diff --git a/app/components/channel-nav/template.hbs b/app/components/channel-nav/template.hbs
index 5790ece5..d3bbf552 100644
--- a/app/components/channel-nav/template.hbs
+++ b/app/components/channel-nav/template.hbs
@@ -8,9 +8,15 @@
         {{#each subspace.channels as |channel|}}
           <li class="channel group relative {{if channel.connected "connected" "disconnected"}} {{channel.unreadMessagesClass}} {{if channel.visible "active bg-white bg-opacity-20" ""}}">
             {{#if channel.isUserChannel}}
-              <LinkTo @route="user-channel" @model={{channel}} class="hc-sidebar-item">
-                {{channel.name}}
-              </LinkTo>
+              {{#if (eq channel.protocol "XMPP")}}
+                <LinkTo @route="user-channel" @model={{channel}} class="hc-sidebar-item">
+                  <IconCornerDownRight @class="ml-2" />&thinsp;{{channel.displayName}}
+                </LinkTo>
+              {{else}}
+                <LinkTo @route="user-channel" @model={{channel}} class="hc-sidebar-item">
+                  {{channel.displayName}}
+                </LinkTo>
+              {{/if}}
             {{else}}
               <LinkTo @route="channel" @model={{channel}} class="hc-sidebar-item">
                 #&thinsp;{{channel.shortName}}
diff --git a/app/components/link-to-username/component.js b/app/components/link-to-username/component.js
index 9b42e967..45876ab7 100644
--- a/app/components/link-to-username/component.js
+++ b/app/components/link-to-username/component.js
@@ -24,4 +24,17 @@ export default class LinkToUsernameComponent extends Component {
     return this.args.username.replace(regex, '');
   }
 
+  get userChannelId () {
+    let id;
+    switch (this.args.channel.protocol) {
+      case 'IRC':
+        id = `${this.usernameWithoutPrefix}@${this.args.channel.domain}`;
+        break;
+      case 'XMPP':
+        id = `${this.args.channel.id}${encodeURIComponent('/')}${this.usernameWithoutPrefix}`;
+        break;
+    }
+    return id;
+  }
+
 }
diff --git a/app/components/link-to-username/template.hbs b/app/components/link-to-username/template.hbs
index 143c757f..82033099 100644
--- a/app/components/link-to-username/template.hbs
+++ b/app/components/link-to-username/template.hbs
@@ -1,5 +1,5 @@
 <LinkTo @route="user-channel"
-        @model={{this.usernameWithoutPrefix}}
+        @model={{this.userChannelId}}
         class="hc-sidebar-item {{this.role}}">
   {{@username}}
 </LinkTo>
diff --git a/app/components/user-list/template.hbs b/app/components/user-list/template.hbs
index 7e8f23cc..cdaf93fb 100644
--- a/app/components/user-list/template.hbs
+++ b/app/components/user-list/template.hbs
@@ -4,13 +4,8 @@
   {{/if}}
   <ul>
     {{#each this.renderedUsers as |username|}}
-      {{#if @allowUserChannels}}
-        <li><LinkToUsername @username={{username}} /></li>
-      {{else}}
-        <li><a class="hc-sidebar-item">{{username}}</a></li>
-      {{/if}}
+      <li><LinkToUsername @username={{username}} @channel={{@channel}}/></li>
     {{/each}}
-
     <li class="last-element"></li>
     <ScrollingObserver @rootElement="#user-list"
                        @rootMargin="200px"
diff --git a/app/controllers/channel/index.js b/app/controllers/channel/index.js
index 11b5ddb3..ec2ea1f2 100644
--- a/app/controllers/channel/index.js
+++ b/app/controllers/channel/index.js
@@ -1,11 +1,7 @@
 import Controller, { inject as controller } from '@ember/controller';
 
 export default class ChannelIndexController extends Controller {
+
   @controller('channel') channel;
 
