diff --git a/msvs/liboio-test.vcxproj b/msvs/liboio-test.vcxproj
index cae3d87c..9b8fa0e3 100644
--- a/msvs/liboio-test.vcxproj
+++ b/msvs/liboio-test.vcxproj
@@ -147,6 +147,7 @@
     <ClCompile Include="..\test\test-callback-stack.c" />
     <ClCompile Include="..\test\test-connection-fail.c" />
     <ClCompile Include="..\test\test-fail-always.c" />
+    <ClCompile Include="..\test\test-loop-handles.c" />
     <ClCompile Include="..\test\test-pass-always.c" />
     <ClCompile Include="..\test\test-ping-pong.c" />
     <ClCompile Include="..\test\runner-win.c" />
diff --git a/test/test-list.h b/test/test-list.h
index 299ee2ea..16066c60 100644
--- a/test/test-list.h
+++ b/test/test-list.h
@@ -30,6 +30,7 @@ TEST_DECLARE   (bind_error_inval)
 TEST_DECLARE   (connection_fail)
 TEST_DECLARE   (callback_stack)
 TEST_DECLARE   (timeout)
+TEST_DECLARE   (loop_handles)
 TEST_DECLARE   (fail_always)
 TEST_DECLARE   (pass_always)
 HELPER_DECLARE (echo_server)
@@ -60,6 +61,8 @@ TASK_LIST_START
 
   TEST_ENTRY  (timeout)
 
+  TEST_ENTRY  (loop_handles)
+
 #if 0
   /* These are for testing the test runner. */
   TEST_ENTRY  (fail_always)
diff --git a/test/test-loop-handles.c b/test/test-loop-handles.c
new file mode 100644
index 00000000..304eff81
--- /dev/null
+++ b/test/test-loop-handles.c
@@ -0,0 +1,329 @@
+/* Copyright Joyent, Inc. and other Node contributors. All rights reserved.
+ *
+ * Permission is hereby granted, free of charge, to any person obtaining a copy
+ * of this software and associated documentation files (the "Software"), to
+ * deal in the Software without restriction, including without limitation the
+ * rights to use, copy, modify, merge, publish, distribute, sublicense, and/or
+ * sell copies of the Software, and to permit persons to whom the Software is
+ * furnished to do so, subject to the following conditions:
+ *
+ * The above copyright notice and this permission notice shall be included in
+ * all copies or substantial portions of the Software.
+ *
+ * THE SOFTWARE IS PROVIDED "AS IS", WITHOUT WARRANTY OF ANY KIND, EXPRESS OR
+ * IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY,
+ * FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. IN NO EVENT SHALL THE
+ * AUTHORS OR COPYRIGHT HOLDERS BE LIABLE FOR ANY CLAIM, DAMAGES OR OTHER
+ * LIABILITY, WHETHER IN AN ACTION OF CONTRACT, TORT OR OTHERWISE, ARISING
+ * FROM, OUT OF OR IN CONNECTION WITH THE SOFTWARE OR THE USE OR OTHER DEALINGS
+ * IN THE SOFTWARE.
+ */
+
+/*
+ * Purpose of this test is to check semantics of starting and stopping
+ * prepare, check and idle watchers.
+ *
+ * - A watcher must be able to safely stop or close itself;
+ * - Once a watcher is stopped or closed its callback should never be called.
+ * - If a watcher is closed, it is implicitly stopped and its close_cb should
+ *   be called exactly once.
+ * - A watcher can safely start and stop other watchers of the same type.
+ * - Prepare and check watchers are called once per event loop iterations.
+ * - All active idle watchers are queued when the event loop has no more work
+ *   to do. This is done repeatedly until all idle watchers are inactive.
+ * - If a watcher starts another watcher of the same type its callback is not
+ *   immediately queued. For check and prepare watchers, that means that if
+ *   a watcher makes another of the same type active, it'll not be called until
+ *   the next event loop iteration. For idle. watchers this means that the
+ *   newly activated idle watcher might not be queued immediately.
+ * - Prepare, check, idle watchers keep the event loop alive even when they're
+ *   not active.
+ *
+ * This is what the test globally does:
+ *
+ * - prepare_1 is always active and counts event loop iterations. It also
+ *   creates and starts prepare_2 every other iteration. Finally it verifies
+ *   that no idle watchers are active before polling.
+ * - prepare_2 is started by prepare_1 every other iteration. It immediately
+ *   stops itself. It verifies that a watcher is not queued immediately
+ *   if created by another watcher of the same type.
