diff --git a/src/xenia/kernel/kernel_state.cc b/src/xenia/kernel/kernel_state.cc
index a63528460..ce136bf75 100644
--- a/src/xenia/kernel/kernel_state.cc
+++ b/src/xenia/kernel/kernel_state.cc
@@ -540,16 +540,9 @@ void KernelState::CompleteOverlappedEx(uint32_t overlapped_ptr, X_RESULT result,
     X_HANDLE thread_handle = XOverlappedGetContext(ptr);
     auto thread = object_table()->LookupObject<XThread>(thread_handle);
     if (thread) {
+      // Queue APC on the thread that requested the overlapped operation.
       uint32_t routine = XOverlappedGetCompletionRoutine(ptr);
-      uint64_t args[] = {
-          result, length, overlapped_ptr,
-      };
-      // TODO(benvanik): queue APC on the thread that requested the overlapped
-      // operation.
-      assert_always();
-      // THIS IS WRONG, for testing only:
-      processor()->Execute(XThread::GetCurrentThread()->thread_state(), routine,
-                           args, xe::countof(args));
+      thread->EnqueueApc(routine, result, length, overlapped_ptr);
     }
   }
 }
diff --git a/src/xenia/kernel/objects/xthread.cc b/src/xenia/kernel/objects/xthread.cc
index 72dfcfadd..01f6825d1 100644
--- a/src/xenia/kernel/objects/xthread.cc
+++ b/src/xenia/kernel/objects/xthread.cc
@@ -417,6 +417,9 @@ void XThread::Execute() {
 
   int exit_code = 0;
 
+  // Dispatch any APCs that were queued before the thread was created first.
+  DeliverAPCs();
+
   // If a XapiThreadStartup value is present, we use that as a trampoline.
   // Otherwise, we are a raw thread.
   if (creation_params_.xapi_thread_startup) {
diff --git a/src/xenia/kernel/objects/xtimer.cc b/src/xenia/kernel/objects/xtimer.cc
index 84e59a131..9256be02a 100644
--- a/src/xenia/kernel/objects/xtimer.cc
+++ b/src/xenia/kernel/objects/xtimer.cc
@@ -12,6 +12,7 @@
 #include "xenia/base/clock.h"
 #include "xenia/base/logging.h"
 #include "xenia/cpu/processor.h"
+#include "xenia/kernel/objects/xthread.h"
 
 namespace xe {
 namespace kernel {
@@ -42,25 +43,38 @@ X_STATUS XTimer::SetTimer(int64_t due_time, uint32_t period_ms,
     return X_STATUS_TIMER_RESUME_IGNORED;
   }
 
-  // Stash routine for callback.
-  current_routine_ = routine;
-  current_routine_arg_ = routine_arg;
-  if (current_routine_) {
-    // Queue APC to call back routine with (arg, low, high).
-    // TODO(benvanik): APC dispatch.
-    XELOGE("Timer needs APC!");
-    assert_zero(current_routine_);
-  }
-
   due_time = Clock::ScaleGuestDurationFileTime(due_time);
   period_ms = Clock::ScaleGuestDurationMillis(period_ms);
 
+  // Stash routine for callback.
+  callback_thread_ = XThread::GetCurrentThread();
+  callback_routine_ = routine;
+  callback_routine_arg_ = routine_arg;
+
+  // This callback will only be issued when the timer is fired.
+  std::function<void()> callback = nullptr;
+  if (callback_routine_) {
+    callback = [this]() {
+      // Queue APC to call back routine with (arg, low, high).
+      // It'll be executed on the thread that requested the timer.
+      uint64_t time = xe::Clock::QueryGuestSystemTime();
+      uint32_t time_low = static_cast<uint32_t>(time);
+      uint32_t time_high = static_cast<uint32_t>(time >> 32);
+      XELOGI("XTimer enqueuing timer callback to %.8X(%.8X, %.8X, %.8X)",
+             callback_routine_, callback_routine_arg_, time_low, time_high);
+      callback_thread_->EnqueueApc(callback_routine_, callback_routine_arg_,
+                                   time_low, time_high);
+    };
+  }
+
   bool result;
   if (!period_ms) {
-    result = timer_->SetOnce(std::chrono::nanoseconds(due_time * 100));
+    result = timer_->SetOnce(std::chrono::nanoseconds(due_time * 100),
+                             std::move(callback));
   } else {
     result = timer_->SetRepeating(std::chrono::nanoseconds(due_time * 100),
-                                  std::chrono::milliseconds(period_ms));
+                                  std::chrono::milliseconds(period_ms),
+                                  std::move(callback));
   }
 
   return result ? X_STATUS_SUCCESS : X_STATUS_UNSUCCESSFUL;
diff --git a/src/xenia/kernel/objects/xtimer.h b/src/xenia/kernel/objects/xtimer.h
index 1bb40aa96..9c81f8f05 100644
--- a/src/xenia/kernel/objects/xtimer.h
+++ b/src/xenia/kernel/objects/xtimer.h
@@ -17,6 +17,8 @@
 namespace xe {
 namespace kernel {
 
+class XThread;
+
 class XTimer : public XObject {
  public:
   explicit XTimer(KernelState* kernel_state);
@@ -24,7 +26,6 @@ class XTimer : public XObject {
 
   void Initialize(uint32_t timer_type);
 
-  // completion routine, arg to completion routine
   X_STATUS SetTimer(int64_t due_time, uint32_t period_ms, uint32_t routine,
                     uint32_t routine_arg, bool resume);
   X_STATUS Cancel();
@@ -34,8 +35,9 @@ class XTimer : public XObject {
  private:
   std::unique_ptr<xe::threading::Timer> timer_;
 
-  uint32_t current_routine_;
-  uint32_t current_routine_arg_;
+  XThread* callback_thread_ = nullptr;
+  uint32_t callback_routine_ = 0;
+  uint32_t callback_routine_arg_ = 0;
 };
 
 }  // namespace kernel