diff --git a/templates.fif.json b/templates.fif.json
index 2d01ea6f..76a0d14f 100644
--- a/templates.fif.json
+++ b/templates.fif.json
@@ -1505,6 +1505,19 @@
                 "START_AFTER_TEST": "install_default_upload"
             }
         },
+        "iot_rpmostree_overlay": {
+            "profiles": {
+                "fedora-IoT-dvd_ostree-iso-aarch64-*-aarch64": 20,
+                "fedora-IoT-dvd_ostree-iso-x86_64-*-64bit": 20
+            },
+            "settings": {
+                "BOOTFROM": "c",
+                "HDD_1": "disk_%FLAVOR%_%MACHINE%.qcow2",
+                "POSTINSTALL": "iot_rpmostree_overlay",
+                "ROOT_PASSWORD": "weakpassword",
+                "START_AFTER_TEST": "install_default_upload"
+            }
+        },
         "mediakit_fileconflicts": {
             "profiles": {
                 "fedora-Server-dvd-iso-aarch64-*-aarch64": 10,
diff --git a/tests/iot_rpmostree_overlay.pm b/tests/iot_rpmostree_overlay.pm
new file mode 100644
index 00000000..7ea45205
--- /dev/null
+++ b/tests/iot_rpmostree_overlay.pm
@@ -0,0 +1,81 @@
+use base "installedtest";
+use strict;
+use testapi;
+use utils;
+
+sub reboot_and_login {
+    # This subroutine reboots the host, waits out the boot process and logs in.
+    my $reboot_time = shift;
+    script_run "systemctl reboot";
+    boot_to_login_screen(timeout => $reboot_time);
+    console_login(user=>"root", password=>get_var("ROOT_PASSWORD"));
+    sleep 2;
+}
+
+sub run {
+    my $self = shift;
+    my $reboot_time = 300;
+    # switch to TTY3 for both, graphical and console tests
+    $self->root_console(tty=>3);
+
+    # Install wget as rpm-ostree overlay. Let's have timeout defined
+    # quite generously, because it loads the package DBs.
+    assert_script_run "rpm-ostree install wget", timeout => 300;
+    # Reboot the machine to boot into the overlayed tree.
+    reboot_and_login "300";
+    
+    # Check that wget rpm is installed
+    assert_script_run "rpm -q wget";
+    # And that it works
+    assert_script_run "wget --version";
+
+    # Then install the httpd package.
+    assert_script_run "rpm-ostree install httpd", timeout => 300;
+    
+    # Reboot the machine to boot into the overlayed tree.
+    reboot_and_login "300";
+
+    # Check for new as well as old overlays
+    assert_script_run "rpm -q wget";
+    assert_script_run "rpm -q httpd";
+    assert_script_run "rpm -q apr";
+
+    # Start the httpd.service and check for its status
+    assert_script_run "systemctl start httpd";
+    assert_script_run "systemctl is-active httpd";
+
+    # Check for the functional test page
+    assert_script_run "curl -o page.html http://localhost";
+    assert_script_run "grep 'Fedora Project' page.html"; 
+
+    # Enable the httpd service
+    assert_script_run "systemctl enable httpd";
+
+    # Reboot the computer to boot check if the service has been enabled and starts
+    # automatically.
+    reboot_and_login "300";
+
+    # See if httpd is started
+    assert_script_run "systemctl is-active httpd";
+
+    # Uninstall wget and httpd again.
+    assert_script_run "rpm-ostree uninstall wget httpd";
+
+    # Reboot to see the changed tree
+    reboot_and_login "300";
+
+    # Check if wget and httpd were removed and no longer can be used.
+    assert_script_run "! rpm -q wget";
+    assert_script_run "! rpm -q httpd";
+    assert_script_run "! wget --version";
+    assert_script_run "! systemctl is-active httpd";
+
+}
+
+sub test_flags {
+    return { fatal => 1 };
+}
+
+1;
+
+# vim: set sw=4 et: