diff --git a/hack/jenkins/e2e.sh b/hack/jenkins/e2e.sh
index a254101bb34..568fdb69c6b 100755
--- a/hack/jenkins/e2e.sh
+++ b/hack/jenkins/e2e.sh
@@ -71,7 +71,7 @@ GCE_DEFAULT_SKIP_TEST_REGEX="Skipped|Density|Reboot|Restart"
 # -flaky- build variants.
 GCE_FLAKY_TEST_REGEX="Addon|Elasticsearch|Nodes.*network\spartition|Shell.*services|readonly\sPD"
 # Tests which are not able to be run in parallel.
-GCE_PARALLEL_SKIP_TEST_REGEX="${GCE_DEFAULT_SKIP_TEST_REGEX}|Etcd|NetworkingNew|Nodes\sNetwork|Nodes\sResize"
+GCE_PARALLEL_SKIP_TEST_REGEX="${GCE_DEFAULT_SKIP_TEST_REGEX}|Etcd|NetworkingNew|Nodes\sNetwork|Nodes\sResize|MaxPods"
 # Tests which are known to be flaky when run in parallel.
 # TODO: figure out why GCE_FLAKY_TEST_REGEX is not a perfect subset of this list.
 GCE_PARALLEL_FLAKY_TEST_REGEX="Addon|Elasticsearch|Hostdir.*MOD|Networking.*intra|PD|ServiceAccounts|Service\sendpoints\slatency|Services.*change\sthe\stype|Services.*functioning\sexternal\sload\sbalancer|Services.*identically\snamed|Services.*release.*load\sbalancer|Shell|multiport\sendpoints"
diff --git a/test/e2e/max_pods.go b/test/e2e/max_pods.go
new file mode 100644
index 00000000000..2ce8ba299d3
--- /dev/null
+++ b/test/e2e/max_pods.go
@@ -0,0 +1,152 @@
+/*
+Copyright 2015 The Kubernetes Authors All rights reserved.
+
+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 e2e
+
+import (
+	"fmt"
+	"strconv"
+	"time"
+
+	"github.com/GoogleCloudPlatform/kubernetes/pkg/api"
+	"github.com/GoogleCloudPlatform/kubernetes/pkg/client"
+	"github.com/GoogleCloudPlatform/kubernetes/pkg/fields"
+	"github.com/GoogleCloudPlatform/kubernetes/pkg/labels"
+	"github.com/GoogleCloudPlatform/kubernetes/pkg/util"
+
+	. "github.com/onsi/ginkgo"
+	. "github.com/onsi/gomega"
+)
+
+var _ = Describe("MaxPods", func() {
+	var c *client.Client
+	var nodeCount int
+	var totalPodCapacity int64
+	var RCName string
+	var ns string
+	var uuid string
+
+	BeforeEach(func() {
+		var err error
+		c, err = loadClient()
+		expectNoError(err)
+		nodes, err := c.Nodes().List(labels.Everything(), fields.Everything())
+		expectNoError(err)
+		nodeCount = len(nodes.Items)
+		Expect(nodeCount).NotTo(BeZero())
+
+		totalPodCapacity = 0
+		for _, node := range nodes.Items {
+			podCapacity, found := node.Status.Capacity["pods"]
+			Expect(found).To(Equal(true))
+			totalPodCapacity += podCapacity.Value()
+		}
+
+		err = deleteTestingNS(c)
+		expectNoError(err)
+
+		nsForTesting, err := createTestingNS("maxp", c)
+		ns = nsForTesting.Name
+		expectNoError(err)
+		uuid = string(util.NewUUID())
+	})
+
+	AfterEach(func() {
+		rc, err := c.ReplicationControllers(ns).Get(RCName)
+		if err == nil && rc.Spec.Replicas != 0 {
+			By("Cleaning up the replication controller")
+			err := DeleteRC(c, ns, RCName)
+			expectNoError(err)
+		}
+
+		By(fmt.Sprintf("Destroying namespace for this suite %v", ns))
+		if err := c.Namespaces().Delete(ns); err != nil {
+			Failf("Couldn't delete ns %s", err)
+		}
+	})
+
+	// This test verifies that max-pods flag works as advertised. It assumes that cluster add-on pods stay stable
+	// and cannot be run in parallel with any other test that touches Nodes or Pods. It is so because to check
+	// if max-pods is working we need to fully saturate the cluster and keep it in this state for few seconds.
+	It("Validates MaxPods limit number of pods that are allowed to run.", func() {
+		pods, err := c.Pods(api.NamespaceAll).List(labels.Everything(), fields.Everything())
+		expectNoError(err)
+		currentlyRunningPods := len(pods.Items)
+		podsNeededForSaturation := int(totalPodCapacity) - currentlyRunningPods
+
+		RCName = "max-pods" + strconv.FormatInt(totalPodCapacity, 10) + "-" + uuid
+
+		config := RCConfig{Client: c,
+			Image:        "gcr.io/google_containers/pause:go",
+			Name:         RCName,
+			Namespace:    ns,
+			PollInterval: 10 * time.Second,
+			Replicas:     int(podsNeededForSaturation),
+		}
+
+		By(fmt.Sprintf("Starting additional %v Pods to fully saturate the cluster and trying to start a new one", podsNeededForSaturation))
+		expectNoError(RunRC(config))
+
+		_, err = c.Pods(ns).Create(&api.Pod{
+			TypeMeta: api.TypeMeta{
+				Kind: "Pod",
+			},
+			ObjectMeta: api.ObjectMeta{
+				Name:   "additional-pod",
+				Labels: map[string]string{"name": "additional"},
+			},
+			Spec: api.PodSpec{
+				Containers: []api.Container{
+					{
+						Name:  "additional-pod",
+						Image: "gcr.io/google_containers/pause:go",
+					},
+				},
+			},
+		})
+		expectNoError(err)
+		// Wait a bit to allow scheduler to do its thing
+		time.Sleep(10 * time.Second)
+
+		allPods, err := c.Pods(api.NamespaceAll).List(labels.Everything(), fields.Everything())
+		expectNoError(err)
+		runningPods := 0
+		notRunningPods := make([]api.Pod, 0)
+		for _, pod := range allPods.Items {
+			if pod.Status.Phase == api.PodRunning {
+				runningPods += 1
+			} else {
+				notRunningPods = append(notRunningPods, pod)
+			}
+		}
+
+		schedEvents, err := c.Events(ns).List(
+			labels.Everything(),
+			fields.Set{
+				"involvedObject.kind":      "Pod",
+				"involvedObject.name":      "additional-pod",
+				"involvedObject.namespace": ns,
+				"source":                   "scheduler",
+				"reason":                   "failedScheduling",
+			}.AsSelector())
+		expectNoError(err)
+
+		Expect(runningPods).To(Equal(int(totalPodCapacity)))
+		Expect(len(notRunningPods)).To(Equal(1))
+		Expect(schedEvents.Items).ToNot(BeEmpty())
+		Expect(notRunningPods[0].Name).To(Equal("additional-pod"))
+	})
+})