diff --git a/bench/src/main/scala/cats/mtl/bench/StateBench.scala b/bench/src/main/scala/cats/mtl/bench/StateBench.scala
new file mode 100644
index 00000000..401cf253
--- /dev/null
+++ b/bench/src/main/scala/cats/mtl/bench/StateBench.scala
@@ -0,0 +1,37 @@
+package cats.mtl.bench
+
+import cats.implicits._
+import cats.data.StateT
+import cats.effect.IO
+import org.openjdk.jmh.annotations._
+import java.util.concurrent.TimeUnit
+
+import cats.mtl.special.StateIO
+
+@BenchmarkMode(Array(Mode.Throughput))
+@OutputTimeUnit(TimeUnit.SECONDS)
+class StateBench {
+
+  def leftFlatMapSpecial(bound: Int): Int = {
+    def loop(i: Int): StateIO[Int, Int] =
+      if (i > bound) StateIO.pure(i)
+      else StateIO.pure[Int, Int](i + 1).flatMap(loop)
+
+    StateIO.pure[Int, Int](0).flatMap(loop).unsafeRunSyncA(0)
+  }
+
+  def leftFlatMapStateT(bound: Int): Int = {
+    def loop(i: Int): StateT[IO, Int, Int] =
+      if (i > bound) StateT.pure[IO, Int, Int](i)
+      else StateT.pure[IO, Int, Int](i + 1).flatMap(loop)
+
+    StateT.pure[IO, Int, Int](0).flatMap(loop).runA(0).unsafeRunSync()
+  }
+
+  @Benchmark
+  def leftAssociatedBindSpecial(): Int = leftFlatMapSpecial(100000)
+
+  @Benchmark
+  def leftAssociatedBindStateT(): Int = leftFlatMapStateT(100000)
+
+}
diff --git a/build.sbt b/build.sbt
index 8add1bf5..e622e004 100644
--- a/build.sbt
+++ b/build.sbt
@@ -118,11 +118,32 @@ val laws = crossProject.crossType(CrossType.Pure)
 val lawsJVM = laws.jvm
 val lawsJS = laws.js
 
+val special = crossProject.crossType(CrossType.Pure)
+  .dependsOn(core)
+  .settings(moduleName := "cats-mtl-special", name := "Cats MTL Special")
+  .settings(Settings.coreSettings:_*)
+  .settings(Dependencies.catsEffect: _*)
+  .jsSettings(Settings.commonJsSettings:_*)
+  .jvmSettings(Settings.commonJvmSettings:_*)
+  .jsSettings(coverageEnabled := false)
+
+val specialJVM = special.jvm
+val specialJS = special.js
+
+lazy val bench = project.dependsOn(coreJVM, specialJVM)
+  .settings(moduleName := "cats-mtl-bench")
+  .settings(Settings.coreSettings:_*)
+  .settings(Publishing.noPublishSettings)
+  .settings(Settings.commonJvmSettings:_*)
+  .settings(coverageEnabled := false)
+  .enablePlugins(JmhPlugin)
+
 val tests = crossProject.crossType(CrossType.Pure)
-  .dependsOn(core, laws)
+  .dependsOn(core, laws, special)
   .settings(moduleName := "cats-mtl-tests")
   .settings(Settings.coreSettings:_*)
   .settings(Dependencies.catsBundle:_*)
+  .settings(Dependencies.catsEffectLaws:_*)
   .settings(Dependencies.discipline:_*)
   .settings(Dependencies.scalaCheck:_*)
   .settings(Publishing.noPublishSettings:_*)
@@ -155,16 +176,16 @@ val catsMtlJVM = project.in(file(".catsJVM"))
   .settings(Settings.coreSettings)
   .settings(Settings.commonJvmSettings)
   .settings(Publishing.noPublishSettings)
-  .aggregate(coreJVM, lawsJVM, testsJVM, jvm, docs)
-  .dependsOn(coreJVM, lawsJVM, testsJVM % "test-internal -> test", jvm)
+  .aggregate(coreJVM, lawsJVM, specialJVM, testsJVM, jvm, docs)
+  .dependsOn(coreJVM, lawsJVM, specialJVM, testsJVM % "test-internal -> test", jvm)
 
 val catsMtlJS = project.in(file(".catsJS"))
   .settings(moduleName := "cats-mtl")
   .settings(Settings.coreSettings)
   .settings(Settings.commonJsSettings)
   .settings(Publishing.noPublishSettings)
-  .aggregate(coreJS, lawsJS, testsJS, js)
-  .dependsOn(coreJS, lawsJS, testsJS % "test-internal -> test", js)
+  .aggregate(coreJS, lawsJS, specialJS, testsJS, js)
+  .dependsOn(coreJS, lawsJS, specialJS, testsJS % "test-internal -> test", js)
   .enablePlugins(ScalaJSPlugin)
 
 val catsMtl = project.in(file("."))
