diff --git a/.testr.conf b/.testr.conf
index fb622677a..3ce7ec2a9 100644
--- a/.testr.conf
+++ b/.testr.conf
@@ -2,6 +2,6 @@
 test_command=OS_STDOUT_CAPTURE=${OS_STDOUT_CAPTURE:-1} \
              OS_STDERR_CAPTURE=${OS_STDERR_CAPTURE:-1} \
              OS_TEST_TIMEOUT=${OS_TEST_TIMEOUT:-60} \
-             ${PYTHON:-python} -m subunit.run discover -t ./ . $LISTOPT $IDOPTION
+             ${PYTHON:-python} -m subunit.run discover -t ./ ${OS_TEST_PATH:-./shade/tests/unit} $LISTOPT $IDOPTION
 test_id_option=--load-list $IDFILE
-test_list_option=--list
\ No newline at end of file
+test_list_option=--list
diff --git a/shade/tests/functional/__init__.py b/shade/tests/functional/__init__.py
new file mode 100644
index 000000000..e69de29bb
diff --git a/shade/tests/functional/hooks/post_test_hook.sh b/shade/tests/functional/hooks/post_test_hook.sh
new file mode 100755
index 000000000..ccf477455
--- /dev/null
+++ b/shade/tests/functional/hooks/post_test_hook.sh
@@ -0,0 +1,29 @@
+# -*- coding: utf-8 -*-
+
+# Licensed under the Apache License, Version 2.0 (the "License"); you may
+# not use this file except in compliance with the License. You may obtain
+# a copy of the License at
+#
+#      http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS, WITHOUT
+# WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied. See the
+# License for the specific language governing permissions and limitations
+# under the License.
+
+export SHADE_DIR="$BASE/new/shade"
+
+cd $BASE/new/devstack
+source openrc admin admin
+unset OS_CACERT
+
+cd $SHADE_DIR
+sudo chown -R jenkins:stack $SHADE_DIR
+echo "Running shade functional test suite"
+set +e
+sudo -E -H -u jenkins tox -efunctional
+EXIT_CODE=$?
+set -e
+
+exit $EXIT_CODE
diff --git a/shade/tests/functional/test_compute.py b/shade/tests/functional/test_compute.py
new file mode 100644
index 000000000..6e456b1a8
--- /dev/null
+++ b/shade/tests/functional/test_compute.py
@@ -0,0 +1,59 @@
+# -*- coding: utf-8 -*-
+
+# Licensed under the Apache License, Version 2.0 (the "License"); you may
+# not use this file except in compliance with the License. You may obtain
+# a copy of the License at
+#
+#      http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS, WITHOUT
+# WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied. See the
+# License for the specific language governing permissions and limitations
+# under the License.
+
+"""
+test_compute
+----------------------------------
+
+Functional tests for `shade` compute methods.
+"""
+
+from novaclient.v2.servers import Server
+from shade import openstack_cloud
+from shade.tests import base
+from shade.tests.functional.util import pick_flavor, pick_image
+
+
+class TestCompute(base.TestCase):
+    def setUp(self):
+        super(TestCompute, self).setUp()
+        # Shell should have OS-* envvars from openrc, typically loaded by job
+        self.cloud = openstack_cloud()
+        self.nova = self.cloud.nova_client
+        self.flavor = pick_flavor(self.nova.flavors.list())
+        if self.flavor is None:
+            self.addDetail('pick_flavor', 'no sensible flavor available')
+        self.image = pick_image(self.nova.images.list())
+        if self.image is None:
+            self.addDetail('pick_image', 'no sensible image available')
+        self.addCleanup(self._cleanup_servers)
+
+    def _cleanup_servers(self):
+        for i in self.nova.servers.list():
+            if i.name.startswith('test'):
+                self.nova.servers.delete(i)
+
+    def test_create_server(self):
+        server = self.cloud.create_server(name='test_create_server',
+                                          image=self.image, flavor=self.flavor)
+        self.assertIsInstance(server, Server)
+        self.assertEquals(server.name, 'test_create_server')
+        self.assertEquals(server.image['id'], self.image.id)
+        self.assertEquals(server.flavor['id'], self.flavor.id)
+
+    def test_delete_server(self):
+        self.cloud.create_server(name='test_delete_server',
+                                 image=self.image, flavor=self.flavor)
+        server_deleted = self.cloud.delete_server('test_delete_server')
+        self.assertIsNone(server_deleted)
diff --git a/shade/tests/functional/util.py b/shade/tests/functional/util.py
new file mode 100644
index 000000000..bddb57f3e
--- /dev/null
+++ b/shade/tests/functional/util.py
@@ -0,0 +1,37 @@
+# -*- coding: utf-8 -*-
+
+# Licensed under the Apache License, Version 2.0 (the "License"); you may
+# not use this file except in compliance with the License. You may obtain
+# a copy of the License at
+#
+#      http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS, WITHOUT
+# WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied. See the
+# License for the specific language governing permissions and limitations
+# under the License.
+
+"""
+util
+--------------------------------
+
+Util methods for functional tests
+"""
+
+
+def pick_flavor(flavors):
+    """Given a flavor list pick a reasonable one."""
+    for flavor in flavors:
+        if flavor.name == 'm1.tiny':
+            return flavor
+
+    for flavor in flavors:
+        if flavor.name == 'm1.small':
+            return flavor
+
+
+def pick_image(images):
+    for image in images:
+        if image.name.startswith('cirros') and image.name.endswith('-uec'):
+            return image
diff --git a/shade/tests/unit/__init__.py b/shade/tests/unit/__init__.py
new file mode 100644
index 000000000..e69de29bb
diff --git a/shade/tests/test_meta.py b/shade/tests/unit/test_meta.py
similarity index 100%
rename from shade/tests/test_meta.py
rename to shade/tests/unit/test_meta.py
diff --git a/shade/tests/test_shade.py b/shade/tests/unit/test_shade.py
similarity index 100%
rename from shade/tests/test_shade.py
rename to shade/tests/unit/test_shade.py
diff --git a/tox.ini b/tox.ini
index e0ff3d6e6..71cbd48c8 100644
--- a/tox.ini
+++ b/tox.ini
@@ -15,6 +15,10 @@ deps = -r{toxinidir}/requirements.txt
        -r{toxinidir}/test-requirements.txt
 commands = python setup.py testr --slowest --testr-args='{posargs}'
 
+[testenv:functional]
+setenv =
+   OS_TEST_PATH = ./shade/tests/functional
+
 [testenv:pep8]
 commands = flake8