diff --git a/boards/xtensa/esp32/Kconfig.defconfig b/boards/xtensa/esp32/Kconfig.defconfig
index 12f2179cf9a..1765615d7b5 100644
--- a/boards/xtensa/esp32/Kconfig.defconfig
+++ b/boards/xtensa/esp32/Kconfig.defconfig
@@ -16,3 +16,20 @@ config LOG_DETECT_MISSED_STRDUP
 	default n
 
 endif
+
+if BT
+
+config HEAP_MEM_POOL_SIZE
+	default 16384
+
+config ENTROPY_GENERATOR
+	default y
+
+config DYNAMIC_INTERRUPTS
+	default y
+
+choice BT_HCI_BUS_TYPE
+	default BT_ESP32
+endchoice
+
+endif # BT
diff --git a/drivers/bluetooth/hci/CMakeLists.txt b/drivers/bluetooth/hci/CMakeLists.txt
index e8ac3e6558e..ea87556d796 100644
--- a/drivers/bluetooth/hci/CMakeLists.txt
+++ b/drivers/bluetooth/hci/CMakeLists.txt
@@ -7,3 +7,4 @@ zephyr_sources_ifdef(CONFIG_BT_RPMSG	rpmsg.c)
 zephyr_sources_ifdef(CONFIG_BT_RPMSG_NRF53	rpmsg_nrf53.c)
 zephyr_sources_ifdef(CONFIG_BT_STM32_IPM	ipm_stm32wb.c)
 zephyr_sources_ifdef(CONFIG_BT_USERCHAN userchan.c)
+zephyr_sources_ifdef(CONFIG_BT_ESP32    hci_esp32.c)
diff --git a/drivers/bluetooth/hci/Kconfig b/drivers/bluetooth/hci/Kconfig
index 2e7ec5e9781..9ad2c301842 100644
--- a/drivers/bluetooth/hci/Kconfig
+++ b/drivers/bluetooth/hci/Kconfig
@@ -63,6 +63,11 @@ config BT_USERCHAN
 	  The Bluetooth adapter must be powered off in order for Zephyr to
 	  be able to use it.
 
