diff --git a/tests/nanocontracts/test_reentrancy.py b/tests/nanocontracts/test_reentrancy.py
new file mode 100644
index 000000000..c5f94df81
--- /dev/null
+++ b/tests/nanocontracts/test_reentrancy.py
@@ -0,0 +1,214 @@
+from hathor.nanocontracts import Blueprint, Context, NCFail, public
+from hathor.nanocontracts.types import Amount, ContractId, NCAction, NCDepositAction, TokenUid
+from tests.nanocontracts.blueprints.unittest import BlueprintTestCase
+
+HTR_TOKEN_UID = TokenUid(b'\0')
+
+
+class InsufficientBalance(NCFail):
+    pass
+
+
+class MyBlueprint(Blueprint):
+    # I used dict[bytes, int] for two reasons:
+    # 1. `bytes` works for both Address and ContractId
+    # 2. int allows negative values
+    balances: dict[bytes, int]
+
+    @public
+    def initialize(self, ctx: Context) -> None:
+        pass
+
+    @public(allow_deposit=True)
+    def deposit(self, ctx: Context) -> None:
+        address = ctx.address
+        action = ctx.get_single_action(HTR_TOKEN_UID)
+        assert isinstance(action, NCDepositAction)
+        amount = action.amount
+
+        if address not in self.balances:
+            self.balances[address] = amount
+        else:
+            self.balances[address] += amount
+
+    @public
+    def transfer_to(self, ctx: Context, amount: Amount, contract: ContractId, method: str) -> None:
+        address = ctx.address
+        if amount > self.balances.get(address, 0):
+            raise InsufficientBalance('insufficient balance')
+
+        actions: list[NCAction] = [NCDepositAction(token_uid=HTR_TOKEN_UID, amount=amount)]
+        # This contract is vulnerable to reentrancy attack because it is transfering before reducing the balance.
+        # Another issue is that it doesn't assert self.balances[address] >= 0.
+        self.syscall.call_public_method(contract, method, actions=actions)
+        self.balances[address] -= amount
+
+    @public
+    def fixed_transfer_to(self, ctx: Context, amount: Amount, contract: ContractId, method: str) -> None:
+        address = ctx.address
+        if amount > self.balances.get(address, 0):
+            raise InsufficientBalance('insufficient balance')
+
+        actions: list[NCAction] = [NCDepositAction(token_uid=HTR_TOKEN_UID, amount=amount)]
+        # This contract is not vulnerable to reentrancy attack. The only difference relies on the moment the balance is
+        # updated.
+        self.balances[address] -= amount
+        self.syscall.call_public_method(contract, method, actions=actions)
+
+
+class AttackerBlueprint(Blueprint):
+    target: ContractId
+    amount: Amount
+    n_calls: int
+    counter: int
+
+    @public(allow_deposit=True)
+    def initialize(self, ctx: Context, target: ContractId, n_calls: int) -> None:
+        self.target = target
+        self.n_calls = n_calls
+        self.counter = 0
+
+        action = ctx.get_single_action(HTR_TOKEN_UID)
+        assert isinstance(action, NCDepositAction)
+        self.amount = Amount(action.amount)
+
+        actions: list[NCAction] = [NCDepositAction(token_uid=HTR_TOKEN_UID, amount=self.amount)]
+        self.syscall.call_public_method(target, 'deposit', actions=actions)
+
+    @public(allow_deposit=True)
+    def nop(self, ctx: Context) -> None:
+        pass
+
+    @public(allow_deposit=True)
+    def attack(self, ctx: Context) -> None:
+        self._run_attack('transfer_to')
+
+    @public(allow_deposit=True)
+    def attack_fail(self, ctx: Context) -> None:
+        self._run_attack('fixed_transfer_to')
+
+    def _run_attack(self, method: str) -> None:
+        if self.counter >= self.n_calls:
+            return
+
+        self.counter += 1
+        self.syscall.call_public_method(
+            self.target,
+            method,
+            actions=[],
+            amount=self.amount,
+            contract=self.syscall.get_contract_id(),
+            method='attack',
+        )
+
+
+class NCReentrancyTestCase(BlueprintTestCase):
+    def setUp(self) -> None:
+        super().setUp()
+
+        self.target_blueprint_id = self.gen_random_blueprint_id()
+        self.attacker_blueprint_id = self.gen_random_blueprint_id()
+
+        self.nc_catalog.blueprints[self.target_blueprint_id] = MyBlueprint
