diff --git a/src/c2wasm/index.ts b/src/c2wasm/index.ts
index d74363e..ace5a0b 100644
--- a/src/c2wasm/index.ts
+++ b/src/c2wasm/index.ts
@@ -27,7 +27,7 @@ export async function buildCDir(
   // Reading all files in the directory tree
   let fileObjects: any[];
   try {
-    fileObjects = readFiles(dirPath);
+    fileObjects = readFiles(dirPath).filter((file) => file.type === "c");
   } catch (error: any) {
     console.error(`Error reading files: ${error}`);
     process.exit(1);
diff --git a/src/commands.ts b/src/commands.ts
index babf841..e6fefe7 100644
--- a/src/commands.ts
+++ b/src/commands.ts
@@ -22,6 +22,41 @@ const copyFiles = (source: string, destination: string) => {
   });
 };
 
+const downloadCHeaderFiles = async (
+  compileHost: string,
+  projectDir: string
+): Promise<void> => {
+  const headerNames = [
+    "error",
+    "extern",
+    "hookapi",
+    "macro",
+    "sfcodes",
+    "tts",
+  ] as const;
+  const response = await axios.get(
+    `${compileHost.replace(/\/+$/, "")}/api/header-files`
+  );
+  const headerFiles = response.data;
+  if (!headerFiles || typeof headerFiles !== "object") {
+    throw Error("Invalid header files response from the compile server");
+  }
+
+  const files = headerNames.map((name) => {
+    const content = headerFiles[name];
+    if (typeof content !== "string" || content.length === 0) {
+      throw Error(`Missing or invalid header file: ${name}.h`);
+    }
+    return { filename: `${name}.h`, content };
+  });
+
+  const includeDir = path.join(projectDir, "contracts", "include");
+  fs.mkdirSync(includeDir, { recursive: true });
+  files.forEach(({ filename, content }) => {
+    fs.writeFileSync(path.join(includeDir, filename), content, "utf-8");
+  });
+};
+
 const clean = (filePath: string, outputPath?: string): string => {
   const tsCode = fs.readFileSync(filePath, "utf-8");
   const importPattern = /^\s*import\s+.*?;\s*$/gm;
@@ -76,15 +111,28 @@ export const initCommand = async (type: "c" | "js", folderName: string) => {
         type === "c" ? "CHooks" : "JSHooks"
       } project in ${newProjectDir}`
     );
-    try {
-      const projectEnv = dotenv.config({
-        path: path.join(newProjectDir, ".env"),
-      });
-      if (!projectEnv.parsed) {
-        console.log("No .env file found in the project template.");
-        process.exit(1);
+    const projectEnv = dotenv.config({
+      path: path.join(newProjectDir, ".env"),
+    });
+    if (!projectEnv.parsed) {
+      console.log("No .env file found in the project template.");
+      process.exit(1);
+    }
+    const env = projectEnv.parsed;
+    if (type === "c") {
+      const compileHost = env.HOOKS_COMPILE_HOST;
+      if (!compileHost) {
+        throw Error("HOOKS_COMPILE_HOST is not set in the project template");
+      }
+      try {
+        await downloadCHeaderFiles(compileHost, newProjectDir);
+        console.log("Header files saved to contracts/include.");
+      } catch (error) {
+        console.error("Error downloading header files:", error);
+        throw error;
       }
-      const env = projectEnv.parsed;
+    }
+    try {
       const aliceResponse = await axios.post(
         `https://${env.XRPLD_WSS.replace("wss://", "")}/newcreds`
       );
diff --git a/src/init/c/package.json b/src/init/c/package.json
index b9c6e5c..37ca6b3 100644
--- a/src/init/c/package.json
+++ b/src/init/c/package.json
@@ -4,7 +4,7 @@
   "description": "",
   "main": "src/index.ts",
   "scripts": {
-    "build": "hooks-cli compile-c contracts build/",
+    "build": "hooks-cli compile-c contracts build/ --headers contracts/include",
     "deploy": "yarn run build && ts-node src/index.ts"
   },
   "author": {
diff --git a/test/integration/c2wasm.test.ts b/test/integration/c2wasm.test.ts
new file mode 100644
index 0000000..e4c1df6
--- /dev/null
+++ b/test/integration/c2wasm.test.ts
@@ -0,0 +1,49 @@
+import axios from "axios";
+import * as fs from "fs";
+import * as path from "path";
+import { buildCDir } from "../../src/c2wasm";
+import { decodeBinary } from "../../src/2bytes/decodeBinary";
+
+jest.mock("axios");
+jest.mock("../../src/2bytes/decodeBinary");
+
+describe("C directory builds", () => {
+  const projectDir = path.join(process.cwd(), "test-c-build-project");
+  const contractsDir = path.join(projectDir, "contracts");
+  const includeDir = path.join(contractsDir, "include");
+  const outDir = path.join(projectDir, "build");
+
+  beforeEach(() => {
+    jest.clearAllMocks();
+    fs.mkdirSync(includeDir, { recursive: true });
+    fs.writeFileSync(path.join(contractsDir, "base.c"), "int64_t hook() {}\n");
+    fs.writeFileSync(path.join(includeDir, "macro.h"), "#define TEST 1\n");
+  });
+
+  afterEach(() => {
+    fs.rmSync(projectDir, { recursive: true, force: true });
+  });
+
+  it("does not compile headers found below the source directory", async () => {
+    (decodeBinary as jest.Mock).mockResolvedValue(new Uint8Array([0]));
+    (axios.post as jest.Mock).mockResolvedValue({
+      data: {
+        success: true,
+        message: "",
+        output: "binary",
+        tasks: [],
+      },
+    });
+
+    await buildCDir(contractsDir, outDir, includeDir, false);
+
+    expect(axios.post).toHaveBeenCalledTimes(1);
+    const body = JSON.parse((axios.post as jest.Mock).mock.calls[0][1]);
+    expect(body.files).toEqual([
+      expect.objectContaining({ name: "base.c", type: "c" }),
+    ]);
+    expect(body.headers).toEqual([
+      expect.objectContaining({ name: "macro.h", type: "h" }),
+    ]);
+  });
+});
diff --git a/test/integration/init.test.ts b/test/integration/init.test.ts
index 7912262..ad10dd8 100644
--- a/test/integration/init.test.ts
+++ b/test/integration/init.test.ts
@@ -38,6 +38,8 @@ describe("Init Tests", () => {
     const tempPathJS = path.join(__dirname, "..", "..", "src", "init", "js");
 
