diff --git a/minichain/contract.py b/minichain/contract.py
index 6723335..6f1b2f9 100644
--- a/minichain/contract.py
+++ b/minichain/contract.py
@@ -22,7 +22,7 @@ def trace_calls(self, frame, event, arg):
 import json
 logger = logging.getLogger(__name__)
 
-def _safe_exec_worker(code, globals_dict, context_dict, result_queue, gas_limit):
+def _safe_exec_worker(code, globals_dict, context_dict, child_conn, gas_limit):
     """
     Worker function to execute contract code in a separate process with gas metering.
     
@@ -62,6 +62,15 @@ def transfer_out(address, amount):
             
         globals_dict["__builtins__"]["transfer_out"] = transfer_out
 
+        def call_contract(address, payload, amount=0):
+            child_conn.send({"type": "call", "address": address, "payload": payload, "amount": amount})
+            resp = child_conn.recv()
+            if not resp.get("success"):
+                raise Exception("Cross-contract call failed: " + str(resp.get("error")))
+            return resp.get("result", True)
+            
+        globals_dict["__builtins__"]["call_contract"] = call_contract
+
         meter = GasMeter(gas_limit)
         sys.settrace(meter.trace_calls)
         
@@ -71,13 +80,13 @@ def transfer_out(address, amount):
             sys.settrace(None)
             
         gas_used = meter.initial_gas - meter.gas
-        result_queue.put({"status": "success", "storage": context_dict.get("storage"), "transfers": transfers, "gas_used": gas_used})
+        child_conn.send({"type": "return", "status": "success", "storage": context_dict.get("storage"), "transfers": transfers, "gas_used": gas_used})
     except OutOfGasException as e:
-        result_queue.put({"status": "error", "error": "Out of gas!", "gas_used": gas_limit})
+        child_conn.send({"type": "return", "status": "error", "error": "Out of gas!", "gas_used": gas_limit})
     except Exception as e:
         # If it failed for another reason, we still charge the gas it consumed up to the failure
         gas_used = gas_limit if 'meter' not in locals() else meter.initial_gas - meter.gas
-        result_queue.put({"status": "error", "error": str(e), "gas_used": gas_used})
+        child_conn.send({"type": "return", "status": "error", "error": str(e), "gas_used": gas_used})
 
 class ContractMachine:
     """
@@ -104,12 +113,15 @@ def _fail(error, gas_used=0):
         """Uniform failure result for execute()."""
         return {"success": False, "gas_used": gas_used, "error": error}
 
-    def execute(self, contract_address, sender_address, payload, amount, gas_limit):
+    def execute(self, contract_address, sender_address, payload, amount, gas_limit, depth=0):
         """
         Executes the contract code associated with the contract_address.
         Returns a dict: {"success": bool, "gas_used": int, "error": str}
         """
 
+        if depth > 10:
+            return self._fail("Max call depth exceeded", gas_limit)
+
         account = self.state.get_account(contract_address)
         if not account:
             return self._fail("Account not found")
@@ -163,23 +175,42 @@ def execute(self, contract_address, sender_address, payload, amount, gas_limit):
 
         try:
             # Execute in a subprocess with timeout
-            queue = multiprocessing.Queue()
+            import time
+            parent_conn, child_conn = multiprocessing.Pipe()
             p = multiprocessing.Process(
                 target=_safe_exec_worker,
-                args=(code, globals_for_exec, context, queue, gas_limit)
+                args=(code, globals_for_exec, context, child_conn, gas_limit)
             )
             p.start()
-            p.join(timeout=5)  # 5 seconds timeout (increased for Windows compatibility)
-
-            if p.is_alive():
-                p.kill()
-                p.join()
-                logger.error("Contract execution timed out")
-                return self._fail("Execution timed out", gas_limit)
+            
+            start_time = time.time()
+            result = None
+            
+            while p.is_alive() or parent_conn.poll():
+                if time.time() - start_time > 5:
+                    p.kill()
+                    p.join()
+                    logger.error("Contract execution timed out")
+                    return self._fail("Execution timed out", gas_limit)
+                    
+                if parent_conn.poll(0.1):
+                    msg = parent_conn.recv()
+                    if msg.get("type") == "call":
+                        # Execute internal sub-call recursively
+                        sub_result = self.state.execute_internal_call(
+                            sender=contract_address, # Caller is the current contract!
+                            receiver_address=msg["address"],
+                            amount=msg.get("amount", 0),
+                            payload=msg["payload"],
+                            gas_limit=gas_limit, # Let inner call use remaining gas
+                            depth=depth + 1
+                        )
+                        parent_conn.send(sub_result)
+                    elif msg.get("type") == "return":
+                        result = msg
+                        break
 