-  get allowUserChannels () {
-    // FIXME allow when fixed for IRC
-    // TODO implement channel DMs for XMPP
-    return false;
-  }
 }
diff --git a/app/models/base_channel.js b/app/models/base_channel.js
index 3ddd7b2c..313dbc30 100644
--- a/app/models/base_channel.js
+++ b/app/models/base_channel.js
@@ -73,7 +73,8 @@ export default class BaseChannel {
   }
 
   get domain () {
-    return this.id.match(/@(.+)$/)[1];
+    const match = this.id.match(/@([^/]+)/);
+    return match[1];
   }
 
   get unreadMessagesClass () {
diff --git a/app/routes/base_channel.js b/app/routes/base_channel.js
index db0c750d..935d68a5 100644
--- a/app/routes/base_channel.js
+++ b/app/routes/base_channel.js
@@ -20,12 +20,16 @@ export default class BaseChannelRoute extends Route {
   @alias('localData.stores.userSettings') userSettings;
 
   model (params) {
-    const channel = this.coms.channels.findBy('slug', params.slug);
+    let channel = this.coms.channels.findBy('slug', params.slug);
+    if (channel) return channel;
 
-    if (channel) {
+    const channelId = decodeURIComponent(params.slug);
+    const domain = channelId.match(/@([^/]+)/)[1];
+    const randomChannelForDomain = this.coms.channels.findBy('domain', domain);
+
+    if (randomChannelForDomain) {
+      channel = this.createChannelOrUserChannel(randomChannelForDomain.account, channelId);
       return channel;
-      // TODO must select acccount automatically (for IRC)
-      // channel = this.createChannelOrUserChannel(account, params.slug);
     } else {
       const firstChannel = this.coms.channels.firstObject;
       this.router.transitionTo('channel', firstChannel);
diff --git a/app/routes/channel.js b/app/routes/channel.js
index f6742b4a..d5c123ed 100644
--- a/app/routes/channel.js
+++ b/app/routes/channel.js
@@ -2,10 +2,17 @@ import BaseChannel from 'hyperchannel/routes/base_channel';
 
 export default class ChannelRoute extends BaseChannel {
 
-  // FIXME must select acccount automatically (for IRC)
-  createChannelOrUserChannel (account, channelName) {
-    // TODO this is IRC only
-    return this.coms.createChannel(account, "#" + channelName);
+  createChannelOrUserChannel (account, channelId) {
+    let channel;
+    switch(account.protocol) {
+      case 'IRC':
+        channel = this.coms.createChannel(account, '#'+channelId.match(/^(.+)@/)[1]);
+        break;
+      case 'XMPP':
+        channel = this.coms.createChannel(account, channelId);
+        break;
+    }
+    return channel;
   }
 
 }
diff --git a/app/routes/user_channel.js b/app/routes/user_channel.js
index 5b5f6489..a2c7a5bb 100644
--- a/app/routes/user_channel.js
+++ b/app/routes/user_channel.js
@@ -2,9 +2,17 @@ import BaseChannel from 'hyperchannel/routes/base_channel';
 
 export default BaseChannel.extend({
 
-  // FIXME must select acccount automatically
-  createChannelOrUserChannel: function(account, channelName){
-    return this.coms.createUserChannel(account, channelName);
+  createChannelOrUserChannel: function(account, channelId) {
+    let channel;
+    switch(account.protocol) {
+      case 'IRC':
+        channel = this.coms.createUserChannel(account, channelId.match(/^(.+)@/)[1]);
+        break;
+      case 'XMPP':
+        channel = this.coms.createUserChannel(account, channelId);
+        break;
+    }
+    return channel;
   }
 
 });
diff --git a/app/services/coms.js b/app/services/coms.js
index a10ad557..81c8a756 100644
--- a/app/services/coms.js
+++ b/app/services/coms.js
@@ -1,16 +1,15 @@
 import Service, { inject as service } from '@ember/service';
 import { isPresent, isEmpty } from '@ember/utils';
 import { A } from '@ember/array';
-import XmppAccount from 'hyperchannel/models/account/xmpp';
-import IrcAccount from 'hyperchannel/models/account/irc';
-import Channel from 'hyperchannel/models/channel';
-import UserChannel from 'hyperchannel/models/user_channel';
-import Message from 'hyperchannel/models/message';
-import config from 'hyperchannel/config/environment';
 import moment from 'moment';
 import { tracked } from '@glimmer/tracking';
 import { computed } from '@ember/object';
 import { sort } from '@ember/object/computed';
+import IrcAccount from 'hyperchannel/models/account/irc';
+import XmppAccount from 'hyperchannel/models/account/xmpp';
+import Channel from 'hyperchannel/models/channel';
+import Message from 'hyperchannel/models/message';
+import config from 'hyperchannel/config/environment';
 
