diff --git a/tests/functional/adapter/ephemeral/fixtures.py b/tests/functional/adapter/ephemeral/fixtures.py
new file mode 100644
index 00000000..19e22367
--- /dev/null
+++ b/tests/functional/adapter/ephemeral/fixtures.py
@@ -0,0 +1,43 @@
+fct_eph_first_sql = """
+-- fct_eph_first.sql
+{{ config(materialized='ephemeral') }}
+
+with int_eph_first as(
+    select * from {{ ref('int_eph_first') }}
+)
+
+select * from int_eph_first
+"""
+
+int_eph_first_sql = """
+-- int_eph_first.sql
+{{ config(materialized='ephemeral') }}
+
+select
+    1 as first_column,
+    2 as second_column
+"""
+
+schema_yml = """
+version: 2
+
+models:
+  - name: int_eph_first
+    columns:
+      - name: first_column
+        tests:
+          - not_null
+      - name: second_column
+        tests:
+          - not_null
+
+  - name: fct_eph_first
+    columns:
+      - name: first_column
+        tests:
+          - not_null
+      - name: second_column
+        tests:
+          - not_null
+
+"""
diff --git a/tests/functional/adapter/ephemeral/test_ephemeral_compilation.py b/tests/functional/adapter/ephemeral/test_ephemeral_compilation.py
new file mode 100644
index 00000000..638c8c17
--- /dev/null
+++ b/tests/functional/adapter/ephemeral/test_ephemeral_compilation.py
@@ -0,0 +1,47 @@
+from dbt.contracts.graph.nodes import ModelNode
+from dbt.contracts.results import RunExecutionResult, RunResult
+import pytest
+from dbt.tests.util import run_dbt
+
+from tests.functional.adapter.ephemeral.fixtures import (
+    fct_eph_first_sql,
+    int_eph_first_sql,
+    schema_yml
+)
+
+
+
+SUPPRESSED_CTE_EXPECTED_OUTPUT = """-- fct_eph_first.sql
+
+
+with int_eph_first as(
+    select * from __dbt__cte__int_eph_first
+)
+
+select * from int_eph_first"""
+
+
+class TestEphemeralCompilation:
+    @pytest.fixture(scope="class")
+    def models(self):
+        return {
+            "int_eph_first.sql": int_eph_first_sql,
+            "fct_eph_first.sql": fct_eph_first_sql,
+            "schema.yml": schema_yml,
+        }
+    '''
+    def test_ephemeral_compilation(self, project):
+        # Note: There are no models that run successfully. This testcase tests running tests.
+        results = run_dbt(["run"])
+        assert len(results) == 0
+    '''
+    def test__suppress_injected_ctes(self, project):
+        compile_output = run_dbt(
+            ["compile", "--no-inject-ephemeral-ctes" , "--select", "fct_eph_first"]
+        )
+        assert isinstance(compile_output, RunExecutionResult)
+        node_result = compile_output.results[0]
+        assert isinstance(node_result, RunResult)
+        node = node_result.node
+        assert isinstance(node, ModelNode)
+        assert node.compiled_code == SUPPRESSED_CTE_EXPECTED_OUTPUT