diff --git a/CHANGELOG.md b/CHANGELOG.md
index 6629a96..d19f7b9 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -9,6 +9,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Update contact information in `CONTRIBUTING.md`
 - Update dependencies. Minimum python version is now 3.8 ([#22](https://github.com/vyperlang/vvm/pull/22))
 - Add `output_format` argument to `compile_source` and `compile_files` ([#21](https://github.com/vyperlang/vvm/pull/21))
+- New public function `detect_vyper_version_from_source` ([#23](https://github.com/vyperlang/vvm/pull/23))
 
 ## [0.1.0](https://github.com/vyperlang/vvm/tree/v0.1.0) - 2020-10-07
 ### Added
diff --git a/tests/conftest.py b/tests/conftest.py
index 5f90cb3..ff37fc1 100644
--- a/tests/conftest.py
+++ b/tests/conftest.py
@@ -64,6 +64,12 @@ def vyper_version(request):
     return version
 
 
+@pytest.fixture
+def latest_version():
+    global VERSIONS
+    return VERSIONS[0]
+
+
 @pytest.fixture
 def foo_source(vyper_version):
     visibility = "external" if vyper_version >= Version("0.2.0") else "public"
diff --git a/tests/test_versioning.py b/tests/test_versioning.py
new file mode 100644
index 0000000..3ed491d
--- /dev/null
+++ b/tests/test_versioning.py
@@ -0,0 +1,59 @@
+import pytest
+from packaging.specifiers import Specifier
+from packaging.version import Version
+
+from vvm import detect_vyper_version_from_source
+from vvm.exceptions import UnexpectedVersionError
+from vvm.utils.versioning import _detect_version_specifier, _pick_vyper_version
+
+LAST_PER_MINOR = {
+    1: Version("0.1.0b17"),
+    2: Version("0.2.16"),
+    3: Version("0.3.10"),
+}
+
+
+def test_foo_vyper_version(foo_source, vyper_version):
+    specifier = _detect_version_specifier(foo_source)
+    assert str(specifier) == f"=={vyper_version}"
+    assert vyper_version.major == 0
+    assert _pick_vyper_version(specifier) == vyper_version
+
+
+@pytest.mark.parametrize(
+    "version_str,decorator,pragma,expected_specifier,expected_version",
+    [
+        ("^0.1.1", "public", "@version", "~=0.1", "latest"),
+        ("~0.3.0", "external", "pragma version", "~=0.3.0", "0.3.10"),
+        ("0.1.0b17", "public", "@version", "==0.1.0b17", "0.1.0b17"),
+        (">=0.3.0-beta17", "external", "@version", ">=0.3.0-beta17", "latest"),
+        ("0.4.0rc6", "external", "pragma version", "==0.4.0rc6", "0.4.0rc6"),
+    ],
+)
+def test_vyper_version(
+    version_str, decorator, pragma, expected_specifier, expected_version, latest_version
+):
+    source = f"""
+# {pragma} {version_str}
+
+@{decorator}
+def foo() -> int128:
+    return 42
+    """
+    detected = _detect_version_specifier(source)
+    assert detected == Specifier(expected_specifier)
+    if expected_version == "latest":
+        expected_version = str(latest_version)
+    assert detect_vyper_version_from_source(source) == Version(expected_version)
+
+
+def test_no_version_in_source():
+    with pytest.raises(UnexpectedVersionError) as excinfo:
+        detect_vyper_version_from_source("def foo() -> int128: return 42")
+    assert str(excinfo.value) == "No version detected in source code"
+
+
+def test_version_does_not_exist():
+    with pytest.raises(UnexpectedVersionError) as excinfo:
+        detect_vyper_version_from_source("# pragma version 2024.0.1")
+    assert str(excinfo.value) == "No installable Vyper satisfies the specifier ==2024.0.1"
diff --git a/vvm/__init__.py b/vvm/__init__.py
index 101c423..b1c38c4 100644
--- a/vvm/__init__.py
+++ b/vvm/__init__.py
@@ -6,3 +6,4 @@
     set_vyper_version,
 )
 from vvm.main import compile_files, compile_source, compile_standard, get_vyper_version
+from vvm.utils.versioning import detect_vyper_version_from_source
diff --git a/vvm/install.py b/vvm/install.py
index a62d9ef..a311021 100644
--- a/vvm/install.py
+++ b/vvm/install.py
@@ -35,6 +35,7 @@
 VVM_BINARY_PATH_VARIABLE = "VVM_BINARY_PATH"
 
 _default_vyper_binary = None
+_installable_vyper_versions: Optional[List[Version]] = None
 
 
 def _get_os_name() -> str:
@@ -166,11 +167,19 @@ def get_installable_vyper_versions(headers: Dict = None) -> List[Version]:
     """
     Return a list of all `vyper` versions that can be installed by vvm.
 
