diff --git a/classes/helper.php b/classes/helper.php
index 470b8ae..b64c6bf 100644
--- a/classes/helper.php
+++ b/classes/helper.php
@@ -36,24 +36,19 @@
 class helper {
 
     /**
-     * Profile field category.
+     * Tag item type.
      */
-    public const PROFILE_CATEGORY = 'Profile field';
+    public const ITEM_TYPE_TAG = 'tag';
 
     /**
-     * Field shortname
-     */
-    public const FIELD_TAG = 'tag';
-
-    /**
-     * Field shortname
+     * Category item type.
      */
-    public const FIELD_CATEGORY = 'category';
+    public const ITEM_TYPE_CATEGORY = 'category';
 
     /**
-     * Field shortname
+     * Course item type.
      */
-    public const FIELD_COURSE = 'course';
+    public const ITEM_TYPE_COURSE = 'course';
 
     /**
      * Field shortname
@@ -61,7 +56,7 @@ class helper {
     public const FIELD_ENROLLED_UNTIL = 'enrolleduntil';
 
     /**
-     * Course fiel name.
+     * Course field name.
      */
     public const COURSE_NAME = 'fullname';
 
@@ -80,6 +75,39 @@ class helper {
      */
     public const STUDENT_ROLE = 'student';
 
+    /**
+     * Set up configuration item.
+     *
+     * @param stdClass $course Course to set up it for.
+     * @param int $itemid Item ID number
+     * @param string $itemtype Item type (tag, course, category)/
+     * @param string $itemname Item name.
+     */
+    public static function set_up_item(stdClass $course, int $itemid, string $itemtype, string $itemname): void {
+        $cohort = helper::get_cohort_by_item($itemid, $itemtype);
+
+        if (empty($cohort)) {
+            $cohort = new stdClass();
+            $cohort->contextid = context_system::instance()->id;
+            $cohort->name = $itemname;
+            $cohort->idnumber = $itemname;
+            $cohort->description = ucfirst($itemtype) . ' related';
+            $typefieled = 'customfield_' . helper::COHORT_FIELD_TYPE;
+            $cohort->$typefieled = $itemtype;
+            $idfieled = 'customfield_' . helper::COHORT_FIELD_ID;
+            $cohort->$idfieled = $itemid;
+
+            // Create a new cohort.
+            $cohort->id = helper::add_cohort($cohort);
+        }
+
+        // Create a dynamic cohort rule associated with this cohort.
+        helper::add_rule($cohort, $itemtype);
+        // Add a tag to a custom profile field.
+        helper::update_profile_field($itemtype, $itemname);
+        // If yes, create enrolment method for the cohort for a given course.
+        helper::add_enrolment_method($course, $cohort);
+    }
 
     /**
      * Get cohort by provided item type and item id.
diff --git a/classes/observer.php b/classes/observer.php
index c2ba8be..e3ad72f 100644
--- a/classes/observer.php
+++ b/classes/observer.php
@@ -16,9 +16,8 @@
 
 namespace tool_enrolprofile;
 
+use core\event\course_created;
 use core\event\tag_added;
-use stdClass;
-use context_system;
 
 /**
  * Event observer class.
@@ -43,36 +42,23 @@ public static function tag_added(tag_added $event): void {
 
         $tagid = $event->other['tagid'];
         $tagname = $event->other['tagrawname'];
+        $course = get_course($event->other['itemid']);
 
-        $courseid = $event->other['itemid'];
-        $course = get_course($courseid);
+        helper::set_up_item($course, $tagid, 'tag', $tagname);
+    }
 
-        $cohort = new stdClass();
-        $cohort->contextid = context_system::instance()->id;
-        $cohort->name = $tagname;
-        $cohort->idnumber = $tagname;
-        $cohort->description = 'Tag related';
-        $typefieled = 'customfield_' . helper::COHORT_FIELD_TYPE;
-        $cohort->$typefieled = 'tag';
-        $idfieled = 'customfield_' . helper::COHORT_FIELD_ID;
-        $cohort->$idfieled = $tagid;
+    /**
+     * Process course_created event.
+     *
+     * @param course_created $event The event.
+     */
+    public static function course_created(course_created $event): void {
+        global $DB;
 
-        // Check if cohort already exists.
-        $existingcohort = helper::get_cohort_by_item($tagid, 'tag');
+        $course = get_course($event->courseid);
+        helper::set_up_item($course, $course->id, 'course', $course->{helper::COURSE_NAME});
 
