diff --git a/.gitignore b/.gitignore
index 7dc57dc7..4099784f 100644
--- a/.gitignore
+++ b/.gitignore
@@ -74,6 +74,15 @@ build/
 .pytest_cache/
 _version.py
 
+# Test coverage and reports
+htmlcov/
+.coverage
+coverage.xml
+test-report.html
+test-results.xml
+*.cover
+.hypothesis/
+
 # Virtual environments
 .venv/
 venv/
diff --git a/tests/README.md b/tests/README.md
new file mode 100644
index 00000000..5a420cba
--- /dev/null
+++ b/tests/README.md
@@ -0,0 +1,27 @@
+# Microsoft Agent 365 SDK Tests
+
+Unit and integration tests for the Microsoft Agent 365-Python SDK. This test suite ensures reliability, maintainability, and quality across all modules including runtime, tooling, notifications, and observability extensions.
+
+## Usage
+
+For detailed instructions on running tests and generating coverage reports, see:
+
+- **[Test Plan](TEST_PLAN.md)** - Comprehensive testing strategy and implementation roadmap
+- **[Running Tests](RUNNING_TESTS.md)** - Complete guide for installation, running tests, generating coverage reports, and troubleshooting
+
+## Support
+
+For issues, questions, or feedback:
+
+- File issues in the [GitHub Issues](https://github.com/microsoft/Agent365-python/issues) section
+- See the [main documentation](../README.md) for more information
+
+## Trademarks
+
+*Microsoft, Windows, Microsoft Azure and/or other Microsoft products and services referenced in the documentation may be either trademarks or registered trademarks of Microsoft in the United States and/or other countries. The licenses for this project do not grant you rights to use any Microsoft names, logos, or trademarks. Microsoft's general trademark guidelines can be found at http://go.microsoft.com/fwlink/?LinkID=254653.*
+
+## License
+
+Copyright (c) Microsoft Corporation. All rights reserved.
+
+Licensed under the MIT License - see the [LICENSE](../LICENSE.md) file for details.
diff --git a/tests/RUNNING_TESTS.md b/tests/RUNNING_TESTS.md
new file mode 100644
index 00000000..9ded70f4
--- /dev/null
+++ b/tests/RUNNING_TESTS.md
@@ -0,0 +1,159 @@
+# Running Unit Tests for Agent365-Python SDK
+
+This guide covers setting up and running tests.
+
+---
+
+## Prerequisites
+
+### 1. Create Virtual Environment
+
+```powershell
+# Create virtual environment using uv
+uv venv
+
+# Activate the virtual environment
+.\.venv\Scripts\Activate.ps1
+```
+
+### 2. Configure Python Environment
+
+1. Press `Ctrl+Shift+P`
+2. Type "Python: Select Interpreter"
+3. Choose the `.venv` interpreter from the list
+
+### 3. Install Dependencies
+
+```powershell
+# Test framework and reporting
+uv pip install pytest pytest-asyncio pytest-mock pytest-cov pytest-html wrapt
+
+# SDK core libraries
+uv pip install -e libraries/microsoft-agents-a365-runtime -e libraries/microsoft-agents-a365-notifications -e libraries/microsoft-agents-a365-observability-core -e libraries/microsoft-agents-a365-tooling
+
+# Framework extension libraries
+uv pip install -e libraries/microsoft-agents-a365-observability-extensions-langchain -e libraries/microsoft-agents-a365-observability-extensions-openai -e libraries/microsoft-agents-a365-observability-extensions-semantickernel -e libraries/microsoft-agents-a365-observability-extensions-agentframework -e libraries/microsoft-agents-a365-tooling-extensions-agentframework -e libraries/microsoft-agents-a365-tooling-extensions-azureaifoundry -e libraries/microsoft-agents-a365-tooling-extensions-openai -e libraries/microsoft-agents-a365-tooling-extensions-semantickernel
+```
+
+---
+
+## Test Structure
+
+> **Note:** This structure will be updated as new tests are added.