 /**
  * This service provides the central command interface for communicating with
@@ -32,6 +31,10 @@ export default class ComsService extends Service {
    * @type {Account[]}
    */
   @tracked accounts = A([]);
+  /**
+   * A collection of all channel instances
+   * @type {Channel[] | UserChannel}
+   */
   @tracked channels = A([]);
 
   channelSorting = ['name'];
@@ -346,24 +349,20 @@ export default class ComsService extends Service {
     });
   }
 
-  createUserChannel (account, userName) {
-    const channel = new UserChannel({
-      account: account,
-      name: userName
-    });
+  createUserChannel (account, name) {
+    const channel = this.getServiceForSockethubPlatform(account.protocol)
+                        .createUserChannel(account, name);
 
-    // TODO check if this is necesarry for XMPP,
-    // because for IRC it is not
-    this.joinChannel(channel, "person");
     this.channels.pushObject(channel);
-
     return channel;
   }
 
   async removeChannel (channel) {
     this.leaveChannel(channel);
     this.channels.removeObject(channel);
-    await this.storage.removeChannel(channel);
+    if (!channel.isUserChannel) {
+      await this.storage.removeChannel(channel);
+    }
     return;
   }
 
diff --git a/app/services/sockethub-irc.js b/app/services/sockethub-irc.js
index 17045696..0f180810 100644
--- a/app/services/sockethub-irc.js
+++ b/app/services/sockethub-irc.js
@@ -1,5 +1,6 @@
 import Service, { inject as service } from '@ember/service';
 import { isEmpty } from '@ember/utils';
+import UserChannel from 'hyperchannel/models/user_channel';
 import channelMessageFromSockethubObject from 'hyperchannel/utils/channel-message-from-sockethub-object';
 import extend from 'extend';
 
@@ -278,6 +279,24 @@ export default class SockethubIrcService extends Service {
     return channel;
   }
 
+  /**
+   * Create a direct-message channel
+   *
+   * @param {Account} account
+   * @param {String} nickname
+   * @returns {UserChannel} user channel
+   * @public
+   */
+  createUserChannel (account, nickname) {
+    const channel = new UserChannel({
+      account: account,
+      name: nickname,
+      displayName: nickname,
+      connected: true
+    });
+    return channel;
+  }
+
   /**
    * Utility function for easier logging
    * @protected
diff --git a/app/services/sockethub-xmpp.js b/app/services/sockethub-xmpp.js
index 1dfe8151..2ce95042 100644
--- a/app/services/sockethub-xmpp.js
+++ b/app/services/sockethub-xmpp.js
@@ -1,6 +1,7 @@
 import Service, { inject as service } from '@ember/service';
 import { isEmpty } from '@ember/utils';
 import extend from 'extend';
+import UserChannel from 'hyperchannel/models/user_channel';
 import channelMessageFromSockethubObject from 'hyperchannel/utils/channel-message-from-sockethub-object';
 
 /**
@@ -186,7 +187,7 @@ export default class SockethubXmppService extends Service {
   addMessageToChannel (message) {
     if (isEmpty(message.object.content)) return;
 
-    const channel = this.getChannelForMessage(message);
+    const channel = this.findOrCreateChannelForMessage(message);
     const channelMessage = channelMessageFromSockethubObject(message);
 
     // TODO should check for message and update sent status if exists
@@ -221,29 +222,49 @@ export default class SockethubXmppService extends Service {
    * @returns {Channel} channel
    * @public
    */
-  getChannelForMessage (message) {
+  findOrCreateChannelForMessage (message) {
     const targetChannelId = message.target['@id'];
     let channel;
 
