diff --git a/pkg/cloudprovider/providers/vsphere/vclib/folder_test.go b/pkg/cloudprovider/providers/vsphere/vclib/folder_test.go
new file mode 100644
index 00000000000..315d008dc09
--- /dev/null
+++ b/pkg/cloudprovider/providers/vsphere/vclib/folder_test.go
@@ -0,0 +1,83 @@
+/*
+Copyright 2016 The Kubernetes Authors.
+
+Licensed under the Apache License, Version 2.0 (the "License");
+you may not use this file except in compliance with the License.
+You may obtain a copy of the License at
+
+    http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing, software
+distributed under the License is distributed on an "AS IS" BASIS,
+WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+See the License for the specific language governing permissions and
+limitations under the License.
+*/
+
+package vclib
+
+import (
+	"context"
+	"path"
+	"testing"
+
+	"github.com/vmware/govmomi"
+	"github.com/vmware/govmomi/simulator"
+)
+
+func TestFolder(t *testing.T) {
+	ctx := context.Background()
+
+	model := simulator.VPX()
+	// Child folder "F0" will be created under the root folder and datacenter folders,
+	// and all resources are created within the "F0" child folders.
+	model.Folder = 1
+
+	defer model.Remove()
+	err := model.Create()
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	s := model.Service.NewServer()
+	defer s.Close()
+
+	c, err := govmomi.NewClient(ctx, s.URL, true)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	vc := &VSphereConnection{GoVmomiClient: c}
+
+	dc, err := GetDatacenter(ctx, vc, testDefaultDatacenter)
+	if err != nil {
+		t.Error(err)
+	}
+
+	const folderName = "F0"
+	vmFolder := path.Join("/", folderName, dc.Name(), "vm")
+
+	tests := []struct {
+		folderPath string
+		expect     int
+	}{
+		{vmFolder, 0},
+		{path.Join(vmFolder, folderName), (model.Host + model.Cluster) * model.Machine},
+	}
+
+	for i, test := range tests {
+		folder, cerr := dc.GetFolderByPath(ctx, test.folderPath)
+		if cerr != nil {
+			t.Fatal(cerr)
+		}
+
+		vms, cerr := folder.GetVirtualMachines(ctx)
+		if cerr != nil {
+			t.Fatalf("%d: %s", i, cerr)
+		}
+
+		if len(vms) != test.expect {
+			t.Errorf("%d: expected %d VMs, got: %d", i, test.expect, len(vms))
+		}
+	}
+}