+
+```plaintext
+tests/
+├── runtime/                           # Runtime tests
+├── observability/                     # Observability tests
+├── tooling/                           # Tooling tests
+└── notifications/                     # Notifications tests
+```
+
+---
+
+## Running Tests in VS Code (Optional)
+
+### Test Explorer
+
+1. Click the beaker icon in the Activity Bar or press `Ctrl+Shift+P` → "Test: Focus on Test Explorer View"
+2. Click the play button to run tests (all/folder/file/individual)
+3. Right-click → "Debug Test" to debug with breakpoints
+
+### Command Palette
+
+- `Test: Run All Tests`
+- `Test: Run Tests in Current File`
+- `Test: Debug Tests in Current File`
+
+---
+
+## Running Tests from Command Line
+
+```powershell
+# Run all tests
+python -m pytest tests/
+
+# Run specific module/file
+python -m pytest tests/runtime/
+python -m pytest tests/runtime/test_environment_utils.py
+
+# Run with options
+python -m pytest tests/ -v                    # Verbose
+python -m pytest tests/ -x                    # Stop on first failure
+python -m pytest tests/ -k "environment"      # Pattern matching
+python -m pytest --lf                         # Re-run failed tests
+```
+
+---
+
+## Generating Reports
+
+### HTML Reports
+
+```powershell
+# Coverage report
+python -m pytest tests/ --cov=libraries --cov-report=html -v
+
+# View reports
+start htmlcov\index.html
+
+# Test report (requires: uv pip install pytest-html)
+python -m pytest tests/ --html=test-report.html --self-contained-html
+
+# View reports
+start test-report.html
+
+# Combined (requires: uv pip install pytest-html)
+python -m pytest tests/ --cov=libraries --cov-report=html --html=test-report.html --self-contained-html -v
+
+# View reports
+start htmlcov\index.html
+```
+
+### CI/CD Reports
+
+```powershell
+# XML reports for CI/CD pipelines
+python -m pytest tests/ --cov=libraries --cov-report=xml --junitxml=test-results.xml
+
+# View reports
+start test-results.xml
+start coverage.xml
+```
+
+---
+
+## Troubleshooting
+
+### Common Issues
+
+| Issue | Solution |
+|-------|----------|
+| **Test loading failed** | Clean pyproject.toml, reinstall packages, restart VS Code |
+| **ImportError: No module named 'pytest'** | `uv pip install pytest pytest-asyncio pytest-mock` |
+| **ImportError: No module named 'microsoft_agents_a365'** | `uv pip install -e .` |
+| **Tests not discovered** | Refresh Test Explorer or restart VS Code |
+
+### Fix Steps
+
+If tests fail to discover or import errors occur:
+
+**1. Clean pyproject.toml**
+
+```powershell
+$content = Get-Content "pyproject.toml" -Raw
+$fixed = $content -replace "`r`n", "`n"
+$fixed | Set-Content "pyproject.toml" -NoNewline
+```
+
+**2. Reinstall packages**
+
+```powershell
+uv pip install -e .
+```
+
+**3. Restart VS Code**
+
+- Close completely and reopen
+- Wait for Python extension to reload
+- Refresh Test Explorer
diff --git a/tests/TEST_PLAN.md b/tests/TEST_PLAN.md
new file mode 100644
index 00000000..4d0c6e6c
--- /dev/null
+++ b/tests/TEST_PLAN.md
@@ -0,0 +1,146 @@
+# Test Plan for Agent365-Python SDK
+
+> **Note:** This plan is under active development. Keep updating as testing progresses.
+
+**Version:** 1.0  
+**Date:** November 24, 2025  
+**Status:** Draft
+
+---
+
+## Overview
+
+### Current State
+- ✅ Unit tests exist for `observability` and `runtime` modules
+- ❌ Missing tests for `tooling` and `notifications` modules
+- ❌ No integration tests or CI/CD automation
+
+### Goals
+- Achieve **80%+ code coverage** across all modules
+- Implement integration tests for cross-module functionality
+- Integrate testing into CI/CD pipeline with coverage enforcement
+
+---
+
+## Testing Strategy
+
+**Framework:** `pytest`  
+**Coverage:** `pytest-cov`  
+**Mocking:** `unittest.mock`  
+**Async:** `pytest-asyncio`
+
+**Test Pattern:** AAA (Arrange → Act → Assert)  
+**Naming Convention:** `test_<method>_<condition>_<expected_result>`
+
+---
+
+## Implementation Roadmap
+
+| Phase | Deliverables | Priority |
+|-------|-------------|----------|
+| 1.1 | Runtime unit tests | ✅ Complete |
+| 1.2 | Tooling unit tests | HIGH |
+| 1.3 | Notifications unit tests | HIGH |
+| 1.4 | Expand observability tests | MEDIUM |
+| 1.5 | Tooling extension tests | LOW |
+| 2 | Integration tests | MEDIUM |
+| 3 | CI/CD automation | HIGH |
+
+---
+