-        // If not.
-        if (empty($existingcohort)) {
-            // Create a new cohort.
-            $cohort->id = helper::add_cohort($cohort);
-            // Create a dynamic cohort rule associated with this cohort.
-            helper::add_rule($cohort, helper::FIELD_TAG);
-            // Add a tag to a custom profile field.
-            helper::update_profile_field(helper::FIELD_TAG, $tagname);
-            // Create enrolment method for the cohort for a given course.
-            helper::add_enrolment_method($course, $cohort);
-        } else {
-            // If yes, create enrolment method for the cohort for a given course.
-            helper::add_enrolment_method($course, $existingcohort);
-        }
+        $category = $DB->get_record('course_categories', ['id' => $course->category]);
+        helper::set_up_item($course, $category->id, 'category', $category->name);
     }
 }
diff --git a/db/events.php b/db/events.php
index 0b0db27..5744525 100644
--- a/db/events.php
+++ b/db/events.php
@@ -29,4 +29,8 @@
         'eventname' => '\core\event\tag_added',
         'callback' => '\tool_enrolprofile\observer::tag_added',
     ],
+    [
+        'eventname' => '\core\event\course_created',
+        'callback' => '\tool_enrolprofile\observer::course_created',
+    ],
 ];
diff --git a/tests/observer_test.php b/tests/observer_test.php
index bb3e577..93ae625 100644
--- a/tests/observer_test.php
+++ b/tests/observer_test.php
@@ -32,6 +32,41 @@
  */
 class observer_test extends advanced_testcase {
 
+    /**
+     * Tag profile field for testing.
+     * @var \stdClass
+     */
+    protected $tagprofilefield;
+
+    /**
+     * Course profile field for testing.
+     * @var \stdClass
+     */
+    protected $courseprofilefield;
+
+    /**
+     * Category profile field for testing.
+     * @var \stdClass
+     */
+    protected $categoryprofilefield;
+
+    /**
+     * Set up before every test.
+     *
+     * @return void
+     */
+    public function setUp(): void {
+        $this->resetAfterTest();
+        $this->setAdminUser();
+
+        $this->tagprofilefield = $this->add_user_profile_field(helper::ITEM_TYPE_TAG, 'autocomplete');
+        $this->courseprofilefield = $this->add_user_profile_field(helper::ITEM_TYPE_COURSE, 'autocomplete');
+        $this->categoryprofilefield = $this->add_user_profile_field(helper::ITEM_TYPE_CATEGORY, 'autocomplete');
+
+        $this->create_cohort_custom_field(helper::COHORT_FIELD_ID);
+        $this->create_cohort_custom_field(helper::COHORT_FIELD_TYPE);
+    }
+
     /**
      * A helper function to create a custom profile field.
      *
@@ -95,24 +130,18 @@ protected function create_cohort_custom_field(string $shortname, string $datatyp
     public function test_tag_added() {
         global $DB;
 
-        $this->resetAfterTest();
-        $this->setAdminUser();
-
-        $prodilefield = $this->add_user_profile_field(helper::FIELD_TAG, 'autocomplete');
-        $this->create_cohort_custom_field(helper::COHORT_FIELD_ID);
-        $this->create_cohort_custom_field(helper::COHORT_FIELD_TYPE);
-        $course1 = $this->getDataGenerator()->create_course();
-        $course2 = $this->getDataGenerator()->create_course();
+        $course = $this->getDataGenerator()->create_course();
         $tagname = 'A tag';
 
         $this->assertEmpty($DB->get_record('cohort', ['name' => $tagname]));
-        $this->assertEmpty($DB->get_field('user_info_field', 'param1', ['id' => $prodilefield->id]));
+        $this->assertEmpty($DB->get_field('user_info_field', 'param1', ['id' => $this->tagprofilefield->id]));
         $this->assertEmpty($DB->get_record('tag', ['rawname' => $tagname]));
         $this->assertEmpty($DB->get_record('tool_dynamic_cohorts', ['name' => $tagname]));
-        $this->assertEmpty($DB->get_record('tool_dynamic_cohorts', ['name' => $tagname]));
-        $this->assertCount(0, $DB->get_records('enrol', ['courseid' => $course1->id, 'enrol' => 'cohort']));
 
-        core_tag_tag::set_item_tags('core', 'course', $course1->id, context_course::instance($course1->id), [$tagname]);
+        // Should be already course and category cohorts.
+        $this->assertCount(2, $DB->get_records('enrol', ['courseid' => $course->id, 'enrol' => 'cohort']));
+
+        core_tag_tag::set_item_tags('core', 'course', $course->id, context_course::instance($course->id), [$tagname]);
 
         $tag = $DB->get_record('tag', ['rawname' => $tagname]);
         $this->assertNotEmpty($tag);
@@ -120,7 +149,7 @@ public function test_tag_added() {
         $cohort = $DB->get_record('cohort', ['name' => $tagname]);
         $this->assertNotEmpty($cohort);
 
-        $cohort = cohort_get_cohort($cohort->id, context_course::instance($course1->id), true);
+        $cohort = cohort_get_cohort($cohort->id, context_course::instance($course->id), true);
         foreach ($cohort->customfields as $customfield) {
             if ($customfield->get_field()->get('shortname') == helper::COHORT_FIELD_ID) {
                 $this->assertSame($tag->id, $customfield->export_value());
@@ -130,7 +159,7 @@ public function test_tag_added() {
             }
         }
 
-        $profilefielddata = $DB->get_field('user_info_field', 'param1', ['id' => $prodilefield->id]);
+        $profilefielddata = $DB->get_field('user_info_field', 'param1', ['id' => $this->tagprofilefield->id]);
         $this->assertNotEmpty($profilefielddata);
         $this->assertTrue(in_array($tagname, explode("\n", $profilefielddata)));
 
