diff --git a/functional/test_resource_group.py b/functional/test_resource_group.py
new file mode 100644
index 0000000..afd9f55
--- /dev/null
+++ b/functional/test_resource_group.py
@@ -0,0 +1,92 @@
+#    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.
+
+import six
+
+from heatclient import exc
+
+from heat_integrationtests.common import test
+
+
+class ResourceGroupTest(test.HeatIntegrationTest):
+
+    def setUp(self):
+        super(ResourceGroupTest, self).setUp()
+        self.client = self.orchestration_client
+
+    def _group_nested_identifier(self, stack_identifier,
+                                 group_name='random_group'):
+        # Get the nested stack identifier from the group
+        rsrc = self.client.resources.get(stack_identifier, group_name)
+        physical_resource_id = rsrc.physical_resource_id
+
+        nested_stack = self.client.stacks.get(physical_resource_id)
+        nested_identifier = '%s/%s' % (nested_stack.stack_name,
+                                       nested_stack.id)
+        parent_id = stack_identifier.split("/")[-1]
+        self.assertEqual(parent_id, nested_stack.parent)
+        return nested_identifier
+
+    def test_resource_group_zero_novalidate(self):
+        # Nested resources should be validated only when size > 0
+        # This allows features to be disabled via size=0 without
+        # triggering validation of nested resource custom contraints
+        # e.g images etc in the nested schema.
+        nested_template_fail = '''
+heat_template_version: 2013-05-23
+resources:
+  random:
+    type: OS::Heat::RandomString
+    properties:
+        length: BAD
+'''
+
+        template_zero_nested = '''
+heat_template_version: 2013-05-23
+resources:
+  random_group:
+    type: OS::Heat::ResourceGroup
+    properties:
+      count: 0
+      resource_def:
+        type: My::RandomString
+'''
+
+        files = {'provider.yaml': nested_template_fail}
+        env = {'resource_registry':
+               {'My::RandomString': 'provider.yaml'}}
+        stack_identifier = self.stack_create(
+            template=template_zero_nested,
+            files=files,
+            environment=env
+        )
+
+        self.assertEqual({u'random_group': u'OS::Heat::ResourceGroup'},
+                         self.list_resources(stack_identifier))
+
+        # Check we created an empty nested stack
+        nested_identifier = self._group_nested_identifier(stack_identifier)
+        self.assertEqual({}, self.list_resources(nested_identifier))
+
+        # Prove validation works for non-zero create/update
+        template_two_nested = template_zero_nested.replace("count: 0",
+                                                           "count: 2")
+        expected_err = "length Value 'BAD' is not an integer"
+        ex = self.assertRaises(exc.HTTPBadRequest, self.update_stack,
+                               stack_identifier, template_two_nested,
+                               environment=env, files=files)
+        self.assertIn(expected_err, six.text_type(ex))
+
+        ex = self.assertRaises(exc.HTTPBadRequest, self.stack_create,
+                               template=template_two_nested,
+                               environment=env, files=files)
+        self.assertIn(expected_err, six.text_type(ex))