diff --git a/packages/durabletask-js-azuremanaged/src/retry-policy.ts b/packages/durabletask-js-azuremanaged/src/retry-policy.ts
index 9f889ac..f3b331a 100644
--- a/packages/durabletask-js-azuremanaged/src/retry-policy.ts
+++ b/packages/durabletask-js-azuremanaged/src/retry-policy.ts
@@ -88,7 +88,9 @@ function statusCodeToName(code: GrpcStatus): string {
  * @returns A JSON string representing the service config.
  */
 export function createServiceConfig(options?: ClientRetryOptions): string {
-  const maxAttempts = options?.maxRetries ?? DEFAULT_MAX_ATTEMPTS;
+  // gRPC maxAttempts includes the original attempt, while maxRetries means
+  // retries *after* the initial call. Convert by adding 1.
+  const maxAttempts = options?.maxRetries != null ? options.maxRetries + 1 : DEFAULT_MAX_ATTEMPTS;
   const initialBackoffMs = options?.initialBackoffMs ?? DEFAULT_INITIAL_BACKOFF_MS;
   const maxBackoffMs = options?.maxBackoffMs ?? DEFAULT_MAX_BACKOFF_MS;
   const backoffMultiplier = options?.backoffMultiplier ?? DEFAULT_BACKOFF_MULTIPLIER;
diff --git a/packages/durabletask-js-azuremanaged/test/unit/retry-policy.spec.ts b/packages/durabletask-js-azuremanaged/test/unit/retry-policy.spec.ts
new file mode 100644
index 0000000..caf3dcf
--- /dev/null
+++ b/packages/durabletask-js-azuremanaged/test/unit/retry-policy.spec.ts
@@ -0,0 +1,185 @@
+// Copyright (c) Microsoft Corporation. All rights reserved.
+// Licensed under the MIT License.
+
+import { status as GrpcStatus } from "@grpc/grpc-js";
+import {
+  createServiceConfig,
+  DEFAULT_SERVICE_CONFIG,
+  DEFAULT_MAX_ATTEMPTS,
+  DEFAULT_INITIAL_BACKOFF_MS,
+  DEFAULT_MAX_BACKOFF_MS,
+  DEFAULT_BACKOFF_MULTIPLIER,
+  ClientRetryOptions,
+} from "../../src/retry-policy";
+
+describe("retry-policy", () => {
+  describe("DEFAULT_SERVICE_CONFIG", () => {
+    it("should be valid JSON", () => {
+      expect(() => JSON.parse(DEFAULT_SERVICE_CONFIG)).not.toThrow();
+    });
+
+    it("should contain a retry policy", () => {
+      const config = JSON.parse(DEFAULT_SERVICE_CONFIG);
+      const retryPolicy = config.methodConfig[0].retryPolicy;
+      expect(retryPolicy).toBeDefined();
+    });
+
+    it("should use default values", () => {
+      const config = JSON.parse(DEFAULT_SERVICE_CONFIG);
+      const retryPolicy = config.methodConfig[0].retryPolicy;
+
+      expect(retryPolicy.maxAttempts).toBe(DEFAULT_MAX_ATTEMPTS);
+      expect(retryPolicy.initialBackoff).toBe(`${DEFAULT_INITIAL_BACKOFF_MS / 1000}s`);
+      expect(retryPolicy.maxBackoff).toBe(`${DEFAULT_MAX_BACKOFF_MS / 1000}s`);
+      expect(retryPolicy.backoffMultiplier).toBe(DEFAULT_BACKOFF_MULTIPLIER);
+    });
+
+    it("should include UNAVAILABLE status code by default", () => {
+      const config = JSON.parse(DEFAULT_SERVICE_CONFIG);
+      const retryPolicy = config.methodConfig[0].retryPolicy;
+      expect(retryPolicy.retryableStatusCodes).toContain("UNAVAILABLE");
+    });
+
+    it("should apply to all gRPC methods via empty service name", () => {
+      const config = JSON.parse(DEFAULT_SERVICE_CONFIG);
+      expect(config.methodConfig[0].name).toEqual([{ service: "" }]);
+    });
+  });
+
+  describe("createServiceConfig", () => {
+    it("should return the same config as DEFAULT_SERVICE_CONFIG when called without options", () => {
+      const config = createServiceConfig();
+      expect(config).toBe(DEFAULT_SERVICE_CONFIG);
+    });
+
+    it("should return the same config as DEFAULT_SERVICE_CONFIG when called with undefined", () => {
+      const config = createServiceConfig(undefined);
+      expect(JSON.parse(config)).toEqual(JSON.parse(DEFAULT_SERVICE_CONFIG));
+    });
+
+    describe("maxRetries to maxAttempts conversion", () => {
+      it("should convert maxRetries to maxAttempts by adding 1 (retries + initial attempt)", () => {
+        const config = JSON.parse(createServiceConfig({ maxRetries: 3 }));
+        // maxRetries: 3 means 3 retries + 1 initial = 4 total attempts
+        expect(config.methodConfig[0].retryPolicy.maxAttempts).toBe(4);
+      });
+
+      it("should produce maxAttempts: 1 when maxRetries is 0 (no retries, just the initial call)", () => {
+        const config = JSON.parse(createServiceConfig({ maxRetries: 0 }));
+        // maxRetries: 0 means 0 retries + 1 initial = 1 total attempt
+        expect(config.methodConfig[0].retryPolicy.maxAttempts).toBe(1);
+      });
+
+      it("should produce maxAttempts: 2 when maxRetries is 1", () => {
+        const config = JSON.parse(createServiceConfig({ maxRetries: 1 }));
+        expect(config.methodConfig[0].retryPolicy.maxAttempts).toBe(2);
+      });
+
+      it("should use DEFAULT_MAX_ATTEMPTS when maxRetries is not specified", () => {
+        const config = JSON.parse(createServiceConfig({}));
