diff --git a/posix-list-dir_test.go b/posix-list-dir_test.go
new file mode 100644
index 000000000..c354710dd
--- /dev/null
+++ b/posix-list-dir_test.go
@@ -0,0 +1,157 @@
+/*
+ * Minio Cloud Storage, (C) 2016 Minio, Inc.
+ *
+ * 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 main
+
+import (
+	"fmt"
+	"io/ioutil"
+	"os"
+	"path/filepath"
+	"sort"
+	"testing"
+)
+
+// Test to check for different input arguments.
+func TestReadDir0(t *testing.T) {
+	// Check non existent directory.
+	if _, err := readDir("/tmp/non-existent-directory"); err != errFileNotFound {
+		t.Fatalf("expected = %s, got: %s", errFileNotFound, err)
+	}
+
+	// Check if file is given.
+	if _, err := readDir("/etc/issue/mydir"); err != errFileNotFound {
+		t.Fatalf("expected = %s, got: %s", errFileNotFound, err)
+	}
+
+	// Check if permission denied.
+	if _, err := readDir("/proc/1/fd"); err == nil {
+		t.Fatalf("expected = an error, got: nil")
+	}
+}
+
+type result struct {
+	dir     string
+	entries []string
+}
+
+var testResults = []result{}
+
+// Test to read empty directory.
+func setupTestReadDir1(t *testing.T) {
+	// Create unique test directory.
+	if dir, err := ioutil.TempDir("", "minio-posix-list-dir"); err != nil {
+		t.Fatal("failed to setup.", err)
+	} else {
+		// Add empty entry slice for this test directory.
+		testResults = append(testResults, result{dir, []string{}})
+	}
+}
+
+// Test to read empty directory with reserved names.
+func setupTestReadDir2(t *testing.T) {
+	// Create unique test directory.
+	if dir, err := ioutil.TempDir("", "minio-posix-list-dir"); err != nil {
+		t.Fatal("failed to setup.", err)
+	} else {
+		entries := []string{}
+		// Create a file with reserved name.
+		for _, reservedName := range posixReservedPrefix {
+			if err := ioutil.WriteFile(filepath.Join(dir, reservedName), []byte{}, os.ModePerm); err != nil {
+				// For cleanup, its required to add these entries into test results.
+				sort.Strings(entries)
+				testResults = append(testResults, result{dir, entries})
+				t.Fatal("failed to setup.", err)
+			}
+		}
+
+		sort.Strings(entries)
+
+		// Add entries slice for this test directory.
+		testResults = append(testResults, result{dir, entries})
+	}
+}
+
+// Test to read non-empty directory.
+func setupTestReadDir3(t *testing.T) {
+	if dir, err := ioutil.TempDir("", "minio-posix-list-dir"); err != nil {
+		t.Fatal("failed to setup.", err)
+	} else {
+		entries := []string{}
+		for i := 0; i < 10; i++ {
+			name := fmt.Sprintf("file-%d", i)
+			entries = append(entries, name)
+			if err := ioutil.WriteFile(filepath.Join(dir, name), []byte{}, os.ModePerm); err != nil {
+				// Keep entries sorted for easier comparison.
+				sort.Strings(entries)
+				// For cleanup, its required to add these entries into test results.
+				testResults = append(testResults, result{dir, entries})
+				t.Fatal("failed to setup.", err)
+			}
+		}
+
+		// Keep entries sorted for easier comparison.
+		sort.Strings(entries)
+
+		// Add entries slice for this test directory.
+		testResults = append(testResults, result{dir, entries})
+	}
+}
+
+// teardown - cleans up test directories.
+func teardown() {
+	for _, r := range testResults {
+		os.RemoveAll(r.dir)
+	}
+}
+
+// checkResult - checks whether entries are got are same as expected entries.
+func checkResult(expected []string, got []string) bool {
+	// If length of expected and got slice are different, the test actually failed.
+	if len(expected) != len(got) {
+		return false
+	}
+
+	for i := range expected {
+		// If entry in expected is not same as entry it got, the test is failed.
+		if expected[i] != got[i] {
+			return false
+		}
+	}
+
+	// expected and got have same entries.
+	return true
+}
+
+// TestReadDir - test function to run various readDir() tests.
+func TestReadDir(t *testing.T) {
+	defer teardown()
+	setupTestReadDir1(t)
+	setupTestReadDir2(t)
+	setupTestReadDir3(t)
+
+	for _, r := range testResults {
+		if entries, err := readDir(r.dir); err != nil {
+			t.Fatal("failed to run test.", err)
+		} else {
+			// Keep entries sorted for easier comparison.
+			sort.Strings(entries)
+			if !checkResult(r.entries, entries) {
+				t.Fatalf("expected = %s, got: %s", r.entries, entries)
+			}
+		}
+	}
+}