diff --git a/cmd/api-server/main.go b/cmd/api-server/main.go
index 8ad5b8c425c..99354160f68 100644
--- a/cmd/api-server/main.go
+++ b/cmd/api-server/main.go
@@ -383,10 +383,11 @@ func main() {
 		envs[pair[0]] += pair[1]
 	}
 
-	nc, err := newNATSConnection(cfg)
+	nc, err := newNATSEncodedConnection(cfg)
 	if err != nil {
 		exitOnError("Creating NATS connection", err)
 	}
+
 	eventBus := bus.NewNATSBus(nc)
 	if cfg.Trace {
 		eventBus.TraceEvents()
@@ -764,7 +765,19 @@ func parseDefaultExecutors(cfg *config.Config) (executors []testkube.ExecutorDet
 	return executors, nil
 }
 
-func newNATSConnection(cfg *config.Config) (*nats.EncodedConn, error) {
+func newNATSEncodedConnection(cfg *config.Config) (*nats.EncodedConn, error) {
+	// if embedded NATS server is enabled, we'll replace connection with one to the embedded server
+	if cfg.NatsEmbedded {
+		_, nc, err := event.ServerWithConnection(cfg.NatsEmbeddedStoreDir)
+		if err != nil {
+			return nil, err
+		}
+
+		log.DefaultLogger.Info("Started embedded NATS server")
+
+		return nats.NewEncodedConn(nc, nats.JSON_ENCODER)
+	}
+
 	return bus.NewNATSEncodedConnection(bus.ConnectionConfig{
 		NatsURI:            cfg.NatsURI,
 		NatsSecure:         cfg.NatsSecure,
diff --git a/internal/config/config.go b/internal/config/config.go
index 77f0921a0bd..42dcb32c539 100644
--- a/internal/config/config.go
+++ b/internal/config/config.go
@@ -37,6 +37,8 @@ type Config struct {
 	ScrapperEnabled                             bool          `envconfig:"SCRAPPERENABLED" default:"false"`
 	LogsBucket                                  string        `envconfig:"LOGS_BUCKET" default:""`
 	LogsStorage                                 string        `envconfig:"LOGS_STORAGE" default:""`
+	NatsEmbedded                                bool          `envconfig:"NATS_EMBEDDED" default:"false"`
+	NatsEmbeddedStoreDir                        string        `envconfig:"NATS_EMBEDDED_STORE_DIR" default:"/app/nats"`
 	NatsURI                                     string        `envconfig:"NATS_URI" default:"nats://localhost:4222"`
 	NatsSecure                                  bool          `envconfig:"NATS_SECURE" default:"false"`
 	NatsSkipVerify                              bool          `envconfig:"NATS_SKIP_VERIFY" default:"false"`
diff --git a/pkg/event/server.go b/pkg/event/server.go
new file mode 100644
index 00000000000..ed078a8cbbc
--- /dev/null
+++ b/pkg/event/server.go
@@ -0,0 +1,52 @@
+package event
+
+import (
+	"fmt"
+	"time"
+
+	"github.com/nats-io/nats-server/v2/server"
+	"github.com/nats-io/nats.go"
+)
+
+const natsConnectionTimeout = 10 * time.Second
+
+var ErrNatsEmbeddedServerTimeout = fmt.Errorf("server not ready for connections in " + natsConnectionTimeout.String())
+
+// ServerWithConnection starts NATS server with embedded JetStream, wait for readines and returns connection to it
+func ServerWithConnection(dir string) (*server.Server, *nats.Conn, error) {
+	opts := &server.Options{
+		JetStream:             true,
+		Port:                  4222,
+		Host:                  "localhost",
+		StoreDir:              dir,
+		NoLog:                 false,
+		NoSigs:                true,
+		MaxControlLine:        4096,
+		DisableShortFirstPing: true,
+	}
+
+	// Initialize new server with options
+	ns, err := server.NewServer(opts)
+	if err != nil {
+		return nil, nil, err
+	}
+
+	// Start the server via goroutine
+	ns.Start()
+	ns.EnableJetStream(&server.JetStreamConfig{
+		StoreDir: dir,
+	})
+
+	// Wait for server to be ready for connections - this one will block
+	if !ns.ReadyForConnections(natsConnectionTimeout) {
+		return nil, nil, ErrNatsEmbeddedServerTimeout
+	}
+
+	// Connect to server
+	nc, err := nats.Connect(ns.ClientURL())
+	if err != nil {
+		return nil, nil, err
+	}
+
+	return ns, nc, nil
+}
diff --git a/pkg/event/server_test.go b/pkg/event/server_test.go
new file mode 100644
index 00000000000..719fe99440b
--- /dev/null
+++ b/pkg/event/server_test.go
@@ -0,0 +1,25 @@
+package event
+
+import (
+	"testing"
+
+	"github.com/nats-io/nats.go"
+	"github.com/stretchr/testify/assert"
+)
+
+func TestEmbeddedServer_Start(t *testing.T) {
+
+	ns, nc, err := ServerWithConnection(t.TempDir())
+	assert.NoError(t, err)
+
+	nc.Subscribe("events", func(msg *nats.Msg) {
+		t.Logf("Received message: %s", string(msg.Data))
+		ns.Shutdown()
+	})
+
+	nc.Publish("events", []byte("test"))
+
+	t.Log("Waiting for shutdown")
+	ns.WaitForShutdown()
+
+}