diff --git a/lib/lua.ex b/lib/lua.ex
index 97ae3a3..f5429e3 100644
--- a/lib/lua.ex
+++ b/lib/lua.ex
@@ -303,67 +303,11 @@ defmodule Lua do
     raise Lua.RuntimeException, "Lua.set!/3 cannot have empty keys"
   end
 
-  def set!(%__MODULE__{} = lua, keys, func) when is_function(func, 1) do
+  def set!(%__MODULE__{} = lua, keys, func) when is_function(func, 1) or is_function(func, 2) do
     keys = keys |> List.wrap() |> Enum.map(&to_lua_key/1)
+    {function_name, scope} = List.pop_at(keys, -1)
 
-    wrapped =
-      {:native_func,
-       fn args, state ->
-         return = List.wrap(func.(args))
-
-         if not Util.list_encoded?(return) do
-           {function_name, scope} = List.pop_at(keys, -1)
-
-           raise Lua.RuntimeException,
-             function: function_name,
-             scope: scope,
-             message: "deflua functions must return encoded data, got #{inspect(return)}"
-         end
-
-         {return, state}
-       end}
-
-    state = do_set_nested(lua.state, keys, wrapped)
-    %{lua | state: state}
-  end
-
-  def set!(%__MODULE__{} = lua, keys, func) when is_function(func, 2) do
-    keys = keys |> List.wrap() |> Enum.map(&to_lua_key/1)
-
-    wrapped =
-      {:native_func,
-       fn args, state ->
-         {function_name, scope} = List.pop_at(keys, -1)
-
-         case func.(args, wrap(state)) do
-           {:error, reason, %__MODULE__{} = returned_lua} ->
-             raise RuntimeError, value: reason, state: returned_lua.state
-
-           {value, %__MODULE__{} = lua} ->
-             value = List.wrap(value)
-
-             if not Util.list_encoded?(value) do
-               raise Lua.RuntimeException,
-                 function: function_name,
-                 scope: scope,
-                 message: "deflua functions must return encoded data, got #{inspect(value)}"
-             end
-
-             {value, lua.state}
-
-           value ->
-             value = List.wrap(value)
-
-             if not Util.list_encoded?(value) do
-               raise Lua.RuntimeException,
-                 function: function_name,
-                 scope: scope,
-                 message: "deflua functions must return encoded data, got #{inspect(value)}"
-             end
-
-             {value, state}
-         end
-       end}
+    wrapped = wrap_callback(func, function_name, scope)
 
     state = do_set_nested(lua.state, keys, wrapped)
     %{lua | state: state}
@@ -372,12 +316,13 @@ defmodule Lua do
   def set!(%__MODULE__{} = lua, keys, value) do
     keys = keys |> List.wrap() |> Enum.map(&to_lua_key/1)
     value = Display.unwrap(value)
+    {function_name, scope} = List.pop_at(keys, -1)
 
     {encoded, state} =
       if Util.encoded?(value) do
         {value, lua.state}
       else
-        Value.encode(value, lua.state)
+        Value.encode(value, lua.state, &wrap_callback(&1, function_name, scope))
       end
 
     state = do_set_nested(state, keys, encoded)
@@ -935,7 +880,7 @@ defmodule Lua do
     if Util.encoded?(value) do
       {value, lua}
     else
-      {encoded, state} = Value.encode(value, state)
+      {encoded, state} = Value.encode(value, state, &wrap_callback(&1, :anonymous, []))
       {encoded, %{lua | state: state}}
     end
   rescue
@@ -1215,6 +1160,53 @@ defmodule Lua do
 