+## Phase 1: Unit Tests
+
+### 1.1 Runtime Module
+**Priority:** HIGH
+
+| Module | Test File | Status |
+|--------|-----------|--------|
+| `power_platform_api_discovery.py` | `test_power_platform_api_discovery.py` | ✅ Complete |
+| `utility.py` | `test_utility.py` | ✅ Complete |
+| `environment_utils.py` | `test_environment_utils.py` | ✅ Complete |
+| `version_utils.py` | `test_version_utils.py` | ✅ Complete |
+
+---
+
+### 1.2 Tooling Module
+**Priority:** HIGH
+
+| Module | Test File | Status |
+|--------|-----------|--------|
+| `utils/utility.py` | `test_utility.py` | ❌ Missing |
+| `models/mcp_server_config.py` | `test_mcp_server_config.py` | ❌ Missing |
+| `services/mcp_tool_server_configuration_service.py` | `test_mcp_tool_server_configuration_service.py` | ❌ Missing |
+
+---
+
+### 1.3 Notifications Module
+**Priority:** HIGH
+
+| Module | Test File | Status |
+|--------|-----------|--------|
+| `models/agent_lifecycle_event.py` | `test_agent_lifecycle_event.py` | ❌ Missing |
+| `models/agent_notification_activity.py` | `test_agent_notification_activity.py` | ❌ Missing |
+| `models/email_reference.py` | `test_email_reference.py` | ❌ Missing |
+| `agent_notification.py` | `test_agent_notification.py` | ❌ Missing |
+
+---
+
+### 1.4 Observability Extensions
+**Priority:** MEDIUM
+
+| Extension | Status |
+|-----------|--------|
+| `agentframework` | ✅ Expand existing |
+| `langchain` | ✅ Expand existing |
+| `openai` | ✅ Expand existing |
+| `semantickernel` | ✅ Expand existing |
+
+---
+
+### 1.5 Tooling Extensions
+**Priority:** LOW
+
+| Extension | Status |
+|-----------|--------|
+| Agent Framework | ❌ Missing |
+| Azure AI Foundry | ❌ Missing |
+| OpenAI | ❌ Missing |
+| Semantic Kernel | ❌ Missing |
+
+---
+
+## Phase 2: Integration Tests
+
+**Priority:** MEDIUM
+
+| Integration | Status |
+|-------------|--------|
+| Runtime + Observability | ❌ Missing |
+| Tooling + Runtime | ❌ Missing |
+| Notifications + Runtime | ❌ Missing |
+| Agent Framework full flow | ❌ Missing |
+| LangChain full flow | ❌ Missing |
+
+---
+
+## Phase 3: CI/CD Integration
+
+**Priority:** HIGH
+
+| Component | Status |
+|-----------|--------|
+| GitHub Actions workflow | ❌ Missing |
+| Python matrix (3.9-3.12) | ❌ Missing |
+| Coverage enforcement (80%+) | ❌ Missing |
+| Codecov integration | ❌ Missing |
+| PR blocking on failures | ❌ Missing |
+
+---
+
+## Success Criteria
+
+- ✅ 80%+ code coverage for all modules
+- ✅ All tests pass independently
+- ✅ Full suite completes in < 30 seconds (unit) / < 5 minutes (full)
+- ✅ Automated test execution on all PRs
+- ✅ Coverage reports visible and enforced
diff --git a/tests/runtime/test_environment_utils.py b/tests/runtime/test_environment_utils.py
new file mode 100644
index 00000000..7660b173
--- /dev/null
+++ b/tests/runtime/test_environment_utils.py
@@ -0,0 +1,38 @@
+# Copyright (c) Microsoft Corporation.
+# Licensed under the MIT License.
+
+"""Unit tests for environment_utils module."""
+
+import pytest
+
+from microsoft_agents_a365.runtime.environment_utils import (
+    PROD_OBSERVABILITY_SCOPE,
+    get_observability_authentication_scope,
+    is_development_environment,
+)
+
+
+def test_get_observability_authentication_scope():
+    """Test get_observability_authentication_scope returns production scope."""
+    result = get_observability_authentication_scope()
+    assert result == [PROD_OBSERVABILITY_SCOPE]
+
+
+@pytest.mark.parametrize(
+    "env_value,expected",
+    [
+        (None, False),
+        ("Development", True),
+        ("production", False),
+        ("staging", False),
+    ],
+)
+def test_is_development_environment(monkeypatch, env_value, expected):
+    """Test is_development_environment returns correct value based on PYTHON_ENVIRONMENT."""
+    if env_value is None:
+        monkeypatch.delenv("PYTHON_ENVIRONMENT", raising=False)
+    else:
+        monkeypatch.setenv("PYTHON_ENVIRONMENT", env_value)
+
+    result = is_development_environment()
+    assert result == expected
diff --git a/tests/runtime/test_power_platform_api_discovery.py b/tests/runtime/test_power_platform_api_discovery.py
index 2a16c66c..4189d44c 100644
--- a/tests/runtime/test_power_platform_api_discovery.py
+++ b/tests/runtime/test_power_platform_api_discovery.py
@@ -1,159 +1,166 @@
-# Copyright (c) Microsoft. All rights reserved.
