diff --git a/tests/unit/runtime/half_precision/test_fp8.py b/tests/unit/runtime/half_precision/test_fp8.py
new file mode 100644
index 000000000000..21217ed7dd82
--- /dev/null
+++ b/tests/unit/runtime/half_precision/test_fp8.py
@@ -0,0 +1,91 @@
+# Copyright (c) Microsoft Corporation.
+# SPDX-License-Identifier: Apache-2.0
+
+# DeepSpeed Team
+
+import torch
+import deepspeed
+import pytest
+from unit.common import DistributedTest
+from unit.util import skip_on_arch
+
+try:
+    import transformer_engine.pytorch as transformer_engine
+    from transformer_engine.common import recipe
+except ImportError:
+    pytest.skip("Transformer Engine package is missing, skipping tests", allow_module_level=True)
+
+
+@pytest.mark.parametrize("base_datatype", ["fp16", "bf16", "fp32"])
+class TestFp8ComposabilityAcrossZero(DistributedTest):
+    world_size = 1
+
+    def test(self, base_datatype):
+        skip_on_arch(min_arch=9)
+
+        def run_zero(stage, model_dtype):
+            num_batches = 128
+            batch_size = 16
+            hidden_dim = 768
+            # Have to set seed before model
+            torch.random.manual_seed(42)
+            enable_fp16 = model_dtype == torch.float16
+            enable_bf16 = model_dtype == torch.bfloat16
+            # TransformerEngine Model
+            model = transformer_engine.Linear(hidden_dim, hidden_dim, bias=True, params_dtype=model_dtype)
+
+            # Create FP8 recipe. Note: All input args are optional.
+            fp8_recipe = recipe.DelayedScaling(fp8_format=recipe.Format.HYBRID,
+                                               amax_history_len=16,
+                                               amax_compute_algo="max")
+            config = {
+                "train_batch_size": batch_size,
+                "gradient_accumulation_steps": 1,
+                "optimizer": {
+                    "type": "Adam",
+                    "params": {
+                        "lr": 0.00001
+                    }
+                },
+                "zero_optimization": {
+                    "stage": stage
+                },
+                "fp16": {
+                    "enabled": enable_fp16,
+                    "loss_scale": 0.1
+                },
+                "bf16": {
+                    "enabled": enable_bf16
+                }
+            }
+            # Init DeepSpeed
+            model, optimizer, _, _ = deepspeed.initialize(args=None,
+                                                          model=model,
+                                                          model_parameters=model.parameters(),
+                                                          config=config)
+
+            batches = torch.randn(num_batches, batch_size, hidden_dim, device=model.device, dtype=model_dtype)
+            for batch in batches:
+                # Enables autocasting for the forward pass
+                with transformer_engine.fp8_autocast(enabled=True, fp8_recipe=fp8_recipe):
+                    out = model(batch)
+                loss = out.mean()
+                model.backward(loss)
+                model.step()
+            return loss
+
+        if base_datatype == "fp16":
+            model_dtype = torch.float16
+        elif base_datatype == "bf16":
+            model_dtype = torch.bfloat16
+        else:
+            model_dtype = torch.float32
+
+        # config
+        zero_stage = [0, 1, 2, 3]
+        losses = []
+        for stage in zero_stage:
+            loss = run_zero(stage, model_dtype)
+            losses.append(loss)
+        all_equal = all(torch.allclose(loss, losses[0], 1e-07, 1e-05) for loss in losses)
+        assert (all_equal)