diff --git a/meta/lib/oeqa/selftest/cases/bblayers.py b/meta/lib/oeqa/selftest/cases/bblayers.py
index c753a7b795..18007764b3 100644
--- a/meta/lib/oeqa/selftest/cases/bblayers.py
+++ b/meta/lib/oeqa/selftest/cases/bblayers.py
@@ -142,3 +142,25 @@ class BitbakeLayers(OESelftestTestCase):
     def test_validate_examplelayersjson(self):
         json = os.path.join(get_bb_var('COREBASE'), "meta/files/layers.example.json")
         self.validate_layersjson(json)
+
+    def test_bitbakelayers_setup(self):
+        result = runCmd('bitbake-layers create-layers-setup {}'.format(self.testlayer_path))
+        jsonfile = os.path.join(self.testlayer_path, "setup-layers.json")
+        self.validate_layersjson(jsonfile)
+
+        # The revision-under-test may not necessarily be available on the remote server,
+        # so replace it with a stable release tag.
+        import json
+        with open(jsonfile) as f:
+            data = json.load(f)
+        for s in data['sources']:
+            data['sources'][s]['git-remote']['rev'] = 'yocto-4.0'
+        with open(jsonfile, 'w') as f:
+            json.dump(data, f)
+
+        testcheckoutdir = os.path.join(self.builddir, 'test-layer-checkout')
+        result = runCmd('{}/setup-layers --destdir {}'.format(self.testlayer_path, testcheckoutdir))
+        # May not necessarily be named 'poky' or 'openembedded-core'
+        oecoredir = os.listdir(testcheckoutdir)[0]
+        testcheckoutfile = os.path.join(testcheckoutdir, oecoredir, "oe-init-build-env")
+        self.assertTrue(os.path.exists(testcheckoutfile), "File {} not found in test layer checkout".format(testcheckoutfile))