-            try:
-                result = queue.get(timeout=1)
-            except Exception:
+            if result is None:
                 logger.error("Contract execution crashed without result")
                 return self._fail("Crashed", gas_limit)
 
diff --git a/minichain/state.py b/minichain/state.py
index 6dc9577..4d2487d 100644
--- a/minichain/state.py
+++ b/minichain/state.py
@@ -122,20 +122,26 @@ def apply_transaction(self, tx):
     # Backwards-compatible alias for the receipt-only entry point.
     validate_and_apply = apply_transaction
 
+
     def _apply_validated_tx(self, tx):
-        """
-        Apply a transaction that has already passed verify_transaction_logic.
-        Mutates state and returns a Receipt.  Never call this directly — use
-        apply_transaction() or validate_and_apply_with_status() instead.
-        """
         sender = self.accounts[tx.sender]
-
         total_cost = tx.amount + (getattr(tx, 'gas_limit', 0) * getattr(tx, 'max_fee_per_gas', 0))
         
-        # Deduct funds and increment nonce
         sender['balance'] -= total_cost
         sender['nonce'] += 1
 
+        import copy
+        state_snapshot = copy.deepcopy(self.accounts)
+
+        def rollback_and_refund(error_message, gas_used):
+            self.accounts = copy.deepcopy(state_snapshot)
+            refund_acc = self.accounts[tx.sender]
+            refund_acc['balance'] += tx.amount
+            gas_refund = getattr(tx, 'gas_limit', 0) - gas_used
+            if gas_refund > 0:
+                refund_acc['balance'] += (gas_refund * getattr(tx, 'max_fee_per_gas', 0))
+            return Receipt(tx.tx_id, status=0, error_message=error_message, gas_used=gas_used)
+
         # LOGIC BRANCH 1: Contract Deployment
         if tx.receiver is None or tx.receiver == "":
             contract_address = self.derive_contract_address(tx.sender, tx.nonce)
@@ -146,71 +152,40 @@ def _apply_validated_tx(self, tx):
             code_gas = code_bytes * GAS_PER_BYTE
             
             if code_gas > gas_used:
-                # Restore sender balance on failure, but keep nonce incremented
-                sender['balance'] += tx.amount
-                return Receipt(tx.tx_id, status=0, error_message="Out of gas (Code size exceeded limit)", gas_used=gas_used)
+                return rollback_and_refund("Out of gas (Code size exceeded limit)", gas_used)
 
-            # Prevent redeploy collision
             existing = self.accounts.get(contract_address)
             if existing and existing.get("code"):
-                # Restore sender balance on failure, but keep nonce incremented
-                sender['balance'] += tx.amount
-                return Receipt(tx.tx_id, status=0, error_message="Contract collision", gas_used=gas_used)
+                return rollback_and_refund("Contract collision", gas_used)
 
             self.create_contract(contract_address, tx.data, initial_balance=tx.amount)
-            return Receipt(tx.tx_id, status=1, contract_address=contract_address, gas_used=gas_used)
+            gas_refund = gas_used - code_gas
+            if gas_refund > 0:
+                self.accounts[tx.sender]['balance'] += (gas_refund * getattr(tx, 'max_fee_per_gas', 0))
+            return Receipt(tx.tx_id, status=1, contract_address=contract_address, gas_used=code_gas)
 
         # LOGIC BRANCH 2: Contract Call
-        # If data is provided (non-empty), treat as contract call
         if tx.data:
-            receiver = self.accounts.get(tx.receiver)
             gas_limit = getattr(tx, 'gas_limit', 0)
-
-            # Fail if contract does not exist or has no code
-            if not receiver or not receiver.get("code"):
-                # Rollback sender balance on failure, but keep nonce incremented
-                sender['balance'] += tx.amount # Refund amount
-                return Receipt(tx.tx_id, status=0, error_message="Contract not found", gas_used=gas_limit)
-
-            # Credit contract balance
-            receiver['balance'] += tx.amount
-
-            # Undo the value transfer while keeping the nonce increment (used on failure paths).
-            def revert_transfer():
-                receiver['balance'] -= tx.amount
-                sender['balance'] += tx.amount
-
-            result = self.contract_machine.execute(
-                contract_address=tx.receiver,
-                sender_address=tx.sender,
-                payload=tx.data,
+            
+            result = self.execute_internal_call(
+                sender=tx.sender,
+                receiver_address=tx.receiver,
                 amount=tx.amount,
-                gas_limit=gas_limit
+                payload=tx.data,
+                gas_limit=gas_limit,
+                depth=0,
+                is_top_level=True
             )
 
