diff --git a/CMakeLists.txt b/CMakeLists.txt
index 25df892c..4c489f4d 100644
--- a/CMakeLists.txt
+++ b/CMakeLists.txt
@@ -67,10 +67,6 @@ option(ENABLE_COVERAGE "Build code coverage report from tests" OFF)
 option(BUILD_SERVER "Build and install neotpeer2-server" ON)
 option(BUILD_CLI "Build and install neotpeer2-cli" ON)
 option(ENABLE_TESTS "Build tests" ON)
-if(ENABLE_TESTS AND NOT BUILD_SERVER)
-    message(WARNING "Tests require the server executable, disabling them.")
-    set(ENABLE_TESTS OFF)
-endif()
 if(ENABLE_TESTS AND "${BUILD_TYPE_UPPER}" STREQUAL "DEBUG" OR "${BUILD_TYPE_UPPER}" STREQUAL "RELWITHDEBINFO")
     option(ENABLE_VALGRIND_TESTS "Build tests with valgrind" ON)
 else()
@@ -78,15 +74,14 @@ else()
 endif()
 option(ENABLE_URL "Enable URL capability" ON)
 option(ENABLE_URL_FILE "Enable the 'file' URL protocol (security advisory: allows authorized users to access local FS as the server user)" OFF)
+option(BUILD_NETOPEER2_LIB "Build netopeer2 library with sysrepo YANG module setup (functionality of setup.sh script)" OFF)
+option(NETOPEER2_LIB_SERVER "Include server main in netopeer2 library" ON)
+option(NETOPEER2_LIB_TESTS "Include server tests in netopeer2 library" ON)
 set(SSH_AUTHORIZED_KEYS_FORMAT "%h/.ssh/authorized_keys" CACHE STRING "sshd-like pattern (with '%h', '%u', '%U') for determining path to users' SSH authorized_keys file.")
 set(THREAD_COUNT 3 CACHE STRING "Number of threads accepting new sessions and handling requests")
 set(POLL_IO_TIMEOUT 10 CACHE STRING "Timeout in milliseconds of polling sessions for new data. It is also used for synchronization of low level IO such as sending a reply while a notification is being sent")
 set(YANG_MODULE_DIR "${CMAKE_INSTALL_PREFIX}/${CMAKE_INSTALL_DATADIR}/yang/modules/netopeer2" CACHE STRING "Directory where to copy the YANG modules to")
 set(DATA_DIR "${CMAKE_INSTALL_PREFIX}/${CMAKE_INSTALL_DATADIR}/netopeer2" CACHE STRING "Directory with shared netopeer2 data")
-set(NETOPEER2_LIB "no" CACHE STRING "Build netopeer2 library with the setup function or also with the full server functionality, allowed values \"no\", \"setup\", and \"server\"")
-if(NOT NETOPEER2_LIB STREQUAL "no" AND NOT NETOPEER2_LIB STREQUAL "setup" AND NOT NETOPEER2_LIB STREQUAL "server")
-    message(FATAL_ERROR "Invalid value \"${NETOPEER2_LIB}\" of NETOPEER2_LIB.")
-endif()
 
 # script options
 option(SYSREPO_SETUP "Install required modules with their default configuration into sysrepo using a script" ON)
@@ -196,6 +191,7 @@ if(ENABLE_TESTS)
     if(NOT CMOCKA_FOUND)
         message(STATUS "Disabling tests because of missing CMocka")
         set(ENABLE_TESTS OFF)
+        set(NETOPEER2_LIB_TESTS OFF)
     endif()
 endif()
 
@@ -441,8 +437,8 @@ if(BUILD_CLI)
     add_subdirectory(cli)
 endif()
 
-# netopeer2 lib
-if(NOT NETOPEER2_LIB STREQUAL "no")
+# netopeer2 lib (after tests, uses its vars)
+if(BUILD_NETOPEER2_LIB)
     add_subdirectory(lib)
 endif()
 
diff --git a/lib/CMakeLists.txt b/lib/CMakeLists.txt
index 63b25122..c66b23d6 100644
--- a/lib/CMakeLists.txt
+++ b/lib/CMakeLists.txt
@@ -8,12 +8,13 @@ include(GNUInstallDirs)
 
