diff --git a/pnpm-lock.yaml b/pnpm-lock.yaml
index 5c420599a419..1b51cf5ab930 100644
--- a/pnpm-lock.yaml
+++ b/pnpm-lock.yaml
@@ -1276,6 +1276,18 @@ importers:
       vite-node: link:../../packages/vite-node
       vitest: link:../../packages/vitest
 
+  test/watch:
+    specifiers:
+      execa: ^7.0.0
+      strip-ansi: ^7.0.1
+      vite: ^4.0.0
+      vitest: workspace:*
+    devDependencies:
+      execa: 7.0.0
+      strip-ansi: 7.0.1
+      vite: 4.0.0
+      vitest: link:../../packages/vitest
+
   test/web-worker:
     specifiers:
       '@vitest/web-worker': workspace:*
diff --git a/test/watch/fixtures/example.test.ts b/test/watch/fixtures/example.test.ts
new file mode 100644
index 000000000000..4fd8bd10912c
--- /dev/null
+++ b/test/watch/fixtures/example.test.ts
@@ -0,0 +1,7 @@
+import { expect, test } from 'vitest'
+
+import { getHelloWorld } from './example'
+
+test('getHello', async () => {
+  expect(getHelloWorld()).toBe('Hello world')
+})
diff --git a/test/watch/fixtures/example.ts b/test/watch/fixtures/example.ts
new file mode 100644
index 000000000000..1c18cd94437c
--- /dev/null
+++ b/test/watch/fixtures/example.ts
@@ -0,0 +1,3 @@
+export function getHelloWorld() {
+  return 'Hello world'
+}
diff --git a/test/watch/fixtures/math.test.ts b/test/watch/fixtures/math.test.ts
new file mode 100644
index 000000000000..e1994a02ed3d
--- /dev/null
+++ b/test/watch/fixtures/math.test.ts
@@ -0,0 +1,7 @@
+import { expect, test } from 'vitest'
+
+import { sum } from './math'
+
+test('sum', () => {
+  expect(sum(1, 2)).toBe(3)
+})
diff --git a/test/watch/fixtures/math.ts b/test/watch/fixtures/math.ts
new file mode 100644
index 000000000000..5d8550bb9d4d
--- /dev/null
+++ b/test/watch/fixtures/math.ts
@@ -0,0 +1,3 @@
+export function sum(a: number, b: number) {
+  return a + b
+}
diff --git a/test/watch/fixtures/vitest.config.ts b/test/watch/fixtures/vitest.config.ts
new file mode 100644
index 000000000000..83ca9cdd40cb
--- /dev/null
+++ b/test/watch/fixtures/vitest.config.ts
@@ -0,0 +1,15 @@
+import { defineConfig } from 'vitest/config'
+
+// Patch stdin on the process so that we can fake it to seem like a real interactive terminal and pass the TTY checks
+process.stdin.isTTY = true
+process.stdin.setRawMode = () => process.stdin
+
+export default defineConfig({
+  test: {
+    watch: true,
+    outputTruncateLength: 999,
+
+    // This configuration is edited by tests
+    reporters: 'verbose',
+  },
+})
diff --git a/test/watch/package.json b/test/watch/package.json
new file mode 100644
index 000000000000..7a005dc398f8
--- /dev/null
+++ b/test/watch/package.json
@@ -0,0 +1,13 @@
+{
+  "name": "@vitest/test-watch",
+  "private": true,
+  "scripts": {
+    "test": "vitest"
+  },
+  "devDependencies": {
+    "execa": "^7.0.0",
+    "strip-ansi": "^7.0.1",
+    "vite": "latest",
+    "vitest": "workspace:*"
+  }
+}
diff --git a/test/watch/test/file-watching.test.ts b/test/watch/test/file-watching.test.ts
new file mode 100644
index 000000000000..7e3c82c5e7f0
--- /dev/null
+++ b/test/watch/test/file-watching.test.ts
@@ -0,0 +1,65 @@
+import { readFileSync, writeFileSync } from 'fs'
+import { afterEach, expect, test } from 'vitest'
+
+import { startWatchMode, waitFor } from './utils'
+
+const EDIT_COMMENT = '// Modified by file-watching.test.ts\n\n'
+
+const sourceFile = 'fixtures/math.ts'
+const sourceFileContent = readFileSync(sourceFile, 'utf-8')
+
+const testFile = 'fixtures/math.test.ts'
+const testFileContent = readFileSync(testFile, 'utf-8')
+
+const configFile = 'fixtures/vitest.config.ts'
+const configFileContent = readFileSync(configFile, 'utf-8')
+
+afterEach(() => {
+  writeFileSync(sourceFile, sourceFileContent, 'utf8')
+  writeFileSync(testFile, testFileContent, 'utf8')
+  writeFileSync(configFile, configFileContent, 'utf8')
+})
+
+test('editing source file triggers re-run', async () => {
+  const vitest = await startWatchMode()
+
+  writeFileSync(sourceFile, `${EDIT_COMMENT}${sourceFileContent}`, 'utf8')
+
+  await waitFor(() => {
+    expect(vitest.getOutput()).toContain('RERUN  math.ts')
+    expect(vitest.getOutput()).toContain('1 passed')
+  })
+})
+
+test('editing test file triggers re-run', async () => {
+  const vitest = await startWatchMode()
+
+  writeFileSync(testFile, `${EDIT_COMMENT}${testFileContent}`, 'utf8')