+config BT_ESP32
+	bool "ESP32 HCI driver"
+	help
+	  Espressif HCI bluetooth interface
+
 config BT_NO_DRIVER
 	bool "No default HCI driver"
 	help
@@ -128,7 +133,7 @@ endif # BT_RPMSG_NRF53
 config BT_DRIVER_QUIRK_NO_AUTO_DLE
 	bool "Host auto-initiated Data Length Update quirk"
 	depends on BT_AUTO_DATA_LEN_UPDATE
-	default y if BT_RPMSG_NRF53
+	default y if BT_RPMSG_NRF53 || BT_ESP32
 	help
 	  Enable the quirk wherein BT Host stack will auto-initiate Data Length
 	  Update procedure for new connections for controllers that do not
diff --git a/drivers/bluetooth/hci/hci_esp32.c b/drivers/bluetooth/hci/hci_esp32.c
new file mode 100644
index 00000000000..ca5f8b46b0d
--- /dev/null
+++ b/drivers/bluetooth/hci/hci_esp32.c
@@ -0,0 +1,313 @@
+/*
+ * Copyright (c) 2021 Espressif Systems (Shanghai) Co., Ltd.
+ *
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+#define LOG_MODULE_NAME bt_hci_driver_esp32
+#include "common/log.h"
+
+#include <init.h>
+#include <sys/byteorder.h>
+
+#include <drivers/bluetooth/hci_driver.h>
+
+#include <esp_bt.h>
+
+#define HCI_CMD                 0x01
+#define HCI_ACL                 0x02
+#define HCI_SCO                 0x03
+#define HCI_EVT                 0x04
+#define HCI_ISO                 0x05
+
+#define HCI_BT_ESP32_TIMEOUT K_MSEC(2000)
+
+static K_SEM_DEFINE(hci_send_sem, 1, 1);
+
+static bool is_hci_event_discardable(const uint8_t *evt_data)
+{
+	uint8_t evt_type = evt_data[0];
+
+	switch (evt_type) {
+#if defined(CONFIG_BT_BREDR)
+	case BT_HCI_EVT_INQUIRY_RESULT_WITH_RSSI:
+	case BT_HCI_EVT_EXTENDED_INQUIRY_RESULT:
+		return true;
+#endif
+	case BT_HCI_EVT_LE_META_EVENT: {
+		uint8_t subevt_type = evt_data[sizeof(struct bt_hci_evt_hdr)];
+
+		switch (subevt_type) {
+		case BT_HCI_EVT_LE_ADVERTISING_REPORT:
+			return true;
+		case BT_HCI_EVT_LE_EXT_ADVERTISING_REPORT:
+			return true;
+		default:
+			return false;
+		}
+	}
+	default:
+		return false;
+	}
+}
+
+static struct net_buf *bt_esp_evt_recv(uint8_t *data, size_t remaining)
+{
+	bool discardable = false;
+	struct bt_hci_evt_hdr hdr;
+	struct net_buf *buf;
+
+	if (remaining < sizeof(hdr)) {
+		BT_ERR("Not enough data for event header");
+		return NULL;
+	}
+
+	discardable = is_hci_event_discardable(data);
+
+	memcpy((void *)&hdr, data, sizeof(hdr));
+	data += sizeof(hdr);
+	remaining -= sizeof(hdr);
+
+	if (remaining != hdr.len) {
+		BT_ERR("Event payload length is not correct");
+		return NULL;
+	}
+	BT_DBG("len %u", hdr.len);
+
+	buf = bt_buf_get_evt(hdr.evt, discardable, K_NO_WAIT);
+	if (!buf) {
+		if (discardable) {
+			BT_DBG("Discardable buffer pool full, ignoring event");
+		} else {
+			BT_ERR("No available event buffers!");
+		}
+		return buf;
+	}
+
+	net_buf_add_mem(buf, &hdr, sizeof(hdr));
+	net_buf_add_mem(buf, data, remaining);
+
+	return buf;
+}
+
+static struct net_buf *bt_esp_acl_recv(uint8_t *data, size_t remaining)
+{
+	struct bt_hci_acl_hdr hdr;
+	struct net_buf *buf;
+
+	if (remaining < sizeof(hdr)) {
+		BT_ERR("Not enough data for ACL header");
+		return NULL;
+	}
+
+	buf = bt_buf_get_rx(BT_BUF_ACL_IN, K_NO_WAIT);
+	if (buf) {
+		memcpy((void *)&hdr, data, sizeof(hdr));
+		data += sizeof(hdr);
+		remaining -= sizeof(hdr);
+
+		net_buf_add_mem(buf, &hdr, sizeof(hdr));
+	} else {
+		BT_ERR("No available ACL buffers!");
+		return NULL;
+	}
+
+	if (remaining != sys_le16_to_cpu(hdr.len)) {
+		BT_ERR("ACL payload length is not correct");
+		net_buf_unref(buf);
+		return NULL;
+	}
+
+	BT_DBG("len %u", remaining);
+	net_buf_add_mem(buf, data, remaining);
+
+	return buf;
+}
+
+static struct net_buf *bt_esp_iso_recv(uint8_t *data, size_t remaining)
+{
+	struct bt_hci_iso_hdr hdr;
+	struct net_buf *buf;
+
+	if (remaining < sizeof(hdr)) {
+		BT_ERR("Not enough data for ISO header");
+		return NULL;
+	}
+
+	buf = bt_buf_get_rx(BT_BUF_ISO_IN, K_NO_WAIT);