   defp wrap(state), do: %__MODULE__{state: state}
 
+  # Builds the `{:native_func, closure}` for a user-supplied Elixir callback.
+  #
+  # Both arities speak the documented `t:Lua.t/0` convention at the VM
+  # boundary: the raw `Lua.VM.State` handed in by the executor is wrapped as a
+  # `%Lua{}` for the callback, the returned `%Lua{}` is unwrapped back to its
+  # raw `.state`, and returns are validated as encoded. Sharing one builder
+  # keeps `Lua.set!/3` at a path, functions nested inside a `set!` value, and
+  # `Lua.encode!/2` on the same convention. `function_name`/`scope` feed only
+  # the error message.
+  defp wrap_callback(func, function_name, scope) when is_function(func, 1) do
+    {:native_func,
+     fn args, state ->
+       return = List.wrap(func.(args))
+       validate_encoded!(return, function_name, scope)
+       {return, state}
+     end}
+  end
+
+  defp wrap_callback(func, function_name, scope) when is_function(func, 2) do
+    {:native_func,
+     fn args, state ->
+       case func.(args, wrap(state)) do
+         {:error, reason, %__MODULE__{} = returned_lua} ->
+           raise RuntimeError, value: reason, state: returned_lua.state
+
+         {value, %__MODULE__{} = lua} ->
+           value = List.wrap(value)
+           validate_encoded!(value, function_name, scope)
+           {value, lua.state}
+
+         value ->
+           value = List.wrap(value)
+           validate_encoded!(value, function_name, scope)
+           {value, state}
+       end
+     end}
+  end
+
+  defp validate_encoded!(value, function_name, scope) do
+    if not Util.list_encoded?(value) do
+      raise Lua.RuntimeException,
+        function: function_name,
+        scope: scope,
+        message: "deflua functions must return encoded data, got #{inspect(value)}"
+    end
+  end
+
   defp to_lua_key(key) when is_atom(key), do: Atom.to_string(key)
   defp to_lua_key(key) when is_binary(key), do: key
   defp to_lua_key(key), do: key
diff --git a/lib/lua/vm/value.ex b/lib/lua/vm/value.ex
index 91dde89..d765d5a 100644
--- a/lib/lua/vm/value.ex
+++ b/lib/lua/vm/value.ex
@@ -227,41 +227,37 @@ defmodule Lua.VM.Value do
 
   Returns `{encoded_value, state}` since encoding maps and lists allocates tables.
   """
-  @spec encode(term(), State.t()) :: {term(), State.t()}
-  def encode(nil, state), do: {nil, state}
-  def encode(value, state) when is_boolean(value), do: {value, state}
-  def encode(value, state) when is_number(value), do: {value, state}
-  def encode(value, state) when is_binary(value), do: {value, state}
-  def encode(value, state) when is_atom(value), do: {Atom.to_string(value), state}
-
-  def encode(fun, state) when is_function(fun, 2), do: {{:native_func, fun}, state}
-
-  def encode(fun, state) when is_function(fun, 1) do
-    wrapper = fn args, st -> {List.wrap(fun.(args)), st} end
-    {{:native_func, wrapper}, state}
-  end
+  @spec encode(term(), State.t(), (fun() -> term())) :: {term(), State.t()}
+  def encode(value, state, fun_wrapper \\ &default_fun_wrapper/1)
+  def encode(nil, state, _fun_wrapper), do: {nil, state}
+  def encode(value, state, _fun_wrapper) when is_boolean(value), do: {value, state}
+  def encode(value, state, _fun_wrapper) when is_number(value), do: {value, state}
+  def encode(value, state, _fun_wrapper) when is_binary(value), do: {value, state}
+  def encode(value, state, _fun_wrapper) when is_atom(value), do: {Atom.to_string(value), state}
+
+  def encode(fun, state, fun_wrapper) when is_function(fun, 1) or is_function(fun, 2), do: {fun_wrapper.(fun), state}
 
-  def encode({:userdata, value}, state) do
+  def encode({:userdata, value}, state, _fun_wrapper) do
     State.alloc_userdata(state, value)
   end
 
-  def encode(map, state) when is_map(map) do
+  def encode(map, state, fun_wrapper) when is_map(map) do
     {data, state} =
       Enum.reduce(map, {%{}, state}, fn {k, v}, {data, state} ->
         key = if is_atom(k), do: Atom.to_string(k), else: k
-        {encoded_v, state} = encode(v, state)
+        {encoded_v, state} = encode(v, state, fun_wrapper)
         {Map.put(data, key, encoded_v), state}
       end)
 
     State.alloc_table(state, data)
   end
 
-  def encode(list, state) when is_list(list) do
+  def encode(list, state, fun_wrapper) when is_list(list) do
     if keyword_list?(list) do
       {data, state} =
         Enum.reduce(list, {%{}, state}, fn {k, v}, {data, state} ->
           key = Atom.to_string(k)
-          {encoded_v, state} = encode(v, state)
+          {encoded_v, state} = encode(v, state, fun_wrapper)
           {Map.put(data, key, encoded_v), state}
         end)
 
@@ -271,7 +267,7 @@ defmodule Lua.VM.Value do
         list
         |> Enum.with_index(1)
         |> Enum.reduce({%{}, state}, fn {v, idx}, {data, state} ->
-          {encoded_v, state} = encode(v, state)
+          {encoded_v, state} = encode(v, state, fun_wrapper)
           {Map.put(data, idx, encoded_v), state}
         end)
 