diff --git a/project/Dependencies.scala b/project/Dependencies.scala
index a8d3c47b..1637f8db 100644
--- a/project/Dependencies.scala
+++ b/project/Dependencies.scala
@@ -15,7 +15,7 @@ object Dependencies {
     val simulacrum = "0.13.0"
     val machinist = "0.6.5"
     val cats = "1.4.0"
-    val shapeless = "2.3.3"
+    val catsEffect = "1.0.0"
   }
 
   val acyclic: Seq[Def.Setting[_]] = Def.settings(
@@ -54,8 +54,12 @@ object Dependencies {
     "org.typelevel" %%% "cats-core" % Versions.cats
   ))
 
-  val shapeless: Seq[Setting[_]] = Def.settings(libraryDependencies ++= Seq(
-    "com.chuusai" %%% "shapeless" % Versions.shapeless
+  val catsEffect: Seq[Setting[_]] = Def.settings(libraryDependencies ++= Seq(
+    "org.typelevel" %%% "cats-effect" % Versions.catsEffect
+  ))
+
+  val catsEffectLaws: Seq[Setting[_]] = Def.settings(libraryDependencies ++= Seq(
+    "org.typelevel" %%% "cats-effect-laws" % Versions.catsEffect
   ))
 
   val simulacrumAndMachinist: Seq[Setting[_]] = Def.settings(libraryDependencies ++= Seq(
diff --git a/project/plugins.sbt b/project/plugins.sbt
index 71d603af..47f2e6bc 100644
--- a/project/plugins.sbt
+++ b/project/plugins.sbt
@@ -12,3 +12,4 @@ addSbtPlugin("com.47deg"           % "sbt-microsites"        % "0.7.23")
 addSbtPlugin("com.dwijnand"        % "sbt-travisci"          % "1.1.3")
 addSbtPlugin("org.lyranthe.sbt"    % "partial-unification"   % "1.1.2")
 addSbtPlugin("com.lucidchart"      % "sbt-scalafmt-coursier" % "1.15")
+addSbtPlugin("pl.project13.scala"  % "sbt-jmh"               % "0.3.4")
diff --git a/special/src/main/scala/cats/mtl/special/Newtype2.scala b/special/src/main/scala/cats/mtl/special/Newtype2.scala
new file mode 100644
index 00000000..a82e26f2
--- /dev/null
+++ b/special/src/main/scala/cats/mtl/special/Newtype2.scala
@@ -0,0 +1,8 @@
+package cats.mtl.special
+
+private[special] trait Newtype2 { self =>
+  private[special] type Base
+  private[special] trait Tag extends Any
+  type Type[A, B] <: Base with Tag
+}
+
diff --git a/special/src/main/scala/cats/mtl/special/StateIO.scala b/special/src/main/scala/cats/mtl/special/StateIO.scala
new file mode 100644
index 00000000..5912c563
--- /dev/null
+++ b/special/src/main/scala/cats/mtl/special/StateIO.scala
@@ -0,0 +1,144 @@
+package cats.mtl.special
+
+import cats.Monad
+import cats.effect.concurrent.Ref
+import cats.effect._
+import cats.mtl.MonadState
+
+
+/* Performant counterpart to StateT[IO, S, A] */
+object StateIO extends StateIOInstances with StateIOImpl with Newtype2 {
+
+  private[cats] def wrap[S, A](s: IO[A]): Type[S, A] =
+    s.asInstanceOf[Type[S, A]]
+
+  private[cats] def unwrap[S, A](e: Type[S, A]): IO[A] =
+    e.asInstanceOf[IO[A]]
+
+  @inline
+  def liftF[S, A](fa: IO[A]): StateIO[S, A] = wrap(fa)
+
+  def get[S]: StateIO[S, S] = liftF(refInstance[S].get)
+
+  def modify[S](f: S => S): StateIO[S, Unit] = liftF(refInstance[S].update(f))
+
+  def set[S](s: S): StateIO[S, Unit] = liftF(refInstance[S].set(s))
+
+  def pure[S, A](a: A): StateIO[S, A] = liftF(IO.pure(a))
+
+  def create[S, A](f: S => IO[(S, A)]): StateIO[S, A] =
+    liftF(refInstance[S].get.flatMap(s => f(s).flatMap {
+      case (s, a) => refInstance[S].set(s).map(_ => a)
+    }))
+
+  implicit def stateIOOps[S, A](v: StateIO[S, A]): StateIOOps[S, A] =
+    new StateIOOps[S, A](v)
+}
+
