diff --git a/pkg/core/dao/cacheddao.go b/pkg/core/dao/cacheddao.go
index 9fc792308..3862ed767 100644
--- a/pkg/core/dao/cacheddao.go
+++ b/pkg/core/dao/cacheddao.go
@@ -1,9 +1,11 @@
 package dao
 
 import (
+	"bytes"
 	"errors"
 
 	"github.com/nspcc-dev/neo-go/pkg/core/state"
+	"github.com/nspcc-dev/neo-go/pkg/core/storage"
 	"github.com/nspcc-dev/neo-go/pkg/io"
 	"github.com/nspcc-dev/neo-go/pkg/util"
 )
@@ -17,6 +19,8 @@ type Cached struct {
 	contracts map[util.Uint160]*state.Contract
 	balances  map[util.Uint160]*state.NEP5Balances
 	transfers map[util.Uint160]map[uint32]*state.NEP5TransferLog
+
+	dropNEP5Cache bool
 }
 
 // NewCached returns new Cached wrapping around given backing store.
@@ -25,7 +29,7 @@ func NewCached(d DAO) *Cached {
 	ctrs := make(map[util.Uint160]*state.Contract)
 	balances := make(map[util.Uint160]*state.NEP5Balances)
 	transfers := make(map[util.Uint160]map[uint32]*state.NEP5TransferLog)
-	return &Cached{d.GetWrapped(), accs, ctrs, balances, transfers}
+	return &Cached{d.GetWrapped(), accs, ctrs, balances, transfers, false}
 }
 
 // GetAccountStateOrNew retrieves Account from cache or underlying store
@@ -121,6 +125,65 @@ func (cd *Cached) AppendNEP5Transfer(acc util.Uint160, index uint32, tr *state.N
 	return lg.Size() >= nep5TransferBatchSize, cd.PutNEP5TransferLog(acc, index, lg)
 }
 
+// MigrateNEP5Balances migrates NEP5 balances from old contract to the new one.
+func (cd *Cached) MigrateNEP5Balances(from, to util.Uint160) error {
+	var (
+		simpleDAO *Simple
+		cachedDAO = cd
+		ok        bool
+		w         = io.NewBufBinWriter()
+	)
+	for simpleDAO == nil {
+		simpleDAO, ok = cachedDAO.DAO.(*Simple)
+		if !ok {
+			cachedDAO, ok = cachedDAO.DAO.(*Cached)
+			if !ok {
+				panic("uknown DAO")
+			}
+		}
+	}
+	for acc, bs := range cd.balances {
+		err := simpleDAO.putNEP5Balances(acc, bs, w)
+		if err != nil {
+			return err
+		}
+		w.Reset()
+	}
+	cd.dropNEP5Cache = true
+	var store = simpleDAO.Store
+	// Create another layer of cache because we can't change original storage
+	// while seeking.
+	var upStore = storage.NewMemCachedStore(store)
+	store.Seek([]byte{byte(storage.STNEP5Balances)}, func(k, v []byte) {
+		if !bytes.Contains(v, from[:]) {
+			return
+		}
+		bs := state.NewNEP5Balances()
+		reader := io.NewBinReaderFromBuf(v)
+		bs.DecodeBinary(reader)
+		if reader.Err != nil {
+			panic("bad nep5 balances")
+		}
+		tr, ok := bs.Trackers[from]
+		if !ok {
+			return
+		}
+		delete(bs.Trackers, from)
+		bs.Trackers[to] = tr
+		w.Reset()
+		bs.EncodeBinary(w.BinWriter)
+		if w.Err != nil {
+			panic("error on nep5 balance encoding")
+		}
+		err := upStore.Put(k, w.Bytes())
+		if err != nil {
+			panic("can't put value in the DB")
+		}
+	})
+	_, err := upStore.Persist()
+	return err
+}
+
 // Persist flushes all the changes made into the (supposedly) persistent
 // underlying store.
 func (cd *Cached) Persist() (int, error) {
@@ -130,6 +193,9 @@ func (cd *Cached) Persist() (int, error) {
 	// usage scenario it should be good enough if cd doesn't modify object
 	// caches (accounts/contracts/etc) in any way.
 	if ok {
+		if cd.dropNEP5Cache {
+			lowerCache.balances = make(map[util.Uint160]*state.NEP5Balances)
+		}
 		var simpleCache *Simple
 		for simpleCache == nil {
 			simpleCache, ok = lowerCache.DAO.(*Simple)
@@ -176,5 +242,6 @@ func (cd *Cached) GetWrapped() DAO {
 		cd.contracts,
 		cd.balances,
 		cd.transfers,
+		false,
 	}
 }
diff --git a/pkg/core/interop_neo.go b/pkg/core/interop_neo.go
index cf41306c4..43e46dd6e 100644
--- a/pkg/core/interop_neo.go
+++ b/pkg/core/interop_neo.go
@@ -154,6 +154,7 @@ func contractUpdate(ic *interop.Context, v *vm.VM) error {
 		if err := ic.DAO.DeleteContractState(oldHash); err != nil {
 			return fmt.Errorf("failed to update script: %v", err)
 		}
+		ic.DAO.MigrateNEP5Balances(oldHash, newHash)
 	}
 	// if manifest was provided, update the old contract manifest and check associated
 	// storage items if needed
@@ -181,6 +182,7 @@ func contractUpdate(ic *interop.Context, v *vm.VM) error {
 			return fmt.Errorf("failed to update manifest: %v", err)
 		}
 	}
+
 	return nil
 }