+
+  await waitFor(() => {
+    expect(vitest.getOutput()).toMatch('RERUN  math.test.ts')
+    expect(vitest.getOutput()).toMatch('1 passed')
+  })
+})
+
+test('editing config file triggers re-run', async () => {
+  const vitest = await startWatchMode()
+
+  writeFileSync(configFile, `${EDIT_COMMENT}${configFileContent}`, 'utf8')
+
+  await waitFor(() => {
+    expect(vitest.getOutput()).toMatch('Restarting due to config changes')
+    expect(vitest.getOutput()).toMatch('2 passed')
+  })
+})
+
+test('editing config file reloads new changes', async () => {
+  const vitest = await startWatchMode()
+
+  writeFileSync(configFile, configFileContent.replace('reporters: \'verbose\'', 'reporters: \'tap\''), 'utf8')
+
+  await waitFor(() => {
+    expect(vitest.getOutput()).toMatch('TAP version')
+    expect(vitest.getOutput()).toMatch('ok 2')
+  })
+})
diff --git a/test/watch/test/stdin.test.ts b/test/watch/test/stdin.test.ts
new file mode 100644
index 000000000000..3ec282c2c1c0
--- /dev/null
+++ b/test/watch/test/stdin.test.ts
@@ -0,0 +1,45 @@
+import { expect, test } from 'vitest'
+
+import { startWatchMode, waitFor } from './utils'
+
+test('quit watch mode', async () => {
+  const vitest = await startWatchMode()
+
+  vitest.write('q')
+
+  await vitest.isDone
+})
+
+test('filter by filename', async () => {
+  const vitest = await startWatchMode()
+
+  vitest.write('p')
+
+  await waitFor(() => {
+    expect(vitest.getOutput()).toMatch('Input filename pattern')
+  })
+
+  vitest.write('math\n')
+
+  await waitFor(() => {
+    expect(vitest.getOutput()).toMatch('Filename pattern: math')
+    expect(vitest.getOutput()).toMatch('1 passed')
+  })
+})
+
+test('filter by test name', async () => {
+  const vitest = await startWatchMode()
+
+  vitest.write('t')
+
+  await waitFor(() => {
+    expect(vitest.getOutput()).toMatch('Input test name pattern')
+  })
+
+  vitest.write('sum\n')
+
+  await waitFor(() => {
+    expect(vitest.getOutput()).toMatch('Test name pattern: /sum/')
+    expect(vitest.getOutput()).toMatch('1 passed')
+  })
+})
diff --git a/test/watch/test/utils.ts b/test/watch/test/utils.ts
new file mode 100644
index 000000000000..4d89702769be
--- /dev/null
+++ b/test/watch/test/utils.ts
@@ -0,0 +1,62 @@
+import { afterEach, expect } from 'vitest'
+import { execa } from 'execa'
+import stripAnsi from 'strip-ansi'
+
+export async function startWatchMode() {
+  const subprocess = execa('vitest', ['--root', 'fixtures'])
+
+  let setDone: (value?: unknown) => void
+  const isDone = new Promise(resolve => (setDone = resolve))
+
+  const vitest = {
+    output: '',
+    isDone,
+    write(text: string) {
+      this.resetOutput()
+      subprocess.stdin!.write(text)
+    },
+    getOutput() {
+      return this.output
+    },
+    resetOutput() {
+      this.output = ''
+    },
+  }
+
+  subprocess.stdout!.on('data', (data) => {
+    vitest.output += stripAnsi(data.toString())
+  })
+
+  subprocess.on('exit', () => setDone())
+
+  // Manually stop the processes so that each test don't have to do this themselves
+  afterEach(async () => {
+    if (subprocess.exitCode === null)
+      subprocess.kill()
+
+    await vitest.isDone
+  })
+
+  // Wait for initial test run to complete
+  await waitFor(() => {
+    expect(vitest.getOutput()).toMatch('Waiting for file changes')
+  })
+  vitest.resetOutput()
+
+  return vitest
+}
+
+export async function waitFor(method: () => unknown, retries = 100): Promise<void> {
+  try {
+    method()
+  }
+  catch (error) {
+    if (retries === 0) {
+      console.error(error)
+      throw error
+    }
+
+    await new Promise(resolve => setTimeout(resolve, 250))
+    return waitFor(method, retries - 1)
+  }
+}
diff --git a/test/watch/vitest.config.ts b/test/watch/vitest.config.ts
new file mode 100644
index 000000000000..9ef05a07f993
--- /dev/null
+++ b/test/watch/vitest.config.ts
@@ -0,0 +1,14 @@
+import { defineConfig } from 'vitest/config'
+
+export default defineConfig({
+  test: {
+    reporters: 'verbose',
+    include: ['test/**/*.test.*'],
+
+    // For Windows CI mostly
+    testTimeout: 30_000,
+
+    // Test cases may have side effects, e.g. files under fixtures/ are modified on the fly to trigger file watchers
+    singleThread: true,
+  },
+})