diff --git a/src/context.c b/src/context.c
new file mode 100644
index 0000000..c2eba9b
--- /dev/null
+++ b/src/context.c
@@ -0,0 +1,291 @@
+/**
+ * @file context.c
+ * @author Radek Krejci <rkrejci@cesnet.cz>
+ * @brief Context implementations
+ *
+ * Copyright (c) 2015 - 2018 CESNET, z.s.p.o.
+ *
+ * This source code is licensed under BSD 3-Clause License (the "License").
+ * You may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *     https://opensource.org/licenses/BSD-3-Clause
+ */
+
+#include <errno.h>
+#include <unistd.h>
+
+#include "libyang.h"
+#include "common.h"
+#include "context.h"
+
+#define LY_INTERNAL_MODS_COUNT 0 /* TODO 6 when parser available */
+
+#define IETF_YANG_METADATA_PATH "../models/ietf-yang-metadata@2016-08-05.h"
+#define YANG_PATH "../models/yang@2017-02-20.h"
+#define IETF_INET_TYPES_PATH "../models/ietf-inet-types@2013-07-15.h"
+#define IETF_YANG_TYPES_PATH "../models/ietf-yang-types@2013-07-15.h"
+#define IETF_DATASTORES "../models/ietf-datastores@2017-08-17.h"
+#define IETF_YANG_LIB_PATH "../models/ietf-yang-library@2018-01-17.h"
+#define IETF_YANG_LIB_REV "2018-01-17"
+
+#if LY_INTERNAL_MODS_COUNT
+#include IETF_YANG_METADATA_PATH
+#include YANG_PATH
+#include IETF_INET_TYPES_PATH
+#include IETF_YANG_TYPES_PATH
+#include IETF_DATASTORES
+#include IETF_YANG_LIB_PATH
+#endif
+
+static struct internal_modules_s {
+    const char *name;
+    const char *revision;
+    const char *data;
+    uint8_t implemented;
+    LYS_INFORMAT format;
+} internal_modules[LY_INTERNAL_MODS_COUNT] = {
+#if LY_INTERNAL_MODS_COUNT
+    {"ietf-yang-metadata", "2016-08-05", (const char*)ietf_yang_metadata_2016_08_05_yin, 0, LYS_IN_YIN},
+    {"yang", "2017-02-20", (const char*)yang_2017_02_20_yin, 1, LYS_IN_YIN},
+    {"ietf-inet-types", "2013-07-15", (const char*)ietf_inet_types_2013_07_15_yin, 0, LYS_IN_YIN},
+    {"ietf-yang-types", "2013-07-15", (const char*)ietf_yang_types_2013_07_15_yin, 0, LYS_IN_YIN},
+    /* ietf-datastores and ietf-yang-library must be right here at the end of the list! */
+    {"ietf-datastores", "2017-08-17", (const char*)ietf_datastores_2017_08_17_yin, 0, LYS_IN_YIN},
+    {"ietf-yang-library", IETF_YANG_LIB_REV, (const char*)ietf_yang_library_2018_01_17_yin, 1, LYS_IN_YIN}
+#endif
+};
+
+API LY_ERR
+ly_ctx_set_searchdir(struct ly_ctx *ctx, const char *search_dir)
+{
+    char *new_dir = NULL;
+    LY_ERR rc = LY_ESYS;
+
+    LY_CHECK_ARG_RET(ctx, ctx, LY_EINVAL);
+
+    if (search_dir) {
+        LY_CHECK_ERR_GOTO(access(search_dir, R_OK | X_OK),
+                          LOGERR(ctx, LY_ESYS, "Unable to use search directory \"%s\" (%s)", search_dir, strerror(errno)),
+                          cleanup);
+        new_dir = realpath(search_dir, NULL);
+        LY_CHECK_ERR_GOTO(!new_dir,
+                          LOGERR(ctx, LY_ESYS, "realpath() call failed for \"%s\" (%s).", search_dir, strerror(errno)),
+                          cleanup);
+        if (ly_set_add(ctx->search_paths, new_dir) == -1) {
+            free(new_dir);
+            return LY_EMEM;
+        }
+
+        rc = LY_SUCCESS;
+    } else {
+        /* consider that no change is not actually an error */
+        return LY_SUCCESS;
+    }
+
+cleanup:
+    free(new_dir);
+    return rc;
+}
+
+API const char * const *
+ly_ctx_get_searchdirs(const struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx, NULL);
+    return (const char * const *)ctx->search_paths.objs;
+}
+
+API LY_ERR
+ly_ctx_unset_searchdirs(struct ly_ctx *ctx, int index)
+{
+    if (!ctx->search_paths.number) {
+        return LY_SUCCESS;
+    }
+
+    if (index >= 0) {
+        /* remove specific search directory */
+        return ly_set_rm_index(ctx->search_paths, index);
+    } else {
+        /* remove them all */
+        for (; ctx->search_paths.number; ctx->search_paths.number--) {
+            free(ctx->search_paths.objs[ctx->search_paths.number - 1]);
+        }
+        free(ctx->search_paths.objs);
+        memset(&ctx->search_paths, 0, sizeof ctx->search_paths);
+    }
+
+    return LY_SUCCESS;
+}
+
+API LY_ERR
+ly_ctx_new(const char *search_dir, int options, struct ly_ctx **new_ctx)
+{
