diff --git a/stages/test/test_gunzip.py b/stages/test/test_gunzip.py
new file mode 100644
index 000000000..bece9847c
--- /dev/null
+++ b/stages/test/test_gunzip.py
@@ -0,0 +1,120 @@
+#!/usr/bin/python3
+
+import os.path
+import re
+import subprocess
+from unittest import mock
+
+import pytest
+
+from osbuild import testutil
+from osbuild.testutil import has_executable
+
+STAGE_NAME = "org.osbuild.gunzip"
+
+
+# Prepare dataset containing good and bad API call parameters
+@pytest.mark.parametrize("test_data, expected_err", [
+    # Bad API parameters
+    ({}, "'path' is a required property"),
+    ({"path": 123}, "123 is not of type 'string'"),
+    # Good API parameters
+    ({"path": "/tmp/"}, ""),
+    ({"path": "/boot/initramfs-5.14.0-247.el9.x86_64.img"}, ""),
+])
+# This test validates only API calls using correct and incorrect queries
+def test_schema_validation_gunzip(stage_schema, test_data, expected_err):
+    test_input = {
+        "type": STAGE_NAME,
+        "options": {
+        }
+    }
+
+    test_input["options"].update(test_data)
+    res = stage_schema.validate(test_input)
+
+    if expected_err == "":
+        assert res.valid is True, f"err: {[e.as_dict() for e in res.errors]}"
+    else:
+        assert res.valid is False
+        testutil.assert_jsonschema_error_contains(res, expected_err, expected_num_errs=1)
+
+
+# This test creates dummy file, compresses it and then decompresses.
+# End result checksum is compared with initial file checksum.
+@pytest.mark.skipif(not has_executable("gunzip"), reason="gunzip")
+@pytest.mark.skipif(not has_executable("gzip"), reason="gzip")
+def test_gunzip_integration(tmp_path, stage_module):
+    fake_file = "fake_file.txt"
+    fake_archive = f"{fake_file}.gz"
+    fake_input_path = tmp_path / fake_file
+
+    with fake_input_path.open("w") as fp:
+        # Create 10MB file
+        fp.truncate(10 * 1024 * 1024)
+        fp.write("Some random text written to a file")
+
+    input_checksum = subprocess.check_output([
+        "md5sum", fake_input_path], encoding="utf-8")
+
+    output = subprocess.check_output([
+        # gzip prints verbouse output on STDERR by default
+        "gzip", "-v", fake_input_path], encoding="utf-8", stderr=subprocess.STDOUT)
+    assert f'{fake_archive}' in output, \
+           f'expect filename: {fake_archive} in: {output}'
+
+    inp = {
+        "file": {
+            "path": tmp_path,
+            "data": {
+                "files": {
+                    fake_archive: "Some test file"
+                }
+            },
+        },
+    }
+    output = tmp_path
+    options = {
+        "path": fake_file
+    }
+    stage_module.main(inp, output, options)
+
+    output_checksum = subprocess.check_output([
+        "md5sum", fake_input_path], encoding="utf-8")
+    assert output_checksum == input_checksum, \
+           "Input and output files does not match"
+
+
+@pytest.mark.parametrize("test_input, expected", [
+    ({"path": "test_file.txt"}, ["/tmp/test_file.txt.gz"]),
+])
+# This test evaluates final binary call and match between its flags and stage args
+@mock.patch("subprocess.run")
+def test_gunzip_cmdline(mock_run, stage_module, test_input, expected):
+    tmp_path = "/tmp"
+    fake_file = "fake_file.txt"
+    fake_archive = f"{fake_file}.gz"
+    fake_input_path = tmp_path + "/" + fake_file
+
+    inp = {
+        "file": {
+            "path": tmp_path,
+            "data": {
+                "files": {
+                    fake_archive: "Some test file"
+                }
+            },
+        },
+    }
+    options = {
+    }
+    output = tmp_path
+    options.update(test_input)
+    stage_module.main(inp, output, options)
+
+    expected = [
+        "gunzip",
+        "--stdout",
+    ] + expected
+    mock_run.assert_called_once_with(expected, stdout=mock.ANY, check=True)
+