diff --git a/tests/conftest.py b/tests/conftest.py
new file mode 100644
index 0000000..2180bc1
--- /dev/null
+++ b/tests/conftest.py
@@ -0,0 +1,15 @@
+"""Pytest configuration and fixtures."""
+
+import os
+
+import pytest
+
+
+@pytest.fixture(scope="session", autouse=True)
+def setup_test_env():
+    """Set up test environment variables for all tests."""
+    os.environ["OPENAI_API_KEY"] = "test-key-for-testing"
+    # Use PostgreSQL from docker-compose for testing
+    # Default credentials match docker-compose.yml defaults
+    # Note: Port 54320 is the host-mapped port from docker compose
+    os.environ["DATABASE_URL"] = "postgresql+psycopg://postgres:postgres@localhost:54320/memu"
diff --git a/tests/test_env_validation.py b/tests/test_env_validation.py
new file mode 100644
index 0000000..f49bf2f
--- /dev/null
+++ b/tests/test_env_validation.py
@@ -0,0 +1,118 @@
+"""Test environment variable validation using subprocess isolation.
+
+This module uses subprocess isolation to test module-level initialization errors.
+This approach avoids issues with shared module state and ensures clean test isolation.
+"""
+
+import subprocess
+import sys
+from pathlib import Path
+
+# Project root directory (parent of tests/)
+PROJECT_ROOT = Path(__file__).parent.parent
+
+
+def _run_import_test(env_vars: dict[str, str], remove_vars: list[str] | None = None) -> subprocess.CompletedProcess:
+    """
+    Run a subprocess that attempts to import app.main with specified environment.
+
+    Args:
+        env_vars: Environment variables to set
+        remove_vars: Environment variables to remove (if any)
+
+    Returns:
+        CompletedProcess with returncode, stdout, and stderr
+    """
+    import os
+
+    # Start with a clean environment based on current env
+    env = os.environ.copy()
+
+    # Remove specified variables
+    if remove_vars:
+        for var in remove_vars:
+            env.pop(var, None)
+
+    # Set specified variables
+    env.update(env_vars)
+
+    # Run Python subprocess that imports app.main
+    result = subprocess.run(
+        [sys.executable, "-c", "from app.main import app; print(app.title)"],
+        env=env,
+        capture_output=True,
+        text=True,
+        cwd=str(PROJECT_ROOT),
+        timeout=30,  # Prevent tests from hanging indefinitely
+    )
+    return result
+
+
+def test_app_requires_openai_api_key():
+    """Test that app refuses to start when OPENAI_API_KEY is not set."""
+    result = _run_import_test(
+        env_vars={
+            "DATABASE_URL": "postgresql+psycopg://test:test@localhost:5432/test",
+        },
+        remove_vars=["OPENAI_API_KEY"],
+    )
+
+    assert result.returncode != 0
+    assert "OPENAI_API_KEY environment variable is not set or is empty" in result.stderr
+
+
+def test_app_refuses_empty_openai_api_key():
+    """Test that app refuses to start when OPENAI_API_KEY is empty."""
+    result = _run_import_test(
+        env_vars={
+            "OPENAI_API_KEY": "",
+            "DATABASE_URL": "postgresql+psycopg://test:test@localhost:5432/test",
+        },
+    )
+
+    assert result.returncode != 0
+    assert "OPENAI_API_KEY environment variable is not set or is empty" in result.stderr
+
+
+def test_app_requires_database_url():
+    """Test that app refuses to start when DATABASE_URL is not set."""
+    result = _run_import_test(
+        env_vars={
+            "OPENAI_API_KEY": "test-key",
+        },
+        remove_vars=["DATABASE_URL", "DATABASE_HOST", "DATABASE_USER", "DATABASE_PASSWORD", "DATABASE_NAME"],
+    )
+
+    assert result.returncode != 0
+    assert "Database configuration is incomplete" in result.stderr
+
+
+def test_app_with_individual_db_vars():
+    """Test that app starts with individual DATABASE_* variables."""
+    result = _run_import_test(
+        env_vars={
+            "OPENAI_API_KEY": "test-key",
+            "DATABASE_HOST": "localhost",
+            "DATABASE_PORT": "54320",
+            "DATABASE_USER": "test_user",
+            "DATABASE_PASSWORD": "test_pass",
+            "DATABASE_NAME": "test_db",
+        },
+        remove_vars=["DATABASE_URL"],
+    )
+
+    assert result.returncode == 0
+    assert "memU Server" in result.stdout
+
+
+def test_app_starts_with_valid_openai_api_key():
+    """Test that app starts successfully with valid OPENAI_API_KEY."""
+    result = _run_import_test(
+        env_vars={
+            "OPENAI_API_KEY": "test-valid-key",
+            "DATABASE_URL": "postgresql+psycopg://test:test@localhost:5432/test",
+        },
+    )
+
+    assert result.returncode == 0
+    assert "memU Server" in result.stdout
diff --git a/tests/test_health.py b/tests/test_health.py
new file mode 100644
index 0000000..625ce4b
--- /dev/null
+++ b/tests/test_health.py
@@ -0,0 +1,24 @@
+"""Tests for the application's root ("/") endpoint."""
+
+import pytest
+from fastapi.testclient import TestClient
+
+
+@pytest.fixture(scope="module")
+def client():
+    """Create FastAPI test client with proper env setup."""
+    try:
+        from app.main import app
+
+        return TestClient(app)
+    except Exception as exc:
+        pytest.skip(f"Could not initialize test client due to application setup error: {exc}")
+
+
+def test_root_endpoint(client):
+    """Test root endpoint returns welcome message."""
+    response = client.get("/")
+    assert response.status_code == 200
+    data = response.json()
+    assert "message" in data
+    assert data["message"] == "Hello MemU user!"