 # source files
 set(LIB_SRC
-    np2_sr_setup.c)
+    np2_sr_setup.c
+    ${compatsrc})
 
-if(NETOPEER2_LIB STREQUAL "server")
-    # build server main function as a library function
-    set(LIB_SRC ${LIB_SRC} $<TARGET_OBJECTS:serverobj> ${PROJECT_SOURCE_DIR}/../src/main.c ${compatsrc})
-    add_definitions(-Dmain=np2_server)
+if(NETOPEER2_LIB_SERVER)
+    # include server main function as a library function
+    add_library(netopeer2_lib_server OBJECT $<TARGET_OBJECTS:serverobj> ${PROJECT_SOURCE_DIR}/../src/main.c)
+    target_compile_definitions(netopeer2_lib_server PRIVATE main=np2_server)
     set(NETOPEER2_SERVER_FUNC "\
 /**
  * @brief netopeer2-server main function.
@@ -26,6 +27,29 @@ if(NETOPEER2_LIB STREQUAL "server")
 int np2_server(int argc, char *argv[]);")
 endif()
 
+if(NETOPEER2_LIB_TESTS)
+    # include every test as a library function
+    foreach(TEST IN LISTS TESTS)
+        add_library(netopeer2_lib_${TEST} OBJECT "${TEST_SRC_DIR}/${TEST}.c")
+        target_compile_definitions(netopeer2_lib_${TEST} PRIVATE main=np2_${TEST})
+        set(NETOPEER2_TESTS_FUNC ${NETOPEER2_TESTS_FUNC} "
+
+/**
+ * @brief netopeer2-server ${TEST}
+ *
+ * @param[in] argc Argument count, should be 0.
+ * @param[in] argv Argument list, should be NULL.
+ * @return EXIT_SUCCESS on success.
+ * @return EXIT_FAILURE on error.
+ */
+int np2_${TEST}(int argc, char *argv[]);")
+    endforeach()
+
+    add_library(netopeer2_lib_test OBJECT "${TEST_SRC_DIR}/${TEST_SRC}")
+    include_directories(${TEST_BIN_DIR})
+    include_directories(${TEST_SRC_DIR})
+endif()
+
 configure_file(${PROJECT_SOURCE_DIR}/netopeer2.h.in ${PROJECT_BINARY_DIR}/include/netopeer2.h ESCAPE_QUOTES @ONLY)
 
 # generate YANG header files
@@ -48,6 +72,15 @@ target_link_libraries(netopeer2 ${serverlibs})
 if(TARGET CURL::libcurl)
     target_link_libraries(netopeer2 CURL::libcurl)
 endif()
+if(NETOPEER2_LIB_SERVER)
+    target_link_libraries(netopeer2 netopeer2_lib_server)
+endif()
+if(NETOPEER2_LIB_TESTS)
+    foreach(TEST IN LISTS TESTS)
+        target_link_libraries(netopeer2 netopeer2_lib_${TEST})
+    endforeach()
+    target_link_libraries(netopeer2 netopeer2_lib_test)
+endif()
 
 # install
 install(TARGETS netopeer2 DESTINATION ${CMAKE_INSTALL_LIBDIR})
diff --git a/lib/netopeer2.h.in b/lib/netopeer2.h.in
index e335434c..793b56cb 100644
--- a/lib/netopeer2.h.in
+++ b/lib/netopeer2.h.in
@@ -34,4 +34,6 @@ int np2_sr_setup(const char *owner, const char *group, mode_t perm);
 
 @NETOPEER2_SERVER_FUNC@
 
+@NETOPEER2_TESTS_FUNC@
+
 #endif /* NETOPEER2_H_ */
diff --git a/tests/CMakeLists.txt b/tests/CMakeLists.txt
index 68eb1e9d..e5f0eecf 100644
--- a/tests/CMakeLists.txt
+++ b/tests/CMakeLists.txt
@@ -33,27 +33,27 @@ include_directories(${CMAKE_CURRENT_SOURCE_DIR})
 include_directories(${CMAKE_CURRENT_BINARY_DIR})
 
