diff --git a/pkg/compiler/analysis.go b/pkg/compiler/analysis.go
index 2440ac2dc..cc89fddbf 100644
--- a/pkg/compiler/analysis.go
+++ b/pkg/compiler/analysis.go
@@ -241,34 +241,86 @@ func (c *codegen) fillDocumentInfo() {
 	})
 }
 
+// analyzeFuncUsage traverses all code and returns map with functions
+// which should be present in the emitted code.
+// This is done using BFS starting from exported functions or
+// function used in variable declarations (graph edge corresponds to
+// function being called in declaration).
 func (c *codegen) analyzeFuncUsage() funcUsage {
-	usage := funcUsage{}
+	type declPair struct {
+		decl      *ast.FuncDecl
+		importMap map[string]string
+		path      string
+	}
 
+	// nodeCache contains top-level function declarations .
+	nodeCache := make(map[string]declPair)
+	diff := funcUsage{}
 	c.ForEachFile(func(f *ast.File, pkg *types.Package) {
+		var pkgPath string
 		isMain := pkg == c.mainPkg.Pkg
+		if !isMain {
+			pkgPath = pkg.Path()
+		}
+
 		ast.Inspect(f, func(node ast.Node) bool {
 			switch n := node.(type) {
 			case *ast.CallExpr:
+				// functions invoked in variable declarations in imported packages
+				// are marked as used.
+				var name string
 				switch t := n.Fun.(type) {
 				case *ast.Ident:
-					var pkgPath string
-					if !isMain {
-						pkgPath = pkg.Path()
-					}
-					usage[c.getIdentName(pkgPath, t.Name)] = true
+					name = c.getIdentName(pkgPath, t.Name)
 				case *ast.SelectorExpr:
-					name, _ := c.getFuncNameFromSelector(t)
-					usage[name] = true
+					name, _ = c.getFuncNameFromSelector(t)
+				default:
+					return true
 				}
+				diff[name] = true
 			case *ast.FuncDecl:
+				name := c.getFuncNameFromDecl(pkgPath, n)
+
 				// exported functions are always assumed to be used
-				if isMain && n.Name.IsExported() {
-					usage[c.getFuncNameFromDecl("", n)] = true
+				if isMain && n.Name.IsExported() || isInitFunc(n) || isDeployFunc(n) {
+					diff[name] = true
 				}
+				nodeCache[name] = declPair{n, c.importMap, pkgPath}
+				return false // will be processed in the next stage
 			}
 			return true
 		})
 	})
+
+	usage := funcUsage{}
+	for len(diff) != 0 {
+		nextDiff := funcUsage{}
+		for name := range diff {
+			fd, ok := nodeCache[name]
+			if !ok || usage[name] {
+				continue
+			}
+			usage[name] = true
+
+			old := c.importMap
+			c.importMap = fd.importMap
+			ast.Inspect(fd.decl, func(node ast.Node) bool {
+				switch n := node.(type) {
+				case *ast.CallExpr:
+					switch t := n.Fun.(type) {
+					case *ast.Ident:
+						nextDiff[c.getIdentName(fd.path, t.Name)] = true
+					case *ast.SelectorExpr:
+						name, _ := c.getFuncNameFromSelector(t)
+						nextDiff[name] = true
+					}
+				}
+				return true
+			})
+			c.importMap = old
+		}
+		diff = nextDiff
+	}
 	return usage
 }
 
diff --git a/pkg/compiler/compiler_test.go b/pkg/compiler/compiler_test.go
index b2f00490e..07ace1e07 100644
--- a/pkg/compiler/compiler_test.go
+++ b/pkg/compiler/compiler_test.go
@@ -180,6 +180,40 @@ func TestEventWarnings(t *testing.T) {
 		})
 		require.NoError(t, err)
 	})
+	t.Run("event in imported package", func(t *testing.T) {
+		t.Run("unused", func(t *testing.T) {
+			src := `package foo
+			import "github.com/nspcc-dev/neo-go/pkg/compiler/testdata/notify"
+			func Main() int {
+				return notify.Value
+			}`
+
+			_, di, err := compiler.CompileWithDebugInfo("eventTest", strings.NewReader(src))
+			require.NoError(t, err)
+
+			_, err = compiler.CreateManifest(di, &compiler.Options{NoEventsCheck: true})
+			require.NoError(t, err)
+		})
+		t.Run("used", func(t *testing.T) {
+			src := `package foo
+			import "github.com/nspcc-dev/neo-go/pkg/compiler/testdata/notify"
+			func Main() int {
+				notify.EmitEvent()
+				return 42
+			}`
+
+			_, di, err := compiler.CompileWithDebugInfo("eventTest", strings.NewReader(src))
+			require.NoError(t, err)
+
+			_, err = compiler.CreateManifest(di, &compiler.Options{})
+			require.Error(t, err)
+
+			_, err = compiler.CreateManifest(di, &compiler.Options{
+				ContractEvents: []manifest.Event{{Name: "Event"}},
+			})
+			require.NoError(t, err)
+		})
+	})
 }
 
