diff --git a/tools/test_apps/README.md b/tools/test_apps/README.md
new file mode 100644
index 0000000000..3bb1e7e121
--- /dev/null
+++ b/tools/test_apps/README.md
@@ -0,0 +1,32 @@
+# Test Apps
+
+This directory contains a set of ESP-IDF projects to be used as tests only, which aim to exercise various
+configuration of components to check completely arbitrary functionality should it be building only, executing under
+various conditions or combination with other components, including custom test frameworks.
+
+The test apps are not intended to demonstrate the ESP-IDF functionality in any way.
+
+# Test Apps projects
+
+Test applications are treated the same way as ESP-IDF examples, so each project directory shall contain
+* Build recipe in cmake and the main component with app sources
+* Configuration files
+  - `sdkconfig.ci` - Default configuration for the project
+  - `sdkconfig.ci.<CONFIG>` - Other configurations, where `<CONFIG>` indicates name of the configuration
+* Test executor in `ttfw_idf` format if the project is intended to also run tests (otherwise the example is build only)
+  - test file in the project dir must end with `_test.py`, by should be named  `app_test.py`
+  - test cases shall be decorated with `@ttfw_idf.idf_custom_test(env_tag="...")`
+
+# Test Apps layout
+
+The test apps should be grouped into subdirectories by category. Categories are:
+* `protocols` contains test of protocol interactions.
+* `network` contains system network tests
+* `system` contains tests on the internal chip features, debugging and development tools.
+
+# Test Apps local execution
+
+* Append relevant `sdkconfig.ci.<CONFIG>` to the sdkconfig for the configuration under test
+* Run `idf.py menuconfig` to configure local project attributes
+* Run `idf.py build` to build the test app
+* Run `python app_test.py` to run the test locally
diff --git a/tools/test_apps/startup/CMakeLists.txt b/tools/test_apps/system/startup/CMakeLists.txt
similarity index 100%
rename from tools/test_apps/startup/CMakeLists.txt
rename to tools/test_apps/system/startup/CMakeLists.txt
diff --git a/tools/test_apps/startup/README.txt b/tools/test_apps/system/startup/README.txt
similarity index 100%
rename from tools/test_apps/startup/README.txt
rename to tools/test_apps/system/startup/README.txt
diff --git a/tools/test_apps/startup/app_test.py b/tools/test_apps/system/startup/app_test.py
similarity index 78%
rename from tools/test_apps/startup/app_test.py
rename to tools/test_apps/system/startup/app_test.py
index f6c1a779b3..ebd4cf3306 100644
--- a/tools/test_apps/startup/app_test.py
+++ b/tools/test_apps/system/startup/app_test.py
@@ -6,13 +6,13 @@ import ttfw_idf
 from tiny_test_fw import Utility
 
 
-@ttfw_idf.idf_test_app_test(env_tag="test_jtag_arm")
+@ttfw_idf.idf_custom_test(env_tag="test_jtag_arm", group="test-apps")
 def test_startup(env, extra_data):
     config_files = glob.glob(os.path.join(os.path.dirname(__file__), "sdkconfig.ci.*"))
     config_names = [os.path.basename(s).replace("sdkconfig.ci.", "") for s in config_files]
     for name in config_names:
         Utility.console_log("Checking config \"{}\"... ".format(name), end="")
-        dut = env.get_dut("startup", "tools/test_apps/startup", app_config_name=name)
+        dut = env.get_dut("startup", "tools/test_apps/system/startup", app_config_name=name)
         dut.start_app()
         dut.expect("app_main running")
         env.close_dut(dut.name)
diff --git a/tools/test_apps/startup/main/CMakeLists.txt b/tools/test_apps/system/startup/main/CMakeLists.txt
similarity index 100%
rename from tools/test_apps/startup/main/CMakeLists.txt
rename to tools/test_apps/system/startup/main/CMakeLists.txt
diff --git a/tools/test_apps/startup/main/test_startup_main.c b/tools/test_apps/system/startup/main/test_startup_main.c
similarity index 100%
rename from tools/test_apps/startup/main/test_startup_main.c
rename to tools/test_apps/system/startup/main/test_startup_main.c
diff --git a/tools/test_apps/startup/sdkconfig.ci.default b/tools/test_apps/system/startup/sdkconfig.ci.default
similarity index 100%
rename from tools/test_apps/startup/sdkconfig.ci.default
rename to tools/test_apps/system/startup/sdkconfig.ci.default
diff --git a/tools/test_apps/startup/sdkconfig.ci.flash_80m_qio b/tools/test_apps/system/startup/sdkconfig.ci.flash_80m_qio
similarity index 100%
rename from tools/test_apps/startup/sdkconfig.ci.flash_80m_qio
rename to tools/test_apps/system/startup/sdkconfig.ci.flash_80m_qio