 # base test source
-set(test_sources "np_test.c")
+set(TEST_SRC "np_test.c")
 
 # list of all the tests
-set(tests test_rpc test_edit test_filter test_subscribe_filter test_subscribe_param test_parallel_sessions
+set(TESTS test_rpc test_edit test_filter test_subscribe_filter test_subscribe_param test_parallel_sessions
     test_candidate test_with_defaults test_nacm test_sub_ntf test_sub_ntf_advanced test_sub_ntf_filter test_error)
 
 if(CMAKE_C_FLAGS MATCHES "-fsanitize=thread")
     message(WARNING "Features which use SIGEV_THREAD are known to be broken under TSAN, disabling tests for YANG-push and confirmed commit")
 else()
     # On TSAN, SIGEV_THREAD is known to not work: https://github.com/google/sanitizers/issues/1612
-    list(APPEND tests test_yang_push test_yang_push_advanced test_confirmed_commit)
+    list(APPEND TESTS test_yang_push test_yang_push_advanced test_confirmed_commit)
 endif()
 
 # append url if supported
 if(NP2SRV_URL_CAPAB)
-    list(APPEND tests test_url)
+    list(APPEND TESTS test_url)
 endif()
 
 # build the executables
-foreach(test_name IN LISTS tests)
-    add_executable(${test_name} ${test_sources} ${test_name}.c)
+foreach(test_name IN LISTS TESTS)
+    add_executable(${test_name} ${TEST_SRC} ${test_name}.c)
     target_link_libraries(${test_name} ${CMOCKA_LIBRARIES} ${LIBNETCONF2_LIBRARIES} ${LIBYANG_LIBRARIES} ${SYSREPO_LIBRARIES} ${CMAKE_THREAD_LIBS_INIT})
     set_property(TARGET ${test_name} PROPERTY RUNTIME_OUTPUT_DIRECTORY ${CMAKE_CURRENT_BINARY_DIR})
 endforeach(test_name)
@@ -69,7 +69,7 @@ if(${CMAKE_VERSION} VERSION_GREATER "3.7")
 endif()
 
 # add tests with their attributes
-foreach(test_name IN LISTS tests)
+foreach(test_name IN LISTS TESTS)
     add_test(NAME ${test_name} COMMAND $<TARGET_FILE:${test_name}> WORKING_DIRECTORY ${CMAKE_BINARY_DIR})
     set_property(TEST ${test_name} APPEND PROPERTY ENVIRONMENT "MALLOC_CHECK_=3")
     set_property(TEST ${test_name} APPEND PROPERTY ENVIRONMENT "TEST_NAME=${test_name}")
@@ -81,7 +81,7 @@ endforeach()
 
 # valgrind tests
 if(ENABLE_VALGRIND_TESTS)
-    foreach(test_name IN LISTS tests)
+    foreach(test_name IN LISTS TESTS)
         add_test(NAME ${test_name}_valgrind COMMAND valgrind --leak-check=full --show-leak-kinds=all --error-exitcode=1 ${CMAKE_CURRENT_BINARY_DIR}/${test_name} WORKING_DIRECTORY ${CMAKE_BINARY_DIR})
         set(test_name "${test_name}_valgrind")
         set_property(TEST ${test_name} APPEND PROPERTY ENVIRONMENT "TEST_NAME=${test_name}")
@@ -92,6 +92,12 @@ if(ENABLE_VALGRIND_TESTS)
     endforeach()
 endif()
 
+# propagate vars to parent
+set(TESTS ${TESTS} PARENT_SCOPE)
+set(TEST_SRC ${TEST_SRC} PARENT_SCOPE)
+set(TEST_SRC_DIR ${CMAKE_CURRENT_SOURCE_DIR} PARENT_SCOPE)
+set(TEST_BIN_DIR ${CMAKE_CURRENT_BINARY_DIR} PARENT_SCOPE)
+
 # phony target for clearing all sysrepo test data
 add_custom_target(test_clean
     COMMAND ${TEST_KILL_SERVER_COMMAND}