 func TestNotifyInVerify(t *testing.T) {
diff --git a/pkg/compiler/function_call_test.go b/pkg/compiler/function_call_test.go
index fb118cffd..a256eb47c 100644
--- a/pkg/compiler/function_call_test.go
+++ b/pkg/compiler/function_call_test.go
@@ -324,3 +324,30 @@ func TestFunctionUnusedParameters(t *testing.T) {
 	}`
 	eval(t, src, big.NewInt(101))
 }
+
+func TestUnusedFunctions(t *testing.T) {
+	t.Run("only variable", func(t *testing.T) {
+		src := `package foo
+		import "github.com/nspcc-dev/neo-go/pkg/compiler/testdata/nestedcall"
+		func Main() int {
+			return nestedcall.X
+		}`
+
+		b, err := compiler.Compile("foo", strings.NewReader(src))
+		require.NoError(t, err)
+		require.Equal(t, 3, len(b)) // PUSHINT8 (42) + RET
+		eval(t, src, big.NewInt(42))
+	})
+	t.Run("imported function", func(t *testing.T) {
+		// Check that import map is set correctly during package traversal.
+		src := `package foo
+		import inner "github.com/nspcc-dev/neo-go/pkg/compiler/testdata/nestedcall"
+		func Main() int {
+			return inner.N()
+		}`
+
+		_, err := compiler.Compile("foo", strings.NewReader(src))
+		require.NoError(t, err)
+		eval(t, src, big.NewInt(65))
+	})
+}
diff --git a/pkg/compiler/testdata/nestedcall/call.go b/pkg/compiler/testdata/nestedcall/call.go
new file mode 100644
index 000000000..bd05c6f21
--- /dev/null
+++ b/pkg/compiler/testdata/nestedcall/call.go
@@ -0,0 +1,30 @@
+package nestedcall
+
+import "github.com/nspcc-dev/neo-go/pkg/compiler/testdata/nestedcall/inner"
+
+// X is what we use.
+const X = 42
+
+// N returns inner.A().
+func N() int {
+	return inner.Return65()
+}
+
+// F calls G.
+func F() int {
+	a := 1
+	return G() + a
+}
+
+// G calls x and returns y().
+func G() int {
+	x()
+	z := 3
+	return y() + z
+}
+
+func x() {}
+func y() int {
+	tmp := 10
+	return tmp
+}
diff --git a/pkg/compiler/testdata/nestedcall/inner/call.go b/pkg/compiler/testdata/nestedcall/inner/call.go
new file mode 100644
index 000000000..d15dd572a
--- /dev/null
+++ b/pkg/compiler/testdata/nestedcall/inner/call.go
@@ -0,0 +1,6 @@
+package inner
+
+// Return65 returns 65.
+func Return65() int {
+	return 65
+}
diff --git a/pkg/compiler/testdata/notify/event.go b/pkg/compiler/testdata/notify/event.go
new file mode 100644
index 000000000..ec1c1b9ae
--- /dev/null
+++ b/pkg/compiler/testdata/notify/event.go
@@ -0,0 +1,15 @@
+package notify
+
+import "github.com/nspcc-dev/neo-go/pkg/interop/runtime"
+
+// Value is the constant we use.
+const Value = 42
+
+// EmitEvent emits some event.
+func EmitEvent() {
+	emitPrivate()
+}
+
+func emitPrivate() {
+	runtime.Notify("Event")
+}