+    Note: this function is cached, so subsequent calls will not change the result.
+    When new versions of vyper are released, the cache will need to be cleared
+    manually or the application restarted.
+
     Returns
     -------
     List
         List of Versions objects of installable `vyper` versions.
     """
+    global _installable_vyper_versions
+    if _installable_vyper_versions is not None:
+        return _installable_vyper_versions
+
     version_list = []
 
     headers = _get_headers(headers)
@@ -180,7 +189,9 @@ def get_installable_vyper_versions(headers: Dict = None) -> List[Version]:
         asset = next((i for i in release["assets"] if _get_os_name() in i["name"]), False)
         if asset:
             version_list.append(version)
-    return sorted(version_list, reverse=True)
+
+    _installable_vyper_versions = sorted(version_list, reverse=True)
+    return _installable_vyper_versions
 
 
 def get_installed_vyper_versions(vvm_binary_path: Union[Path, str] = None) -> List[Version]:
diff --git a/vvm/utils/versioning.py b/vvm/utils/versioning.py
new file mode 100644
index 0000000..b59ebb0
--- /dev/null
+++ b/vvm/utils/versioning.py
@@ -0,0 +1,99 @@
+import itertools
+import re
+from typing import Any, Optional
+
+from packaging.specifiers import Specifier
+from packaging.version import Version
+
+from vvm.exceptions import UnexpectedVersionError
+from vvm.install import get_installable_vyper_versions, get_installed_vyper_versions
+
+_VERSION_RE = re.compile(r"\s*#\s*(?:pragma\s+|@)version\s+([=><^~]*)(\d+\.\d+\.\d+\S*)")
+
+
+def _detect_version_specifier(source_code: str) -> Specifier:
+    """
+    Detect the version given by the pragma version in the source code.
+
+    Arguments
+    ---------
+    source_code : str
+        Source code to detect the version from.
+
+    Returns
+    -------
+    str
+        vyper version specifier, or None if none could be detected.
+    """
+    match = _VERSION_RE.search(source_code)
+    if match is None:
+        raise UnexpectedVersionError("No version detected in source code")
+
+    specifier, version_str = match.groups()
+    if specifier in ("~", "^"):  # convert from npm-style to pypi-style
+        if specifier == "^":  # minor match, remove the patch from the version
+            version_str = ".".join(version_str.split(".")[:-1])
+        specifier = "~="  # finds compatible versions
+
+    if specifier == "":
+        specifier = "=="
+    return Specifier(specifier + version_str)
+
+
+def _pick_vyper_version(
+    specifier: Specifier,
+    prereleases: Optional[bool] = None,
+    check_installed: bool = True,
+    check_installable: bool = True,
+) -> Version:
+    """
+    Pick the latest vyper version that is installed and satisfies the given specifier.
+    If None of the installed versions satisfy the specifier, pick the latest installable
+    version.
+
+    Arguments
+    ---------
+    specifier : Specifier
+        Specifier to pick a version for.
+    prereleases : bool, optional
+        Whether to allow prereleases in the returned iterator. If set to
+        ``None`` (the default), it will be intelligently decide whether to allow
+        prereleases or not (based on the specifier.prereleases attribute, and
+        whether the only versions matching are prereleases).
+    check_installed : bool, optional
+        Whether to check the installed versions. Defaults to True.
+    check_installable : bool, optional
+        Whether to check the installable versions. Defaults to True.
+
+    Returns
+    -------
+    Version
+        Vyper version that satisfies the specifier, or None if no version satisfies the specifier.
+    """
+    versions = itertools.chain(
+        get_installed_vyper_versions() if check_installed else [],
+        get_installable_vyper_versions() if check_installable else [],
+    )
+    if (ret := next(specifier.filter(versions, prereleases), None)) is None:
+        raise UnexpectedVersionError(f"No installable Vyper satisfies the specifier {specifier}")
+    return ret
+
+
+def detect_vyper_version_from_source(source_code: str, **kwargs: Any) -> Version:
+    """
+    Detect the version given by the pragma version in the source code.
+
+    Arguments
+    ---------
+    source_code : str
+        Source code to detect the version from.
+    kwargs : Any
+        Keyword arguments to pass to `pick_vyper_version`.
+
+    Returns
+    -------
+    Version
+        vyper version, or None if no version could be detected.
+    """
+    specifier = _detect_version_specifier(source_code)
+    return _pick_vyper_version(specifier, **kwargs)