     if (message.target['@type'] === 'room') {
       channel = this.coms.channels.findBy('sockethubChannelId', targetChannelId);
+
       // TODO Find account for new channel by sockerhubPersonId
-      console.warn('Received message for unknown channel', message);
-      // if (!channel) {
-      //   channel = this.coms.createChannel(space, targetChannelId);
-      // }
+      if (!channel) {
+        console.warn('Received message for unknown channel', message);
+        // channel = this.coms.createChannel(space, targetChannelId);
+      }
     } else {
       channel = this.coms.channels.findBy('sockethubChannelId', message.actor['@id']);
-      // TODO
-      console.warn('Received message for unknown user channel', message);
-      // if (!channel) {
-      //   channel = this.coms.createUserChannel(space, message.actor['@id']);
-      // }
+
+      if (!channel) {
+        const account = this.coms.accounts.findBy('sockethubPersonId', message.target['@id']);
+        if (!account) console.warn('Received direct message for unknown account', message);
+        channel = this.coms.createUserChannel(account, message.actor['@id']);
+      }
     }
 
     return channel;
   }
 
+  /**
+   * Create a direct-message channel
+   *
+   * @param {Account} account
+   * @param {String} sockethub actor ID
+   * @returns {UserChannel} user channel
+   * @public
+   */
+  createUserChannel (account, sockethubActorId) {
+    const channel = new UserChannel({
+      account: account,
+      name: sockethubActorId, // e.g. kosmos-dev@kosmos.chat/jimmy
+      displayName: sockethubActorId.match(/\/(.+)$/)[1],
+      connected: true
+    });
+    return channel;
+  }
+
   /**
    * Utility function for easier logging
    * @private
diff --git a/app/styles/app.scss b/app/styles/app.scss
index 2d737f06..83918755 100644
--- a/app/styles/app.scss
+++ b/app/styles/app.scss
@@ -104,6 +104,10 @@ header {
     @apply block px-4 h-7 leading-7
            overflow-hidden overflow-ellipsis
            hover:bg-white hover:bg-opacity-20;
+
+    svg {
+      @apply inline-block h-4 w-4 -mt-0.5;
+    }
   }
 }
 
diff --git a/app/templates/channel/index.hbs b/app/templates/channel/index.hbs
index 11459f34..ba508486 100644
--- a/app/templates/channel/index.hbs
+++ b/app/templates/channel/index.hbs
@@ -1,2 +1 @@
-<UserList @users={{this.model.sortedUserList}}
-          @allowUserChannels={{this.allowUserChannels}} />
\ No newline at end of file
+<UserList @users={{this.model.sortedUserList}} @channel={{this.model}} />
\ No newline at end of file
diff --git a/app/templates/components/icon-corner-down-right.hbs b/app/templates/components/icon-corner-down-right.hbs
index b27d408d..76ec8222 100644
--- a/app/templates/components/icon-corner-down-right.hbs
+++ b/app/templates/components/icon-corner-down-right.hbs
@@ -1 +1 @@
-<svg xmlns="http://www.w3.org/2000/svg" width="24" height="24" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="feather feather-corner-down-right"><polyline points="15 10 20 15 15 20"></polyline><path d="M4 4v7a4 4 0 0 0 4 4h12"></path></svg>
\ No newline at end of file
+<svg xmlns="http://www.w3.org/2000/svg" width="24" height="24" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="feather feather-corner-down-right {{@class}}"><polyline points="15 10 20 15 15 20"></polyline><path d="M4 4v7a4 4 0 0 0 4 4h12"></path></svg>
\ No newline at end of file
diff --git a/app/utils/channel-message-from-sockethub-object.js b/app/utils/channel-message-from-sockethub-object.js
index daa1ba6c..057d5366 100644
--- a/app/utils/channel-message-from-sockethub-object.js
+++ b/app/utils/channel-message-from-sockethub-object.js
@@ -2,16 +2,24 @@ import { isEmpty } from '@ember/utils';
 import Message from 'hyperchannel/models/message';
 
 export default function channelMessageFromSockethubObject(message) {
-  let channelMessage = new Message({
+  const channelMessage = new Message({
     type: message.object['@type'] === 'me' ? 'message-chat-me' : 'message-chat',
     date: extractDate(message.published),
-    nickname: message.actor.displayName || message.actor['@id'],
+    nickname: extractNickname(message.actor),
     content: message.object.content
   });
-
   return channelMessage;
 }
 