+	if (buf) {
+		memcpy((void *)&hdr, data, sizeof(hdr));
+		data += sizeof(hdr);
+		remaining -= sizeof(hdr);
+
+		net_buf_add_mem(buf, &hdr, sizeof(hdr));
+	} else {
+		BT_ERR("No available ISO buffers!");
+		return NULL;
+	}
+
+	if (remaining != sys_le16_to_cpu(hdr.len)) {
+		BT_ERR("ISO payload length is not correct");
+		net_buf_unref(buf);
+		return NULL;
+	}
+
+	BT_DBG("len %zu", remaining);
+	net_buf_add_mem(buf, data, remaining);
+
+	return buf;
+}
+
+static int hci_esp_host_rcv_pkt(uint8_t *data, uint16_t len)
+{
+	uint8_t pkt_indicator;
+	struct net_buf *buf = NULL;
+	size_t remaining = len;
+
+	BT_HEXDUMP_DBG(data, len, "host packet data:");
+
+	pkt_indicator = *data++;
+	remaining -= sizeof(pkt_indicator);
+
+	switch (pkt_indicator) {
+	case HCI_EVT:
+		buf = bt_esp_evt_recv(data, remaining);
+		break;
+
+	case HCI_ACL:
+		buf = bt_esp_acl_recv(data, remaining);
+		break;
+
+	case HCI_SCO:
+		buf = bt_esp_iso_recv(data, remaining);
+		break;
+
+	default:
+		BT_ERR("Unknown HCI type %u", pkt_indicator);
+		return -1;
+	}
+
+	if (buf) {
+		BT_DBG("Calling bt_recv(%p)", buf);
+
+		bt_recv(buf);
+	}
+
+	return 0;
+}
+
+static void hci_esp_controller_rcv_pkt_ready(void)
+{
+	k_sem_give(&hci_send_sem);
+}
+
+static esp_vhci_host_callback_t vhci_host_cb = {
+	hci_esp_controller_rcv_pkt_ready,
+	hci_esp_host_rcv_pkt
+};
+
+static int bt_esp32_send(struct net_buf *buf)
+{
+	int err = 0;
+	uint8_t pkt_indicator;
+
+	BT_DBG("buf %p type %u len %u", buf, bt_buf_get_type(buf), buf->len);
+
+	switch (bt_buf_get_type(buf)) {
+	case BT_BUF_ACL_OUT:
+		pkt_indicator = HCI_ACL;
+		break;
+	case BT_BUF_CMD:
+		pkt_indicator = HCI_CMD;
+		break;
+	case BT_BUF_ISO_OUT:
+		pkt_indicator = HCI_ISO;
+		break;
+	default:
+		BT_ERR("Unknown type %u", bt_buf_get_type(buf));
+		goto done;
+	}
+	net_buf_push_u8(buf, pkt_indicator);
+
+	BT_HEXDUMP_DBG(buf->data, buf->len, "Final HCI buffer:");
+
+	if (!esp_vhci_host_check_send_available()) {
+		BT_WARN("Controller not ready to receive packets");
+	}
+
+	if (k_sem_take(&hci_send_sem, HCI_BT_ESP32_TIMEOUT) == 0) {
+		esp_vhci_host_send_packet(buf->data, buf->len);
+	} else {
+		BT_ERR("Send packet timeout error");
+		err = -ETIMEDOUT;
+	}
+
+done:
+	net_buf_unref(buf);
+	k_sem_give(&hci_send_sem);
+
+	return err;
+}
+
+static int bt_esp32_ble_init(void)
+{
+	int ret;
+	esp_bt_controller_config_t bt_cfg = BT_CONTROLLER_INIT_CONFIG_DEFAULT();
+
+#ifdef CONFIG_BT_BREDR
+	esp_bt_mode_t mode = ESP_BT_MODE_BTDM;
+#else
+	esp_bt_mode_t mode = ESP_BT_MODE_BLE;
+#endif
+
+	ret = esp_bt_controller_init(&bt_cfg);
+	if (ret) {
+		BT_ERR("Bluetooth controller init failed %d", ret);
+		return ret;
+	}
+
+	ret = esp_bt_controller_enable(mode);
+	if (ret) {
+		BT_ERR("Bluetooth controller enable failed: %d", ret);
+		return ret;
+	}
+
+	esp_vhci_host_register_callback(&vhci_host_cb);
+
+	return 0;
+}
+
+static int bt_esp32_open(void)
+{
+	int err;
+
+	err = bt_esp32_ble_init();
+	if (err) {
+		return err;
+	}
+
+	BT_DBG("ESP32 BT started");
+
+	return 0;
+}
+
+static const struct bt_hci_driver drv = {
+	.name           = "BT ESP32",
+	.open           = bt_esp32_open,
+	.send           = bt_esp32_send,
+	.bus            = BT_HCI_DRIVER_BUS_IPM,
+#if defined(CONFIG_BT_DRIVER_QUIRK_NO_AUTO_DLE)
+	.quirks         = BT_QUIRK_NO_AUTO_DLE,
+#endif
+};
+
+static int bt_esp32_init(const struct device *unused)
+{
+	ARG_UNUSED(unused);
+
+	bt_hci_driver_register(&drv);
+
+	return 0;
+}
+
+SYS_INIT(bt_esp32_init, POST_KERNEL, CONFIG_KERNEL_INIT_PRIORITY_DEVICE);
diff --git a/soc/xtensa/esp32/Kconfig.soc b/soc/xtensa/esp32/Kconfig.soc
index 41c13a9e63b..743ffc17dfd 100644
--- a/soc/xtensa/esp32/Kconfig.soc
+++ b/soc/xtensa/esp32/Kconfig.soc
@@ -7,12 +7,19 @@ config SOC_ESP32
 	select CLOCK_CONTROL
 	select CLOCK_CONTROL_ESP32
 
