diff --git a/Cargo.lock b/Cargo.lock
index 3da4aa30..1cdcf7c6 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -2166,7 +2166,7 @@ dependencies = [
 [[package]]
 name = "starknet_api"
 version = "0.12.0-dev.1"
-source = "git+https://github.com/starkware-libs/starknet-api.git?rev=6b14aaf#6b14aaf081e7ca19f66fe8d861d99c5672e9082c"
+source = "git+https://github.com/starkware-libs/starknet-api.git?rev=016ff6c#016ff6c26b75b2a2b8a46d6e7100776d5b65a59f"
 dependencies = [
  "cairo-lang-starknet-classes",
  "derive_more",
@@ -2204,6 +2204,16 @@ dependencies = [
  "validator",
 ]
 
+[[package]]
+name = "starknet_mempool"
+version = "0.0.0"
+dependencies = [
+ "assert_matches",
+ "derive_more",
+ "starknet_api",
+ "tokio",
+]
+
 [[package]]
 name = "static_assertions"
 version = "1.1.0"
diff --git a/Cargo.toml b/Cargo.toml
index e46f3652..b541ef14 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -1,6 +1,6 @@
 [workspace]
 resolver = "2"
-members = ["crates/gateway", "crates/mempool_node"]
+members = ["crates/gateway", "crates/mempool", "crates/mempool_node"]
 
 [workspace.package]
 version = "0.0.0"
@@ -21,15 +21,16 @@ as_conversions = "deny"
 [workspace.dependencies]
 assert_matches = "1.5.0"
 axum = "0.6.12"
-clap = { version = "4.3.10" }
+clap = "4.3.10"
+derive_more = "0.99"
 hyper = "1.2.0"
+papyrus_config = "0.3.0"
 pretty_assertions = "1.4.0"
 rstest = "0.17.0"
 serde = { version = "1.0.193", features = ["derive"] }
 serde_json = "1.0"
 # TODO(Arni, 1/5/2024): Use a fixed version once the StarkNet API is stable.
-starknet_api = { git = "https://github.com/starkware-libs/starknet-api.git", rev = "6b14aaf" }
-papyrus_config = "0.3.0"
+starknet_api = { git = "https://github.com/starkware-libs/starknet-api.git", rev = "016ff6c" }
 thiserror = "1.0"
 tokio = { version = "1", features = ["full"] }
 tower = "0.4.13"
diff --git a/crates/mempool/Cargo.toml b/crates/mempool/Cargo.toml
new file mode 100644
index 00000000..4beff2d2
--- /dev/null
+++ b/crates/mempool/Cargo.toml
@@ -0,0 +1,17 @@
+[package]
+name = "starknet_mempool"
+version.workspace = true
+edition.workspace = true
+repository.workspace = true
+license.workspace = true
+
+[lints]
+workspace = true
+
+[dependencies]
+derive_more.workspace = true
+starknet_api.workspace = true
+
+[dev-dependencies]
+assert_matches.workspace = true
+tokio.workspace = true
diff --git a/crates/mempool/src/lib.rs b/crates/mempool/src/lib.rs
new file mode 100644
index 00000000..b25f4f10
--- /dev/null
+++ b/crates/mempool/src/lib.rs
@@ -0,0 +1,2 @@
+// TODO: change to pub(crate) once this is used by the (not yet implemented) mempool struct.
+pub mod priority_queue;
diff --git a/crates/mempool/src/priority_queue.rs b/crates/mempool/src/priority_queue.rs
new file mode 100644
index 00000000..bc02d687
--- /dev/null
+++ b/crates/mempool/src/priority_queue.rs
@@ -0,0 +1,75 @@
+#[cfg(test)]
+#[path = "priority_queue_test.rs"]
+pub mod priority_queue_test;
+
+use std::{cmp::Ordering, collections::BTreeSet};
+
+use starknet_api::{
+    internal_transaction::InternalTransaction,
+    transaction::{DeclareTransaction, DeployAccountTransaction, InvokeTransaction, Tip},
+};
+
+// Assumption: for the MVP only one transaction from the same contract class can be in the mempool
+// at a time. When this changes, saving the transactions themselves on the queu might no longer be
+// appropriate, because we'll also need to stores transactions without indexing them. For example,
+// transactions with future nonces will need to be stored, and potentially indexed on block commits.
+#[derive(Clone, Debug, Default, derive_more::Deref, derive_more::DerefMut)]
+pub struct PriorityQueue(BTreeSet<PQTransaction>);
+
+impl PriorityQueue {
+    pub fn push(&mut self, tx: InternalTransaction) {
+        let mempool_tx = PQTransaction(tx);
+        self.insert(mempool_tx);
+    }
+
+    // Removes and returns the transaction with the highest tip.
