diff --git a/apps/openstacknetworking/app/src/test/java/org/onosproject/openstacknetworking/impl/OpenstackSecurityGroupManagerTest.java b/apps/openstacknetworking/app/src/test/java/org/onosproject/openstacknetworking/impl/OpenstackSecurityGroupManagerTest.java
new file mode 100644
index 0000000..b657aa1
--- /dev/null
+++ b/apps/openstacknetworking/app/src/test/java/org/onosproject/openstacknetworking/impl/OpenstackSecurityGroupManagerTest.java
@@ -0,0 +1,309 @@
+/*
+ * Copyright 2018-present Open Networking Foundation
+ *
+ * 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 org.onosproject.openstacknetworking.impl;
+
+import com.google.common.collect.ImmutableList;
+import com.google.common.collect.Lists;
+import com.google.common.util.concurrent.MoreExecutors;
+import org.junit.After;
+import org.junit.Before;
+import org.junit.Test;
+import org.onlab.junit.TestUtils;
+import org.onosproject.core.ApplicationId;
+import org.onosproject.core.CoreServiceAdapter;
+import org.onosproject.core.DefaultApplicationId;
+import org.onosproject.event.Event;
+import org.onosproject.openstacknetworking.api.OpenstackSecurityGroupEvent;
+import org.onosproject.openstacknetworking.api.OpenstackSecurityGroupListener;
+import org.onosproject.store.service.TestStorageService;
+import org.openstack4j.model.network.SecurityGroup;
+import org.openstack4j.model.network.SecurityGroupRule;
+import org.openstack4j.openstack.networking.domain.NeutronSecurityGroup;
+import org.openstack4j.openstack.networking.domain.NeutronSecurityGroupRule;
+
+import java.util.List;
+
+import static org.junit.Assert.assertEquals;
+import static org.junit.Assert.assertNotNull;
+import static org.junit.Assert.assertNull;
+import static org.onosproject.openstacknetworking.api.OpenstackSecurityGroupEvent.Type.OPENSTACK_SECURITY_GROUP_CREATED;
+import static org.onosproject.openstacknetworking.api.OpenstackSecurityGroupEvent.Type.OPENSTACK_SECURITY_GROUP_REMOVED;
+
+/**
+ * Unit tests for openstack security group manager.
+ */
+public class OpenstackSecurityGroupManagerTest {
+
+    private static final ApplicationId TEST_APP_ID = new DefaultApplicationId(1, "test");
+
+    private static final String SECURITY_GROUP_ID_1 = "sg-id-1";
+    private static final String SECURITY_GROUP_ID_2 = "sg-id-2";
+    private static final String UNKNOWN_ID = "sg-id-x";
+
+
+    private static final String SECURITY_GROUP_NAME_1 = "sg-name-1";
+    private static final String SECURITY_GROUP_NAME_2 = "sg-name-2";
+
+    private static final String SECURITY_GROUP_TENANT_ID_1 = "tenant-id-1";
+    private static final String SECURITY_GROUP_TENANT_ID_2 = "tenant-id-2";
+
+    private static final String SECURITY_GROUP_DESCRIPTION_1 = "description-1";
+    private static final String SECURITY_GROUP_DESCRIPTION_2 = "description-2";
+
+    private static final String SECURITY_GROUP_RULE_ID_1_1 = "sgr-id-1-1";
+    private static final String SECURITY_GROUP_RULE_ID_1_2 = "sgr-id-1-2";
+    private static final String SECURITY_GROUP_RULE_ID_2_1 = "sgr-id-2-1";
+    private static final String SECURITY_GROUP_RULE_ID_2_2 = "sgr-id-2-2";
+
+    private static final String SECURITY_GROUP_ETH_TYPE = "IP";
+    private static final String SECURITY_GROUP_DIRECTION = "EGRESS";
+    private static final String SECURITY_GROUP_PROTOCOL_1 = "TCP";
+    private static final String SECURITY_GROUP_PROTOCOL_2 = "UDP";
+
+    private static final int SECURITY_GROUP_PORT_RANGE_MIN_1 = 1;
+    private static final int SECURITY_GROUP_PORT_RANGE_MIN_2 = 101;
+    private static final int SECURITY_GROUP_PORT_RANGE_MAX_1 = 100;
+    private static final int SECURITY_GROUP_PORT_RANGE_MAX_2 = 200;
+
+    private static final String SECURITY_GROUP_REMOTE_IP_PREFIX_1 = "1.1.1.0/24";
+    private static final String SECURITY_GROUP_REMOTE_IP_PREFIX_2 = "2.2.2.0/24";
+
+    private SecurityGroup securityGroup1;
+    private SecurityGroup securityGroup2;
+
+    private SecurityGroupRule securityGroupRule11;
+    private SecurityGroupRule securityGroupRule12;
+    private SecurityGroupRule securityGroupRule21;
+    private SecurityGroupRule securityGroupRule22;
+
+    private List<SecurityGroupRule> securityGroupRules1;
+    private List<SecurityGroupRule> securityGroupRules2;
+
+    private OpenstackSecurityGroupManager target;
+    private DistributedSecurityGroupStore store;
+
+    private final TestOpenstackSecurityGroupListener
+            testOpenstackSecurityGroupListener = new TestOpenstackSecurityGroupListener();
+
+    /**
+     * Initial setup for this unit test.
