diff --git a/.testr.conf b/.testr.conf
index 30108f0b0..bb49f15d4 100644
--- a/.testr.conf
+++ b/.testr.conf
@@ -3,7 +3,7 @@ test_command=OS_STDOUT_CAPTURE=${OS_STDOUT_CAPTURE:-1} \
              OS_STDERR_CAPTURE=${OS_STDERR_CAPTURE:-1} \
              OS_LOG_CAPTURE=${OS_LOG_CAPTURE:-1} \
              OS_TEST_TIMEOUT=${OS_TEST_TIMEOUT:-160} \
-             ${PYTHON:-python} -m subunit.run discover -t ./ ./mistral/tests $LISTOPT $IDOPTION
+             ${PYTHON:-python} -m subunit.run discover -t ./ ./mistral/tests/unit $LISTOPT $IDOPTION
 
 test_id_option=--load-list $IDFILE
 test_list_option=--list
diff --git a/functionaltests/post_test_hook.sh b/functionaltests/post_test_hook.sh
index d510cfaaa..8a8f9c500 100755
--- a/functionaltests/post_test_hook.sh
+++ b/functionaltests/post_test_hook.sh
@@ -27,8 +27,6 @@ if [[ "$ZUUL_PROJECT" == "stackforge/mistral" ]]; then
     echo "Run mistral API tests"
     sudo bash ./functionaltests/run_tests.sh
     RETVAL=$?
-    # Copy tempest log files to be published among other logs upon job completion
-    sudo cp /opt/stack/new/mistral/functionaltests/tempest.log /opt/stack/logs
 fi
 
 #Run client tests for both repositories: mistral and python-mistralclient
@@ -39,7 +37,4 @@ if [[ RETVAL -eq 0 ]]; then
     RETVAL=$?
 fi
 
-# Copy tempest log files to be published among other logs upon job completion
-sudo cp /opt/stack/new/python-mistralclient/functionaltests/tempest.log /opt/stack/logs/tempest_client.log
-
 exit $RETVAL
diff --git a/functionaltests/run_tests.sh b/functionaltests/run_tests.sh
index 32cc071e5..36d775a2c 100755
--- a/functionaltests/run_tests.sh
+++ b/functionaltests/run_tests.sh
@@ -31,9 +31,6 @@ MISTRALCLIENT_DIR=/opt/stack/new/python-mistralclient
 
 # Define PYTHONPATH
 export PYTHONPATH=$PYTHONPATH:$TEMPEST_DIR
-export PYTHONPATH=$PYTHONPATH:$MISTRAL_DIR
-export PYTHONPATH=$PYTHONPATH:$MISTRALCLIENT_DIR
 
-echo $PYTHONPATH
 pwd
-nosetests -sv functionaltests
+nosetests -sv mistral/tests/functional/
diff --git a/functionaltests/__init__.py b/mistral/tests/functional/__init__.py
similarity index 100%
rename from functionaltests/__init__.py
rename to mistral/tests/functional/__init__.py
diff --git a/functionaltests/api/__init__.py b/mistral/tests/functional/api/__init__.py
similarity index 100%
rename from functionaltests/api/__init__.py
rename to mistral/tests/functional/api/__init__.py
diff --git a/functionaltests/api/base.py b/mistral/tests/functional/api/base.py
similarity index 100%
rename from functionaltests/api/base.py
rename to mistral/tests/functional/api/base.py
diff --git a/functionaltests/api/v1/__init__.py b/mistral/tests/functional/api/v1/__init__.py
similarity index 100%
rename from functionaltests/api/v1/__init__.py
rename to mistral/tests/functional/api/v1/__init__.py
diff --git a/functionaltests/api/v1/demo.yaml b/mistral/tests/functional/api/v1/demo.yaml
similarity index 100%
rename from functionaltests/api/v1/demo.yaml
rename to mistral/tests/functional/api/v1/demo.yaml
diff --git a/functionaltests/api/v1/test_mistral_basic.py b/mistral/tests/functional/api/v1/test_mistral_basic.py
similarity index 99%
rename from functionaltests/api/v1/test_mistral_basic.py
rename to mistral/tests/functional/api/v1/test_mistral_basic.py
index 91b22fe2b..8784a507a 100644
--- a/functionaltests/api/v1/test_mistral_basic.py
+++ b/mistral/tests/functional/api/v1/test_mistral_basic.py
@@ -1,5 +1,3 @@
-
-
 # Copyright 2013 Mirantis, Inc.
 #
 # Licensed under the Apache License, Version 2.0 (the "License"); you may
@@ -20,7 +18,7 @@ import uuid
 from tempest import exceptions
 from tempest import test
 
-from functionaltests.api import base
+from mistral.tests.functional.api import base
 
 
 class SanityTests(base.TestCase):
diff --git a/run_tests.sh b/run_tests.sh
index c34ecf429..0abfc7fce 100755
--- a/run_tests.sh
+++ b/run_tests.sh
@@ -110,7 +110,7 @@ function run_tests {
     if [ "$testropts" = "" ] && [ "$testrargs" = "" ]; then
       # Default to running all tests if specific test is not
       # provided.
-      testrargs="discover ./mistral/tests"
+      testrargs="discover ./mistral/tests/unit"
     fi
     ${wrapper} python -m testtools.run $testropts $testrargs