             gas_used = result.get("gas_used", gas_limit)
-            gas_refund = gas_limit - gas_used
-            if gas_refund > 0:
-                sender['balance'] += (gas_refund * getattr(tx, 'max_fee_per_gas', 0))
 
             if not result.get("success"):
-                revert_transfer()
-                return Receipt(tx.tx_id, status=0, error_message=result.get("error", "Execution failed"), gas_used=gas_used)
-
-            transfers = result.get("transfers", [])
-            total_transferred_out = sum(t["amount"] for t in transfers)
+                return rollback_and_refund(result.get("error", "Execution failed"), gas_used)
 
-            if total_transferred_out > receiver['balance']:
-                revert_transfer()
-                return Receipt(tx.tx_id, status=0, error_message="Insufficient contract balance for transfers", gas_used=gas_used)
-
-            # Execution & transfers valid: commit state changes atomically
-            self.update_contract_storage(tx.receiver, result["storage"])
-            
-            receiver['balance'] -= total_transferred_out
-            for t in transfers:
-                target_acc = self.get_account(t["to"])
-                target_acc['balance'] += t["amount"]
+            gas_refund = gas_limit - gas_used
+            if gas_refund > 0:
+                self.accounts[tx.sender]['balance'] += (gas_refund * getattr(tx, 'max_fee_per_gas', 0))
 
             return Receipt(tx.tx_id, status=1, gas_used=gas_used)
 
@@ -220,6 +195,52 @@ def revert_transfer():
         gas_used = getattr(tx, 'gas_limit', 0)
         return Receipt(tx.tx_id, status=1, gas_used=gas_used)
 
