diff --git a/test/global.test.ts b/test/global.test.ts
index d7b6516ce..49ef2aa78 100644
--- a/test/global.test.ts
+++ b/test/global.test.ts
@@ -27,7 +27,10 @@ let oldRequestTimeout: number | undefined;
 
 let testWorkspaceFolders: string[];
 let workspaceFolderIndex = 0;
-export function getTestWorkspaceFolder(): string {
+export function getTestWorkspaceFolder(folder?: string): string {
+    if (folder) {
+        return testWorkspaceFolders.find(f => f.toLowerCase().includes(folder.toLowerCase())) || testWorkspaceFolders[0];
+    }
     if (workspaceFolderIndex >= testWorkspaceFolders.length) {
         throw new Error('Not enough workspace folders. Add more in "test/test.code-workspace".')
     }
@@ -170,6 +173,12 @@ async function initTestWorkspaceFolders(): Promise<string[]> {
         for (let i = 0; i < workspaceFolders.length; i++) {
             const workspacePath: string = workspaceFolders[i].uri.fsPath;
             const folderName = path.basename(workspacePath);
+            if (folderName === 'containerizedFunctionProject') {
+                await AzExtFsExtra.ensureDir(workspacePath);
+                await AzExtFsExtra.emptyDir(workspacePath);
+                folders.push(workspacePath);
+                continue;
+            }
             assert.equal(folderName, String(i), `Unexpected workspace folder name "${folderName}".`);
             await AzExtFsExtra.ensureDir(workspacePath);
             await AzExtFsExtra.emptyDir(workspacePath);
diff --git a/test/project/createAndValidateProject.ts b/test/project/createAndValidateProject.ts
index b688db9b9..6ae637cac 100644
--- a/test/project/createAndValidateProject.ts
+++ b/test/project/createAndValidateProject.ts
@@ -4,13 +4,16 @@
  *--------------------------------------------------------------------------------------------*/
 
 import { type TestActionContext, type TestInput } from '@microsoft/vscode-azext-dev';
+import { AzExtFsExtra } from '@microsoft/vscode-azext-utils';
 import * as path from 'path';
 import { ProjectLanguage, createNewProjectInternal, getRandomHexString, hiddenStacksSetting } from '../../extension.bundle';
 // eslint-disable-next-line no-restricted-imports
+import { CreateDockerfileProjectStep } from '../../src/commands/createNewProject/dockerfileSteps/CreateDockerfileProjectStep';
+// eslint-disable-next-line no-restricted-imports
 import type * as api from '../../src/vscode-azurefunctions.api';
-import { testFolderPath } from '../global.test';
+import { getTestWorkspaceFolder, testFolderPath } from '../global.test';
 import { runWithFuncSetting } from '../runWithSetting';
-import { validateProject, type IValidateProjectOptions } from './validateProject';
+import { validateContainerizedProject, validateProject, type IValidateProjectOptions } from './validateProject';
 
 export interface ICreateProjectTestOptions extends IValidateProjectOptions {
     isHiddenLanguage?: boolean;
@@ -50,3 +53,32 @@ export async function createAndValidateProject(context: TestActionContext, optio
 
     await validateProject(projectPath, options);
 }
+
+export async function createAndValidateContainerizedProject(context: TestActionContext, options: ICreateProjectTestOptions): Promise<void> {
+    // Clone inputs here so we have a different array each time
+    const inputs: (string | TestInput | RegExp)[] = options.inputs ? [...options.inputs] : [];
+    const language: ProjectLanguage = options.language;
+    const projectPath: string = getTestWorkspaceFolder('containerizedFunctionProject');
+    //Empty folder for next test
+    await AzExtFsExtra.emptyDir(projectPath);
+
+    if (!options.isHiddenLanguage) {
+        inputs.unshift(options.displayLanguage || language);
+    }
+
+    inputs.unshift('containerizedFunctionProject');
+
+    await runWithFuncSetting(hiddenStacksSetting, true, async () => {
+        await context.ui.runWithInputs(inputs, async () => {
+            await createNewProjectInternal(context,
+                {
+                    executeStep: new CreateDockerfileProjectStep(),
+                    languageFilter: /Python|C\#|(Java|Type)Script|PowerShell$/i,
+                    version: options.version,
+                    suppressOpenFolder: true
+                });
+        });
+    });
+
+    await validateContainerizedProject(projectPath, options);
+}
diff --git a/test/project/createNewContainerizedDotenetProject.test.ts b/test/project/createNewContainerizedDotenetProject.test.ts
new file mode 100644
index 000000000..aead1fda0
--- /dev/null
+++ b/test/project/createNewContainerizedDotenetProject.test.ts
@@ -0,0 +1,29 @@
+/*---------------------------------------------------------------------------------------------
+*  Copyright (c) Microsoft Corporation. All rights reserved.
+*  Licensed under the MIT License. See License.md in the project root for license information.
+*--------------------------------------------------------------------------------------------*/
+
+import { runWithTestActionContext } from "@microsoft/vscode-azext-dev";
+import { FuncVersion, getRandomHexString } from "../../extension.bundle";
+import { getRotatingAuthLevel } from "../nightly/getRotatingValue";
+import { createAndValidateContainerizedProject } from "./createAndValidateProject";
+import { getCSharpValidateOptions } from "./validateProject";
+
+suite('Create New Dotnet Project', () => {
+    test('checkDockerfileDotnetIsolated', async () => {
+        const functionName: string = 'func' + getRandomHexString();
+        const input = [/7.*isolated/i, /http\s*trigger/i, functionName, 'Company.Function', getRotatingAuthLevel()]
+        await runWithTestActionContext('createProject', async context => {
+            await createAndValidateContainerizedProject(context, { ...getCSharpValidateOptions('net7.0', FuncVersion.v4), inputs: input })
+        });
+    });
+
+    test('checkDockerfileDotnetLTS', async () => {
+        const functionName: string = 'func' + getRandomHexString();
+        const input = [/6/i, /http\s*trigger/i, functionName, 'Company.Function', getRotatingAuthLevel()]
+        await runWithTestActionContext('createProject', async context => {
+            await createAndValidateContainerizedProject(context, { ...getCSharpValidateOptions('net6.0', FuncVersion.v4), inputs: input })
+        });
+    });
+});
+
diff --git a/test/project/validateProject.ts b/test/project/validateProject.ts
index f10e4c309..00c25f659 100644
--- a/test/project/validateProject.ts
+++ b/test/project/validateProject.ts
@@ -8,7 +8,10 @@ import * as assert from 'assert';
 import * as fse from 'fs-extra';
 import * as globby from 'globby';
 import * as path from 'path';
+import * as semver from 'semver';
 import { FuncVersion, JavaBuildTool, ProjectLanguage, extensionId, getContainingWorkspace, type IExtensionsJson, type ILaunchJson, type ITasksJson } from '../../extension.bundle';
+// eslint-disable-next-line no-restricted-imports
+import { detectFunctionsDockerfile } from '../../src/commands/createFunctionApp/containerImage/detectDockerfile';
 
