diff --git a/.changes/unreleased/Under the Hood-20230912-190506.yaml b/.changes/unreleased/Under the Hood-20230912-190506.yaml
new file mode 100644
index 00000000000..41804b6c0c7
--- /dev/null
+++ b/.changes/unreleased/Under the Hood-20230912-190506.yaml	
@@ -0,0 +1,6 @@
+kind: Under the Hood
+body: Add unit testing functional tests
+time: 2023-09-12T19:05:06.023126-04:00
+custom:
+  Author: gshank
+  Issue: "8512"
diff --git a/tests/functional/unit_testing/test_unit_testing.py b/tests/functional/unit_testing/test_unit_testing.py
index dd7cbdc1666..0773a53e613 100644
--- a/tests/functional/unit_testing/test_unit_testing.py
+++ b/tests/functional/unit_testing/test_unit_testing.py
@@ -1,5 +1,6 @@
 import pytest
-from dbt.tests.util import run_dbt
+from dbt.tests.util import run_dbt, write_file, get_manifest, get_artifact
+from dbt.exceptions import DuplicateResourceNameError
 
 my_model_sql = """
 SELECT
@@ -86,6 +87,11 @@
               - {id: 1, string_b: b}
         expect:
           - {string_c: ab}
+        config:
+           tags: test_this
+"""
+
+datetime_test = """
       - name: test_my_model_datetime
         given:
           - input: ref('my_model_a')
@@ -106,7 +112,7 @@ def models(self):
             "my_model.sql": my_model_sql,
             "my_model_a.sql": my_model_a_sql,
             "my_model_b.sql": my_model_b_sql,
-            "test_my_model.yml": test_my_model_yml,
+            "test_my_model.yml": test_my_model_yml + datetime_test,
         }
 
     @pytest.fixture(scope="class")
@@ -114,9 +120,55 @@ def project_config_update(self):
         return {"vars": {"my_test": "my_test_var"}}
 
     def test_basic(self, project):
-        run_dbt(["deps"])
         results = run_dbt(["run"])
         assert len(results) == 3
 
+        # Select by model name
         results = run_dbt(["unit-test", "--select", "my_model"], expect_pass=False)
         assert len(results) == 5
+
+        # Test select by test name
+        results = run_dbt(["unit-test", "--select", "test_name:test_my_model_string_concat"])
+        assert len(results) == 1
+
+        # Select, method not specified
+        results = run_dbt(["unit-test", "--select", "test_my_model_overrides"])
+        assert len(results) == 1
+
+        # Select using tag
+        results = run_dbt(["unit-test", "--select", "tag:test_this"])
+        assert len(results) == 1
+
+        # Partial parsing... remove test
+        write_file(test_my_model_yml, project.project_root, "models", "test_my_model.yml")
+        results = run_dbt(["unit-test", "--select", "my_model"], expect_pass=False)
+        assert len(results) == 4
+
+        # Partial parsing... put back removed test
+        write_file(
+            test_my_model_yml + datetime_test, project.project_root, "models", "test_my_model.yml"
+        )
+        results = run_dbt(["unit-test", "--select", "my_model"], expect_pass=False)
+        assert len(results) == 5
+
+        manifest = get_manifest(project.project_root)
+        assert len(manifest.unit_tests) == 5
+        # Every unit test has a depends_on to the model it tests
+        for unit_test_definition in manifest.unit_tests.values():
+            assert unit_test_definition.depends_on.nodes[0] == "model.test.my_model"
+
+        # We should have a UnitTestNode for every test, plus two input models for each test
+        unit_test_manifest = get_artifact(
+            project.project_root, "target", "unit_test_manifest.json"
+        )
+        assert len(unit_test_manifest["nodes"]) == 15
+
+        # Check for duplicate unit test name
+        write_file(
+            test_my_model_yml + datetime_test + datetime_test,
+            project.project_root,
+            "models",
+            "test_my_model.yml",
+        )
+        with pytest.raises(DuplicateResourceNameError):
+            run_dbt(["unit-test", "--select", "my_model"])