diff --git a/pkg/compiler/analysis.go b/pkg/compiler/analysis.go
index c1b01e2ee..974ba34d2 100644
--- a/pkg/compiler/analysis.go
+++ b/pkg/compiler/analysis.go
@@ -16,6 +16,7 @@ var (
 		"SHA1", "Hash256", "Hash160",
 		"VerifySignature", "AppCall",
 		"FromAddress", "Equals",
+		"panic",
 	}
 )
 
@@ -69,6 +70,12 @@ func isIdentBool(ident *ast.Ident) bool {
 	return ident.Name == "true" || ident.Name == "false"
 }
 
+// isExprNil looks if the given expression is a `nil`.
+func isExprNil(e ast.Expr) bool {
+	v, ok := e.(*ast.Ident)
+	return ok && v.Name == "nil"
+}
+
 // makeBoolFromIdent creates a bool type from an *ast.Ident.
 func makeBoolFromIdent(ident *ast.Ident, tinfo *types.Info) (types.TypeAndValue, error) {
 	var b bool
diff --git a/pkg/compiler/codegen.go b/pkg/compiler/codegen.go
index 0be404597..8a9650d43 100644
--- a/pkg/compiler/codegen.go
+++ b/pkg/compiler/codegen.go
@@ -770,6 +770,17 @@ func (c *codegen) convertBuiltin(expr *ast.CallExpr) {
 			emitOpcode(c.prog.BinWriter, opcode.XSWAP)
 			emitOpcode(c.prog.BinWriter, opcode.APPEND)
 		}
+	case "panic":
+		arg := expr.Args[0]
+		if isExprNil(arg) {
+			emitOpcode(c.prog.BinWriter, opcode.DROP)
+			emitOpcode(c.prog.BinWriter, opcode.THROW)
+		} else if isStringType(c.typeInfo.Types[arg].Type) {
+			emitSyscall(c.prog.BinWriter, "Neo.Runtime.Log")
+			emitOpcode(c.prog.BinWriter, opcode.THROW)
+		} else {
+			c.prog.Err = errors.New("panic should have string or nil argument")
+		}
 	case "SHA256":
 		emitOpcode(c.prog.BinWriter, opcode.SHA256)
 	case "SHA1":
diff --git a/pkg/compiler/panic_test.go b/pkg/compiler/panic_test.go
new file mode 100644
index 000000000..f6e3b4d59
--- /dev/null
+++ b/pkg/compiler/panic_test.go
@@ -0,0 +1,71 @@
+package compiler_test
+
+import (
+	"fmt"
+	"math/big"
+	"testing"
+
+	"github.com/CityOfZion/neo-go/pkg/vm"
+	"github.com/stretchr/testify/require"
+)
+
+func TestPanic(t *testing.T) {
+	t.Run("no panic", func(t *testing.T) {
+		src := getPanicSource(false, `"execution fault"`)
+		eval(t, src, big.NewInt(7))
+	})
+
+	t.Run("panic with message", func(t *testing.T) {
+		var logs []string
+		src := getPanicSource(true, `"execution fault"`)
+		v := vmAndCompile(t, src)
+		v.RegisterInteropGetter(logGetter(&logs))
+
+		require.Error(t, v.Run())
+		require.True(t, v.HasFailed())
+		require.Equal(t, 1, len(logs))
+		require.Equal(t, "execution fault", logs[0])
+	})
+
+	t.Run("panic with nil", func(t *testing.T) {
+		var logs []string
+		src := getPanicSource(true, `nil`)
+		v := vmAndCompile(t, src)
+		v.RegisterInteropGetter(logGetter(&logs))
+
+		require.Error(t, v.Run())
+		require.True(t, v.HasFailed())
+		require.Equal(t, 0, len(logs))
+	})
+}
+
+func getPanicSource(need bool, message string) string {
+	return fmt.Sprintf(`
+	package main
+	func Main() int {
+		needPanic := %#v
+		if needPanic {
+			panic(%s)
+			return 5
+		}
+		return 7
+	}
+	`, need, message)
+}
+
+func logGetter(logs *[]string) vm.InteropGetterFunc {
+	logID := vm.InteropNameToID([]byte("Neo.Runtime.Log"))
+	return func(id uint32) *vm.InteropFuncPrice {
+		if id != logID {
+			return nil
+		}
+
+		return &vm.InteropFuncPrice{
+			Func: func(v *vm.VM) error {
+				msg := string(v.Estack().Pop().Bytes())
+				*logs = append(*logs, msg)
+				return nil
+			},
+		}
+	}
+}