+ * - There's a check watcher that stops the event loop after a certain number
+ *   of iterations. It starts a varying number of idle_1 watchers.
+ * - Idle_1 watchers stop themselves after being called a few times. All idle_1
+ *   watchers try to start the idle_2 watcher if it is not already started or
+ *   awaiting its close callback.
+ * - The idle_2 watcher always exists but immediately closes itself after
+ *   being started by a check_1 watcher. It verifies that a watcher is
+ *   implicitly stopped when closed, and that a watcher can close itself
+ *   safely.
+ * - There is a timeout request that reposts itself after every timeout. It
+ *   does not keep te event loop alive (ev_unref) but makes sure that the loop
+ *   keeps polling the system for events.
+ */
+
+#include "../oio.h"
+#include "task.h"
+
+#include <math.h>
+
+
+#define IDLE_COUNT      7
+#define ITERATIONS      21
+#define TIMEOUT         100
+
+
+static oio_handle prepare_1_handle;
+static oio_handle prepare_2_handle;
+
+static oio_handle check_handle;
+
+static oio_handle idle_1_handles[IDLE_COUNT];
+static oio_handle idle_2_handle;
+
+static oio_req timeout_req;
+
+
+static int loop_iteration = 0;
+
+static int prepare_1_cb_called = 0;
+static int prepare_1_close_cb_called = 0;
+
+static int prepare_2_cb_called = 0;
+static int prepare_2_close_cb_called = 0;
+
+static int check_cb_called = 0;
+static int check_close_cb_called = 0;
+
+static int idle_1_cb_called = 0;
+static int idle_1_close_cb_called = 0;
+static int idles_1_active = 0;
+
+static int idle_2_cb_called = 0;
+static int idle_2_close_cb_called = 0;
+static int idle_2_cb_started = 0;
+static int idle_2_is_active = 0;
+
+static int timeout_cb_called = 0;
+
+
+static void timeout_cb(oio_req *req, int64_t skew, int status) {
+  ASSERT(req == &timeout_req);
+  ASSERT(status == 0);
+
+  timeout_cb_called++;
+
+  oio_timeout(req, TIMEOUT);
+}
+
+
+static void idle_2_cb(oio_handle* handle, int status) {
+  ASSERT(handle == &idle_2_handle);
+  ASSERT(status == 0);
+
+  idle_2_cb_called++;
+
+  oio_close(handle);
+}
+
+
+static void idle_2_close_cb(oio_handle* handle, int status){
+  ASSERT(handle == &idle_2_handle);
+  ASSERT(status == 0);
+
+  ASSERT(idle_2_is_active);
+
+  idle_2_close_cb_called++;
+  idle_2_is_active = 0;
+}
+
+
+static void idle_1_cb(oio_handle* handle, int status) {
+  ASSERT(handle != NULL);
+  ASSERT(status == 0);
+
+  ASSERT(idles_1_active > 0);
+
+  /* Init idle_2 and make it active */
+  if (!idle_2_is_active) {
+    oio_idle_init(&idle_2_handle, idle_2_close_cb, NULL);
+    oio_idle_start(&idle_2_handle, idle_2_cb);
+    idle_2_is_active = 1;
+    idle_2_cb_started++;
+  }
+
+  idle_1_cb_called++;
+
+  if (idle_1_cb_called % 5 == 0) {
+    oio_idle_stop(handle);
+    idles_1_active--;
+  }
+}
+
+
+static void idle_1_close_cb(oio_handle* handle, int status){
+  ASSERT(handle != NULL);
+  ASSERT(status == 0);
+
+  idle_1_close_cb_called++;
+}
+
+
+static void check_cb(oio_handle* handle, int status) {
+  int i;
+
+  ASSERT(handle == &check_handle);
+  ASSERT(status == 0);
+
+  ASSERT(idles_1_active == 0);
+  ASSERT(idle_2_is_active == 0);
+
+  if (loop_iteration < ITERATIONS) {
+    /* Make some idle watchers active */
+    for (i = 0; i < 1 + (loop_iteration % IDLE_COUNT); i++) {
+      oio_idle_start(&idle_1_handles[i], idle_1_cb);
+      idles_1_active++;
+    }
+
+  } else {
+    /* End of the test - close all handles */
+    oio_close(&prepare_1_handle);
+    oio_close(&check_handle);
+    oio_close(&prepare_2_handle);
+
