diff --git a/src/tests/__init__.py b/src/tests/__init__.py
new file mode 100644
index 00000000..e69de29b
diff --git a/src/tests/apinotify_handler.py b/src/tests/apinotify_handler.py
new file mode 100755
index 00000000..e39e01c5
--- /dev/null
+++ b/src/tests/apinotify_handler.py
@@ -0,0 +1,14 @@
+#!/usr/bin/env python
+
+import os
+import sys
+import tempfile
+from datetime import datetime
+
+
+if __name__ == '__main__':
+    if sys.argv()[1] == 'startingUp':
+        with open(
+            os.path.join(tempfile.gettempdir(), '.api_started'), 'wb'
+        ) as start_file:
+            start_file.write(datetime.now())
diff --git a/src/tests/test_api.py b/src/tests/test_api.py
new file mode 100644
index 00000000..8041141a
--- /dev/null
+++ b/src/tests/test_api.py
@@ -0,0 +1,104 @@
+import unittest
+import subprocess
+import xmlrpclib
+import base64
+import json
+import os
+import tempfile
+from time import sleep
+
+
+class TestAPI(unittest.TestCase):
+    @classmethod
+    def setUpClass(cls):
+        subprocess.call(['pybitmessage', '-t'])
+        cls.addresses = []
+        cls.api = xmlrpclib.ServerProxy(
+            "http://username:password@127.0.0.1:8442/")
+        for tick in range(0, 10):
+            sleep(1)
+            if os.path.isfile(os.path.join(
+                    tempfile.gettempdir(), '.api_started')):
+                print('API start detected!')
+                return
+
+    def test_user_password(self):
+        api_wrong = xmlrpclib.ServerProxy("http://test:wrong@127.0.0.1:8442/")
+        self.assertEqual(
+            api_wrong.clientStatus(),
+            'RPC Username or password incorrect or HTTP header lacks'
+            ' authentication at all.'
+        )
+
+    def test_connection(self):
+        self.assertEqual(
+            self.api.helloWorld('hello', 'world'),
+            'hello-world'
+        )
+
+    def test_arithmetic(self):
+        self.assertEqual(self.api.add(69, 42), 111)
+
+    def test_invalid_method(self):
+        self.assertEqual(
+            self.api.test(),
+            'API Error 0020: Invalid method: test'
+        )
+
+    def test_list_addresses(self):
+        self.assertEqual(
+            json.loads(self.api.listAddresses()).get('addresses'),
+            self.addresses
+        )
+
+    def test_decode_address(self):
+        result = json.loads(
+            self.api.decodeAddress('BM-2cWzSnwjJ7yRP3nLEWUV5LisTZyREWSzUK'))
+        self.assertEqual(result.get('status'), 'success')
+        self.assertEqual(result['addressVersion'], 4)
+        self.assertEqual(result['streamNumber'], 1)
+
+    def test_create_deterministic_addresses(self):
+        seed = base64.encodestring(
+            'TIGER, tiger, burning bright. In the forests of the night')
+        self.assertEqual(
+            self.api.getDeterministicAddress(seed, 4, 1),
+            'BM-2cWzSnwjJ7yRP3nLEWUV5LisTZyREWSzUK'
+        )
+        self.assertEqual(
+            self.api.getDeterministicAddress(seed, 3, 1),
+            'BM-2DBPTgeSawWYZceFD69AbDT5q4iUWtj1ZN'
+        )
+        # The following for version 2:
+        # "API Error 0021: Unexpected API Failure -
+        #  cannot concatenate 'str' and 'int' objects"
+
+    # def test_create_random_address(self):
+    #     pass
+
+    def test_addressbook(self):
+        # Initially it's empty
+        self.assertEqual(
+            json.loads(self.api.listAddressBookEntries()).get('addresses'),
+            []
+        )
+        # Add known address
+        self.api.addAddressBookEntry(
+            'BM-2cWzSnwjJ7yRP3nLEWUV5LisTZyREWSzUK',
+            base64.encodestring('tiger_4')
+        )
+        # Check addressbook entry
+        entries = json.loads(
+            self.api.listAddressBookEntries()).get('addresses')[0]
+        self.assertEqual(
+            entries['address'], 'BM-2cWzSnwjJ7yRP3nLEWUV5LisTZyREWSzUK')
+        self.assertEqual(
+            base64.decodestring(entries['label']), 'tiger_4')
+        # Remove known address
+        self.api.deleteAddressBookEntry(
+            'BM-2cWzSnwjJ7yRP3nLEWUV5LisTZyREWSzUK')
+        # Addressbook should be empty again
+        self.assertEqual(
+            json.loads(self.api.listAddressBookEntries()).get('addresses'),
+            []
+        )