+     */
+    @Before
+    public void setUp() throws Exception {
+
+        store = new DistributedSecurityGroupStore();
+        TestUtils.setField(store, "coreService", new TestCoreService());
+        TestUtils.setField(store, "storageService", new TestStorageService());
+        TestUtils.setField(store, "eventExecutor", MoreExecutors.newDirectExecutorService());
+        store.activate();
+
+        target = new OpenstackSecurityGroupManager();
+        TestUtils.setField(target, "coreService", new TestCoreService());
+        target.osSecurityGroupStore = store;
+        target.addListener(testOpenstackSecurityGroupListener);
+        target.activate();
+
+        securityGroupRule11 = NeutronSecurityGroupRule.builder()
+                                            .id(SECURITY_GROUP_RULE_ID_1_1)
+                                            .securityGroupId(SECURITY_GROUP_ID_1)
+                                            .tenantId(SECURITY_GROUP_TENANT_ID_1)
+                                            .remoteGroupId(SECURITY_GROUP_ID_1)
+                                            .ethertype(SECURITY_GROUP_ETH_TYPE)
+                                            .direction(SECURITY_GROUP_DIRECTION)
+                                            .portRangeMin(SECURITY_GROUP_PORT_RANGE_MIN_1)
+                                            .portRangeMax(SECURITY_GROUP_PORT_RANGE_MAX_1)
+                                            .protocol(SECURITY_GROUP_PROTOCOL_1)
+                                            .remoteIpPrefix(SECURITY_GROUP_REMOTE_IP_PREFIX_1)
+                                            .build();
+
+        securityGroupRule12 = NeutronSecurityGroupRule.builder()
+                                            .id(SECURITY_GROUP_RULE_ID_1_2)
+                                            .securityGroupId(SECURITY_GROUP_ID_1)
+                                            .tenantId(SECURITY_GROUP_TENANT_ID_1)
+                                            .remoteGroupId(SECURITY_GROUP_ID_1)
+                                            .ethertype(SECURITY_GROUP_ETH_TYPE)
+                                            .direction(SECURITY_GROUP_DIRECTION)
+                                            .portRangeMin(SECURITY_GROUP_PORT_RANGE_MIN_1)
+                                            .portRangeMax(SECURITY_GROUP_PORT_RANGE_MAX_1)
+                                            .protocol(SECURITY_GROUP_PROTOCOL_1)
+                                            .remoteIpPrefix(SECURITY_GROUP_REMOTE_IP_PREFIX_1)
+                                            .build();
+
+        securityGroupRule21 = NeutronSecurityGroupRule.builder()
+                                            .id(SECURITY_GROUP_RULE_ID_2_1)
+                                            .securityGroupId(SECURITY_GROUP_ID_2)
+                                            .tenantId(SECURITY_GROUP_TENANT_ID_2)
+                                            .remoteGroupId(SECURITY_GROUP_ID_2)
+                                            .ethertype(SECURITY_GROUP_ETH_TYPE)
+                                            .direction(SECURITY_GROUP_DIRECTION)
+                                            .portRangeMin(SECURITY_GROUP_PORT_RANGE_MIN_2)
+                                            .portRangeMax(SECURITY_GROUP_PORT_RANGE_MAX_2)
+                                            .protocol(SECURITY_GROUP_PROTOCOL_2)
+                                            .remoteIpPrefix(SECURITY_GROUP_REMOTE_IP_PREFIX_2)
+                                            .build();
+
+        securityGroupRule22 = NeutronSecurityGroupRule.builder()
+                                            .id(SECURITY_GROUP_RULE_ID_2_2)
+                                            .securityGroupId(SECURITY_GROUP_ID_2)
+                                            .tenantId(SECURITY_GROUP_TENANT_ID_2)
+                                            .remoteGroupId(SECURITY_GROUP_ID_2)
+                                            .ethertype(SECURITY_GROUP_ETH_TYPE)
+                                            .direction(SECURITY_GROUP_DIRECTION)
+                                            .portRangeMin(SECURITY_GROUP_PORT_RANGE_MIN_2)
+                                            .portRangeMax(SECURITY_GROUP_PORT_RANGE_MAX_2)
+                                            .protocol(SECURITY_GROUP_PROTOCOL_2)
+                                            .remoteIpPrefix(SECURITY_GROUP_REMOTE_IP_PREFIX_2)
+                                            .build();
+
+        securityGroupRules1 = ImmutableList.of(securityGroupRule11, securityGroupRule12);
+        securityGroupRules2 = ImmutableList.of(securityGroupRule21, securityGroupRule22);
+
+        securityGroup1 = NeutronSecurityGroup.builder()
+                                            .id(SECURITY_GROUP_ID_1)
+                                            .name(SECURITY_GROUP_NAME_1)
+                                            .tenantId(SECURITY_GROUP_TENANT_ID_1)
+                                            .description(SECURITY_GROUP_DESCRIPTION_1)
+                                            .build();
+
+        securityGroup2 = NeutronSecurityGroup.builder()
+                                            .id(SECURITY_GROUP_ID_2)
+                                            .name(SECURITY_GROUP_NAME_2)
+                                            .tenantId(SECURITY_GROUP_TENANT_ID_2)
+                                            .description(SECURITY_GROUP_DESCRIPTION_2)
+                                            .build();
+
+    }
+
+    /**
+     * Tears down all of this unit test.