-
-import unittest
-
-from microsoft_agents_a365.runtime.power_platform_api_discovery import PowerPlatformApiDiscovery
-
-
-class TestPowerPlatformApiDiscovery(unittest.TestCase):
-    def test_host_suffix_and_audience(self):
-        expected_host_suffixes = {
-            "local": "api.powerplatform.localhost",
-            "dev": "api.powerplatform.com",
-            "test": "api.powerplatform.com",
-            "preprod": "api.powerplatform.com",
-            "firstrelease": "api.powerplatform.com",
-            "prod": "api.powerplatform.com",
-            "gov": "api.gov.powerplatform.microsoft.us",
-            "high": "api.high.powerplatform.microsoft.us",
-            "dod": "api.appsplatform.us",
-            "mooncake": "api.powerplatform.partner.microsoftonline.cn",
-            "ex": "api.powerplatform.eaglex.ic.gov",
-            "rx": "api.powerplatform.microsoft.scloud",
-        }
-
-        for cluster, expected in expected_host_suffixes.items():
-            with self.subTest(cluster=cluster):
-                disc = PowerPlatformApiDiscovery(cluster)  # type: ignore[arg-type]
-                self.assertEqual(disc.get_token_endpoint_host(), expected)
-                self.assertEqual(disc.get_token_audience(), f"https://{expected}")
-
-    def test_hex_suffix_length_rules(self):
-        prod = PowerPlatformApiDiscovery("prod")
-        first = PowerPlatformApiDiscovery("firstrelease")
-        dev = PowerPlatformApiDiscovery("dev")
-
-        self.assertEqual(prod._get_hex_api_suffix_length(), 2)
-        self.assertEqual(first._get_hex_api_suffix_length(), 2)
-        self.assertEqual(dev._get_hex_api_suffix_length(), 1)
-
-    def test_tenant_endpoint_generation_prod(self):
-        disc = PowerPlatformApiDiscovery("prod")
-        tenant_id = "abc-012"  # normalized -> abc012; suffix length 2 -> '12'
-        expected = "abc0.12.tenant.api.powerplatform.com"
-        self.assertEqual(disc.get_tenant_endpoint(tenant_id), expected)
-
-    def test_tenant_endpoint_generation_dev(self):
-        disc = PowerPlatformApiDiscovery("dev")
-        tenant_id = "A1B2"  # normalized -> a1b2; suffix length 1 -> '2'
-        expected = "a1b.2.tenant.api.powerplatform.com"
-        self.assertEqual(disc.get_tenant_endpoint(tenant_id), expected)
-
-    def test_tenant_island_cluster_endpoint(self):
-        disc = PowerPlatformApiDiscovery("prod")
-        tenant_id = "abc-1234"  # normalized -> abc1234; suffix '34', prefix 'abc12'
-        expected = "il-abc12.34.tenant.api.powerplatform.com"
-        self.assertEqual(disc.get_tenant_island_cluster_endpoint(tenant_id), expected)
-
-    def test_invalid_characters_in_tenant_identifier(self):
-        disc = PowerPlatformApiDiscovery("dev")
-        with self.assertRaisesRegex(ValueError, r"invalid host name characters"):
-            disc.get_tenant_endpoint("invalid$name")
-
-    def test_tenant_identifier_too_short_for_suffix(self):
-        disc = PowerPlatformApiDiscovery("prod")
-        # prod requires normalized length >= 3 (2 + 1). Provide only 2 characters.
-        with self.assertRaisesRegex(ValueError, r"must be at least"):
-            disc.get_tenant_endpoint("ab")
-
-    def test_normalization_of_tenant_id(self):
-        disc = PowerPlatformApiDiscovery("dev")
-        tenant_id = "Ab-Cd-Ef"  # normalized -> abcdef; suffix 1 -> 'f', prefix 'abcde'
-        expected = "abcde.f.tenant.api.powerplatform.com"
-        self.assertEqual(disc.get_tenant_endpoint(tenant_id), expected)
-
-    def test_nodejs_tenant_examples(self):
-        tenant_id = "e3064512-cc6d-4703-be71-a2ecaecaa98a"
-        expected_map = {
-            "local": "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.localhost",
-            "dev": "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com",
-            "test": "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com",
-            "preprod": "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com",
-            "firstrelease": "e3064512cc6d4703be71a2ecaecaa9.8a.tenant.api.powerplatform.com",
-            "prod": "e3064512cc6d4703be71a2ecaecaa9.8a.tenant.api.powerplatform.com",
-            "gov": "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.gov.powerplatform.microsoft.us",
-            "high": "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.high.powerplatform.microsoft.us",
-            "dod": "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.appsplatform.us",
-            "mooncake": "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.partner.microsoftonline.cn",
-            "ex": "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.eaglex.ic.gov",
-            "rx": "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.microsoft.scloud",
-        }
-
-        for cluster, expected in expected_map.items():
-            with self.subTest(cluster=cluster):
-                disc = PowerPlatformApiDiscovery(cluster)  # type: ignore[arg-type]
-                self.assertEqual(disc.get_tenant_endpoint(tenant_id), expected)
-
-    def test_nodejs_tenant_island_examples(self):
-        tenant_id = "e3064512-cc6d-4703-be71-a2ecaecaa98a"
-        expected_map = {
-            "local": "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.localhost",
-            "dev": "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com",
-            "test": "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com",
-            "preprod": "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com",
-            "firstrelease": "il-e3064512cc6d4703be71a2ecaecaa9.8a.tenant.api.powerplatform.com",
-            "prod": "il-e3064512cc6d4703be71a2ecaecaa9.8a.tenant.api.powerplatform.com",
-            "gov": "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.gov.powerplatform.microsoft.us",
-            "high": "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.high.powerplatform.microsoft.us",
-            "dod": "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.appsplatform.us",
-            "mooncake": "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.partner.microsoftonline.cn",
-            "ex": "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.eaglex.ic.gov",
-            "rx": "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.microsoft.scloud",
-        }
-
-        for cluster, expected in expected_map.items():
-            with self.subTest(cluster=cluster):
-                disc = PowerPlatformApiDiscovery(cluster)  # type: ignore[arg-type]
-                self.assertEqual(disc.get_tenant_island_cluster_endpoint(tenant_id), expected)
-
-    def test_nodejs_invalid_characters_exact_message(self):
-        disc = PowerPlatformApiDiscovery("local")
-        expected_msg = "Cannot generate Power Platform API endpoint because the tenant identifier contains invalid host name characters, only alphanumeric and dash characters are expected: invalid?"