+if SOC_ESP32
+
 config IDF_TARGET_ESP32
 	bool "ESP32 as target board"
 	default y
-	depends on SOC_ESP32
 
 config ESPTOOLPY_FLASHFREQ_80M
 	bool
 	default y
-	depends on SOC_ESP32
+
+config ESP32_BT_RESERVE_DRAM
+	hex "Bluetooth controller reserved RAM region"
+	default 0xdb5c if BT
+	default 0
+
+endif # SOC_ESP32
diff --git a/soc/xtensa/esp32/linker.ld b/soc/xtensa/esp32/linker.ld
index 4cb39b5de43..723a3b36ea4 100644
--- a/soc/xtensa/esp32/linker.ld
+++ b/soc/xtensa/esp32/linker.ld
@@ -39,9 +39,8 @@ MEMORY
    *
    * FIXME:
    *  - Utilize available memory regions to full capacity
-   *  - Reserve memory region for BT controller library from ROM
    */
-  dram0_0_seg(RW): org = 0x3FFB0000, len = 0x30000
+  dram0_0_seg(RW): org = 0x3FFB0000 + CONFIG_ESP32_BT_RESERVE_DRAM, len = 0x2c200 - CONFIG_ESP32_BT_RESERVE_DRAM
   dram0_1_seg(RW): org = 0x3FFE4350, len = 0x1BCB0
   drom0_0_seg(R): org = 0x3F400020, len = 0x400000-0x20
   rtc_iram_seg(RWX): org = 0x400C0000, len = 0x2000
@@ -206,6 +205,12 @@ _net_buf_pool_list = _esp_net_buf_pool_list;
   .dram0.data :
   {
     _data_start = ABSOLUTE(.);
+
+    _btdm_data_start = ABSOLUTE(.);
+    *libbtdm_app.a:(.data .data.*)
+    . = ALIGN (4);
+    _btdm_data_end = ABSOLUTE(.);
+
     *(.data)
     *(.data.*)
     *(.gnu.linkonce.d.*)
@@ -260,6 +265,26 @@ _net_buf_pool_list = _esp_net_buf_pool_list;
     . = ALIGN(4);
 #endif
 