+private[special] class StateIOOps[S, A](val sp: StateIO[S, A]) extends AnyVal {
+
+  def unsafeRunAsync(s: S)(f: Either[Throwable, (S, A)] => Unit): Unit =
+    StateIO.refInstance[S].set(s)
+      .flatMap(_ => StateIO.unwrap(sp).flatMap(a => StateIO.refInstance[S].get.map(s => (s, a))))
+      .unsafeRunAsync(f)
+
+  def unsafeRunSync(s: S): (S, A) =
+    StateIO.refInstance[S].set(s)
+      .flatMap(_ => StateIO.unwrap(sp).flatMap(a => StateIO.refInstance[S].get.map(s => (s, a))))
+      .unsafeRunSync()
+
+  def unsafeRunSyncA(s: S): A =
+    StateIO.refInstance[S].set(s).flatMap(_ => StateIO.unwrap(sp)).unsafeRunSync()
+
+  def unsafeRunSyncS(s: S): S =
+    StateIO.refInstance[S].set(s)
+      .flatMap(_ => StateIO.unwrap(sp).flatMap(_ => StateIO.refInstance[S].get))
+      .unsafeRunSync()
+}
+
+
+private[special] abstract class StateIOAsync[S] extends Async[StateIO[S, ?]] {
+
+  def flatMap[A, B](fa: StateIO[S, A])(f: A => StateIO[S, B]): StateIO[S, B] =
+    StateIO.wrap(StateIO.unwrap(fa).flatMap(a => StateIO.unwrap(f(a))))
+
+  def suspend[A](thunk: => StateIO[S, A]): StateIO[S, A] =
+    StateIO.liftF(IO.suspend(StateIO.unwrap(thunk)))
+
+  def bracketCase[A, B](acquire: StateIO[S, A])
+                       (use: A => StateIO[S, B])
+                       (release: (A, ExitCase[Throwable]) => StateIO[S, Unit]): StateIO[S, B] =
+    StateIO.liftF(StateIO.unwrap(acquire)
+      .bracketCase(a => StateIO.unwrap(use(a)))((a, ec) => StateIO.unwrap(release(a, ec))))
+
+  def async[A](k: (Either[Throwable, A] => Unit) => Unit): StateIO[S, A] =
+    StateIO.liftF(IO.async(k))
+
+  def asyncF[A](k: (Either[Throwable, A] => Unit) => StateIO[S, Unit]): StateIO[S, A] =
+    StateIO.liftF(IO.asyncF(cb => StateIO.unwrap(k(cb))))
+
+  override def map[A, B](fa: StateIO[S, A])(f: A => B): StateIO[S, B] =
+    StateIO.liftF(StateIO.unwrap(fa).map(f))
+
+  def pure[A](x: A): StateIO[S, A] = StateIO.pure(x)
+
+  def raiseError[A](e: Throwable): StateIO[S, A] = StateIO.liftF(IO.raiseError(e))
+
+  def handleErrorWith[A](fa: StateIO[S, A])(f: Throwable => StateIO[S, A]): StateIO[S, A] =
+    StateIO.liftF(StateIO.unwrap(fa).handleErrorWith(e => StateIO.unwrap(f(e))))
+
+  def tailRecM[A, B](a: A)(f: A => StateIO[S, Either[A, B]]): StateIO[S, B] =
+    StateIO.liftF(Monad[IO].tailRecM(a)(a => StateIO.unwrap(f(a))))
+}
+
+private[special] sealed abstract class StateIOInstances extends StateIOInstances0 {
+  implicit def stateIOMonadState[S]: MonadState[StateIO[S, ?], S] = new MonadState[StateIO[S, ?], S] {
+    val monad: Monad[StateIO[S, ?]] = stateIOAsync[S]
+
+    def get: StateIO[S, S] = StateIO.get[S]
+
+    def modify(f: S => S): StateIO[S, Unit] = StateIO.modify(f)
+
+    def set(s: S): StateIO[S, Unit] = StateIO.set(s)
+
+    def inspect[A](f: S => A): StateIO[S, A] = monad.map(StateIO.get)(f)
+  }
+
+  implicit def stateIOConcurrent[S](implicit ctx: ContextShift[IO]): Concurrent[StateIO[S, ?]] =
+    new StateIOAsync[S] with Concurrent[StateIO[S, ?]] {
+
+      type Fiber[A] = cats.effect.Fiber[StateIO[S, ?], A]
+
+      override def cancelable[A](k: (Either[Throwable, A] => Unit) => CancelToken[StateIO[S, ?]]): StateIO[S, A] =
+        StateIO.liftF(IO.cancelable[A](cb => StateIO.unwrap(k(cb))))
+
+      def start[A](fa: StateIO[S, A]): StateIO[S, Fiber[A]] =
