diff --git a/tests/v2/test_peer_manager.nim b/tests/v2/test_peer_manager.nim
index efbb593a1..12f657896 100644
--- a/tests/v2/test_peer_manager.nim
+++ b/tests/v2/test_peer_manager.nim
@@ -16,7 +16,7 @@ import
   libp2p/crypto/crypto,
   libp2p/protocols/pubsub/pubsub,
   libp2p/protocols/pubsub/rpc/message,
-  libp2p/builders
+  libp2p/peerid
 import
   ../../waku/common/sqlite,
   ../../waku/v2/node/peer_manager/peer_manager,
@@ -494,3 +494,63 @@ procSuite "Peer Manager":
     check:
       selectedPeer5.isSome() == true
       selectedPeer5.get().peerId == peers[2].peerId
+
+  test "peer manager cant have more max connections than peerstore size":
+    # Peerstore size can't be smaller than max connections
+    let peerStoreSize = 5
+    let maxConnections = 10
+
+    expect(Defect):
+      let pm = PeerManager.new(
+        switch = SwitchBuilder.new().withRng(rng).withMplex().withNoise()
+        .withPeerStore(peerStoreSize)
+        .withMaxConnections(maxConnections)
+        .build(),
+        storage = nil)
+
+  test "prunePeerStore() correctly removes peers to match max quota":
+    # Create peer manager
+    let pm = PeerManager.new(
+      switch = SwitchBuilder.new().withRng(rng).withMplex().withNoise()
+      .withPeerStore(10)
+      .withMaxConnections(5)
+      .build(),
+      maxFailedAttempts = 1,
+      storage = nil)
+
+    # Create 15 peers and add them to the peerstore
+    let peers = toSeq(1..15).mapIt(parseRemotePeerInfo("/ip4/0.0.0.0/tcp/0/p2p/" & $PeerId.random().get()))
+    for p in peers: pm.addPeer(p, "")
+
+    # Check that we have 15 peers in the peerstore
+    check:
+      pm.peerStore.peers.len == 15
+
+    # fake that some peers failed to connected
+    pm.peerStore[NumberFailedConnBook][peers[0].peerId] = 2
+    pm.peerStore[NumberFailedConnBook][peers[1].peerId] = 2
+    pm.peerStore[NumberFailedConnBook][peers[2].peerId] = 2
+
+    # fake that some peers are connected
+    pm.peerStore[ConnectionBook][peers[5].peerId] = Connected
+    pm.peerStore[ConnectionBook][peers[8].peerId] = Connected
+    pm.peerStore[ConnectionBook][peers[10].peerId] = Connected
+    pm.peerStore[ConnectionBook][peers[12].peerId] = Connected
+
+    # Prune the peerstore
+    pm.prunePeerStore()
+
+    check:
+      # ensure peerstore was pruned
+      pm.peerStore.peers.len == 10
+
+      # ensure connected peers were not pruned
+      pm.peerStore.peers.anyIt(it.peerId == peers[5].peerId)
+      pm.peerStore.peers.anyIt(it.peerId == peers[8].peerId)
+      pm.peerStore.peers.anyIt(it.peerId == peers[10].peerId)
+      pm.peerStore.peers.anyIt(it.peerId == peers[12].peerId)
+
+      # ensure peers that failed were the first to be pruned
+      not pm.peerStore.peers.anyIt(it.peerId == peers[0].peerId)
+      not pm.peerStore.peers.anyIt(it.peerId == peers[1].peerId)
+      not pm.peerStore.peers.anyIt(it.peerId == peers[2].peerId)
diff --git a/waku/v2/node/peer_manager/peer_manager.nim b/waku/v2/node/peer_manager/peer_manager.nim
index 7a930258e..02c8265ea 100644
--- a/waku/v2/node/peer_manager/peer_manager.nim
+++ b/waku/v2/node/peer_manager/peer_manager.nim
@@ -23,6 +23,7 @@ declareCounter waku_peers_dials, "Number of peer dials", ["outcome"]
 declarePublicCounter waku_node_conns_initiated, "Number of connections initiated", ["source"]
 declarePublicGauge waku_peers_errors, "Number of peer manager errors", ["type"]
 declarePublicGauge waku_connected_peers, "Number of connected peers per direction: inbound|outbound", ["direction"]
+declarePublicGauge waku_peer_store_size, "Number of peers managed by the peer store"
 
 logScope:
   topics = "waku node peer_manager"
@@ -46,6 +47,9 @@ const
   # Delay between consecutive relayConnectivityLoop runs
   ConnectivityLoopInterval = chronos.seconds(30)
 
