diff --git a/test/test_streamlayerformat.py b/test/test_streamlayerformat.py
new file mode 100644
index 000000000..056afa4ce
--- /dev/null
+++ b/test/test_streamlayerformat.py
@@ -0,0 +1,143 @@
+import unittest
+import tarfile
+
+from StringIO import StringIO
+from util.streamlayerformat import StreamLayerMerger, AUFS_WHITEOUT
+
+class TestStreamLayerMerger(unittest.TestCase):
+  def create_layer(self, **kwargs):
+    output = StringIO()
+    with tarfile.open(fileobj=output, mode='w:gz') as tar:
+      for filename in kwargs:
+        current_filename = filename
+        current_contents = kwargs[filename]
+
+        if current_contents is None:
+          # This is a deleted file.
+          current_filename = AUFS_WHITEOUT + current_filename
+          current_contents = ''
+          
+        info = tarfile.TarInfo(name=current_filename)
+        info.size = len(current_contents)
+        tar.addfile(info, fileobj=StringIO(current_contents))
+
+    return output.getvalue()
+
+  def squash_layers(self, layers):
+    def get_layers():
+      return [StringIO(layer) for layer in layers]
+
+    merger = StreamLayerMerger(get_layers)
+    merged_data = ''.join(merger.get_generator())
+    return merged_data
+
+  def assertHasFile(self, squashed, filename, contents):
+    with tarfile.open(fileobj=StringIO(squashed), mode='r:*') as tar:
+      member = tar.getmember(filename)
+      self.assertEquals(contents, '\n'.join(tar.extractfile(member).readlines()))
+
+  def assertDoesNotHaveFile(self, squashed, filename):
+    with tarfile.open(fileobj=StringIO(squashed), mode='r:*') as tar:
+      try:
+        member = tar.getmember(filename)
+        self.fail('Filename %s found' % filename)
+      except:
+        pass    
+
+  def test_single_layer(self):
+    tar_layer = self.create_layer(
+      some_file = 'foo',
+      another_file = 'bar',
+      third_file = 'meh')
+
+    squashed = self.squash_layers([tar_layer])
+
+    self.assertHasFile(squashed, 'some_file', 'foo')
+    self.assertHasFile(squashed, 'another_file', 'bar')
+    self.assertHasFile(squashed, 'third_file', 'meh')
+
+  def test_multiple_layers(self):
+    second_layer = self.create_layer(
+      some_file = 'foo',
+      another_file = 'bar',
+      third_file = 'meh')
+
+    first_layer = self.create_layer(
+      top_file = 'top')
+
+    squashed = self.squash_layers([first_layer, second_layer])
+
+    self.assertHasFile(squashed, 'some_file', 'foo')
+    self.assertHasFile(squashed, 'another_file', 'bar')
+    self.assertHasFile(squashed, 'third_file', 'meh')
+    self.assertHasFile(squashed, 'top_file', 'top')
+    
+  def test_multiple_layers_overwrite(self):
+    second_layer = self.create_layer(
+      some_file = 'foo',
+      another_file = 'bar',
+      third_file = 'meh')
+
+    first_layer = self.create_layer(
+      another_file = 'top')
+
+    squashed = self.squash_layers([first_layer, second_layer])
+
+    self.assertHasFile(squashed, 'some_file', 'foo')
+    self.assertHasFile(squashed, 'third_file', 'meh')
+    self.assertHasFile(squashed, 'another_file', 'top')
+
+  def test_deleted_file(self):
+    second_layer = self.create_layer(
+      some_file = 'foo',
+      another_file = 'bar',
+      third_file = 'meh')
+
+    first_layer = self.create_layer(
+      another_file = None)
+
+    squashed = self.squash_layers([first_layer, second_layer])
+
+    self.assertHasFile(squashed, 'some_file', 'foo')
+    self.assertHasFile(squashed, 'third_file', 'meh')
+    self.assertDoesNotHaveFile(squashed, 'another_file')
+
+  def test_deleted_readded_file(self):
+    third_layer = self.create_layer(
+      another_file = 'bar')
+
+    second_layer = self.create_layer(
+      some_file = 'foo',
+      another_file = None,
+      third_file = 'meh')
+
+    first_layer = self.create_layer(
+      another_file = 'newagain')
+
+    squashed = self.squash_layers([first_layer, second_layer, third_layer])
+
+    self.assertHasFile(squashed, 'some_file', 'foo')
+    self.assertHasFile(squashed, 'third_file', 'meh')
+    self.assertHasFile(squashed, 'another_file', 'newagain')
+
+  def test_deleted_in_lower_layer(self):
+    third_layer = self.create_layer(
+      another_file = 'bar')
+
+    second_layer = self.create_layer(
+      some_file = 'foo',
+      another_file = None,
+      third_file = 'meh')
+
+    first_layer = self.create_layer(
+      top_file = 'top')
+
+    squashed = self.squash_layers([first_layer, second_layer, third_layer])
+
+    self.assertHasFile(squashed, 'some_file', 'foo')
+    self.assertHasFile(squashed, 'third_file', 'meh')
+    self.assertHasFile(squashed, 'top_file', 'top')
+    self.assertDoesNotHaveFile(squashed, 'another_file')
+
+if __name__ == '__main__':
+  unittest.main()