diff --git a/python/plugins/processing/tests/AlgorithmsTestBase.py b/python/plugins/processing/tests/AlgorithmsTestBase.py
index 62d0df7f8a00..78d39491e57a 100644
--- a/python/plugins/processing/tests/AlgorithmsTestBase.py
+++ b/python/plugins/processing/tests/AlgorithmsTestBase.py
@@ -86,7 +86,12 @@ def check_algorithm(self, name, defs):
         :param defs: A python dict containing a test algorithm definition
         """
         self.vector_layer_params = {}
-        QgsProject.instance().removeAllMapLayers()
+        QgsProject.instance().clear()
+
+        if 'project' in defs:
+            full_project_path = os.path.join(processingTestDataPath(), defs['project'])
+            project_read_success = QgsProject.instance().read(full_project_path)
+            self.assertTrue(project_read_success, 'Failed to load project file: ' + defs['project'])
 
         if 'project_crs' in defs:
             QgsProject.instance().setCrs(QgsCoordinateReferenceSystem(defs['project_crs']))
@@ -212,6 +217,9 @@ def load_result_param(self, param):
                 basename = 'raster.tif'
             filepath = os.path.join(outdir, basename)
             return filepath
+        elif param['type'] == 'directory':
+            outdir = tempfile.mkdtemp()
+            return outdir
 
         raise KeyError("Unknown type '{}' specified for parameter".format(param['type']))
 
@@ -350,6 +358,11 @@ def check_results(self, results, context, params, expected):
                 result_filepath = results[id]
 
                 self.assertFilesEqual(expected_filepath, result_filepath)
+            elif 'directory' == expected_result['type']:
+                expected_dirpath = self.filepath_from_param(expected_result)
+                result_dirpath = results[id]
+
+                self.assertDirectoriesEqual(expected_dirpath, result_dirpath)
             elif 'regex' == expected_result['type']:
                 with open(results[id], 'r') as file:
                     data = file.read()
diff --git a/python/plugins/processing/tests/README.md b/python/plugins/processing/tests/README.md
index db46027f42e4..7b884feb8efe 100644
--- a/python/plugins/processing/tests/README.md
+++ b/python/plugins/processing/tests/README.md
@@ -194,6 +194,25 @@ OUTPUT:
     - 'Feature Count: 6'
 ```
 
+#### Directories
+
+You can compare the content of an output directory by en expected result reference directory
+
+```yaml
+OUTPUT_DIR:
+  name: expected/tiles_xyz/test_1
+  type: directory
+```
+
+### Algorithm Context
+
+There are few more definitions that can modify context of the algorithm - these can be specified at top level of test:
+
+- `project` - will load a specified QGIS project file before running the algorithm. If not specified, algorithm will run with empty project
+- `project_crs` - overrides the default project CRS - e.g. `EPSG:27700`
+- `ellipsoid` - overrides the default project ellipsoid used for measurements - e.g. `GRS80`
+
+
 Running tests locally
 ------------------
 ```bash
diff --git a/python/testing/__init__.py b/python/testing/__init__.py
index 4f648db2b494..fbe5e1c9b688 100644
--- a/python/testing/__init__.py
+++ b/python/testing/__init__.py
@@ -29,6 +29,7 @@
 import sys
 import difflib
 import functools
+import filecmp
 
 from qgis.PyQt.QtCore import QVariant
 from qgis.core import QgsApplication, QgsFeatureRequest, NULL
@@ -196,6 +197,20 @@ def assertFilesEqual(self, filepath_expected, filepath_result):
                 diff = list(diff)
                 self.assertEqual(0, len(diff), ''.join(diff))
 
+    def assertDirectoriesEqual(self, dirpath_expected, dirpath_result):
+        """ Checks whether both directories have the same content (recursively) and raises an assertion error if not. """
+        dc = filecmp.dircmp(dirpath_expected, dirpath_result)
+        dc.report_full_closure()
+
+        def _check_dirs_equal_recursive(dcmp):
+            self.assertEqual(dcmp.left_only, [])
+            self.assertEqual(dcmp.right_only, [])
+            self.assertEqual(dcmp.diff_files, [])
+            for sub_dcmp in dcmp.subdirs.values():
+                _check_dirs_equal_recursive(sub_dcmp)
+
+        _check_dirs_equal_recursive(dc)
+
     def assertGeometriesEqual(self, geom0, geom1, geom0_id='geometry 1', geom1_id='geometry 2', precision=14, topo_equal_check=False):
         self.checkGeometriesEqual(geom0, geom1, geom0_id, geom1_id, use_asserts=True, precision=precision, topo_equal_check=topo_equal_check)