diff --git a/.github/workflows/actions.yaml b/.github/workflows/actions.yaml
index 40446c4..3253b62 100644
--- a/.github/workflows/actions.yaml
+++ b/.github/workflows/actions.yaml
@@ -73,6 +73,7 @@ jobs:
           'variables',
           'math_lib',
           'imports',
+          'library',
           'predicate',
         ]
 
diff --git a/docs/src/SUMMARY.md b/docs/src/SUMMARY.md
index 1d22e5e..6f446d5 100644
--- a/docs/src/SUMMARY.md
+++ b/docs/src/SUMMARY.md
@@ -24,5 +24,6 @@
 - [Storage Map](./storage-map.md)
 - [Vector](./vector.md)
 - [Base Asset](./base-asset.md)
+- [Library](./library.md)
 - [Predicate](./predicate.md)
 - [SRC20](./src20.md)
diff --git a/docs/src/library.md b/docs/src/library.md
new file mode 100644
index 0000000..169936d
--- /dev/null
+++ b/docs/src/library.md
@@ -0,0 +1,8 @@
+# Library
+
+Example on how to create a library in Sway and how to use it in your Smart Contract.
+This example also showcases how to use different types of imports in Sway depending on external library or library from the same project.
+
+```sway
+{{#include ../examples/library/src/main.sw}}
+```
diff --git a/examples/library/.gitignore b/examples/library/.gitignore
new file mode 100644
index 0000000..77d3844
--- /dev/null
+++ b/examples/library/.gitignore
@@ -0,0 +1,2 @@
+out
+target
diff --git a/examples/library/Forc.lock b/examples/library/Forc.lock
new file mode 100644
index 0000000..df1470d
--- /dev/null
+++ b/examples/library/Forc.lock
@@ -0,0 +1,13 @@
+[[package]]
+name = "core"
+source = "path+from-root-0DAF035ABF1276AD"
+
+[[package]]
+name = "library"
+source = "member"
+dependencies = ["std"]
+
+[[package]]
+name = "std"
+source = "git+https://github.com/fuellabs/sway?rev#4c2c38430264472221dd4c68142013d819843b01"
+dependencies = ["core"]
diff --git a/examples/library/Forc.toml b/examples/library/Forc.toml
new file mode 100644
index 0000000..05b70f9
--- /dev/null
+++ b/examples/library/Forc.toml
@@ -0,0 +1,7 @@
+[project]
+authors = ["Nazeeh Vahora"]
+entry = "main.sw"
+license = "Apache-2.0"
+name = "library"
+
+[dependencies]
diff --git a/examples/library/src/main.sw b/examples/library/src/main.sw
new file mode 100644
index 0000000..154cd07
--- /dev/null
+++ b/examples/library/src/main.sw
@@ -0,0 +1,60 @@
+contract;
+
+// 1. Importing within the same project
+// Using "mod" keyword, you can import an internal library that has been defined in this project.
+mod sqrt_lib;
+
+// It is a good practice to import in ABI
+// It is also a good practice to define events and custom errors using this way
+
+// Using "use" keyword imports in a library. This method is used to import an external lilbray that is defined outside the main `src` directory.
+// use sqrt_lib::math_sqrt;
+// $ tree
+// .
+// ├── my_project
+// │   ├── Cargo.toml
+// │   ├── Forc.toml
+// │   └─── src
+// │       └── main.sw
+// │
+// └── external_lib
+//     ├── Cargo.toml
+//     ├── Forc.toml
+//     └─── src
+//         └── lib.sw
+// External library is outside the src directory of our project. Thus, it needs to be added as a dependency in the Forc.toml of our project.
+// [dependencies]
+// external_lib = { path = "../external_lib" }
+
+
+// 2. Importing the standard library
+// The standard library consists of
+//   a. language primitives
+//   b. blockchain contextual operations
+//   c. native asset management
+//   etc.
+// Functions like msg.sender(), block.timestamp(),etc are found here https://github.com/FuelLabs/sway/tree/master/sway-lib-std
+// use std::{
+//     identity::*,
+//     address::*,
+//     constants::*,
+//     auth::msg_sender,
+// };
+
+
+// 3. Importing from a different project
+// If any library is not listed as a dependency, but present in forc.toml, you can use it as below.
+// Math libraries copied from https://github.com/sway-libs/concentrated-liquidity/
+// use math_lib::full_math::*;
+
+use ::sqrt_lib::math_sqrt;
+
+abi TestMath {
+    fn test_square_root(x: u256) -> u256;
+}
+
+impl TestMath for Contract {
+    fn test_square_root(x: u256) -> u256 {
+        math_sqrt(x)
+    }
+}
\ No newline at end of file
diff --git a/examples/library/src/sqrt_lib.sw b/examples/library/src/sqrt_lib.sw
new file mode 100644
index 0000000..87d5de9
--- /dev/null
+++ b/examples/library/src/sqrt_lib.sw
@@ -0,0 +1,16 @@
+library;
+
+pub fn math_sqrt(y: u256) -> u256 {
+    let mut z: u256 = 0;
+    if y > 3 {
+        z = y;
+        let mut x = y / 2 + 1;
+        while x < z {
+            z = x;
+            x = (y / x + x) / 2;
+        }
+    } else if y != 0 {
+        z = 1;
+    }
+    z
+}