diff --git a/jest.setup.ts b/jest.setup.ts
index 7b0828b..af95130 100644
--- a/jest.setup.ts
+++ b/jest.setup.ts
@@ -1 +1,8 @@
 import '@testing-library/jest-dom';
+
+// @ts-expect-error not all properties are required here to mock fetch
+global.fetch = jest.fn(() =>
+  Promise.resolve({
+    json: () => Promise.resolve({ data: 'success' }),
+  }),
+);
diff --git a/src/components/CLI/CLI.tsx b/src/components/CLI/CLI.tsx
index 50c1c6c..c4ad381 100644
--- a/src/components/CLI/CLI.tsx
+++ b/src/components/CLI/CLI.tsx
@@ -21,10 +21,15 @@ export default function Cli({ decreaseCommandsLeft }: CliProps) {
     <div
       ref={terminalRef}
       className="flex flex-col h-full bg-gray-900 text-white font-mono text-sm overflow-auto top-0 pl-4 pb-2"
+      data-testid="terminal"
       onClick={() => inputRef.current?.focus()}
     >
       {output.map((line, index) => (
-        <div key={index} className="text-white p-1">
+        <div
+          key={index}
+          data-testid="terminal-output"
+          className="text-white p-1"
+        >
           {line}
         </div>
       ))}
@@ -37,6 +42,7 @@ export default function Cli({ decreaseCommandsLeft }: CliProps) {
             value={command}
             onChange={handleInputChange}
             onKeyDown={handleKeyDown}
+            data-testid="cli-input"
             className="w-full bg-transparent outline-none text-white"
           />
         </div>
diff --git a/src/components/CLI/__tests__/index.test.tsx b/src/components/CLI/__tests__/index.test.tsx
new file mode 100644
index 0000000..7500faa
--- /dev/null
+++ b/src/components/CLI/__tests__/index.test.tsx
@@ -0,0 +1,110 @@
+import '@testing-library/jest-dom';
+import { render, screen } from '@testing-library/react';
+import userEvent from '@testing-library/user-event';
+import CLI from '../CLI';
+
+const decreaseCommandsLeftMock = jest.fn();
+
+const dummyCommands = [
+  'set abc 100',
+  'get abc',
+  'set xyz 200',
+  'get xyz',
+  'set pqr 300',
+  'get pqr',
+];
+
+const setupTest = () => {
+  const user = userEvent.setup();
+  const utils = render(<CLI decreaseCommandsLeft={decreaseCommandsLeftMock} />);
+
+  const terminalElement = screen.getByTestId('terminal');
+  const cliInputElement = screen.getByTestId<HTMLInputElement>('cli-input');
+
+  const typeMultipleCommands = async () => {
+    for (const command of dummyCommands) {
+      await user.type(cliInputElement, `${command}{enter}`);
+    }
+  };
+
+  return {
+    terminalElement,
+    cliInputElement,
+    user,
+    typeMultipleCommands,
+    ...utils,
+  };
+};
+
+describe('CLI Component', () => {
+  it('should focus on terminal element click', async () => {
+    const { terminalElement, cliInputElement, user } = setupTest();
+    await user.click(terminalElement);
+    expect(cliInputElement).toHaveFocus();
+  });
+
+  it('should update values when new value is typed', async () => {
+    const { cliInputElement, user } = setupTest();
+
+    // type a command and check if the value is updated
+    await user.type(cliInputElement, 'set abc');
+    expect(cliInputElement.value).toBe('set abc');
+
+    await user.type(cliInputElement, '{enter}');
+    expect(cliInputElement.value).toBe('');
+  });
+
+  it('should throw error when user types blacklisted command', async () => {
+    const { cliInputElement, user, getByTestId } = setupTest();
+
+    await user.type(cliInputElement, 'EXEC{enter}');
+    const terminalOutputElement = getByTestId('terminal-output');
+    expect(terminalOutputElement).toHaveTextContent(
+      "(error) ERR unknown command 'EXEC'",
+    );
+  });
+
+  it('should navigate through command history', async () => {
+    const { cliInputElement, user, typeMultipleCommands } = setupTest();
+
+    await typeMultipleCommands();
+    expect(cliInputElement.value).toBe('');
+
+    await user.keyboard('[ArrowUp]');
+    expect(cliInputElement.value).toBe(dummyCommands[dummyCommands.length - 1]);
+
+    await user.keyboard('[ArrowUp]');
+    expect(cliInputElement.value).toBe(dummyCommands[dummyCommands.length - 2]);
+
+    await user.keyboard('[ArrowDown]');
+    await user.keyboard('[ArrowDown]');
+    expect(cliInputElement.value).toBe('');
+  });
+
+  it('should navigate through command history based on current user input', async () => {
+    const { cliInputElement, user, typeMultipleCommands } = setupTest();
+    await typeMultipleCommands();
+    expect(cliInputElement.value).toBe('');
+
+    const newCommand = 'set';
+    await user.type(cliInputElement, newCommand);
+    const filteredCommands = dummyCommands.filter((cmd) =>
+      cmd.startsWith(newCommand),
+    );
+
+    await user.keyboard('[ArrowUp]');
+    expect(cliInputElement.value).toBe(
+      filteredCommands[filteredCommands.length - 1],
+    );
+
+    await user.keyboard('[ArrowUp]');
+    expect(cliInputElement.value).toBe(
+      filteredCommands[filteredCommands.length - 2],
+    );
+
+    // check whether typed command is accessible
+    await user.keyboard('[ArrowDown]');
+    await user.keyboard('[ArrowDown]');
+    expect(cliInputElement.value).toBe(newCommand);
+  });
+});
diff --git a/src/components/CLI/hooks/useCli.tsx b/src/components/CLI/hooks/useCli.tsx
index a6cfbb3..ddc8a47 100644
--- a/src/components/CLI/hooks/useCli.tsx
+++ b/src/components/CLI/hooks/useCli.tsx
@@ -18,22 +18,20 @@ export const useCli = (decreaseCommandsLeft: () => void) => {
   const terminalRef = useRef<HTMLDivElement>(null);
   const inputRef = useRef<HTMLInputElement>(null);
 
