diff --git a/.vscode-test.js b/.vscode-test.js
index f2db8d695fe..89e1b855ee0 100644
--- a/.vscode-test.js
+++ b/.vscode-test.js
@@ -45,6 +45,10 @@ const extensions = [
 		label: 'github-authentication',
 		workspaceFolder: path.join(os.tmpdir(), `msft-auth-${Math.floor(Math.random() * 100000)}`),
 		mocha: { timeout: 60_000 }
+	},
+	{
+		label: 'microsoft-authentication',
+		mocha: { timeout: 60_000 }
 	}
 ];
 
diff --git a/extensions/microsoft-authentication/src/common/test/loopbackClientAndOpener.test.ts b/extensions/microsoft-authentication/src/common/test/loopbackClientAndOpener.test.ts
new file mode 100644
index 00000000000..5c55567d1d0
--- /dev/null
+++ b/extensions/microsoft-authentication/src/common/test/loopbackClientAndOpener.test.ts
@@ -0,0 +1,83 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import * as assert from 'assert';
+import { env, Uri } from 'vscode';
+import * as sinon from 'sinon';
+import { UriHandlerLoopbackClient } from '../loopbackClientAndOpener';
+import { UriEventHandler } from '../../UriEventHandler';
+
+suite('UriHandlerLoopbackClient', () => {
+	const redirectUri = 'http://localhost';
+	let uriHandler: UriEventHandler;
+	let client: UriHandlerLoopbackClient;
+	let envStub: sinon.SinonStubbedInstance<typeof env>;
+	let callbackUri: Uri;
+
+	setup(async () => {
+		callbackUri = await env.asExternalUri(Uri.parse(`${env.uriScheme}://vscode.microsoft-authentication`));
+		envStub = sinon.stub(env);
+		envStub.openExternal.resolves(true);
+		envStub.asExternalUri.callThrough();
+		uriHandler = new UriEventHandler();
+		client = new UriHandlerLoopbackClient(uriHandler, redirectUri);
+	});
+
+	teardown(() => {
+		sinon.restore();
+		uriHandler.dispose();
+	});
+
+	suite('openBrowser', () => {
+		test('should open browser with correct URL', async () => {
+			const testUrl = 'http://example.com?foo=5';
+
+			await client.openBrowser(testUrl);
+
+			assert.ok(envStub.asExternalUri.calledOnce);
+			assert.ok(envStub.openExternal.calledOnce);
+
+			const expectedUri = Uri.parse(testUrl + `&state=${encodeURI(callbackUri.toString(true))}`);
+			const value = envStub.openExternal.getCalls()[0].args[0];
+			assert.strictEqual(value.toString(true), expectedUri.toString(true));
+		});
+	});
+
+	suite('getRedirectUri', () => {
+		test('should return the redirect URI', () => {
+			const result = client.getRedirectUri();
+			assert.strictEqual(result, redirectUri);
+		});
+	});
+
+	suite('listenForAuthCode', () => {
+		test('should return auth code from URL', async () => {
+			const code = '1234';
+			const state = '5678';
+			const testUrl = Uri.parse(`http://example.com?code=${code}&state=${state}`);
+			const promise = client.listenForAuthCode();
+			uriHandler.handleUri(testUrl);
+			const result = await promise;
+
+			assert.strictEqual(result.code, code);
+			assert.strictEqual(result.state, state);
+		});
+
+		test('should return auth error from URL', async () => {
+			const error = 'access_denied';
+			const errorDescription = 'reason';
+			const errorUri = 'uri';
+			const testUrl = Uri.parse(`http://example.com?error=${error}&error_description=${errorDescription}&error_uri=${errorUri}`);
+
+			const promise = client.listenForAuthCode();
+			uriHandler.handleUri(testUrl);
+			const result = await promise;
+
+			assert.strictEqual(result.error, 'access_denied');
+			assert.strictEqual(result.error_description, 'reason');
+			assert.strictEqual(result.error_uri, 'uri');
+		});
+	});
+});