+  # How often the peer store is pruned
+  PrunePeerStoreInterval = chronos.minutes(5)
+
 type
   PeerManager* = ref object of RootObj
     switch*: Switch
@@ -119,16 +123,6 @@ proc dialPeer(pm: PeerManager, peerId: PeerID,
 
   return none(Connection)
 
-# TODO: To be addressed in nwaku/pull/1473. Do not prune service peers
-# TODO: Currently unused
-proc prunePeerStore(pm: PeerManager) =
-  # iterate peers in peerstore
-  # skip service peers
-  #if pm.peerStore[NumberFailedConnBook][peerId] >= pm.maxFailedAttempts:
-  #  debug "Removing peer from peer store", peerId = peerId, failedAttempts=failedAttempts
-  #  pm.peerStore.del(peerId)
-  doAssert(false, "Not implemented!")
-
 proc loadFromStorage(pm: PeerManager) =
   debug "loading peers from storage"
   # Load peers from storage, if available
@@ -191,6 +185,14 @@ proc new*(T: type PeerManager,
           backoffFactor = BackoffFactor,
           maxFailedAttempts = MaxFailedAttempts,): PeerManager =
 
+  let capacity = switch.peerStore.capacity
+  let maxConnections = switch.connManager.inSema.size
+  if maxConnections > capacity:
+    error "Max number of connections can't be greater than PeerManager capacity",
+         capacity = capacity,
+         maxConnections = maxConnections
+    raise newException(Defect, "Max number of connections can't be greater than PeerManager capacity")
+
   let pm = PeerManager(switch: switch,
                        peerStore: switch.peerStore,
                        storage: storage,
@@ -200,9 +202,15 @@ proc new*(T: type PeerManager,
   proc peerHook(peerId: PeerID, event: ConnEvent): Future[void] {.gcsafe.} =
     onConnEvent(pm, peerId, event)
 
+  proc peerStoreChanged(peerId: PeerId) {.gcsafe.} =
+    waku_peer_store_size.set(toSeq(pm.peerStore[AddressBook].book.keys).len.int64)
+
   pm.switch.addConnEventHandler(peerHook, ConnEventKind.Connected)
   pm.switch.addConnEventHandler(peerHook, ConnEventKind.Disconnected)
 
+  # called every time the peerstore is updated
+  pm.peerStore[AddressBook].addHandler(peerStoreChanged)
+
   pm.serviceSlots = initTable[string, RemotePeerInfo]()
 
   if not storage.isNil():
@@ -386,6 +394,45 @@ proc relayConnectivityLoop*(pm: PeerManager) {.async.} =
 
     await sleepAsync(ConnectivityLoopInterval)
 
+proc prunePeerStore*(pm: PeerManager) =
+  let numPeers = toSeq(pm.peerStore[AddressBook].book.keys).len
+  let capacity = pm.peerStore.capacity
+  if numPeers < capacity:
+    return
+
+  debug "Peer store capacity exceeded", numPeers = numPeers, capacity = capacity
+  let peersToPrune = numPeers - capacity
+
+  # prune peers with too many failed attempts
+  var pruned = 0
+  for peerId in pm.peerStore[NumberFailedConnBook].book.keys:
+    if peersToPrune - pruned == 0:
+      break
+    if pm.peerStore[NumberFailedConnBook][peerId] >= pm.maxFailedAttempts:
+      pm.peerStore.del(peerId)
+      pruned += 1
+
+  # if we still need to prune, prune peers that are not connected
+  let notConnected = pm.peerStore.getNotConnectedPeers().mapIt(it.peerId)
+  for peerId in notConnected:
+    if peersToPrune - pruned == 0:
+      break
+    pm.peerStore.del(peerId)
+    pruned += 1
+
+  let afterNumPeers = toSeq(pm.peerStore[AddressBook].book.keys).len
+  debug "Finished pruning peer store", beforeNumPeers = numPeers,
+                                       afterNumPeers = afterNumPeers,
+                                       capacity = capacity,
+                                       pruned = pruned
+
+
+proc prunePeerStoreLoop(pm: PeerManager) {.async.}  =
+  while pm.started:
+    pm.prunePeerStore()
+    await sleepAsync(PrunePeerStoreInterval)
+
+
 proc selectPeer*(pm: PeerManager, proto: string): Option[RemotePeerInfo] =
   debug "Selecting peer from peerstore", protocol=proto
 
@@ -416,6 +463,7 @@ proc selectPeer*(pm: PeerManager, proto: string): Option[RemotePeerInfo] =
 proc start*(pm: PeerManager) =
   pm.started = true
   asyncSpawn pm.relayConnectivityLoop()
+  asyncSpawn pm.prunePeerStoreLoop()
 
 proc stop*(pm: PeerManager) =
   pm.started = false