diff --git a/e2e/cypress/integration/plugins/upgrade_spec.js b/e2e/cypress/integration/plugins/upgrade_spec.js
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+++ b/e2e/cypress/integration/plugins/upgrade_spec.js
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+// Copyright (c) 2015-present Mattermost, Inc. All Rights Reserved.
+// See LICENSE.txt for license information.
+
+// ***************************************************************
+// - [#] indicates a test step (e.g. # Go to a page)
+// - [*] indicates an assertion (e.g. * Check the title)
+// - Use element ID when selecting an element. Create one if none.
+// ***************************************************************
+
+// Group: @system_console @plugin
+
+/**
+ * Note : This test requires two demo plugin tar files under fixtures folder.
+ * Download version 0.1.0 from :
+ * https://github.com/mattermost/mattermost-plugin-demo/releases/download/v0.1.0/com.mattermost.demo-plugin-0.1.0.tar.gz
+ * Copy to : ./e2e/cypress/fixtures/com.mattermost.demo-plugin-0.1.0.tar.gz
+ *
+ * Download version 0.2.0 from :
+ * https://github.com/mattermost/mattermost-plugin-demo/releases/download/v0.2.0/com.mattermost.demo-plugin-0.2.0.tar.gz
+ * Copy to : ./e2e/cypress/fixtures/com.mattermost.demo-plugin-0.2.0.tar.gz
+ */
+
+import * as TIMEOUTS from '../../fixtures/timeouts';
+
+describe('Plugin remains enabled when upgraded', () => {
+    const pluginIdDemo = 'com.mattermost.demo-plugin';
+
+    before(() => {
+        // # Initialize setup and visit town-square
+        cy.apiInitSetup().then(({team}) => {
+            cy.visit(`/${team.name}/channels/town-square`);
+
+            // #If Demo plugin is already enabled , uninstall it
+            cy.apiRemovePluginById(pluginIdDemo);
+            cy.visit('/admin_console/plugins/plugin_management');
+            cy.get('.admin-console__header', {timeout: TIMEOUTS.ONE_MIN}).should('be.visible').and('have.text', 'Plugin Management');
+        });
+    });
+
+    after(() => {
+        cy.apiRemovePluginById(pluginIdDemo);
+    });
+
+    it('MT40 Plugin remains enabled when upgraded', () => {
+    // * Upload Demo plugin from the browser
+        const fileName1 = 'com.mattermost.demo-plugin-0.1.0.tar.gz';
+        const fileName2 = 'com.mattermost.demo-plugin-0.2.0.tar.gz';
+        const mimeType = 'application/gzip';
+        cy.fixture(fileName1, 'binary').
+            then(Cypress.Blob.binaryStringToBlob).
+            then((fileContent) => {
+                cy.get('input[type=file]').attachFile({fileContent, fileName: fileName1, mimeType});
+            });
+
+        cy.get('#uploadPlugin').scrollIntoView().should('be.visible').click().wait(TIMEOUTS.HALF_SEC);
+
+        // * Verify that the button shows correct text while uploading
+        cy.findByText('Uploading...', {timeout: TIMEOUTS.ONE_MIN}).should('be.visible');
+
+        // * Verify that the button shows correct text and is disabled after upload
+        cy.findByText('Upload', {timeout: TIMEOUTS.ONE_MIN}).should('be.visible');
+        cy.get('#uploadPlugin').and('be.disabled');
+
+        // # Enable demo plugin
+        doTaskOnPlugin(pluginIdDemo, () => {
+        // * Verify Demo Plugin title is shown
+            cy.waitUntil(() => cy.get('strong').scrollIntoView().should('be.visible').then((title) => {
+                return title[0].innerText === 'Demo Plugin';
+            }));
+
+            // # Click on Enable link
+            cy.findByText('Enable').click();
+        });
+
+        // * Verify V0.1.0 of plugin
+        cy.findByText(/0.1.0/).scrollIntoView().should('be.visible');
+
+        cy.get('#uploadPlugin').scrollIntoView().should('be.visible');
+
+        // # Upgrade plugin
+        cy.fixture(fileName2, 'binary').
+            then(Cypress.Blob.binaryStringToBlob).
+            then((fileContent) => {
+                cy.get('input[type=file]').attachFile({fileContent, fileName: fileName2, mimeType});
+            });
+
+        // * Verify that the button shows correct text while uploading
+        cy.get('#uploadPlugin').should('be.visible').click().wait(TIMEOUTS.HALF_SEC);
+
+        // # Confirm overwrite of plugin with same name
+        cy.get('#confirmModalButton').should('be.visible').click();
+
+        doTaskOnPlugin(pluginIdDemo, () => {
+        // * Verify plugin is running
+            waitForAlert('This plugin is running.');
+        });
+
+        // * Verify v0.2.0 of plugin
+        cy.findByText(/0.2.0/).scrollIntoView().should('be.visible');
+    });
+});
+
+function waitForAlert(message) {
+    cy.waitUntil(() => cy.get('.alert').scrollIntoView().should('be.visible').then((alert) => {
+        return alert[0].innerText === message;
+    }));
+}
+
+function doTaskOnPlugin(pluginId, taskCallback) {
+    cy.findByText(/Installed Plugins/).scrollIntoView().should('be.visible');
+    cy.findByTestId(pluginId).scrollIntoView().should('be.visible').within(() => {
+        // # Perform task
+        taskCallback();
+    });
+}