+    pub fn pop(&mut self) -> Option<InternalTransaction> {
+        self.pop_last().map(|tx| tx.0)
+    }
+}
+
+#[derive(Clone, Debug, derive_more::Deref)]
+pub struct PQTransaction(pub InternalTransaction);
+
+impl PQTransaction {
+    fn tip(&self) -> Tip {
+        match &self.0 {
+            InternalTransaction::Declare(declare_tx) => match &declare_tx.tx {
+                DeclareTransaction::V3(tx_v3) => tx_v3.tip,
+                _ => unimplemented!(),
+            },
+            InternalTransaction::DeployAccount(deploy_account_tx) => match &deploy_account_tx.tx {
+                DeployAccountTransaction::V3(tx_v3) => tx_v3.tip,
+                _ => unimplemented!(),
+            },
+            InternalTransaction::Invoke(invoke_tx) => match &invoke_tx.tx {
+                InvokeTransaction::V3(tx_v3) => tx_v3.tip,
+                _ => unimplemented!(),
+            },
+        }
+    }
+}
+
+// Compare transactions based on their tip only, which implies `Eq`, because `tip` is uint.
+impl PartialEq for PQTransaction {
+    fn eq(&self, other: &PQTransaction) -> bool {
+        self.tip() == other.tip()
+    }
+}
+
+/// Marks PQTransaction as capable of strict equality comparisons, signaling to the compiler it
+/// adheres to equality semantics.
+// Note: this depends on the implementation of `PartialEq`, see its docstring.
+impl Eq for PQTransaction {}
+
+impl Ord for PQTransaction {
+    fn cmp(&self, other: &Self) -> Ordering {
+        self.tip().cmp(&other.tip())
+    }
+}
+
+impl PartialOrd for PQTransaction {
+    fn partial_cmp(&self, other: &Self) -> Option<Ordering> {
+        Some(self.cmp(other))
+    }
+}
diff --git a/crates/mempool/src/priority_queue_test.rs b/crates/mempool/src/priority_queue_test.rs
new file mode 100644
index 00000000..105d827f
--- /dev/null
+++ b/crates/mempool/src/priority_queue_test.rs
@@ -0,0 +1,62 @@
+use starknet_api::hash::StarkFelt;
+use starknet_api::{
+    data_availability::DataAvailabilityMode,
+    internal_transaction::{InternalInvokeTransaction, InternalTransaction},
+    transaction::{
+        InvokeTransaction, InvokeTransactionV3, ResourceBounds, ResourceBoundsMapping, Tip,
+        TransactionHash,
+    },
+};
+
+use crate::priority_queue::PriorityQueue;
+
+pub fn create_tx_for_testing(tip: Tip, tx_hash: TransactionHash) -> InternalTransaction {
+    let tx = InvokeTransactionV3 {
+        resource_bounds: ResourceBoundsMapping::try_from(vec![
+            (
+                starknet_api::transaction::Resource::L1Gas,
+                ResourceBounds::default(),
+            ),
+            (
+                starknet_api::transaction::Resource::L2Gas,
+                ResourceBounds::default(),
+            ),
+        ])
+        .expect("Resource bounds mapping has unexpected structure."),
+        signature: Default::default(),
+        nonce: Default::default(),
+        sender_address: Default::default(),
+        calldata: Default::default(),
+        nonce_data_availability_mode: DataAvailabilityMode::L1,
+        fee_data_availability_mode: DataAvailabilityMode::L1,
+        paymaster_data: Default::default(),
+        account_deployment_data: Default::default(),
+        tip,
+    };
+
+    InternalTransaction::Invoke(InternalInvokeTransaction {
+        tx: InvokeTransaction::V3(tx),
+        tx_hash,
+        only_query: false,
+    })
+}
+
+#[tokio::test]
+async fn test_priority_queue() {
+    let tx_hash_50 = TransactionHash(StarkFelt::ONE);
+    let tx_hash_100 = TransactionHash(StarkFelt::TWO);
+    let tx_hash_10 = TransactionHash(StarkFelt::THREE);
+
+    let tx_tip_50 = create_tx_for_testing(Tip(50), tx_hash_50);
+    let tx_tip_100 = create_tx_for_testing(Tip(100), tx_hash_100);
+    let tx_tip_10 = create_tx_for_testing(Tip(10), tx_hash_10);
+
+    let mut pq = PriorityQueue::default();
+    pq.push(tx_tip_50.clone());
+    pq.push(tx_tip_100.clone());
+    pq.push(tx_tip_10.clone());
+
+    assert_eq!(pq.pop().unwrap(), tx_tip_100);
+    assert_eq!(pq.pop().unwrap(), tx_tip_50);
+    assert_eq!(pq.pop().unwrap(), tx_tip_10);
+}