-        with self.assertRaises(ValueError) as cm:
-            disc.get_tenant_endpoint("invalid?")
-        self.assertEqual(str(cm.exception), expected_msg)
-
-    def test_nodejs_insufficient_length_exact_messages(self):
-        disc_local = PowerPlatformApiDiscovery("local")
-        with self.assertRaises(ValueError) as cm1:
-            disc_local.get_tenant_endpoint("a")
-        self.assertEqual(
-            str(cm1.exception),
-            "Cannot generate Power Platform API endpoint because the normalized tenant identifier must be at least 2 characters in length: a",
-        )
-
-        with self.assertRaises(ValueError) as cm2:
-            disc_local.get_tenant_endpoint("a-")
-        self.assertEqual(
-            str(cm2.exception),
-            "Cannot generate Power Platform API endpoint because the normalized tenant identifier must be at least 2 characters in length: a",
-        )
-
-        disc_prod = PowerPlatformApiDiscovery("prod")
-        with self.assertRaises(ValueError) as cm3:
-            disc_prod.get_tenant_endpoint("aa")
-        self.assertEqual(
-            str(cm3.exception),
-            "Cannot generate Power Platform API endpoint because the normalized tenant identifier must be at least 3 characters in length: aa",
-        )
-
-        with self.assertRaises(ValueError) as cm4:
-            disc_prod.get_tenant_endpoint("a-a")
-        self.assertEqual(
-            str(cm4.exception),
-            "Cannot generate Power Platform API endpoint because the normalized tenant identifier must be at least 3 characters in length: aa",
-        )
-
-
-if __name__ == "__main__":
-    unittest.main()
+# Copyright (c) Microsoft Corporation.
+# Licensed under the MIT License.
+
+"""Unit tests for PowerPlatformApiDiscovery class."""
+
+import pytest
+
+from microsoft_agents_a365.runtime.power_platform_api_discovery import (
+    PowerPlatformApiDiscovery,
+)
+
+
+# Tests for get_token_endpoint_host and get_token_audience
+@pytest.mark.parametrize(
+    "cluster,expected_host",
+    [
+        ("local", "api.powerplatform.localhost"),
+        ("dev", "api.powerplatform.com"),
+        ("test", "api.powerplatform.com"),
+        ("preprod", "api.powerplatform.com"),
+        ("firstrelease", "api.powerplatform.com"),
+        ("prod", "api.powerplatform.com"),
+        ("gov", "api.gov.powerplatform.microsoft.us"),
+        ("high", "api.high.powerplatform.microsoft.us"),
+        ("dod", "api.appsplatform.us"),
+        ("mooncake", "api.powerplatform.partner.microsoftonline.cn"),
+        ("ex", "api.powerplatform.eaglex.ic.gov"),
+        ("rx", "api.powerplatform.microsoft.scloud"),
+    ],
+)
+def test_host_suffix_and_audience(cluster, expected_host):
+    """Test get_token_endpoint_host and get_token_audience return correct values for each cluster."""
+    disc = PowerPlatformApiDiscovery(cluster)
+    assert disc.get_token_endpoint_host() == expected_host
+    assert disc.get_token_audience() == f"https://{expected_host}"
+
+
+# Tests for _get_hex_api_suffix_length
+@pytest.mark.parametrize(
+    "cluster,expected_length",
+    [
+        ("prod", 2),
+        ("firstrelease", 2),
+        ("dev", 1),
+        ("test", 1),
+        ("preprod", 1),
+        ("local", 1),
+        ("gov", 1),
+        ("high", 1),
+        ("dod", 1),
+        ("mooncake", 1),
+        ("ex", 1),
+        ("rx", 1),
+    ],
+)
+def test_hex_suffix_length_rules(cluster, expected_length):
+    """Test _get_hex_api_suffix_length returns correct suffix length for each cluster."""
+    disc = PowerPlatformApiDiscovery(cluster)
+    assert disc._get_hex_api_suffix_length() == expected_length
+
+
+# Tests for get_tenant_endpoint
+@pytest.mark.parametrize(
+    "cluster,tenant_id,expected",
+    [
+        ("prod", "abc-012", "abc0.12.tenant.api.powerplatform.com"),
+        ("dev", "A1B2", "a1b.2.tenant.api.powerplatform.com"),
+        ("dev", "Ab-Cd-Ef", "abcde.f.tenant.api.powerplatform.com"),
+    ],
+)
+def test_tenant_endpoint_generation(cluster, tenant_id, expected):
+    """Test get_tenant_endpoint for various clusters and tenant IDs."""
+    disc = PowerPlatformApiDiscovery(cluster)
+    assert disc.get_tenant_endpoint(tenant_id) == expected
+
+
+@pytest.mark.parametrize(
+    "cluster,expected",
+    [
+        ("local", "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.localhost"),
+        ("dev", "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com"),
+        ("test", "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com"),
+        ("preprod", "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com"),
+        ("firstrelease", "e3064512cc6d4703be71a2ecaecaa9.8a.tenant.api.powerplatform.com"),
+        ("prod", "e3064512cc6d4703be71a2ecaecaa9.8a.tenant.api.powerplatform.com"),
+        ("gov", "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.gov.powerplatform.microsoft.us"),
+        ("high", "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.high.powerplatform.microsoft.us"),
+        ("dod", "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.appsplatform.us"),
+        (
+            "mooncake",
+            "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.partner.microsoftonline.cn",
+        ),
+        ("ex", "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.eaglex.ic.gov"),
+        ("rx", "e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.microsoft.scloud"),
+    ],
+)
+def test_tenant_endpoint_with_real_uuid(cluster, expected):
+    """Test get_tenant_endpoint with real UUID across all clusters."""