@@ -279,6 +275,15 @@ defmodule Lua.VM.Value do
     end
   end
 
+  # Default function wrapper, preserving the raw-state calling convention for
+  # low-level callers. `Lua.set!/3` and `Lua.encode!/2` inject their own
+  # wrapper so callbacks receive the public `t:Lua.t/0` instead.
+  defp default_fun_wrapper(fun) when is_function(fun, 2), do: {:native_func, fun}
+
+  defp default_fun_wrapper(fun) when is_function(fun, 1) do
+    {:native_func, fn args, st -> {List.wrap(fun.(args)), st} end}
+  end
+
   @doc """
   Encodes a list of Elixir values, threading state through each encoding.
 
diff --git a/test/lua/callback_state_asymmetry_test.exs b/test/lua/callback_state_asymmetry_test.exs
new file mode 100644
index 0000000..8064d29
--- /dev/null
+++ b/test/lua/callback_state_asymmetry_test.exs
@@ -0,0 +1,89 @@
+defmodule Lua.CallbackStateAsymmetryTest do
+  @moduledoc """
+  A two-arity Elixir callback (`fn args, state -> {results, state} end`)
+  must receive the same `state` argument — and accept the same return
+  shape — regardless of how it entered the VM:
+
+  | How the callback enters the VM                                  | `state` it receives |
+  | --------------------------------------------------------------- | ------------------- |
+  | `Lua.set!(lua, [:f], fun)` — function directly at the path       | `t:Lua.t/0`         |
+  | `deflua` + `Lua.load_api/3`                                      | `t:Lua.t/0`         |
+  | `Lua.set!(lua, [:t], %{"f" => fun})` — function inside a value   | `t:Lua.t/0`         |
+  | `Lua.encode!(lua, fun)` — closure handed to Lua at runtime       | `t:Lua.t/0`         |
+
+  Every entry point hands the callback the public `t:Lua.t/0`, so the public
+  API (`Lua.decode!/2`, `Lua.encode!/2`, `Lua.get_private!/2`, …) works and a
+  single closure written against the documented `Lua.set!/3` convention works
+  in every position.
+  """
+  use ExUnit.Case, async: true
+
+  defmodule DefluaProbe do
+    @moduledoc false
+    use Lua.API, scope: "probe"
+
+    deflua whoami(), state do
+      {[inspect(state.__struct__)], state}
+    end
+  end
+
+  # Reports the struct name of the state the VM handed the callback.
+  defp probe_callback do
+    fn _args, state -> {[inspect(state.__struct__)], state} end
+  end
+
+  # A callback written exactly the way the `Lua.set!/3` docs teach: treat
+  # `state` as a `t:Lua.t/0`, use the public API on it, return it as received.
+  defp documented_convention_callback do
+    fn _args, state -> {[Lua.get_private!(state, :secret)], state} end
+  end
+
+  describe "callbacks that receive the public Lua.t (documented convention)" do
+    test "a function set! directly at a path receives Lua.t" do
+      lua = Lua.set!(Lua.new(), [:probe], probe_callback())
+
+      assert {["Lua"], _} = Lua.eval!(lua, "return probe()")
+    end
+
+    test "a deflua function loaded via load_api receives Lua.t" do
+      lua = Lua.load_api(Lua.new(), DefluaProbe)
+
+      assert {["Lua"], _} = Lua.eval!(lua, "return probe.whoami()")
+    end
+
+    test "a set!-at-path callback can use the public Lua API on its state" do
+      lua =
+        Lua.new()
+        |> Lua.put_private(:secret, "from-private")
+        |> Lua.set!([:fetch], documented_convention_callback())
+
+      assert {["from-private"], _} = Lua.eval!(lua, "return fetch()")
+    end
+  end
+
+  describe "callbacks that enter the VM as encoded values" do
+    test "a closure embedded via encode! receives the same Lua.t" do
+      {fun, lua} = Lua.encode!(Lua.new(), probe_callback())
+      lua = Lua.set!(lua, [:probe], fun)
+
+      assert {["Lua"], _} = Lua.eval!(lua, "return probe()")
+    end
+
+    test "a function nested inside a table passed to set! receives the same Lua.t" do
+      lua = Lua.set!(Lua.new(), [:api], %{"probe" => probe_callback()})
+
+      assert {["Lua"], _} = Lua.eval!(lua, "return api.probe()")
+    end
+
+    test "the same callback works identically via set! and via encode!" do
+      lua = Lua.put_private(Lua.new(), :secret, "from-private")
+
+      lua = Lua.set!(lua, [:registered], documented_convention_callback())
+      {encoded, lua} = Lua.encode!(lua, documented_convention_callback())
+      lua = Lua.set!(lua, [:embedded], encoded)
+
+      assert {["from-private", "from-private"], _} =
+               Lua.eval!(lua, "return registered(), embedded()")
+    end
+  end
+end