@@ -141,11 +170,84 @@ public function test_tag_added() {
         $conditions = $DB->get_records('tool_dynamic_cohorts_c', ['ruleid' => $rule->id]);
         $this->assertCount(2, $conditions);
 
-        $this->assertCount(1, $DB->get_records('enrol', ['courseid' => $course1->id, 'enrol' => 'cohort']));
-        $enrol = $DB->get_record('enrol', ['courseid' => $course1->id, 'enrol' => 'cohort']);
+        $this->assertCount(3, $DB->get_records('enrol', ['courseid' => $course->id, 'enrol' => 'cohort']));
+        $enrol = $DB->get_record('enrol', ['courseid' => $course->id, 'enrol' => 'cohort', 'customint1' => $cohort->id]);
+        $this->assertNotEmpty($enrol);
+    }
+
+    /**
+     * Check logic when creating a course.
+     * @return void
+     */
+    public function test_course_created() {
+        global $DB;
+
+        $coursename = 'Course name';
+        $this->assertEmpty($DB->get_record('cohort', ['name' => $coursename]));
+        $this->assertEmpty($DB->get_field('user_info_field', 'param1', ['id' => $this->courseprofilefield->id]));
+        $this->assertEmpty($DB->get_record('tag', ['rawname' => $coursename]));
+        $this->assertEmpty($DB->get_record('tool_dynamic_cohorts', ['name' => $coursename]));
+
+        $course = $this->getDataGenerator()->create_course(['fullname' => $coursename]);
+
+        // Should be course and category cohorts.
+        $this->assertCount(2, $DB->get_records('enrol', ['courseid' => $course->id, 'enrol' => 'cohort']));
+
+        // Check everything about course cohort.
+        $coursecohort = $DB->get_record('cohort', ['name' => $coursename]);
+        $this->assertNotEmpty($coursecohort);
+
+        $cohort = cohort_get_cohort($coursecohort->id, context_course::instance($course->id), true);
+        foreach ($cohort->customfields as $customfield) {
+            if ($customfield->get_field()->get('shortname') == helper::COHORT_FIELD_ID) {
+                $this->assertSame($course->id, $customfield->export_value());
+            }
+            if ($customfield->get_field()->get('shortname') == helper::COHORT_FIELD_TYPE) {
+                $this->assertSame('course', $customfield->export_value());
+            }
+        }
+
+        $profilefielddata = $DB->get_field('user_info_field', 'param1', ['id' => $this->courseprofilefield->id]);
+        $this->assertNotEmpty($profilefielddata);
+        $this->assertTrue(in_array($coursename, explode("\n", $profilefielddata)));
+
+        $rule = $DB->get_record('tool_dynamic_cohorts', ['name' => $coursename]);
+        $this->assertNotEmpty($rule);
+        $this->assertEquals($cohort->id, $rule->cohortid);
+        $this->assertEquals(1, $rule->enabled);
+        $conditions = $DB->get_records('tool_dynamic_cohorts_c', ['ruleid' => $rule->id]);
+        $this->assertCount(2, $conditions);
+
+        $enrol = $DB->get_record('enrol', ['courseid' => $course->id, 'enrol' => 'cohort', 'customint1' => $cohort->id]);
         $this->assertNotEmpty($enrol);
-        $this->assertEquals($cohort->id, $enrol->customint1);
 
-        core_tag_tag::set_item_tags('core', 'course', $course2->id, \context_course::instance($course1->id), [$tagname]);
+        // Check everything about category cohort.
+        $category = $DB->get_record('course_categories', ['id' => $course->category]);
+        $categorycohort = $DB->get_record('cohort', ['name' => $category->name]);
+        $this->assertNotEmpty($categorycohort);
+
+        $cohort = cohort_get_cohort($categorycohort->id, context_course::instance($category->id), true);
+        foreach ($cohort->customfields as $customfield) {
+            if ($customfield->get_field()->get('shortname') == helper::COHORT_FIELD_ID) {
+                $this->assertSame($category->id, $customfield->export_value());
+            }
+            if ($customfield->get_field()->get('shortname') == helper::COHORT_FIELD_TYPE) {
+                $this->assertSame('category', $customfield->export_value());
+            }
+        }
+
+        $profilefielddata = $DB->get_field('user_info_field', 'param1', ['id' => $this->categoryprofilefield->id]);
+        $this->assertNotEmpty($profilefielddata);
+        $this->assertTrue(in_array($category->name, explode("\n", $profilefielddata)));
+
+        $rule = $DB->get_record('tool_dynamic_cohorts', ['name' => $category->name]);
+        $this->assertNotEmpty($rule);
+        $this->assertEquals($cohort->id, $rule->cohortid);
+        $this->assertEquals(1, $rule->enabled);
+        $conditions = $DB->get_records('tool_dynamic_cohorts_c', ['ruleid' => $rule->id]);
+        $this->assertCount(2, $conditions);
+
+        $enrol = $DB->get_record('enrol', ['courseid' => $course->id, 'enrol' => 'cohort', 'customint1' => $cohort->id]);
+        $this->assertNotEmpty($enrol);
     }
 }