     beforeEach(() => {
+      jest.clearAllMocks();
+
       // Clean up any existing directories
       if (fs.existsSync(projectPathC)) {
         fs.rmSync(projectPathC, { recursive: true, force: true });
@@ -58,8 +60,16 @@ describe("Init Tests", () => {
     });
 
     it("should initialize a new C project", async () => {
-      // Mock axios response
-      jest.mock("axios");
+      const headerFiles = {
+        error: "#define INTERNAL_ERROR -2\n",
+        extern: "extern int64_t accept(uint32_t, uint32_t, int64_t);\n",
+        hookapi: '#include "macro.h"\n',
+        macro: "#define SBUF(str) (uint32_t)(str), sizeof(str)\n",
+        sfcodes: "#define sfAccount ((8U << 16U) + 1U)\n",
+        tts: "#define ttINVOKE 99\n",
+      };
+
+      (axios.get as jest.Mock).mockResolvedValue({ data: headerFiles });
       (axios.post as jest.Mock).mockResolvedValue({
         data: {
           code: "tesSUCCESS",
@@ -97,6 +107,30 @@ describe("Init Tests", () => {
       expect(env?.XRPLD_WSS).toBeDefined();
       expect(env?.XRPLD_WSS).toEqual(originalEnv?.XRPLD_WSS);
       expect(env?.ALICE_SEED).toBeDefined();
+
+      expect(axios.get).toHaveBeenCalledWith(
+        `${originalEnv?.HOOKS_COMPILE_HOST}/api/header-files`
+      );
+
+      const includePath = path.join(projectPathC, "contracts", "include");
+      expect(fs.statSync(includePath).isDirectory()).toBe(true);
+      expect(fs.readdirSync(includePath).sort()).toEqual(
+        Object.keys(headerFiles)
+          .map((name) => `${name}.h`)
+          .sort()
+      );
+      Object.entries(headerFiles).forEach(([name, content]) => {
+        expect(
+          fs.readFileSync(path.join(includePath, `${name}.h`), "utf-8")
+        ).toBe(content);
+      });
+
+      const generatedPackage = JSON.parse(
+        fs.readFileSync(path.join(projectPathC, "package.json"), "utf-8")
+      );
+      expect(generatedPackage.scripts.build).toBe(
+        "hooks-cli compile-c contracts build/ --headers contracts/include"
+      );
     });
 
     it("should initialize a new JS project", async () => {
@@ -110,6 +144,8 @@ describe("Init Tests", () => {
 
       await expect(initCommand("js", folderNameJS)).resolves.not.toThrow();
 
+      expect(axios.get).not.toHaveBeenCalled();
+
       // Verify that the directory was created
       expect(fs.existsSync(projectPathJS)).toBe(true);
 
@@ -140,6 +176,27 @@ describe("Init Tests", () => {
       expect(env?.ALICE_SEED).toBeDefined();
     });
 
+    it("should fail C initialization when a required header is missing", async () => {
+      (axios.get as jest.Mock).mockResolvedValue({
+        data: {
+          error: "error",
+          extern: "extern",
+          hookapi: "hookapi",
+          macro: "macro",
+          sfcodes: "sfcodes",
+        },
+      });
+
+      await expect(initCommand("c", folderNameC)).rejects.toThrow(
+        "Missing or invalid header file: tts.h"
+      );
+
+      expect(axios.post).not.toHaveBeenCalled();
+      expect(
+        fs.existsSync(path.join(projectPathC, "contracts", "include"))
+      ).toBe(false);
+    });
+
     it("should handle existing directory error", async () => {
       // Create the directory beforehand to simulate existing directory
       fs.mkdirSync(projectPathC, { recursive: true });