diff --git a/systest/license/docker-compose.yml b/systest/license/docker-compose.yml
new file mode 100644
index 00000000000..f00460ffaa7
--- /dev/null
+++ b/systest/license/docker-compose.yml
@@ -0,0 +1,36 @@
+# Auto-generated with: [compose -a 1 -z 1 -w]
+#
+version: "3.5"
+services:
+  alpha1:
+    image: dgraph/dgraph:latest
+    container_name: alpha1
+    working_dir: /data/alpha1
+    labels:
+      cluster: test
+    ports:
+    - 8180:8180
+    - 9180:9180
+    volumes:
+    - type: bind
+      source: $GOPATH/bin
+      target: /gobin
+      read_only: true
+    command: /gobin/dgraph alpha -o 100 --my=alpha1:7180 --lru_mb=1024 --zero=zero1:5180
+  zero1:
+    image: dgraph/dgraph:latest
+    container_name: zero1
+    working_dir: /data/zero1
+    labels:
+      cluster: test
+    ports:
+    - 5180:5180
+    - 6180:6180
+    volumes:
+    - type: bind
+      source: $GOPATH/bin
+      target: /gobin
+      read_only: true
+    command: /gobin/dgraph zero -o 100 --idx=1 --my=zero1:5180 --logtostderr -v=2
+      --bindall
+volumes: {}
diff --git a/systest/license/license_test.go b/systest/license/license_test.go
new file mode 100644
index 00000000000..1223dc72409
--- /dev/null
+++ b/systest/license/license_test.go
@@ -0,0 +1,162 @@
+/*
+ * Copyright 2018 Dgraph Labs, Inc. and Contributors
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+package main
+
+import (
+	"bytes"
+	"encoding/json"
+	"io/ioutil"
+	"net/http"
+	"testing"
+
+	"github.com/stretchr/testify/require"
+)
+
+var expiredKey = []byte(`-----BEGIN PGP MESSAGE-----
+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+=2lFm
+-----END PGP MESSAGE-----
+`)
+
+var invalidKey = []byte(`-----BEGIN PGP MESSAGE-----
+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+=2lFm
+-----END PGP MESSAGE-----
+`)
+
+type Location struct {
+	Line   int `json:"line,omitempty"`
+	Column int `json:"column,omitempty"`
+}
+
+type GqlError struct {
+	Message    string                 `json:"message"`
+	Locations  []Location             `json:"locations,omitempty"`
+	Path       []interface{}          `json:"path,omitempty"`
+	Extensions map[string]interface{} `json:"extensions,omitempty"`
+}
+
+type GqlErrorList []*GqlError
+
+type responseStruct struct {
+	Errors  GqlErrorList           `json:"errors"`
+	Code    string                 `json:"code"`
+	Message string                 `json:"message"`
+	License map[string]interface{} `json:"license"`
+}
+
+func TestEnterpriseLicense(t *testing.T) {
+
+	stateURL := "http://localhost:6180/state"
+	enterpriseLicenseURL := "http://localhost:6180/enterpriseLicense"
+
+	var tests = []struct {
+		name       string
+		licenseKey []byte
+		code       string
+		user       string
+		message    string
+	}{
+		{
+			"Using expired entrerprise license key, should be able to extract user information",
+			expiredKey,
+			`Success`,
+			`Dgraph Test Key`,
+			``,
+		},
+		{
+			"Using invalid entrerprise license key should return an error",
+			invalidKey,
+			``,
+			``,
+			`while extracting enterprise details from the license: while reading PGP message from license file: openpgp: unsupported feature: public key version`,
+		},
+		{
+			"Using empty entrerprise license key should return an error",
+			[]byte(``),
+			``,
+			``,
+			`while extracting enterprise details from the license: while decoding license file: EOF`,
+		},
+	}
+	for _, tt := range tests {
+
+		// Apply the license
+		response, err := http.Post(enterpriseLicenseURL, "application/text", bytes.NewBuffer(tt.licenseKey))
+		require.NoError(t, err)
+
+		var enterpriseResponse responseStruct
+		responseBody, err := ioutil.ReadAll(response.Body)
+		require.NoError(t, err)
+		err = json.Unmarshal(responseBody, &enterpriseResponse)
+		require.NoError(t, err)
+
+		// Check if the license is applied
+		require.Equal(t, enterpriseResponse.Code, tt.code)
+
+		if enterpriseResponse.Code == `Success` {
+
+			// check the user information in case the license is applied
+			// Expired license should not be enabled even after it is applied
+
+			response, err := http.Get(stateURL)
+			require.NoError(t, err)
+
+			var stateResponse responseStruct
+			responseBody, err := ioutil.ReadAll(response.Body)
+			require.NoError(t, err)
+			err = json.Unmarshal(responseBody, &stateResponse)
+			require.NoError(t, err)
+
+			require.Equal(t, stateResponse.License["user"], tt.user)
+			require.Equal(t, stateResponse.License["enabled"], false)
+		} else {
+			// check the error message in case the license is not applied
+			require.Equal(t, enterpriseResponse.Errors[0].Message, tt.message)
+		}
+	}
+}