diff --git a/tests/cases/unittests/projectInit.ts b/tests/cases/unittests/projectInit.ts
new file mode 100644
index 00000000000..77ca3492819
--- /dev/null
+++ b/tests/cases/unittests/projectInit.ts
@@ -0,0 +1,180 @@
+/// <reference path="..\..\..\src\harness\harness.ts" />
+/// <reference path="..\..\..\src\compiler\emitter.ts" />
+/// <reference path="..\..\..\src\compiler\commandLineParser.ts" />
+
+module ts {
+    describe('Project initializer', () => {
+        interface ExpectedCompilerOptionsOutput {
+            [option: string]: string | boolean;
+        }
+
+        function assertConfigFile(
+            compilerOptions: CompilerOptions,
+            fileNames: string[],
+            excludes: string[],
+            expectedCompilerOptionOutput: ExpectedCompilerOptionsOutput): void {
+
+            let writer = createTextWriter("\n");
+            let optionNameMap = getOptionNameMap().optionNameMap;
+
+            buildConfigFile(writer, compilerOptions, fileNames, excludes);
+
+            let expectedOutput = `{\n    "compilerOptions": {\n`;
+            for (let option in expectedCompilerOptionOutput) {
+                let lowerCaseOption = option.toLowerCase()
+                if (optionNameMap[lowerCaseOption].description &&
+                    optionNameMap[lowerCaseOption].description.key) {
+
+                    expectedOutput += `        // ${optionNameMap[lowerCaseOption].description.key}\n`;
+                }
+
+                expectedOutput += `        "${option}": `;
+                if (typeof expectedCompilerOptionOutput[option] === "string") {
+                     expectedOutput += `"${expectedCompilerOptionOutput[option]}",\n`;
+                }
+                else {
+                    expectedOutput += expectedCompilerOptionOutput[option].toString() + ",\n";
+                }
+            }
+            expectedOutput += "    }";
+
+            if (fileNames) {
+                expectedOutput += ",\n";
+                expectedOutput += `    "files": [\n`;
+                for (let fileName of fileNames) {
+                    expectedOutput += `        "${fileName}",\n`;
+                }
+                expectedOutput += "    ]";
+            }
+
+            if (excludes) {
+                expectedOutput += ",\n";
+                expectedOutput += `    "exclude": [\n`;
+                for (let exclude of excludes) {
+                    expectedOutput += `        "${exclude}",\n`;
+                }
+                expectedOutput += "    ]";
+            }
+            expectedOutput += "\n}";
+
+            expect(writer.getText()).to.equal(expectedOutput);
+        }
+
+        it("should generate default compiler options @projectInit", () => {
+            assertConfigFile(
+                {},
+                null,
+                null,
+                {
+                    module: "commonjs",
+                    target: "es3",
+                    noImplicitAny: true,
+                    outDir: "built",
+                    rootDir: ".",
+                    sourceMap: false,
+                });
+        });
+
+        it("should override default compiler options @projectInit", () => {
+            assertConfigFile(
+                {
+                    module: ModuleKind.AMD,
+                    target: ScriptTarget.ES5,
+                },
+                null,
+                null,
+                {
+                    module: "amd", // overrides commonjs
+                    target: "es5", // overrides es3
+                    noImplicitAny: true,
+                    outDir: "built",
+                    rootDir: ".",
+                    sourceMap: false,
+                });
+        });
+
+        it("should be able to generate newline option @projectInit", () => {
+            assertConfigFile(
+                {
+                    newLine: NewLineKind.CarriageReturnLineFeed
+                },
+                null,
+                null,
+                {
+                    newLine: "CRLF",
+                    module: "commonjs",
+                    target: "es3",
+                    noImplicitAny: true,
+                    outDir: "built",
+                    rootDir: ".",
+                    sourceMap: false,
+                });
+
+            assertConfigFile(
+                {
+                    newLine: NewLineKind.LineFeed
+                },
+                null,
+                null,
+                {
+                    newLine: "LF",
+                    module: "commonjs",
+                    target: "es3",
+                    noImplicitAny: true,
+                    outDir: "built",
+                    rootDir: ".",
+                    sourceMap: false,
+                });
+        });
+
+        it("should generate a `files` property @projectInit", () => {
+            assertConfigFile(
+                {},
+                ["file1.ts", "file2.ts"],
+                null,
+                {
+                    module: "commonjs",
+                    target: "es3",
+                    noImplicitAny: true,
+                    outDir: "built",
+                    rootDir: ".",
+                    sourceMap: false
+                });
+        });
+
+        it("should generete exclude options @projectInit", () => {
+            assertConfigFile(
+                {},
+                null,
+                ["node_modules"],
+                {
+                    module: "commonjs",
+                    target: "es3",
+                    noImplicitAny: true,
+                    outDir: "built",
+                    rootDir: ".",
+                    sourceMap: false
+                });
+        });
+
+        it("should not genereate compiler options for `version`, `watch`, `init` and `help` @projectInit", () => {
+            assertConfigFile(
+                {
+                    version: true,
+                    watch: true,
+                    init: true,
+                    help: true,
+                },
+                null,
+                null,
+                {
+                    module: "commonjs",
+                    target: "es3",
+                    noImplicitAny: true,
+                    outDir: "built",
+                    rootDir: ".",
+                    sourceMap: false
+                });
+        });
+    });
+}
\ No newline at end of file