+function extractNickname (actor) {
+  if (actor.displayName) {
+    return actor.displayName;
+  } else {
+    const matchChannelUser = actor['@id'].match(/^.+@.+\/(.*)$/);
+    return matchChannelUser ? matchChannelUser[1] : actor['@id'];
+  }
+}
+
 function extractDate(dateField) {
    if (isEmpty(dateField)) {
      return new Date();
diff --git a/tests/integration/components/channel-nav-test.js b/tests/integration/components/channel-nav/component-test.js
similarity index 52%
rename from tests/integration/components/channel-nav-test.js
rename to tests/integration/components/channel-nav/component-test.js
index d7fc35d4..4898fd47 100644
--- a/tests/integration/components/channel-nav-test.js
+++ b/tests/integration/components/channel-nav/component-test.js
@@ -1,17 +1,17 @@
 // import { module, test } from 'qunit';
 // import { setupRenderingTest } from 'ember-qunit';
 // import { render } from '@ember/test-helpers';
-// import hbs from 'htmlbars-inline-precompile';
+// import { hbs } from 'ember-cli-htmlbars';
 //
 // module('Integration | Component | channel-nav', function(hooks) {
 //   setupRenderingTest(hooks);
 //
 //   test('it renders', async function(assert) {
-//     assert.expect(1);
+//     // Set any properties with this.set('myProperty', 'value');
+//     // Handle any actions with this.set('myAction', function(val) { ... });
 //
-//     await render(hbs`{{channel-nav}}`);
+//     await render(hbs`<ChannelNav />`);
 //
-//     assert.dom(this.element).hasText('');
+//     assert.equal(this.element.textContent.trim(), '');
 //   });
 // });
-//
diff --git a/tests/integration/components/link-to-username-test.js b/tests/integration/components/link-to-username-test.js
index 750099ea..31700027 100644
--- a/tests/integration/components/link-to-username-test.js
+++ b/tests/integration/components/link-to-username-test.js
@@ -2,12 +2,20 @@ import { module, test } from 'qunit';
 import { setupRenderingTest } from 'ember-qunit';
 import { render } from '@ember/test-helpers';
 import hbs from 'htmlbars-inline-precompile';
+import Channel from 'hyperchannel/models/channel';
+import { xmppAccount } from '../../fixtures/accounts';
+
+const xmppChannel = new Channel({
+  account: xmppAccount,
+  name: 'kosmos-dev@kosmos.chat'
+});
 
 module('Integration | Component | link to username', function(hooks) {
   setupRenderingTest(hooks);
 
   test('it renders for a normal user', async function(assert) {
-    await render(hbs`{{link-to-username username='test_user'}}`);
+    this.set('channel', xmppChannel);
+    await render(hbs`<LinkToUsername @username='test_user' @channel={{this.channel}} />`);
 
     const link = this.element.querySelector('a');
 
@@ -16,7 +24,8 @@ module('Integration | Component | link to username', function(hooks) {
   });
 
   test('it renders for an op user', async function(assert) {
-    await render(hbs`{{link-to-username username='@op'}}`);
+    this.set('channel', xmppChannel);
+    await render(hbs`<LinkToUsername @username='@op' @channel={{this.channel}} />`);
 
     const link = this.element.querySelector('a');
 
@@ -25,7 +34,8 @@ module('Integration | Component | link to username', function(hooks) {
   });
 
   test('it renders for a half-op user', async function(assert) {
-    await render(hbs`{{link-to-username username='%wannabe_op'}}`);
+    this.set('channel', xmppChannel);
+    await render(hbs`<LinkToUsername @username='%wannabe_op' @channel={{this.channel}} />`);
 
     const link = this.element.querySelector('a');
 
diff --git a/tests/unit/models/base-channel-test.js b/tests/unit/models/base-channel-test.js
index 9cf3129e..b5176fb2 100644
--- a/tests/unit/models/base-channel-test.js
+++ b/tests/unit/models/base-channel-test.js
@@ -173,17 +173,26 @@ module('Unit | Model | base-channel', function(hooks) {
     assert.deepEqual(channel.userList, ['some-random-user']);
   });
 
-  test('#domain', function(assert) {
+  test('#domain (XMPP)', function(assert) {
     let channel = new BaseChannel({
       account: xmppAccount,
       name: 'kosmos-dev@kosmos.chat'
     });
-    assert.equal(channel.domain, 'kosmos.chat', 'returns the MUC domain for XMPP channels');
+    assert.equal(channel.domain, 'kosmos.chat', 'returns the MUC domain for rooms');
 
     channel = new BaseChannel({
+      account: xmppAccount,
+      isUserChannel: true,
+      name: 'kosmos-dev@kosmos.chat/jimmy'
+    });
+    assert.equal(channel.domain, 'kosmos.chat', 'returns the MUC domain for direct message channels');
+  });
+
+  test('#domain (IRC)', function(assert) {
+    const channel = new BaseChannel({
       account: ircAccount,
       name: '#kosmos-dev'
     });
-    assert.equal(channel.domain, 'irc.libera.chat', 'returns the network/account domain for IRC channels');
+    assert.equal(channel.domain, 'irc.libera.chat', 'returns the network/account domain');
   });
 });
diff --git a/tests/unit/services/sockethub-xmpp-test.js b/tests/unit/services/sockethub-xmpp-test.js
index b349f1f2..72a50e22 100644
--- a/tests/unit/services/sockethub-xmpp-test.js
+++ b/tests/unit/services/sockethub-xmpp-test.js
@@ -43,7 +43,7 @@ module('Unit | Service | sockethub xmpp', function(hooks) {
     assert.notOk(channel.userList.includes('walter'));
   });
 
-  test('#getChannelForMessage returns the channel for a given message', function(assert) {
+  test('#findOrCreateChannelForMessage returns the channel for a given message', function(assert) {
     const channel = new Channel({ account: xmppAccount, name: 'some-channel@kosmos.chat' });
     const comsService = this.owner.factoryFor('service:coms').create({
       accounts: [ xmppAccount ], channels: [ channel ]
@@ -67,7 +67,7 @@ module('Unit | Service | sockethub xmpp', function(hooks) {
       }
     };
 
-    assert.equal(service.getChannelForMessage(message), channel);
+    assert.equal(service.findOrCreateChannelForMessage(message), channel);
   });
 
   test('#addMessageToChannel adds the message to the channel', function(assert) {
@@ -98,4 +98,18 @@ module('Unit | Service | sockethub xmpp', function(hooks) {
 
     assert.equal(channel.messages.lastObject.content, 'hello world');
   });
+
+  test('#createUserChannel', function(assert) {
+    const comsService = this.owner.factoryFor('service:coms').create({
+      accounts: [ xmppAccount ]
+    });
+    const service = this.owner.factoryFor('service:sockethub-xmpp').create({ coms: comsService });
+
+    const channel = service.createUserChannel(xmppAccount, 'kosmos-dev@kosmos.chat/walter');
+
+    assert.equal(channel.name, 'kosmos-dev@kosmos.chat/walter');
+    assert.equal(channel.displayName, 'walter');
+    assert.ok(channel.isUserChannel);
+    assert.ok(channel.connected);
+  });
 });
diff --git a/tests/unit/utils/channel-message-from-sockethub-object-test.js b/tests/unit/utils/channel-message-from-sockethub-object-test.js
index 02c5158a..32d1aec2 100644
--- a/tests/unit/utils/channel-message-from-sockethub-object-test.js
+++ b/tests/unit/utils/channel-message-from-sockethub-object-test.js
@@ -46,6 +46,26 @@ module('Unit | Utility | channel message from sockethub object', function() {
                  new Date('2017-06-14T06:32:42.025Z').toISOString());
   });
 
+  test('it uses the whole JID for XMPP messages without displayName', function(assert) {
+    const message = {
+      actor: { '@id': 'walter@kosmos.org', '@type': 'person' },
+      object: { '@type': 'message', content: 'this is a direct message' }
+    };
+    const result = channelMessageFromSockethubObject(message);
+
+    assert.equal(result.nickname, 'walter@kosmos.org');
+  });
+
+  test('it extracts the nickname from XMPP channel DM actor IDs', function(assert) {
+    const message = {
+      actor: { '@id': 'kosmos-dev@kosmos.chat/walter', '@type': 'person' },
+      object: { '@type': 'message', content: 'this is a direct message' }
+    };
+    const result = channelMessageFromSockethubObject(message);
+
+    assert.equal(result.nickname, 'walter');
+  });
+
   test('it works with the published field being a unix timestamp', function(assert) {
     sockethubMessageObject.published = '1497421962025';