+#if defined(CONFIG_BT_BREDR)
+    . = ALIGN(4);
+    Z_LINK_ITERABLE(bt_l2cap_br_fixed_chan);
+    . = ALIGN(4);
+#endif
+
+#if defined(CONFIG_BT_MESH)
+    Z_LINK_ITERABLE(bt_mesh_subnet_cb);
+    Z_LINK_ITERABLE(bt_mesh_app_key_cb);
+    Z_LINK_ITERABLE(bt_mesh_hb_cb);
+#endif
+
+    . = ALIGN(4);
+    Z_LINK_ITERABLE(bt_gatt_service_static);
+    . = ALIGN(4);
+
+    . = ALIGN(4);
+    Z_LINK_ITERABLE(bt_l2cap_fixed_chan);
+    . = ALIGN(4);
+
     . = ALIGN(4);
     Z_LINK_ITERABLE(shell);
     . = ALIGN(4);
@@ -363,6 +388,8 @@ __shell_root_cmds_end = __esp_shell_root_cmds_end;
 #endif
 
     _iram_text_end = ABSOLUTE(.);
+    . = ALIGN(4);
+    _iram_end = ABSOLUTE(.);
   } GROUP_LINK_IN(IRAM_REGION)
 
   .flash.text :
@@ -396,6 +423,12 @@ __shell_root_cmds_end = __esp_shell_root_cmds_end;
   {
     . = ALIGN (8);
     _bss_start = ABSOLUTE(.);
+
+    _btdm_bss_start = ABSOLUTE(.);
+    *libbtdm_app.a:(.bss .bss.* COMMON)
+    . = ALIGN (4);
+    _btdm_bss_end = ABSOLUTE(.);
+
     *(.dynsbss)
     *(.sbss)
     *(.sbss.*)
@@ -414,6 +447,9 @@ __shell_root_cmds_end = __esp_shell_root_cmds_end;
     _bss_end = ABSOLUTE(.);
   } GROUP_LINK_IN(RAMABLE_REGION)
 
+  ASSERT(((_bss_end - ORIGIN(dram0_0_seg)) <= LENGTH(dram0_0_seg)),
+          "DRAM segment data does not fit.")
+
   SECTION_DATA_PROLOGUE(_NOINIT_SECTION_NAME, (NOLOAD),)
   {
     . = ALIGN (8);
@@ -435,3 +471,6 @@ __shell_root_cmds_end = __esp_shell_root_cmds_end;
   }
 
 }
+
+ASSERT(((_iram_end - ORIGIN(iram0_0_seg)) <= LENGTH(iram0_0_seg)),
+          "IRAM0 segment data does not fit.")
diff --git a/subsys/bluetooth/Kconfig b/subsys/bluetooth/Kconfig
index a8caf984238..a934e323e99 100644
--- a/subsys/bluetooth/Kconfig
+++ b/subsys/bluetooth/Kconfig
@@ -190,7 +190,7 @@ if BT_CONN
 config BT_HCI_ACL_FLOW_CONTROL
 	bool "Controller to Host ACL flow control support"
 	# Enable if building a Host-only build
-	default y if !BT_CTLR  && !BT_STM32_IPM
+	default y if !BT_CTLR && !BT_STM32_IPM && !BT_ESP32
 	# Enable if building a Controller-only build
 	default y if BT_HCI_RAW
 	select POLL
diff --git a/subsys/bluetooth/host/Kconfig b/subsys/bluetooth/host/Kconfig
index 2c7057ef009..b5ea0628d51 100644
--- a/subsys/bluetooth/host/Kconfig
+++ b/subsys/bluetooth/host/Kconfig
@@ -119,6 +119,7 @@ config BT_HCI_RESERVE
 	default 1 if BT_SPI
 	default 1 if BT_STM32_IPM
 	default 1 if BT_USERCHAN
+	default 1 if BT_ESP32
 	# Even if no driver is selected the following default is still
 	# needed e.g. for unit tests.
 	default 0