+    tenant_id = "e3064512-cc6d-4703-be71-a2ecaecaa98a"
+    disc = PowerPlatformApiDiscovery(cluster)
+    assert disc.get_tenant_endpoint(tenant_id) == expected
+
+
+# Tests for get_tenant_island_cluster_endpoint
+@pytest.mark.parametrize(
+    "cluster,expected",
+    [
+        ("local", "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.localhost"),
+        ("dev", "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com"),
+        ("test", "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com"),
+        ("preprod", "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.com"),
+        ("firstrelease", "il-e3064512cc6d4703be71a2ecaecaa9.8a.tenant.api.powerplatform.com"),
+        ("prod", "il-e3064512cc6d4703be71a2ecaecaa9.8a.tenant.api.powerplatform.com"),
+        ("gov", "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.gov.powerplatform.microsoft.us"),
+        ("high", "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.high.powerplatform.microsoft.us"),
+        ("dod", "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.appsplatform.us"),
+        (
+            "mooncake",
+            "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.partner.microsoftonline.cn",
+        ),
+        ("ex", "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.eaglex.ic.gov"),
+        ("rx", "il-e3064512cc6d4703be71a2ecaecaa98.a.tenant.api.powerplatform.microsoft.scloud"),
+    ],
+)
+def test_tenant_island_cluster_endpoint(cluster, expected):
+    """Test get_tenant_island_cluster_endpoint with real UUID across all clusters."""
+    tenant_id = "e3064512-cc6d-4703-be71-a2ecaecaa98a"
+    disc = PowerPlatformApiDiscovery(cluster)
+    assert disc.get_tenant_island_cluster_endpoint(tenant_id) == expected
+
+
+# Tests for error handling
+@pytest.mark.parametrize(
+    "tenant_id",
+    [
+        "invalid$name",
+        "invalid?",
+        "tenant@id",
+        "tenant#123",
+        "tenant with spaces",
+        "",
+        "---",
+        "-",
+    ],
+)
+def test_invalid_tenant_identifier(tenant_id):
+    """Test ValueError is raised for invalid tenant IDs (invalid chars, empty, or all dashes)."""
+    disc = PowerPlatformApiDiscovery("dev")
+    with pytest.raises(ValueError):
+        disc.get_tenant_endpoint(tenant_id)
+
+
+@pytest.mark.parametrize(
+    "cluster,tenant_id,min_length",
+    [
+        ("local", "a", 2),
+        ("local", "a-", 2),
+        ("prod", "aa", 3),
+        ("prod", "a-a", 3),
+    ],
+)
+def test_tenant_identifier_too_short(cluster, tenant_id, min_length):
+    """Test ValueError is raised when tenant ID is too short after normalization."""
+    disc = PowerPlatformApiDiscovery(cluster)
+    with pytest.raises(ValueError, match=f"must be at least {min_length}"):
+        disc.get_tenant_endpoint(tenant_id)
diff --git a/tests/runtime/test_utility.py b/tests/runtime/test_utility.py
index d6cd2d4f..2ce17e2e 100644
--- a/tests/runtime/test_utility.py
+++ b/tests/runtime/test_utility.py
@@ -1,159 +1,126 @@
-# Copyright (c) Microsoft. All rights reserved.
+# Copyright (c) Microsoft Corporation.
+# Licensed under the MIT License.
+
+"""Unit tests for Utility class."""
 
-import unittest
 import uuid
-import jwt
+from unittest.mock import Mock
 
+import jwt
+import pytest
 from microsoft_agents_a365.runtime.utility import Utility
 
 
-class TestUtility(unittest.TestCase):
-    """Test cases for the Utility class."""
+# Fixtures (Mocks and Helpers)
+@pytest.fixture
+def create_test_jwt():
+    """Fixture to create test JWT tokens."""
 
-    def setUp(self):
-        """Set up test fixtures."""
-        self.test_app_id = "12345678-1234-1234-1234-123456789abc"
-        self.test_azp_id = "87654321-4321-4321-4321-cba987654321"
-
-    def create_test_jwt(self, claims: dict) -> str:
-        """Create a test JWT token with the given claims."""
-        # Use PyJWT to create a proper JWT token (unsigned for testing)
+    def _create(claims: dict) -> str:
         return jwt.encode(claims, key="", algorithm="none")
 
-    def test_get_app_id_from_token_with_none_token(self):
-        """Test get_app_id_from_token with None token."""
-        result = Utility.get_app_id_from_token(None)
-        self.assertEqual(result, str(uuid.UUID(int=0)))
-
-    def test_get_app_id_from_token_with_empty_token(self):
-        """Test get_app_id_from_token with empty token."""