+    for (i = 0; i < IDLE_COUNT; i++) {
+      oio_close(&idle_1_handles[i]);
+    }
+
+    /* This handle is closed/recreated every time, close it only if it is */
+    /* active.*/
+    if (idle_2_is_active) {
+      oio_close(&idle_2_handle);
+    }
+  }
+
+  check_cb_called++;
+}
+
+
+static void check_close_cb(oio_handle* handle, int status){
+  ASSERT(handle == &check_handle);
+  ASSERT(status == 0);
+
+  check_close_cb_called++;
+}
+
+
+static void prepare_2_cb(oio_handle* handle, int status) {
+  ASSERT(handle == &prepare_2_handle);
+  ASSERT(status == 0);
+
+  ASSERT(idles_1_active == 0);
+  ASSERT(idle_2_is_active == 0);
+
+  /* prepare_2 gets started by prepare_1 when (loop_iteration % 2 == 0), */
+  /* and it stops itself immediately. A started watcher is not queued */
+  /* until the next round, so when this callback is made */
+  /* (loop_iteration % 2 == 0) cannot be true. */
+  ASSERT(loop_iteration % 2 != 0);
+
+  oio_prepare_stop(handle);
+
+  prepare_2_cb_called++;
+}
+
+
+static void prepare_2_close_cb(oio_handle* handle, int status){
+  ASSERT(handle == &prepare_2_handle);
+  ASSERT(status == 0);
+
+  prepare_2_close_cb_called++;
+}
+
+
+static void prepare_1_cb(oio_handle* handle, int status) {
+  ASSERT(handle == &prepare_1_handle);
+  ASSERT(status == 0);
+
+  ASSERT(idles_1_active == 0);
+  ASSERT(idle_2_is_active == 0);
+
+  if (loop_iteration % 2 == 0) {
+    oio_prepare_start(&prepare_2_handle, prepare_2_cb);
+  }
+
+  prepare_1_cb_called++;
+  loop_iteration++;
+
+  printf("Loop iteration %d of %d.\n", loop_iteration, ITERATIONS);
+}
+
+
+static void prepare_1_close_cb(oio_handle* handle, int status){
+  ASSERT(handle == &prepare_1_handle);
+  ASSERT(status == 0);
+
+  prepare_1_close_cb_called++;
+}
+
+
+static oio_buf alloc_cb(oio_handle* handle, size_t size) {
+  oio_buf rv = { 0, 0 };
+  FATAL("alloc_cb should never be called in this test");
+  return rv;
+}
+
+
+TEST_IMPL(loop_handles) {
+  int i;
+
+  oio_init(alloc_cb);
+
+  oio_prepare_init(&prepare_1_handle, prepare_1_close_cb, NULL);
+  oio_prepare_start(&prepare_1_handle, prepare_1_cb);
+
+  oio_check_init(&check_handle, check_close_cb, NULL);
+  oio_check_start(&check_handle, check_cb);
+
+  /* initialize only, prepare_2 is started by prepare_1_cb */
+  oio_prepare_init(&prepare_2_handle, prepare_2_close_cb, NULL);
+
+  for (i = 0; i < IDLE_COUNT; i++) {
+    /* initialize only, idle_1 handles are started by check_cb */
+    oio_idle_init(&idle_1_handles[i], idle_1_close_cb, NULL);
+  }
+
+  /* don't init or start idle_2, both is done by idle_1_cb */
+
+  /* the timer callback is there to keep the event loop polling */
+  /* unref it as it is not supposed to keep the loop alive */
+  oio_req_init(&timeout_req, NULL, timeout_cb);
+  oio_timeout(&timeout_req, TIMEOUT);
+  oio_unref();
+
+  oio_run();
+
+  ASSERT(loop_iteration == ITERATIONS);
+
+  ASSERT(prepare_1_cb_called == ITERATIONS);
+  ASSERT(prepare_1_close_cb_called == 1);
+
+  ASSERT(prepare_2_cb_called == floor(ITERATIONS / 2));
+  ASSERT(prepare_2_close_cb_called == 1);
+
+  ASSERT(check_cb_called == ITERATIONS);
+  ASSERT(check_close_cb_called == 1);
+
+  /* idle_1_cb should be called a lot */
+  ASSERT(idle_1_cb_called >= ITERATIONS * IDLE_COUNT * 2);
+  ASSERT(idle_1_close_cb_called == IDLE_COUNT);
+  ASSERT(idles_1_active == 0);
+
+  ASSERT(idle_2_cb_started >= ITERATIONS);
+  ASSERT(idle_2_cb_called == idle_2_cb_started);
+  ASSERT(idle_2_close_cb_called == idle_2_cb_started);
+  ASSERT(idle_2_is_active == 0);
+
+  ASSERT(timeout_cb_called > 0);
+
+  return 0;
+}