-  const handleCommandWrapper = (e: KeyboardEvent<HTMLInputElement>) => {
-    if (e.key === 'Enter') {
-      const commandName = command.trim().split(' ')[0].toUpperCase(); // Extract the command
-
-      if (blacklistedCommands.includes(commandName)) {
-        setOutput((prevOutput) => [
-          ...prevOutput,
-          `(error) ERR unknown command '${commandName}'`,
-        ]);
-      } else {
-        handleCommand({ command, setOutput }); // Execute if not blacklisted
-      }
+  const handleCommandWrapper = () => {
+    const commandName = command.trim().split(' ')[0].toUpperCase(); // Extract the command
 
-      setCommand(''); // Clear input
-      decreaseCommandsLeft(); // Call to update remaining commands
+    if (blacklistedCommands.includes(commandName)) {
+      setOutput((prevOutput) => [
+        ...prevOutput,
+        `(error) ERR unknown command '${commandName}'`,
+      ]);
+    } else {
+      handleCommand({ command, setOutput }); // Execute if not blacklisted
     }
+
+    setCommand(''); // Clear input
+    decreaseCommandsLeft(); // Call to update remaining commands
   };
 
   useEffect(() => {
@@ -62,27 +60,36 @@ export const useCli = (decreaseCommandsLeft: () => void) => {
 
   const handleInputChange = (e: ChangeEvent<HTMLInputElement>) => {
     setCommand(e.target.value);
+    // Save current input when starting to navigate history
+    setTempCommand(e.target.value);
   };
 
   const handleKeyDown = (e: KeyboardEvent<HTMLInputElement>) => {
     if (e.key === 'Enter') {
-      handleCommandWrapper(e);
+      handleCommandWrapper();
       if (command.trim().length !== 0) {
         setCommandHistory((prev) => [...prev, command]);
         setHistoryIndex(-1);
       }
+      return;
     }
 
+    const filteredCommandHistory = commandHistory.filter((cmd) => {
+      return cmd.startsWith(tempCommand);
+    });
+
     if (e.key === 'ArrowUp') {
       e.preventDefault();
-      if (historyIndex < commandHistory.length - 1) {
+      if (historyIndex < filteredCommandHistory.length - 1) {
         if (historyIndex === -1) {
           // Save current input when starting to navigate history
           setTempCommand(command);
         }
         const newIndex = historyIndex + 1;
         setHistoryIndex(newIndex);
-        setCommand(commandHistory[commandHistory.length - 1 - newIndex]);
+        setCommand(
+          filteredCommandHistory[filteredCommandHistory.length - 1 - newIndex],
+        );
       }
     } else if (e.key === 'ArrowDown') {
       e.preventDefault();
@@ -93,7 +100,11 @@ export const useCli = (decreaseCommandsLeft: () => void) => {
           // Restore the saved input when reaching the bottom
           setCommand(tempCommand);
         } else {
-          setCommand(commandHistory[commandHistory.length - 1 - newIndex]);
+          setCommand(
+            filteredCommandHistory[
+              filteredCommandHistory.length - 1 - newIndex
+            ],
+          );
         }
       }
     }