+        expect(config.methodConfig[0].retryPolicy.maxAttempts).toBe(DEFAULT_MAX_ATTEMPTS);
+      });
+    });
+
+    describe("backoff configuration", () => {
+      it("should convert initialBackoffMs to seconds string", () => {
+        const config = JSON.parse(createServiceConfig({ initialBackoffMs: 100 }));
+        expect(config.methodConfig[0].retryPolicy.initialBackoff).toBe("0.1s");
+      });
+
+      it("should convert maxBackoffMs to seconds string", () => {
+        const config = JSON.parse(createServiceConfig({ maxBackoffMs: 5000 }));
+        expect(config.methodConfig[0].retryPolicy.maxBackoff).toBe("5s");
+      });
+
+      it("should apply the specified backoff multiplier", () => {
+        const config = JSON.parse(createServiceConfig({ backoffMultiplier: 3 }));
+        expect(config.methodConfig[0].retryPolicy.backoffMultiplier).toBe(3);
+      });
+    });
+
+    describe("retryable status codes", () => {
+      it("should always include UNAVAILABLE even when custom codes are specified", () => {
+        const config = JSON.parse(
+          createServiceConfig({
+            retryableStatusCodes: [GrpcStatus.INTERNAL],
+          }),
+        );
+        const statusCodes = config.methodConfig[0].retryPolicy.retryableStatusCodes;
+        expect(statusCodes).toContain("UNAVAILABLE");
+        expect(statusCodes).toContain("INTERNAL");
+      });
+
+      it("should not duplicate UNAVAILABLE when already in custom codes", () => {
+        const config = JSON.parse(
+          createServiceConfig({
+            retryableStatusCodes: [GrpcStatus.UNAVAILABLE, GrpcStatus.INTERNAL],
+          }),
+        );
+        const statusCodes: string[] = config.methodConfig[0].retryPolicy.retryableStatusCodes;
+        const unavailableCount = statusCodes.filter((c) => c === "UNAVAILABLE").length;
+        expect(unavailableCount).toBe(1);
+      });
+
+      it("should map all standard gRPC status codes correctly", () => {
+        const allCodes = [
+          { code: GrpcStatus.OK, name: "OK" },
+          { code: GrpcStatus.CANCELLED, name: "CANCELLED" },
+          { code: GrpcStatus.UNKNOWN, name: "UNKNOWN" },
+          { code: GrpcStatus.INVALID_ARGUMENT, name: "INVALID_ARGUMENT" },
+          { code: GrpcStatus.DEADLINE_EXCEEDED, name: "DEADLINE_EXCEEDED" },
+          { code: GrpcStatus.NOT_FOUND, name: "NOT_FOUND" },
+          { code: GrpcStatus.ALREADY_EXISTS, name: "ALREADY_EXISTS" },
+          { code: GrpcStatus.PERMISSION_DENIED, name: "PERMISSION_DENIED" },
+          { code: GrpcStatus.RESOURCE_EXHAUSTED, name: "RESOURCE_EXHAUSTED" },
+          { code: GrpcStatus.FAILED_PRECONDITION, name: "FAILED_PRECONDITION" },
+          { code: GrpcStatus.ABORTED, name: "ABORTED" },
+          { code: GrpcStatus.OUT_OF_RANGE, name: "OUT_OF_RANGE" },
+          { code: GrpcStatus.UNIMPLEMENTED, name: "UNIMPLEMENTED" },
+          { code: GrpcStatus.INTERNAL, name: "INTERNAL" },
+          { code: GrpcStatus.UNAVAILABLE, name: "UNAVAILABLE" },
+          { code: GrpcStatus.DATA_LOSS, name: "DATA_LOSS" },
+          { code: GrpcStatus.UNAUTHENTICATED, name: "UNAUTHENTICATED" },
+        ];
+
+        for (const { code, name } of allCodes) {
+          const config = JSON.parse(
+            createServiceConfig({ retryableStatusCodes: [code] }),
+          );
+          const statusCodes: string[] = config.methodConfig[0].retryPolicy.retryableStatusCodes;
+          expect(statusCodes).toContain(name);
+        }
+      });
+
+      it("should fall back to 'UNKNOWN' for unrecognized status codes", () => {
+        const config = JSON.parse(
+          createServiceConfig({ retryableStatusCodes: [999 as GrpcStatus] }),
+        );
+        const statusCodes: string[] = config.methodConfig[0].retryPolicy.retryableStatusCodes;
+        expect(statusCodes).toContain("UNKNOWN");
+      });
+    });
+
+    describe("full custom configuration", () => {
+      it("should apply all custom options together", () => {
+        const options: ClientRetryOptions = {
+          maxRetries: 5,
+          initialBackoffMs: 200,
+          maxBackoffMs: 2000,
+          backoffMultiplier: 1.5,
+          retryableStatusCodes: [GrpcStatus.UNAVAILABLE, GrpcStatus.DEADLINE_EXCEEDED],
+        };
+
+        const config = JSON.parse(createServiceConfig(options));
+        const retryPolicy = config.methodConfig[0].retryPolicy;
+
+        expect(retryPolicy.maxAttempts).toBe(6); // 5 retries + 1 initial
+        expect(retryPolicy.initialBackoff).toBe("0.2s");
+        expect(retryPolicy.maxBackoff).toBe("2s");
+        expect(retryPolicy.backoffMultiplier).toBe(1.5);
+        expect(retryPolicy.retryableStatusCodes).toContain("UNAVAILABLE");
+        expect(retryPolicy.retryableStatusCodes).toContain("DEADLINE_EXCEEDED");
+      });
+    });
+  });
+});