+     */
+    @After
+    public void tearDown() {
+        target.removeListener(testOpenstackSecurityGroupListener);
+        store.deactivate();
+        target.deactivate();
+        store = null;
+        target = null;
+    }
+
+    /**
+     * Tests if getting all security groups returns the correct set of groups.
+     */
+    @Test
+    public void testGetSecurityGroups() {
+        createBasicSecurityGroups();
+        assertEquals("Number of security group did not match",
+                2, target.securityGroups().size());
+    }
+
+    /**
+     * Tests if getting a security group with group ID returns the correct group.
+     */
+    @Test
+    public void testGetSecurityGroupById() {
+        createBasicSecurityGroups();
+        assertNotNull("Instance port did not match", target.securityGroup(SECURITY_GROUP_ID_1));
+        assertNotNull("Instance port did not match", target.securityGroup(SECURITY_GROUP_ID_2));
+        assertNull("Instance port did not match", target.securityGroup(UNKNOWN_ID));
+    }
+
+    /**
+     * Tests creating and removing a security group, and checks if it triggers proper events.
+     */
+    @Test
+    public void testCreateAndRemoveSecurityGroup() {
+        target.createSecurityGroup(securityGroup1);
+        assertEquals("Number of security group did not match",
+                1, target.securityGroups().size());
+        assertNotNull("Security group did not match",
+                target.securityGroup(SECURITY_GROUP_ID_1));
+
+        target.removeSecurityGroup(SECURITY_GROUP_ID_1);
+        assertEquals("Number of security group did not match",
+                0, target.securityGroups().size());
+        assertNull("Security group did not match",
+                target.securityGroup(SECURITY_GROUP_ID_1));
+
+        validateEvents(OPENSTACK_SECURITY_GROUP_CREATED, OPENSTACK_SECURITY_GROUP_REMOVED);
+    }
+
+    /**
+     * Tests if creating a null security group fails with an exception.
+     */
+    @Test(expected = NullPointerException.class)
+    public void testCreateNullSecurityGroup() {
+        target.createSecurityGroup(null);
+    }
+
+    /**
+     * Tests if creating a duplicated security group fails with an exception.
+     */
+    @Test(expected = IllegalArgumentException.class)
+    public void testCreateDuplicateSecurityGroup() {
+        target.createSecurityGroup(securityGroup1);
+        target.createSecurityGroup(securityGroup1);
+    }
+
+    /**
+     * Tests if removing security group with null ID fails with an exception.
+     */
+    @Test(expected = IllegalArgumentException.class)
+    public void testRemoveSecurityGroupWithNull() {
+        target.removeSecurityGroup(null);
+    }
+
+    /**
+     * Tests if updating an unregistered security group fails with an exception.
+     */
+    @Test(expected = IllegalArgumentException.class)
+    public void testUpdateUnregisteredSecurityGroup() {
+        target.updateSecurityGroup(securityGroup1);
+    }
+
+    private void createBasicSecurityGroups() {
+        target.createSecurityGroup(securityGroup1);
+        target.createSecurityGroup(securityGroup2);
+    }
+
+    private static class TestCoreService extends CoreServiceAdapter {
+
+        @Override
+        public ApplicationId registerApplication(String name) {
+            return TEST_APP_ID;
+        }
+    }
+
+    private static class TestOpenstackSecurityGroupListener
+                                    implements OpenstackSecurityGroupListener {
+        private List<OpenstackSecurityGroupEvent> events = Lists.newArrayList();
+
+        @Override
+        public void event(OpenstackSecurityGroupEvent event) {
+            events.add(event);
+        }
+    }
+
+    private void validateEvents(Enum... types) {
+        int i = 0;
+        assertEquals("Number of events did not match", types.length,
+                testOpenstackSecurityGroupListener.events.size());
+        for (Event event : testOpenstackSecurityGroupListener.events) {
+            assertEquals("Incorrect event received", types[i], event.type());
+            i++;
+        }
+        testOpenstackSecurityGroupListener.events.clear();
+    }
+}