diff --git a/packages/components/__test__/components/ThemeProvider.test.tsx b/packages/components/__test__/components/ThemeProvider.test.tsx
new file mode 100644
index 00000000..980b0bca
--- /dev/null
+++ b/packages/components/__test__/components/ThemeProvider.test.tsx
@@ -0,0 +1,57 @@
+import { render } from 'vitest-browser-vue';
+import { nextTick } from 'vue';
+
+describe('ThemeProvider', () => {
+  it('theme inheritance', async () => {
+    render(() => (
+      <l-theme-provider
+        color="red"
+        appearance="dark"
+        scale={1.1}
+        grayColor="mauve"
+        highContrast={true}
+        size="3"
+        radius="small"
+      >
+        <l-button id="button1"></l-button>
+        <l-theme-provider>
+          <l-button id="button2"></l-button>
+          <l-theme-provider
+            color="blue"
+            appearance="light"
+            scale={0.9}
+            grayColor="sage"
+            highContrast={false}
+            size="1"
+            radius="full"
+          >
+            <l-button id="button3"></l-button>
+          </l-theme-provider>
+        </l-theme-provider>
+      </l-theme-provider>
+    ));
+    await nextTick();
+
+    const button1 = document.getElementById('button1')!,
+      button1Root = button1.shadowRoot!,
+      button2 = document.getElementById('button2')!,
+      button2Root = button2.shadowRoot!,
+      button3 = document.getElementById('button3')!,
+      button3Root = button3.shadowRoot!;
+    expect(button1Root.firstElementChild!.classList.contains('l-color--red')).toBe(true);
+    expect(button1Root.firstElementChild!.classList.contains('l-button--size-3')).toBe(true);
+    expect(button1Root.firstElementChild!.classList.contains('is-dark')).toBe(true);
+    expect((button1.computedStyleMap().get('--l-scale') as CSSUnparsedValue)?.[0]).toBe('1.1');
+
+    // button2 should be same as button1, as its parent theme-provider doesn't provide anything
+    expect(button2Root.firstElementChild!.classList.contains('l-color--red')).toBe(true);
+    expect(button2Root.firstElementChild!.classList.contains('l-button--size-3')).toBe(true);
+    expect(button2Root.firstElementChild!.classList.contains('is-dark')).toBe(true);
+    expect((button2.computedStyleMap().get('--l-scale') as CSSUnparsedValue)?.[0]).toBe('1.1');
+
+    expect(button3Root.firstElementChild!.classList.contains('l-color--blue')).toBe(true);
+    expect(button3Root.firstElementChild!.classList.contains('l-button--size-1')).toBe(true);
+    expect(button3Root.firstElementChild!.classList.contains('is-dark')).toBe(false);
+    expect((button3.computedStyleMap().get('--l-scale') as CSSUnparsedValue)?.[0]).toBe('0.9');
+  });
+});