diff --git a/.testr.conf b/.testr.conf
index e9f70e1d..23c7d4f8 100644
--- a/.testr.conf
+++ b/.testr.conf
@@ -2,7 +2,7 @@
 test_command=OS_STDOUT_CAPTURE=${OS_STDOUT_CAPTURE:-1} \
              OS_STDERR_CAPTURE=${OS_STDERR_CAPTURE:-1} \
              OS_TEST_TIMEOUT=${OS_TEST_TIMEOUT:-160} \
-             ${PYTHON:-python} -m subunit.run discover -t ./ ${OS_TEST_PATH:-./tests} $LISTOPT $IDOPTION
+             ${PYTHON:-python} -m subunit.run discover -t ./ ${OS_TEST_PATH:-./tests/unit} $LISTOPT $IDOPTION
 
 test_id_option=--load-list $IDFILE
 test_list_option=--list
diff --git a/poppy/provider/maxcdn/services.py b/poppy/provider/maxcdn/services.py
index 80c1a471..2f29001a 100644
--- a/poppy/provider/maxcdn/services.py
+++ b/poppy/provider/maxcdn/services.py
@@ -129,6 +129,8 @@ class ServiceController(base.ServiceBase):
         Map a poppy service name to a provider's service name so it
         can comply provider's naming convention.
         """
+        if isinstance(service_name, bytes):
+            service_name = service_name.decode("utf-8")
         if MAXCDN_NAMING_REGEX.match(service_name):
             return service_name
         else:
diff --git a/setup.cfg b/setup.cfg
index 2b2c26fb..2886db24 100644
--- a/setup.cfg
+++ b/setup.cfg
@@ -76,17 +76,6 @@ poppy.provider.akamai.cert_info_storage =
 [wheel]
 universal = 1
 
-[nosetests]
-cover-branches = true
-cover-erase = true
-cover-inclusive = true
-#cover-min-percentage = 100
-cover-package = poppy
-#match = ^test
-where = tests
-with-coverage = true
-verbosity=2
-
 ; Disabled: Causes a bug in testtools to manifest.
 ; Trigger: self.assertX(condition), where condition == False.
 ;
diff --git a/tests/test-requirements.txt b/tests/test-requirements.txt
index 029b58a1..c25bedd0 100644
--- a/tests/test-requirements.txt
+++ b/tests/test-requirements.txt
@@ -4,9 +4,9 @@ dnspython
 fixtures
 hacking
 mock
-nose
 openstack.nose_plugin
 oslotest>=1.9.0
+os-testr>=0.7.0 # Apache-2.0
 requests-mock
 testrepository
 testtools
diff --git a/tests/unit/distributed_task/taskflow/test_flows.py b/tests/unit/distributed_task/taskflow/test_flows.py
index ea91db20..48cff374 100644
--- a/tests/unit/distributed_task/taskflow/test_flows.py
+++ b/tests/unit/distributed_task/taskflow/test_flows.py
@@ -312,6 +312,8 @@ class TestFlowRuns(base.TestCase):
 
             self.patch_delete_flow(service_controller, storage_controller,
                                    dns_controller)
+            storage_controller.get_service = mock.Mock(
+                return_value=service_obj)
             engines.run(delete_service.delete_service(), store=kwargs)
 
     def test_purge_flow_normal(self):
diff --git a/tests/unit/manager/default/test_flavors.py b/tests/unit/manager/default/test_flavors.py
index 02754c66..faeaaf4d 100644
--- a/tests/unit/manager/default/test_flavors.py
+++ b/tests/unit/manager/default/test_flavors.py
@@ -19,6 +19,7 @@ import uuid
 import mock
 from oslo_config import cfg
 
