diff --git a/python/pyproject.toml b/python/pyproject.toml
index b902b050..0ec35a44 100644
--- a/python/pyproject.toml
+++ b/python/pyproject.toml
@@ -81,7 +81,7 @@ exclude = [
 ]
 
 [tool.pytest.ini_options]
-testpaths = ["."]
+testpaths = ["tests"]
 python_files = "test_*.py"
 python_classes = "Test*"
 python_functions = "test_*"
diff --git a/python/e2e/__init__.py b/python/tests/e2e/__init__.py
similarity index 100%
rename from python/e2e/__init__.py
rename to python/tests/e2e/__init__.py
diff --git a/python/e2e/conftest.py b/python/tests/e2e/conftest.py
similarity index 100%
rename from python/e2e/conftest.py
rename to python/tests/e2e/conftest.py
diff --git a/python/e2e/test_ask_user.py b/python/tests/e2e/test_ask_user.py
similarity index 100%
rename from python/e2e/test_ask_user.py
rename to python/tests/e2e/test_ask_user.py
diff --git a/python/e2e/test_client.py b/python/tests/e2e/test_client.py
similarity index 100%
rename from python/e2e/test_client.py
rename to python/tests/e2e/test_client.py
diff --git a/python/e2e/test_compaction.py b/python/tests/e2e/test_compaction.py
similarity index 100%
rename from python/e2e/test_compaction.py
rename to python/tests/e2e/test_compaction.py
diff --git a/python/e2e/test_hooks.py b/python/tests/e2e/test_hooks.py
similarity index 100%
rename from python/e2e/test_hooks.py
rename to python/tests/e2e/test_hooks.py
diff --git a/python/e2e/test_mcp_and_agents.py b/python/tests/e2e/test_mcp_and_agents.py
similarity index 100%
rename from python/e2e/test_mcp_and_agents.py
rename to python/tests/e2e/test_mcp_and_agents.py
diff --git a/python/e2e/test_permissions.py b/python/tests/e2e/test_permissions.py
similarity index 100%
rename from python/e2e/test_permissions.py
rename to python/tests/e2e/test_permissions.py
diff --git a/python/e2e/test_session.py b/python/tests/e2e/test_session.py
similarity index 100%
rename from python/e2e/test_session.py
rename to python/tests/e2e/test_session.py
diff --git a/python/e2e/test_skills.py b/python/tests/e2e/test_skills.py
similarity index 100%
rename from python/e2e/test_skills.py
rename to python/tests/e2e/test_skills.py
diff --git a/python/e2e/test_tools.py b/python/tests/e2e/test_tools.py
similarity index 100%
rename from python/e2e/test_tools.py
rename to python/tests/e2e/test_tools.py
diff --git a/python/e2e/testharness/__init__.py b/python/tests/e2e/testharness/__init__.py
similarity index 100%
rename from python/e2e/testharness/__init__.py
rename to python/tests/e2e/testharness/__init__.py
diff --git a/python/e2e/testharness/context.py b/python/tests/e2e/testharness/context.py
similarity index 95%
rename from python/e2e/testharness/context.py
rename to python/tests/e2e/testharness/context.py
index 533ee87e..fb084a80 100644
--- a/python/e2e/testharness/context.py
+++ b/python/tests/e2e/testharness/context.py
@@ -13,14 +13,13 @@
 
 from copilot import CopilotClient
 
-from .proxy import CapiProxy
+from .proxy import BASE_DIR, CapiProxy
 
 
 def get_cli_path_for_tests() -> str:
     """Get CLI path for E2E tests. Uses node_modules CLI during development."""
     # Look for CLI in sibling nodejs directory's node_modules
-    base_path = Path(__file__).parents[3]
-    full_path = base_path / "nodejs" / "node_modules" / "@github" / "copilot" / "index.js"
+    full_path = BASE_DIR / "nodejs" / "node_modules" / "@github" / "copilot" / "index.js"
     if full_path.exists():
         return str(full_path.resolve())
 
@@ -28,7 +27,7 @@ def get_cli_path_for_tests() -> str:
 
 
 CLI_PATH = get_cli_path_for_tests()
-SNAPSHOTS_DIR = Path(__file__).parents[3] / "test" / "snapshots"
+SNAPSHOTS_DIR = BASE_DIR / "test" / "snapshots"
 
 
 class E2ETestContext:
diff --git a/python/e2e/testharness/helper.py b/python/tests/e2e/testharness/helper.py
similarity index 100%
rename from python/e2e/testharness/helper.py
rename to python/tests/e2e/testharness/helper.py
diff --git a/python/e2e/testharness/proxy.py b/python/tests/e2e/testharness/proxy.py
similarity index 96%
rename from python/e2e/testharness/proxy.py
rename to python/tests/e2e/testharness/proxy.py
index e26ec65c..21ca6b96 100644
--- a/python/e2e/testharness/proxy.py
+++ b/python/tests/e2e/testharness/proxy.py
@@ -6,6 +6,7 @@
 """
 
 import os
+import pathlib
 import platform
 import re
 import subprocess
@@ -13,6 +14,8 @@
 
 import httpx
 
+BASE_DIR = pathlib.Path(__file__).parents[4]
+
 
 class CapiProxy:
     """Manages a replaying proxy server for E2E tests."""
@@ -27,9 +30,7 @@ async def start(self) -> str:
             return self._proxy_url
 
         # The harness server is in the shared test directory
-        server_path = os.path.join(
-            os.path.dirname(__file__), "..", "..", "..", "test", "harness", "server.ts"
-        )
+        server_path = os.path.join(BASE_DIR / "test" / "harness" / "server.ts")
         server_path = os.path.abspath(server_path)
 
         # On Windows, use shell=True to find npx
diff --git a/python/test_client.py b/python/tests/test_client.py
similarity index 100%
rename from python/test_client.py
rename to python/tests/test_client.py
index 7b4af8c0..114fe794 100644
--- a/python/test_client.py
+++ b/python/tests/test_client.py
@@ -5,9 +5,9 @@
 """
 
 import pytest
+from e2e.testharness import CLI_PATH
 
 from copilot import CopilotClient
-from e2e.testharness import CLI_PATH
 
 
 class TestHandleToolCallRequest:
diff --git a/python/test_event_forward_compatibility.py b/python/tests/test_event_forward_compatibility.py
similarity index 100%
rename from python/test_event_forward_compatibility.py
rename to python/tests/test_event_forward_compatibility.py
diff --git a/python/test_jsonrpc.py b/python/tests/test_jsonrpc.py
similarity index 100%
rename from python/test_jsonrpc.py
rename to python/tests/test_jsonrpc.py
diff --git a/python/e2e/test_tools_unit.py b/python/tests/test_tools_unit.py
similarity index 100%
rename from python/e2e/test_tools_unit.py
rename to python/tests/test_tools_unit.py