+        StateIO.liftF[S, Fiber[A]](StateIO.unwrap(fa).start.map(fiberT))
+
+
+      def racePair[A, B](fa: StateIO[S, A], fb: StateIO[S, B]): StateIO[S, Either[(A, Fiber[B]), (Fiber[A], B)]] =
+        StateIO.liftF(IO.racePair(StateIO.unwrap(fa), StateIO.unwrap(fb)).map {
+          case Left((a, fib)) => Left((a, fiberT(fib)))
+          case Right((fib, b)) => Right((fiberT(fib), b))
+        })
+
+      protected def fiberT[A](fiber: cats.effect.Fiber[IO, A]): Fiber[A] =
+        Fiber(StateIO.liftF(fiber.join), StateIO.liftF(fiber.cancel))
+    }
+}
+
+private[special] sealed abstract class StateIOInstances0 {
+  implicit def stateIOAsync[S]: Async[StateIO[S, ?]] =
+    new StateIOAsync[S]{}
+}
+
+
+private[special] sealed trait StateIOImpl {
+
+  /* There be dragons */
+  // scalastyle:off null
+  private val ref: Ref[IO, Any] = Ref.unsafe[IO, Any](null)
+  // scalastyle:on null
+
+  private[special] def refInstance[S]: Ref[IO, S] = ref.asInstanceOf[Ref[IO, S]]
+}
diff --git a/special/src/main/scala/cats/mtl/special/package.scala b/special/src/main/scala/cats/mtl/special/package.scala
new file mode 100644
index 00000000..d4d0cff6
--- /dev/null
+++ b/special/src/main/scala/cats/mtl/special/package.scala
@@ -0,0 +1,5 @@
+package cats.mtl
+
+package object special {
+  type StateIO[S, A] = StateIO.Type[S, A]
+}
diff --git a/tests/src/test/scala/cats/mtl/tests/StateIOTests.scala b/tests/src/test/scala/cats/mtl/tests/StateIOTests.scala
new file mode 100644
index 00000000..2381913d
--- /dev/null
+++ b/tests/src/test/scala/cats/mtl/tests/StateIOTests.scala
@@ -0,0 +1,49 @@
+package cats
+package mtl
+package tests
+
+
+import cats.implicits._
+import cats.laws.discipline.arbitrary._
+import cats.laws.discipline._
+import cats.effect.IO
+import cats.effect.concurrent.Deferred
+import cats.effect.laws.discipline.arbitrary._
+import cats.effect.laws.util.TestInstances._
+import cats.effect.laws.util.TestContext
+import cats.laws.discipline.eq._
+import cats.mtl.laws.discipline.MonadStateTests
+import cats.mtl.special.StateIO
+import org.scalacheck._
+
+class StateIOTests extends BaseSuite {
+
+  implicit val ec = TestContext()
+
+  implicit def arbStateIO[S: Arbitrary, A: Arbitrary: Cogen]: Arbitrary[StateIO[S, A]] =
+    Arbitrary(Gen.oneOf(
+      catsEffectLawsArbitraryForIO[A].arbitrary.map(StateIO.liftF[S, A]),
+      implicitly[Arbitrary[A]].arbitrary.map(a => StateIO.get[S].as(a)),
+      implicitly[Arbitrary[A]].arbitrary.flatMap(a =>
+        implicitly[Arbitrary[S]].arbitrary.map(s => StateIO.set(s).as(a))),
+      implicitly[Arbitrary[A]].arbitrary.flatMap(a =>
+        implicitly[Arbitrary[S]].arbitrary.map(s => StateIO.modify[S](_ => s).as(a)))
+    ))
+
+
+  implicit def eqStateIO[S: Arbitrary: Eq, A: Eq](implicit ctx: TestContext, e: Eq[IO[(S, A)]]): Eq[StateIO[S, A]] =
+    Eq.by(sio => { (s: S) =>
+      Deferred.uncancelable[IO, (S, A)].flatMap(deferred =>
+        IO(sio.unsafeRunAsync(s) {
+          case Right(sa) => deferred.complete(sa).unsafeRunSync()
+          case Left(t) => throw t
+        }).flatMap(_ => deferred.get))
+    })
+
+  checkAll("StateIO[String, Int]",
+    MonadStateTests[StateIO[String, ?], String]
+      .monadState[Int])
+  checkAll("MonadState[StateIO[String, ?]]",
+    SerializableTests.serializable(MonadState[StateIO[String, ?], String]))
+
+}