-        result = Utility.get_app_id_from_token("")
-        self.assertEqual(result, str(uuid.UUID(int=0)))
-
-        result = Utility.get_app_id_from_token("   ")
-        self.assertEqual(result, str(uuid.UUID(int=0)))
-
-    def test_get_app_id_from_token_with_appid_claim(self):
-        """Test get_app_id_from_token with appid claim."""
-        token = self.create_test_jwt({"appid": self.test_app_id, "other": "value"})
-        result = Utility.get_app_id_from_token(token)
-        self.assertEqual(result, self.test_app_id)
-
-    def test_get_app_id_from_token_with_azp_claim(self):
-        """Test get_app_id_from_token with azp claim."""
-        token = self.create_test_jwt({"azp": self.test_azp_id, "other": "value"})
-        result = Utility.get_app_id_from_token(token)
-        self.assertEqual(result, self.test_azp_id)
-
-    def test_get_app_id_from_token_with_both_claims(self):
-        """Test get_app_id_from_token with both appid and azp claims (appid takes precedence)."""
-        token = self.create_test_jwt({"appid": self.test_app_id, "azp": self.test_azp_id})
-        result = Utility.get_app_id_from_token(token)
-        self.assertEqual(result, self.test_app_id)
-
-    def test_get_app_id_from_token_without_app_claims(self):
-        """Test get_app_id_from_token with token containing no app claims."""
-        token = self.create_test_jwt({"sub": "user123", "iss": "issuer"})
-        result = Utility.get_app_id_from_token(token)
-        self.assertEqual(result, "")
-
-    def test_get_app_id_from_token_with_invalid_token(self):
-        """Test get_app_id_from_token with invalid token formats."""
-        # Invalid token format
-        result = Utility.get_app_id_from_token("invalid.token")
-        self.assertEqual(result, "")
-
-        # Token with only two parts
-        result = Utility.get_app_id_from_token("header.payload")
-        self.assertEqual(result, "")
-
-        # Token with invalid base64
-        result = Utility.get_app_id_from_token("invalid.!!!invalid!!!.signature")
-        self.assertEqual(result, "")
-
-
-class MockActivity:
-    """Mock activity class for testing."""
-
-    def __init__(self, is_agentic: bool = False, agentic_id: str = ""):
-        self._is_agentic = is_agentic
-        self._agentic_id = agentic_id
-
-    def is_agentic_request(self) -> bool:
-        return self._is_agentic
-
-    def get_agentic_instance_id(self) -> str:
-        return self._agentic_id
-
-
-class MockContext:
-    """Mock context class for testing."""
-
-    def __init__(self, activity=None):
-        self.activity = activity
-
-
-class TestUtilityResolveAgentIdentity(unittest.TestCase):
-    """Test cases for the resolve_agent_identity method."""
-
-    def setUp(self):
-        """Set up test fixtures."""
-        self.test_app_id = "token-app-id-123"
-        self.agentic_id = "agentic-id-456"
-
-        # Create a test token with PyJWT
-        claims = {"appid": self.test_app_id}
-        self.test_token = jwt.encode(claims, key="", algorithm="none")
-
-    def test_resolve_agent_identity_with_agentic_request(self):
-        """Test resolve_agent_identity with agentic request."""
-        activity = MockActivity(is_agentic=True, agentic_id=self.agentic_id)
-        context = MockContext(activity)
-
-        result = Utility.resolve_agent_identity(context, self.test_token)
-        self.assertEqual(result, self.agentic_id)
-
-    def test_resolve_agent_identity_with_non_agentic_request(self):
-        """Test resolve_agent_identity with non-agentic request."""
-        activity = MockActivity(is_agentic=False)
-        context = MockContext(activity)
-
-        result = Utility.resolve_agent_identity(context, self.test_token)
-        self.assertEqual(result, self.test_app_id)
-
-    def test_resolve_agent_identity_with_context_without_activity(self):
-        """Test resolve_agent_identity with context that has no activity."""
-        context = MockContext()
-
-        result = Utility.resolve_agent_identity(context, self.test_token)
-        self.assertEqual(result, self.test_app_id)
-
-    def test_resolve_agent_identity_with_none_context(self):
-        """Test resolve_agent_identity with None context."""
-        result = Utility.resolve_agent_identity(None, self.test_token)
-        self.assertEqual(result, self.test_app_id)
-
-    def test_resolve_agent_identity_with_agentic_but_empty_id(self):
-        """Test resolve_agent_identity with agentic request but empty agentic ID."""
-        activity = MockActivity(is_agentic=True, agentic_id="")
-        context = MockContext(activity)
-
-        result = Utility.resolve_agent_identity(context, self.test_token)
-        self.assertEqual(result, "")
-
-    def test_resolve_agent_identity_fallback_on_exception(self):
-        """Test resolve_agent_identity falls back to token when context access fails."""
-
-        # Create a context that will raise an exception when accessed
-        class FaultyContext:
-            @property
-            def activity(self):
-                raise RuntimeError("Context access failed")
-
-        context = FaultyContext()
-        result = Utility.resolve_agent_identity(context, self.test_token)
-        self.assertEqual(result, self.test_app_id)
-
-
-if __name__ == "__main__":
-    unittest.main()
+    return _create
+
+
+@pytest.fixture
+def mock_activity():
+    """Fixture to create mock activity."""