+from poppy import bootstrap
 from poppy.manager.default import driver
 from poppy.manager.default import flavors
 from poppy.model import flavor
@@ -42,6 +43,9 @@ class DefaultManagerFlavorTests(base.TestCase):
                 os.path.dirname(os.path.dirname(__file__)))))
         conf_path = os.path.join(tests_path, 'etc', 'default_functional.conf')
         cfg.CONF(args=[], default_config_files=[conf_path])
+        cfg.CONF.register_opts(bootstrap._DEFAULT_OPTIONS)
+        cfg.CONF.register_opts(bootstrap._DRIVER_OPTIONS,
+                               group=bootstrap._DRIVER_GROUP)
 
         manager_driver = driver.DefaultManagerDriver(cfg.CONF,
                                                      mock_driver,
diff --git a/tests/unit/model/helpers/test_domain.py b/tests/unit/model/helpers/test_domain.py
index 9c244a1b..2db691c5 100644
--- a/tests/unit/model/helpers/test_domain.py
+++ b/tests/unit/model/helpers/test_domain.py
@@ -27,8 +27,8 @@ class TestDomain(base.TestCase):
     @ddt.unpack
     @ddt.data({'domain_name': 'www.mydomain.com',
                'changed_domain_name': 'www.changed-domain.com'},
-              {'domain_name': u'www.düsseldorf-Lörick.com',
-               'changed_domain_name': u'www.düsseldorf.com'
+              {'domain_name': u'www.düsseldorf-Lörick.com'.encode("utf-8"),
+               'changed_domain_name': u'www.düsseldorf.com'.encode("utf-8")
                },
               {'domain_name': u'WWW.UPPERCASE.COM',
                'changed_domain_name': u'WWW.UPPERCASE-CHANGED.COM'
diff --git a/tests/unit/model/helpers/test_origin.py b/tests/unit/model/helpers/test_origin.py
index 85ebfbb2..2274ad77 100644
--- a/tests/unit/model/helpers/test_origin.py
+++ b/tests/unit/model/helpers/test_origin.py
@@ -27,8 +27,8 @@ class TestOrigin(base.TestCase):
     @ddt.unpack
     @ddt.data({'origin_url': 'www.mydomain.com',
               'changed_origin_url': 'www.changed-domain.com'},
-              {'origin_url': u'www.düsseldorf-Lörick.com',
-              'changed_origin_url': u'www.düsseldorf.com'})
+              {'origin_url': u'www.düsseldorf-Lörick.com'.encode("utf-8"),
+              'changed_origin_url': u'www.düsseldorf.com'.encode("utf-8")})
     def test_origin(self, origin_url, changed_origin_url):
 
         port = 80
diff --git a/tests/unit/provider/maxcdn/test_services.py b/tests/unit/provider/maxcdn/test_services.py
index 70403d37..d929a3a0 100644
--- a/tests/unit/provider/maxcdn/test_services.py
+++ b/tests/unit/provider/maxcdn/test_services.py
@@ -289,7 +289,8 @@ class TestServices(base.TestCase):
         self.assertEqual(controller._map_service_name(service_name),
                          service_name)
 
-    @ddt.data(u'www.düsseldorf-Lörick.com', 'yahoo%_notvalid')
+    @ddt.data(u'www.düsseldorf-Lörick.com'.encode("utf-8"),
+              'yahoo%_notvalid')
     @mock.patch.object(driver.CDNProvider, 'client',
                        new=fake_maxcdn_api_client())
     def test_map_service_name_with_hash(self, service_name):
diff --git a/tests/unit/provider/mock/test_services.py b/tests/unit/provider/mock/test_services.py
index 8f632c74..7e4d92a1 100644
--- a/tests/unit/provider/mock/test_services.py
+++ b/tests/unit/provider/mock/test_services.py
@@ -74,7 +74,8 @@ class MockProviderServicesTest(base.TestCase):
         response = self.sc.create(service_obj)
         self.assertTrue(response is not None)
 