+    def execute_internal_call(self, sender, receiver_address, amount, payload, gas_limit, depth, is_top_level=False):
+        receiver = self.accounts.get(receiver_address)
+        if not receiver or not receiver.get("code"):
+            return {"success": False, "error": "Contract not found", "gas_used": gas_limit}
+            
+        sender_acc = self.accounts[sender]
+        
+        if not is_top_level:
+            if sender_acc['balance'] < amount:
+                return {"success": False, "error": "Insufficient balance", "gas_used": gas_limit}
+            sender_acc['balance'] -= amount
+            
+        receiver['balance'] += amount
+        
+        result = self.contract_machine.execute(
+            contract_address=receiver_address,
+            sender_address=sender,
+            payload=payload,
+            amount=amount,
+            gas_limit=gas_limit,
+            depth=depth
+        )
+        
+        if not result.get("success"):
+            receiver['balance'] -= amount
+            if not is_top_level:
+                sender_acc['balance'] += amount
+            return result
+            
+        transfers = result.get("transfers", [])
+        total_transferred_out = sum(t["amount"] for t in transfers)
+        if total_transferred_out > receiver['balance']:
+            receiver['balance'] -= amount
+            if not is_top_level:
+                sender_acc['balance'] += amount
+            return {"success": False, "error": "Insufficient contract balance for transfers", "gas_used": result.get("gas_used", gas_limit)}
+            
+        self.update_contract_storage(receiver_address, result["storage"])
+        
+        receiver['balance'] -= total_transferred_out
+        for t in transfers:
+            target_acc = self.get_account(t["to"])
+            target_acc['balance'] += t["amount"]
+            
+        return result
+
     def derive_contract_address(self, sender, nonce):
         raw = f"{sender}:{nonce}".encode()
         return sha256(raw, encoder=HexEncoder).decode()[:40]
diff --git a/tests/test_contract_calls.py b/tests/test_contract_calls.py
new file mode 100644
index 0000000..7aa086e
--- /dev/null
+++ b/tests/test_contract_calls.py
@@ -0,0 +1,97 @@
+import unittest
+from nacl.signing import SigningKey
+from nacl.encoding import HexEncoder
+from minichain.state import State
+from minichain.block import Transaction
+
+class TestCrossContractCalls(unittest.TestCase):
+    def setUp(self):
+        self.state = State()
+        self.sender_sk = SigningKey.generate()
+        self.sender_pk = self.sender_sk.verify_key.encode(encoder=HexEncoder).decode()
+        
+        # Credit sender with enough balance to deploy and call
+        self.state.credit_mining_reward(self.sender_pk, 1000000)
+
+    def _sign(self, tx):
+        tx.sign(self.sender_sk)
+        return tx
+
+    def test_successful_cross_contract_call(self):
+        # 1. Deploy target contract
+        code_target = """
+msg_data = msg.get('data')
+if msg_data == 'increment':
+    storage['count'] = storage.get('count', 0) + 1
+    # Returning the current count doesn't exist natively, 
+    # but we can set the success return value in theory, but python exec doesn't return values directly. 
+    # We will just verify it updated storage!
+"""
+        deploy_tx1 = self._sign(Transaction(self.sender_pk, None, amount=0, nonce=0, data=code_target, gas_limit=50000, max_fee_per_gas=1))
+        receipt1 = self.state.apply_transaction(deploy_tx1)
+        self.assertEqual(receipt1.status, 1)
+        target_addr = receipt1.contract_address
+
+        # 2. Deploy caller contract
+        code_caller = f"""
+target = "{target_addr}"
+# Call target contract
+call_contract(target, 'increment', 0)
+storage['called'] = True
+"""
+        deploy_tx2 = self._sign(Transaction(self.sender_pk, None, amount=0, nonce=1, data=code_caller, gas_limit=50000, max_fee_per_gas=1))
+        receipt2 = self.state.apply_transaction(deploy_tx2)
+        self.assertEqual(receipt2.status, 1)
+        caller_addr = receipt2.contract_address
+
+        # 3. Call caller contract
+        call_tx = self._sign(Transaction(self.sender_pk, caller_addr, amount=0, nonce=2, data="go", gas_limit=50000, max_fee_per_gas=1))
+        receipt3 = self.state.apply_transaction(call_tx)
+        
+        self.assertEqual(receipt3.status, 1)
+        
+        # Verify Caller Storage
+        self.assertEqual(self.state.get_account(caller_addr)['storage']['called'], True)
+        
+        # Verify Target Storage
+        self.assertEqual(self.state.get_account(target_addr)['storage']['count'], 1)
+
+    def test_cross_contract_call_failure_reverts(self):
+        # 1. Deploy target contract that fails
+        code_target = """
+storage['count'] = storage.get('count', 0) + 1
+raise Exception("Deliberate failure")
+"""
+        deploy_tx1 = self._sign(Transaction(self.sender_pk, None, amount=0, nonce=0, data=code_target, gas_limit=50000, max_fee_per_gas=1))
+        receipt1 = self.state.apply_transaction(deploy_tx1)
+        self.assertEqual(receipt1.status, 1)
+        target_addr = receipt1.contract_address
+
+        # 2. Deploy caller contract
+        code_caller = f"""
+target = "{target_addr}"
+storage['called'] = True
+# This should fail and revert everything
+call_contract(target, 'increment', 0)
+"""
+        deploy_tx2 = self._sign(Transaction(self.sender_pk, None, amount=0, nonce=1, data=code_caller, gas_limit=50000, max_fee_per_gas=1))
+        receipt2 = self.state.apply_transaction(deploy_tx2)
+        self.assertEqual(receipt2.status, 1)
+        caller_addr = receipt2.contract_address
+
+        # 3. Call caller contract
+        call_tx = self._sign(Transaction(self.sender_pk, caller_addr, amount=0, nonce=2, data="go", gas_limit=50000, max_fee_per_gas=1))
+        receipt3 = self.state.apply_transaction(call_tx)
+        
+        # Must fail
+        self.assertEqual(receipt3.status, 0)
+        self.assertIn("Cross-contract call failed", receipt3.error_message)
+        
+        # Verify Caller Storage reverted (or wasn't applied)
+        self.assertEqual(self.state.get_account(caller_addr)['storage'], {})
+        
+        # Verify Target Storage reverted (or wasn't applied)
+        self.assertEqual(self.state.get_account(target_addr)['storage'], {})
+
+if __name__ == '__main__':
+    unittest.main()