 export const defaultTestFuncVersion: FuncVersion = FuncVersion.v4;
 
@@ -425,3 +428,33 @@ export async function validateProject(projectPath: string, options: IValidatePro
     const gitignoreContents: string = (await fse.readFile(path.join(projectPath, '.gitignore'))).toString();
     assert.equal(gitignoreContents.indexOf('.vscode'), -1, 'The ".vscode" folder is being ignored.');
 }
+
+export async function validateContainerizedProject(projectPath: string, options: IValidateProjectOptions): Promise<void> {
+    //
+    // Validate dockerfile is functions dockerfile
+    const expectedPaths: ExpectedPath[] = getCommonExpectedPaths(projectPath, options.workspaceFolder).filter(p1 => !options.excludedPaths || !options.excludedPaths.find(p2 => p1 === p2));
+    expectedPaths.push('Dockerfile');
+    if (expectedPaths.find(p => typeof p === 'string' && p.includes('Dockerfile'))) {
+        assert.ok(await AzExtFsExtra.pathExists(path.join(projectPath, 'Dockerfile')), 'Dockerfile does not exist.');
+        const dockerfileFound = await detectFunctionsDockerfile(path.join(projectPath, 'Dockerfile'));
+        assert.ok(dockerfileFound, 'Dockerfile does not contain the expected functions image.');
+    }
+
+    //validate csproj version matches dockerfile type
+    const dockerfileContents: string = (await fse.readFile(path.join(projectPath, 'Dockerfile'))).toString();
+    const dockerfileLines: string[] = dockerfileContents.split('\n');
+    const csprojContents: string = (await fse.readFile(path.join(projectPath, 'containerizedFunctionProject.csproj'))).toString();
+    const csprojLines: string[] = csprojContents.split('\n');
+    for (const line of dockerfileLines) {
+        if (line.includes('dotnet-isolated')) {
+            const azureFunctionsWorkerVersion = csprojLines.find(l => l.includes('Include=\"Microsoft.Azure.Functions.Worker\"'))?.match(/Version=\"(\d+\.\d+\.\d+)\"/)?.[1];
+            assert.ok(azureFunctionsWorkerVersion, 'csproj does not contain a Microsoft.Azure.Functions.Worker version.');
+            assert.ok(semver.satisfies(azureFunctionsWorkerVersion, '1.20.x'), 'csproj does not contain the expected Microsoft.Azure.Functions.Worker version.');
+        } else if (line.includes('dotnet:4')) {
+            const netSdkFunctionsVersion = csprojLines.find(l => l.includes('Include=\"Microsoft.NET.Sdk.Functions\"'))?.match(/Version=\"(\d+\.\d+\.\d+)\"/)?.[1];
+            assert.ok(netSdkFunctionsVersion, 'csproj does not contain an sdk package.');
+            assert.ok(semver.satisfies(netSdkFunctionsVersion, '4.x.x'), 'csproj does not contain the expected sdk package.');
+            assert.ok(csprojLines.some(l => l.includes('Include=\"Microsoft.NET.Sdk.Functions\" Version=\"4.2.0\"')), 'csproj does not contain the expected sdk package.');
+        }
+    }
+}
diff --git a/test/test.code-workspace b/test/test.code-workspace
index 26a370e25..5cc6c5a3a 100644
--- a/test/test.code-workspace
+++ b/test/test.code-workspace
@@ -29,6 +29,9 @@
         },
         {
             "path": "../testWorkspace/9"
+        },
+        {
+            "path": "../testWorkspace/containerizedFunctionProject"
         }
     ],
     "settings": {