+
+    def _create(is_agentic=False, agentic_id=""):
+        activity = Mock()
+        activity.is_agentic_request.return_value = is_agentic
+        activity.get_agentic_instance_id.return_value = agentic_id
+        return activity
+
+    return _create
+
+
+@pytest.fixture
+def mock_context():
+    """Fixture to create mock context."""
+
+    def _create(activity=None):
+        context = Mock()
+        context.activity = activity
+        return context
+
+    return _create
+
+
+# Tests for get_app_id_from_token
+@pytest.mark.parametrize(
+    "token,expected",
+    [
+        (None, str(uuid.UUID(int=0))),
+        ("", str(uuid.UUID(int=0))),
+        ("   ", str(uuid.UUID(int=0))),
+        ("invalid.token", ""),
+    ],
+)
+def test_get_app_id_from_token_invalid(token, expected):
+    """Test get_app_id_from_token handles invalid tokens correctly."""
+    result = Utility.get_app_id_from_token(token)
+    assert result == expected
+
+
+@pytest.mark.parametrize(
+    "claims,expected",
+    [
+        ({"appid": "test-app-id"}, "test-app-id"),
+        ({"azp": "azp-app-id"}, "azp-app-id"),
+        ({"appid": "appid-value", "azp": "azp-value"}, "appid-value"),
+        ({"sub": "user123"}, ""),
+    ],
+)
+def test_get_app_id_from_token_valid_tokens(create_test_jwt, claims, expected):
+    """Test get_app_id_from_token with valid tokens and various claims."""
+    token = create_test_jwt(claims)
+    result = Utility.get_app_id_from_token(token)
+    assert result == expected
+
+
+# Tests for resolve_agent_identity
+@pytest.mark.parametrize(
+    "is_agentic,agentic_id,expected",
+    [
+        (True, "agentic-id", "agentic-id"),
+        (True, "", ""),
+        (False, "", "token-app-id"),
+        (False, "ignored-id", "token-app-id"),
+    ],
+)
+def test_resolve_agent_identity_with_context(
+    create_test_jwt, mock_activity, mock_context, is_agentic, agentic_id, expected
+):
+    """Test resolve_agent_identity returns correct ID based on context."""
+    token = create_test_jwt({"appid": "token-app-id"})
+    activity = mock_activity(is_agentic=is_agentic, agentic_id=agentic_id)
+    context = mock_context(activity)
+
+    result = Utility.resolve_agent_identity(context, token)
+    assert result == expected
+
+
+@pytest.mark.parametrize(
+    "context",
+    [
+        None,
+        Mock(activity=None),
+    ],
+)
+def test_resolve_agent_identity_fallback(create_test_jwt, context):
+    """Test resolve_agent_identity falls back to token when context is invalid."""
+    token = create_test_jwt({"appid": "token-app-id"})
+    result = Utility.resolve_agent_identity(context, token)
+    assert result == "token-app-id"
+
+
+def test_resolve_agent_identity_exception_handling(create_test_jwt, mock_context):
+    """Test resolve_agent_identity falls back to token when activity methods raise exceptions."""
+    token = create_test_jwt({"appid": "token-app-id"})
+    activity = Mock()
+    activity.is_agentic_request.side_effect = AttributeError("Method not available")
+    context = mock_context(activity)
+
+    result = Utility.resolve_agent_identity(context, token)
+    assert result == "token-app-id"
diff --git a/tests/runtime/test_version_utils.py b/tests/runtime/test_version_utils.py
new file mode 100644
index 00000000..5da6851b
--- /dev/null
+++ b/tests/runtime/test_version_utils.py
@@ -0,0 +1,41 @@
+# Copyright (c) Microsoft Corporation.
+# Licensed under the MIT License.
+
+"""Unit tests for version_utils module."""
+
+import warnings
+import pytest
+
+from microsoft_agents_a365.runtime.version_utils import build_version
+
+
+# Tests for build_version
+@pytest.mark.parametrize(
+    "env_value,expected",
+    [
+        (None, "0.0.0"),
+        ("1.2.3", "1.2.3"),
+        ("2.5.0-beta", "2.5.0-beta"),
+        ("", ""),
+    ],
+)
+def test_build_version(monkeypatch, env_value, expected):
+    """Test build_version returns correct version based on environment variable."""
+    if env_value is None:
+        monkeypatch.delenv("AGENT365_PYTHON_SDK_PACKAGE_VERSION", raising=False)
+    else:
+        monkeypatch.setenv("AGENT365_PYTHON_SDK_PACKAGE_VERSION", env_value)
+
+    with warnings.catch_warnings():
+        warnings.simplefilter("ignore", DeprecationWarning)
+        result = build_version()
+
+    assert result == expected
+
+
+def test_build_version_deprecation_warning():
+    """Test that build_version raises DeprecationWarning with correct message."""
+    with pytest.warns(
+        DeprecationWarning, match="build_version.*deprecated.*setuptools-git-versioning"
+    ):
+        build_version()