind(order_uid.0.as_ref());
+    }
+    query_builder.push(")");
+
+    query_builder.build().execute(ex).await?;
+
+    Ok(())
+}
+
+/// Insert cancellation events for all given orders
+async fn insert_cancellation_events(
+    ex: &mut PgConnection,
+    order_uids: &[OrderUid],
+    timestamp: DateTime<Utc>,
+) -> Result<()> {
+    if order_uids.is_empty() {
+        return Ok(());
+    }
+
+    // Use the standard insert_order_event function for each order to respect
+    // the deduplication logic (don't insert if the last event is already Cancelled)
+    for order_uid in order_uids {
+        insert_order_event(
+            ex,
+            &OrderEvent {
+                order_uid: *order_uid,
+                timestamp,
+                label: OrderEventLabel::Cancelled,
+            },
+        )
+        .await?;
+
+        tracing::debug!(
+            ?order_uid,
+            "Order cancelled due to transfer of order token from owner"
+        );
+    }
+
+    Ok(())
+}
diff --git a/crates/autopilot/src/database/transfer_listener/mod.rs b/crates/autopilot/src/database/transfer_listener/mod.rs
new file mode 100644
index 0000000000..8eecd7cba2
--- /dev/null
+++ b/crates/autopilot/src/database/transfer_listener/mod.rs
@@ -0,0 +1,6 @@
+//! Listens for ERC20 Transfer events and cancels orders that have transferred
+//! their sell tokens away from the order owner.
+
+pub mod listener;
+
+pub use listener::TransferListener;
diff --git a/crates/autopilot/src/maintenance.rs b/crates/autopilot/src/maintenance.rs
index 1344c6ba67..54b585fb91 100644
--- a/crates/autopilot/src/maintenance.rs
+++ b/crates/autopilot/src/maintenance.rs
@@ -116,6 +116,33 @@ impl Maintenance {
         });
     }
 
+    /// Spawns the Transfer event listener that cancels orders when tokens are
+    /// transferred.
+    pub fn spawn_transfer_listener(
+        transfer_listener: crate::database::transfer_listener::TransferListener,
+        current_block: CurrentBlockWatcher,
+    ) {
+        tracing::info!(?current_block, "spawning transfer listener task");
+        tokio::task::spawn(async move {
+            let mut stream = into_stream(current_block);
+            loop {
+                if let Some(block) = stream.next().await {
+                    if let Err(err) = Self::timed_future(
+                        "transfer_listener",
+                        transfer_listener.process_block(block.number),
+                    )
+                    .await
+                    {
+                        tracing::warn!(?err, "transfer listener failed an iteration");
+                    }
+                } else {
+                    tracing::error!("block stream terminated unexpectedly");
+                    break;
+                }
+            }
+        });
+    }
+
     pub fn with_cow_amms(&mut self, registry: &cow_amm::Registry) {
         self.cow_amm_indexer = registry.maintenance_tasks().clone();
     }
diff --git a/crates/autopilot/src/run.rs b/crates/autopilot/src/run.rs
index be521e3a9d..768e362b20 100644
--- a/crates/autopilot/src/run.rs
+++ b/crates/autopilot/src/run.rs
@@ -639,6 +639,16 @@ pub async fn run(args: Arguments, shutdown_controller: ShutdownController) {
         );
     }
 
+    if args.transfer_listener_enabled {
+        let ignored_addresses = vec![*eth.contracts().settlement().address(), vault_relayer];
+        let transfer_listener = crate::database::transfer_listener::TransferListener::new(
+            db_write.clone(),
+            web3.clone(),
+            ignored_addresses,
+        );
+        Maintenance::spawn_transfer_listener(transfer_listener, eth.current_block().clone());
+    }
+
     let run_loop_config = run_loop::Config {
         submission_deadline: args.submission_deadline as u64,
         max_settlement_transaction_wait: args.max_settlement_transaction_wait,