+        self.nc_catalog.blueprints[self.attacker_blueprint_id] = AttackerBlueprint
+
+        self.nc_target_id = self.gen_random_contract_id()
+        self.nc_attacker_id = self.gen_random_contract_id()
+
+        tx = self.get_genesis_tx()
+
+        self.address1 = self.gen_random_address()
+        self.address2 = self.gen_random_address()
+
+        ctx = Context([], tx, self.address1, timestamp=0)
+        self.runner.create_contract(self.nc_target_id, self.target_blueprint_id, ctx)
+
+        self.n_calls = 15
+        ctx = Context([NCDepositAction(token_uid=HTR_TOKEN_UID, amount=50)], tx, self.address2, timestamp=0)
+        self.runner.create_contract(
+            self.nc_attacker_id,
+            self.attacker_blueprint_id,
+            ctx,
+            target=self.nc_target_id,
+            n_calls=self.n_calls,
+        )
+
+        # Address1 deposits 1.00 HTR
+        actions: list[NCAction] = [NCDepositAction(token_uid=HTR_TOKEN_UID, amount=1_00)]
+        ctx = Context(actions, tx, self.address1, timestamp=0)
+        self.runner.call_public_method(self.nc_target_id, 'deposit', ctx)
+
+        # Address2 deposits 100.00 HTR
+        actions = [NCDepositAction(token_uid=HTR_TOKEN_UID, amount=100_00)]
+        ctx = Context(actions, tx, self.address2, timestamp=0)
+        self.runner.call_public_method(self.nc_target_id, 'deposit', ctx)
+
+        self.target_storage = self.runner.get_storage(self.nc_target_id)
+        self.attacker_storage = self.runner.get_storage(self.nc_attacker_id)
+
+        assert self.target_storage.get_balance(HTR_TOKEN_UID).value == 10_150
+        assert self.attacker_storage.get_balance(HTR_TOKEN_UID).value == 0
+
+    def test_basics(self) -> None:
+        tx = self.get_genesis_tx()
+
+        # Address1 sends 0.30 HTR to attacker contract.
+        ctx = Context([], tx, self.address1, timestamp=0)
+        self.runner.call_public_method(
+            self.nc_target_id,
+            'transfer_to',
+            ctx,
+            amount=30,
+            contract=self.nc_attacker_id,
+            method='nop',
+        )
+
+        assert self.target_storage.get_balance(HTR_TOKEN_UID).value == 10_150 - 30
+        assert self.attacker_storage.get_balance(HTR_TOKEN_UID).value == 0 + 30
+
+        # Address1 tries to send 0.80 HTR but it fails due to insufficient balance.
+        # This misleads developers into thinking the safety mechanism is working.
+        with self.assertRaises(InsufficientBalance):
+            ctx = Context([], tx, self.address1, timestamp=0)
+            self.runner.call_public_method(
+                self.nc_target_id,
+                'transfer_to',
+                ctx,
+                amount=80,
+                contract=self.nc_attacker_id,
+                method='nop',
+            )
+
+        assert self.target_storage.get_balance(HTR_TOKEN_UID).value == 10_150 - 30
+        assert self.attacker_storage.get_balance(HTR_TOKEN_UID).value == 0 + 30
+
+    def test_attack_succeed(self) -> None:
+        tx = self.get_genesis_tx()
+
+        # Attacker contract has a balance of 0.50 HTR in the target contract.
+        # It tries to extract more than 0.50 HTR and succeeds.
+        ctx = Context([], tx, self.address1, timestamp=0)
+        self.runner.call_public_method(
+            self.nc_attacker_id,
+            'attack',
+            ctx,
+        )
+
+        assert self.target_storage.get_balance(HTR_TOKEN_UID).value == 10_150 - self.n_calls * 50
+        assert self.attacker_storage.get_balance(HTR_TOKEN_UID).value == self.n_calls * 50
+
+    def test_attack_fail(self) -> None:
+        tx = self.get_genesis_tx()
+
+        # Attacker contract has a balance of 0.50 HTR in the target contract.
+        # It tries to extract more than 0.50 HTR and fails.
+        with self.assertRaises(InsufficientBalance):
+            ctx = Context([], tx, self.address1, timestamp=0)
+            self.runner.call_public_method(
+                self.nc_attacker_id,
+                'attack_fail',
+                ctx,
+            )
+
+        assert self.target_storage.get_balance(HTR_TOKEN_UID).value == 10_150
+        assert self.attacker_storage.get_balance(HTR_TOKEN_UID).value == 0