diff --git a/indy_node/server/config_req_handler.py b/indy_node/server/config_req_handler.py
index 8cee34dc4..987667dc6 100644
--- a/indy_node/server/config_req_handler.py
+++ b/indy_node/server/config_req_handler.py
@@ -47,7 +47,7 @@ def _doStaticValidationPoolUpgrade(self, identifier, reqId, operation):
             force = operation.get(FORCE)
             force = str(force) == 'True'
             isValid, msg = self.upgrader.isScheduleValid(
-                schedule, self.poolManager.nodeIds, force)
+                schedule, self.poolManager.getNodesServices(), force)
             if not isValid:
                 raise InvalidClientRequest(identifier, reqId,
                                            "{} not a valid schedule since {}".
diff --git a/indy_node/server/upgrader.py b/indy_node/server/upgrader.py
index faf54edf2..4189423e5 100644
--- a/indy_node/server/upgrader.py
+++ b/indy_node/server/upgrader.py
@@ -253,19 +253,20 @@ def didLastExecutedUpgradeSucceeded(self) -> bool:
             return self.compareVersions(currentVersion, scheduledVersion) == 0
         return False
 
-    def isScheduleValid(self, schedule, nodeIds, force) -> (bool, str):
+    def isScheduleValid(self, schedule, node_srvs, force) -> (bool, str):
         """
         Validates schedule of planned node upgrades
 
         :param schedule: dictionary of node ids and upgrade times
-        :param nodeIds: real node ids
+        :param nodeSrvs: dictionary of node ids and services
         :return: whether schedule valid
         """
 
         # flag "force=True" ignore basic checks! only datetime format is
         # checked
         times = []
-        if not force and set(schedule.keys()) != nodeIds:
+        non_demoted_nodes = set([k for k, v in node_srvs.items() if v])
+        if not force and set(schedule.keys()) != non_demoted_nodes:
             return False, 'Schedule should contain id of all nodes'
         now = datetime.utcnow().replace(tzinfo=dateutil.tz.tzutc())
         for dateStr in schedule.values():
diff --git a/indy_node/test/upgrade/test_upgrade_pool_with_demoted_nodes.py b/indy_node/test/upgrade/test_upgrade_pool_with_demoted_nodes.py
new file mode 100644
index 000000000..34c6cb1f9
--- /dev/null
+++ b/indy_node/test/upgrade/test_upgrade_pool_with_demoted_nodes.py
@@ -0,0 +1,30 @@
+from indy_node.test import waits
+from stp_core.loop.eventually import eventually
+from plenum.common.constants import ALIAS, SERVICES, VERSION
+from indy_common.constants import SCHEDULE
+from indy_node.test.upgrade.helper import ensureUpgradeSent, checkUpgradeScheduled
+
+from plenum.test.pool_transactions.helper import updateNodeData
+from plenum.test.conftest import pool_txn_stewards_data, stewards_and_wallets
+
+
+def test_update_with_demoted_node(looper, nodeSet, validUpgrade,
+                                  stewards_and_wallets, trustee, trusteeWallet):
+    # demote one node
+    node_steward_cl, steward_wallet = stewards_and_wallets[3]
+    node_data = {
+        ALIAS: nodeSet[3].name,
+        SERVICES: []
+    }
+    updateNodeData(looper, node_steward_cl, steward_wallet, nodeSet[3], node_data)
+
+    # remove demoted node from upgrade schedule
+    upgr = validUpgrade
+    del upgr[SCHEDULE][nodeSet[3].id]
+
+    # send upgrade
+    ensureUpgradeSent(looper, trustee, trusteeWallet, upgr)
+
+    # check upg scheduled
+    looper.run(eventually(checkUpgradeScheduled, nodeSet[:3], upgr[VERSION], retryWait=1,
+                          timeout=waits.expectedUpgradeScheduled()))
diff --git a/setup.py b/setup.py
index 640125826..3c7c6f898 100644
--- a/setup.py
+++ b/setup.py
@@ -56,7 +56,7 @@
     data_files=[(
         (BASE_DIR, ['data/nssm_original.exe'])
     )],
-    install_requires=['indy-plenum-dev==1.2.225',
+    install_requires=['indy-plenum-dev==1.2.226',
                       'indy-anoncreds-dev==1.0.32',
                       'python-dateutil',
                       'timeout-decorator'],