diff --git a/pkg/compiler/analysis.go b/pkg/compiler/analysis.go
index 1c1dab8bd..4905490c3 100644
--- a/pkg/compiler/analysis.go
+++ b/pkg/compiler/analysis.go
@@ -48,6 +48,7 @@ func (c *codegen) traverseGlobals() int {
 		}
 		emit.Instruction(c.prog.BinWriter, opcode.INITSSLOT, []byte{byte(n)})
 		c.ForEachFile(c.convertGlobals)
+		c.ForEachFile(c.convertInitFuncs)
 	}
 	return n
 }
diff --git a/pkg/compiler/codegen.go b/pkg/compiler/codegen.go
index fc34b7b04..59bcd9020 100644
--- a/pkg/compiler/codegen.go
+++ b/pkg/compiler/codegen.go
@@ -275,24 +275,48 @@ func (c *codegen) convertGlobals(f *ast.File, _ *types.Package) {
 	})
 }
 
+func isInitFunc(decl *ast.FuncDecl) bool {
+	return decl.Name.Name == "init" && decl.Recv == nil &&
+		decl.Type.Params.NumFields() == 0 &&
+		decl.Type.Results.NumFields() == 0
+}
+
+func (c *codegen) convertInitFuncs(f *ast.File, pkg *types.Package) {
+	ast.Inspect(f, func(node ast.Node) bool {
+		switch n := node.(type) {
+		case *ast.FuncDecl:
+			if isInitFunc(n) {
+				c.convertFuncDecl(f, n, pkg)
+			}
+		case *ast.GenDecl:
+			return false
+		}
+		return true
+	})
+}
+
 func (c *codegen) convertFuncDecl(file ast.Node, decl *ast.FuncDecl, pkg *types.Package) {
 	var (
 		f            *funcScope
 		ok, isLambda bool
 	)
-
-	f, ok = c.funcs[c.getFuncNameFromDecl("", decl)]
-	if ok {
-		// If this function is a syscall or builtin we will not convert it to bytecode.
-		if isSyscall(f) || isCustomBuiltin(f) {
-			return
-		}
-		c.setLabel(f.label)
-	} else if f, ok = c.lambda[c.getIdentName("", decl.Name.Name)]; ok {
-		isLambda = ok
-		c.setLabel(f.label)
+	isInit := isInitFunc(decl)
+	if isInit {
+		f = c.newFuncScope(decl, c.newLabel())
 	} else {
-		f = c.newFunc(decl)
+		f, ok = c.funcs[c.getFuncNameFromDecl("", decl)]
+		if ok {
+			// If this function is a syscall or builtin we will not convert it to bytecode.
+			if isSyscall(f) || isCustomBuiltin(f) {
+				return
+			}
+			c.setLabel(f.label)
+		} else if f, ok = c.lambda[c.getIdentName("", decl.Name.Name)]; ok {
+			isLambda = ok
+			c.setLabel(f.label)
+		} else {
+			f = c.newFunc(decl)
+		}
 	}
 
 	f.rng.Start = uint16(c.prog.Len())
@@ -342,7 +366,7 @@ func (c *codegen) convertFuncDecl(file ast.Node, decl *ast.FuncDecl, pkg *types.
 	// If we have reached the end of the function without encountering `return` statement,
 	// we should clean alt.stack manually.
 	// This can be the case with void and named-return functions.
-	if !lastStmtIsReturn(decl) {
+	if !isInit && !lastStmtIsReturn(decl) {
 		c.saveSequencePoint(decl.Body)
 		emit.Opcode(c.prog.BinWriter, opcode.RET)
 	}
@@ -1488,7 +1512,7 @@ func (c *codegen) compile(info *buildInfo, pkg *loader.PackageInfo) error {
 				// Don't convert the function if it's not used. This will save a lot
 				// of bytecode space.
 				name := c.getFuncNameFromDecl(pkg.Path(), n)
-				if funUsage.funcUsed(name) && !isInteropPath(pkg.Path()) {
+				if !isInitFunc(n) && funUsage.funcUsed(name) && !isInteropPath(pkg.Path()) {
 					c.convertFuncDecl(f, n, pkg)
 				}
 			}
diff --git a/pkg/compiler/init_test.go b/pkg/compiler/init_test.go
new file mode 100644
index 000000000..878e87ab4
--- /dev/null
+++ b/pkg/compiler/init_test.go
@@ -0,0 +1,62 @@
+package compiler_test
+
+import (
+	"math/big"
+	"testing"
+)
+
+func TestInit(t *testing.T) {
+	t.Run("Simple", func(t *testing.T) {
+		src := `package foo
+		var a int
+		func init() {
+			a = 42
+		}
+		func Main() int {
+			return a
+		}`
+		eval(t, src, big.NewInt(42))
+	})
+	t.Run("Multi", func(t *testing.T) {
+		src := `package foo
+		var m = map[int]int{}
+		var a = 2
+		func init() {
+			m[1] = 11
+		}
+		func init() {
+			a = 1
+			m[3] = 30
+		}
+		func Main() int {
+			return m[1] + m[3] + a
+		}`
+		eval(t, src, big.NewInt(42))
+	})
+	t.Run("WithCall", func(t *testing.T) {
+		src := `package foo
+		var m = map[int]int{}
+		func init() {
+			initMap(m)
+		}
+		func initMap(m map[int]int) {
+			m[11] = 42
+		}
+		func Main() int {
+			return m[11]
+		}`
+		eval(t, src, big.NewInt(42))
+	})
+	t.Run("InvalidSignature", func(t *testing.T) {
+		src := `package foo
+		type Foo int
+		var a int
+		func (f Foo) init() {
+			a = 2
+		}
+		func Main() int {
+			return a
+		}`
+		eval(t, src, big.NewInt(0))
+	})
+}