diff --git a/docs/release-notes/release-notes-0.20.1.md b/docs/release-notes/release-notes-0.20.1.md
index 59370eaae7e..25fbb6b1759 100644
--- a/docs/release-notes/release-notes-0.20.1.md
+++ b/docs/release-notes/release-notes-0.20.1.md
@@ -32,6 +32,11 @@
   addresses](https://github.com/lightningnetwork/lnd/pull/10341) were added to
   the node announcement and `getinfo` output.
 
+* A bug in the [implementation of
+  `FlatMap`](https://github.com/lightningnetwork/lnd/pull/10403) in the `fn`
+  package has been corrected by applying the provided function when the result
+  is `Ok` and propagate the error unchanged when it is `Err`.
+
 # New Features
 
 ## Functional Enhancements
diff --git a/fn/result.go b/fn/result.go
index 37958f26cd4..39f8674811d 100644
--- a/fn/result.go
+++ b/fn/result.go
@@ -149,10 +149,10 @@ func FlattenResult[A any](r Result[Result[A]]) Result[A] {
 // success value if it exists.
 func (r Result[T]) FlatMap(f func(T) Result[T]) Result[T] {
 	if r.IsOk() {
-		return r
+		return f(r.left)
 	}
 
-	return f(r.left)
+	return r
 }
 
 // AndThen is an alias for FlatMap. This along with OrElse can be used to
diff --git a/fn/result_test.go b/fn/result_test.go
index 2b5d942a4f6..2a4497af0f7 100644
--- a/fn/result_test.go
+++ b/fn/result_test.go
@@ -96,3 +96,135 @@ func TestSinkOnOkContinuationCall(t *testing.T) {
 	require.True(t, called)
 	require.Nil(t, res)
 }
+
+var errFlatMap = errors.New("fail")
+var errFlatMapOrig = errors.New("original")
+
+var flatMapTestCases = []struct {
+	name      string
+	input     Result[int]
+	fnA       func(int) Result[int]
+	fnB       func(int) Result[string]
+	expectedA Result[int]
+	expectedB Result[string]
+}{
+	{
+		name:  "Ok to Ok",
+		input: Ok(1),
+		fnA:   func(i int) Result[int] { return Ok(i + 1) },
+		fnB: func(i int) Result[string] {
+			return Ok(fmt.Sprintf("%d", i+1))
+		},
+		expectedA: Ok(2),
+		expectedB: Ok("2"),
+	},
+	{
+		name:  "Ok to Err",
+		input: Ok(1),
+		fnA: func(i int) Result[int] {
+			return Err[int](errFlatMap)
+		},
+		fnB: func(i int) Result[string] {
+			return Err[string](errFlatMap)
+		},
+		expectedA: Err[int](errFlatMap),
+		expectedB: Err[string](errFlatMap),
+	},
+	{
+		name:  "Err to Err (function not called)",
+		input: Err[int](errFlatMapOrig),
+		fnA:   func(i int) Result[int] { return Ok(i + 1) },
+		fnB: func(i int) Result[string] {
+			return Ok("should not happen")
+		},
+		expectedA: Err[int](errFlatMapOrig),
+		expectedB: Err[string](errFlatMapOrig),
+	},
+}
+
+var orElseTestCases = []struct {
+	name     string
+	input    Result[int]
+	fn       func(error) Result[int]
+	expected Result[int]
+}{
+	{
+		name:     "Ok to Ok (function not called)",
+		input:    Ok(1),
+		fn:       func(err error) Result[int] { return Ok(2) },
+		expected: Ok(1),
+	},
+	{
+		name:     "Err to Ok",
+		input:    Err[int](errFlatMapOrig),
+		fn:       func(err error) Result[int] { return Ok(2) },
+		expected: Ok(2),
+	},
+	{
+		name:  "Err to Err",
+		input: Err[int](errFlatMapOrig),
+		fn: func(err error) Result[int] {
+			return Err[int](errFlatMap)
+		},
+		expected: Err[int](errFlatMap),
+	},
+}
+
+func TestFlatMap(t *testing.T) {
+	for _, tc := range flatMapTestCases {
+		tc := tc
+		t.Run(tc.name, func(t *testing.T) {
+			t.Parallel()
+			actual := tc.input.FlatMap(tc.fnA)
+			require.Equal(t, tc.expectedA, actual)
+		})
+	}
+}
+
+func TestAndThenMethod(t *testing.T) {
+	// Since AndThen is just an alias for FlatMap, we can reuse the same
+	// test cases.
+	for _, tc := range flatMapTestCases {
+		tc := tc
+		t.Run(tc.name, func(t *testing.T) {
+			t.Parallel()
+			actual := tc.input.AndThen(tc.fnA)
+			require.Equal(t, tc.expectedA, actual)
+		})
+	}
+}
+
+func TestOrElseMethod(t *testing.T) {
+	for _, tc := range orElseTestCases {
+		tc := tc
+		t.Run(tc.name, func(t *testing.T) {
+			t.Parallel()
+			actual := tc.input.OrElse(tc.fn)
+			require.Equal(t, tc.expected, actual)
+		})
+	}
+}
+
+func TestFlatMapResult(t *testing.T) {
+	for _, tc := range flatMapTestCases {
+		tc := tc
+		t.Run(tc.name, func(t *testing.T) {
+			t.Parallel()
+			actual := FlatMapResult(tc.input, tc.fnB)
+			require.Equal(t, tc.expectedB, actual)
+		})
+	}
+}
+
+func TestAndThenFunc(t *testing.T) {
+	// Since AndThen is just an alias for FlatMapResult, we can reuse the
+	// same test cases.
+	for _, tc := range flatMapTestCases {
+		tc := tc
+		t.Run(tc.name, func(t *testing.T) {
+			t.Parallel()
+			actual := AndThen(tc.input, tc.fnB)
+			require.Equal(t, tc.expectedB, actual)
+		})
+	}
+}