+    struct ly_ctx *ctx = NULL;
+    struct lys_module *module;
+    char *search_dir_list;
+    char *sep, *dir;
+    LY_ERR rc = LY_SUCCESS;
+    int i;
+
+    ctx = calloc(1, sizeof *ctx);
+    LY_CHECK_ERR_RETURN(!ctx, LOGMEM(NULL), LY_EMEM);
+
+    /* dictionary */
+    lydict_init(&ctx->dict);
+
+    /* plugins */
+    ly_load_plugins();
+
+    /* initialize thread-specific key */
+    while ((i = pthread_key_create(&ctx->errlist_key, ly_err_free)) == EAGAIN);
+
+    /* models list */
+    ctx->flags = options;
+    if (search_dir) {
+        search_dir_list = strdup(search_dir);
+        LY_CHECK_ERR_GOTO(!search_dir_list, LOGMEM(NULL); rc = LY_EMEM, error);
+
+        for (dir = search_dir_list; (sep = strchr(dir, ':')) != NULL && rc == LY_SUCCESS; dir = sep + 1) {
+            *sep = 0;
+            rc = ly_ctx_set_searchdir(ctx, dir);
+        }
+        if (*dir && rc == LY_SUCCESS) {
+            rc = ly_ctx_set_searchdir(ctx, dir);
+        }
+        free(search_dir_list);
+
+        /* If ly_ctx_set_searchdir() failed, the error is already logged. Just exit */
+        if (rc != LY_SUCCESS) {
+            goto error;
+        }
+    }
+    ctx->module_set_id = 1;
+
+    /* load internal modules */
+    for (i = 0; i < (options & LY_CTX_NOYANGLIBRARY) ? LY_INTERNAL_MODS_COUNT - 2 : LY_INTERNAL_MODS_COUNT; i++) {
+        module = (struct lys_module *)lys_parse_mem(ctx, internal_modules[i].data, internal_modules[i].format);
+        LY_CHECK_GOTO(!module, error);
+        module->parsed->implemented = internal_modules[i].implemented;
+    }
+
+    *new_ctx = ctx;
+    return rc;
+
+error:
+    ly_ctx_destroy(ctx, NULL);
+    return rc;
+}
+
+API void
+ly_ctx_set_disable_searchdirs(struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+    ctx->flags |= LY_CTX_DISABLE_SEARCHDIRS;
+}
+
+API void
+ly_ctx_unset_disable_searchdirs(struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+    ctx->flags &= ~LY_CTX_DISABLE_SEARCHDIRS;
+}
+
+API void
+ly_ctx_set_disable_searchdir_cwd(struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+    ctx->flags |= LY_CTX_DISABLE_SEARCHDIR_CWD;
+}
+
+API void
+ly_ctx_unset_disable_searchdir_cwd(struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+    ctx->flags &= ~LY_CTX_DISABLE_SEARCHDIR_CWD;
+}
+
+API void
+ly_ctx_set_prefer_searchdirs(struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+    ctx->flags |= LY_CTX_PREFER_SEARCHDIRS;
+}
+
+API void
+ly_ctx_unset_prefer_searchdirs(struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+    ctx->flags &= ~LY_CTX_PREFER_SEARCHDIRS;
+}
+
+API void
+ly_ctx_set_allimplemented(struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+    ctx->flags |= LY_CTX_ALLIMPLEMENTED;
+}
+
+API void
+ly_ctx_unset_allimplemented(struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+    ctx->flags &= ~LY_CTX_ALLIMPLEMENTED;
+}
+
+API void
+ly_ctx_set_trusted(struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+    ctx->flags |= LY_CTX_TRUSTED;
+}
+
+API void
+ly_ctx_unset_trusted(struct ly_ctx *ctx)
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+    ctx->flags &= ~LY_CTX_TRUSTED;
+}
+
+API int
+ly_ctx_get_options(struct ly_ctx *ctx)
+{
+    return ctx->flags;
+}
+
+API uint16_t
+ly_ctx_get_module_set_id(const struct ly_ctx *ctx)
+{
+    return ctx->module_set_id;
+}
+
+API void
+ly_ctx_destroy(struct ly_ctx *ctx, void (*private_destructor)(const struct lys_node *node, void *priv))
+{
+    LY_CHECK_ARG_RET(ctx, ctx,);
+
+    /* models list */
+    for (; ctx->list.number; ctx->list.number--) {
+        /* remove the module */
+#if 0 /* TODO when parser implemented */
+        lys_free(ctx->list[ctx->list.number - 1], private_destructor, 1, 0);
+#endif
+    }
+    free(ctx->list.objs);
+
+    /* search paths list */
+    ly_ctx_unset_searchdirs(ctx, -1);
+
+    /* clean the error list */
+    ly_err_clean(ctx, 0);
+    pthread_key_delete(ctx->errlist_key);
+
+    /* dictionary */
+    lydict_clean(&ctx->dict);
+
+#if 0 /* TODO when plugins implemented */
+    /* plugins - will be removed only if this is the last context */
+    ly_clean_plugins();
+#endif
+
+    free(ctx);
+}