-    @ddt.data("my_mock_service.com", u'www.düsseldorf-Lörick.com')
+    @ddt.data("my_mock_service.com",
+              u'www.düsseldorf-Lörick.com'.encode('utf-8'))
     def test__map_service_name(self, service_name):
         self.assertTrue(self.sc._map_service_name(service_name),
                         service_name)
diff --git a/tests/unit/provider/sample/__init__.py b/tests/unit/provider/sample/__init__.py
deleted file mode 100644
index e69de29b..00000000
diff --git a/tools/ostestr_compat_shim.sh b/tools/ostestr_compat_shim.sh
new file mode 100755
index 00000000..a483ed1a
--- /dev/null
+++ b/tools/ostestr_compat_shim.sh
@@ -0,0 +1,8 @@
+#!/bin/sh
+
+# preserve old behavior of using an arg as a regex when '--' is not present
+case $@ in
+  (*--*) ostestr $@;;
+  ('') ostestr;;
+  (*) ostestr --regex "$@"
+esac
diff --git a/tox.ini b/tox.ini
index 1d16ec21..476fda8f 100644
--- a/tox.ini
+++ b/tox.ini
@@ -1,25 +1,38 @@
 [tox]
 minversion = 1.6
-envlist = py34,py27,pypy,pep8
+envlist = py34,py27,functional,functional-py34,pypy,pep8
 skipsdist = True
 
 [testenv]
 usedevelop = True
 # Customize pip command, add -U to force updates.
-install_command = pip install -U {opts} {packages}
 setenv = VIRTUAL_ENV={envdir}
          LC_ALL = en_US.UTF-8
-         NOSE_WITH_OPENSTACK=1
-         NOSE_OPENSTACK_COLOR=1
-         NOSE_OPENSTACK_RED=0.05
-         NOSE_OPENSTACK_YELLOW=0.025
-         NOSE_OPENSTACK_SHOW_ELAPSED=1
-         NOSE_OPENSTACK_STDOUT=1
-         PYTHONDONTWRITEBYTECODE=1
+install_command = pip install -U {opts} {packages}
+passenv = TRACE_FAILONLY GENERATE_HASHES http_proxy HTTP_PROXY https_proxy HTTPS_PROXY no_proxy NO_PROXY
 deps = -r{toxinidir}/requirements/requirements.txt
        -r{toxinidir}/tests/test-requirements.txt
 commands = pip install git+https://github.com/stackforge/opencafe.git#egg=cafe
-           nosetests unit functional {posargs:--nologcapture}
+           {toxinidir}/tools/ostestr_compat_shim.sh {posargs}
+
+[testenv:common]
+# Fake job to define environment variables shared between dsvm/non-dsvm jobs
+setenv = OS_TEST_TIMEOUT=180
+
+[testenv:functional]
+basepython = python2.7
+setenv = {[testenv]setenv}
+         {[testenv:common]setenv}
+         OS_TEST_PATH=./tests/functional
+         OS_LOG_PATH={env:OS_LOG_PATH:{homedir}/.poppy/logs}
+deps =
+  {[testenv]deps}
+
+[testenv:functional-py34]
+basepython = python3.4
+setenv = {[testenv:functional]setenv}
+deps =
+  {[testenv:functional]deps}
 
 [testenv:pep8]
 commands = flake8
@@ -47,7 +60,11 @@ commands =
     python setup.py build_sphinx -E -a -b coverage
 
 [testenv:cover]
-setenv = NOSE_WITH_COVERAGE=1
+install_command = pip install -U {opts} {packages}
+basepython = python2.7
+commands =
+  python setup.py testr --coverage --testr-args='{posargs}'
+  coverage report
 
 [testenv:venv]
 commands = {posargs}
@@ -66,15 +83,11 @@ setenv = CAFE_CONFIG_FILE_PATH={homedir}/.poppy/tests.conf
          CAFE_ROOT_LOG_PATH={homedir}/.poppy/logs
          CAFE_TEST_LOG_PATH={homedir}/.poppy/logs
 
-         NOSE_WITH_OPENSTACK=1
-         NOSE_OPENSTACK_COLOR=1
-         NOSE_OPENSTACK_RED=0.05
-         NOSE_OPENSTACK_YELLOW=0.025
-         NOSE_OPENSTACK_SHOW_ELAPSED=1
-         NOSE_OPENSTACK_STDOUT=1
+         OS_TEST_PATH=./tests/api
+         OS_LOG_PATH={env:OS_LOG_PATH:{homedir}/.poppy/logs}
 
 commands =
     pip install git+https://github.com/openstack/opencafe.git#egg=cafe
-    ./run_poppy.sh -d
+    #./run_poppy.sh -d
 
-    nosetests api --nologcapture
+    {toxinidir}/tools/ostestr_compat_shim.sh