diff --git a/internal/kratos/fake_kratos.go b/internal/kratos/fake_kratos.go
index 17141b046bc..1162690b626 100644
--- a/internal/kratos/fake_kratos.go
+++ b/internal/kratos/fake_kratos.go
@@ -3,7 +3,11 @@
 
 package kratos
 
-import "context"
+import (
+	"context"
+
+	"github.com/ory/fosite"
+)
 
 type (
 	FakeKratos struct {
@@ -14,6 +18,8 @@ type (
 
 const (
 	FakeSessionID = "fake-kratos-session-id"
+	FakeUsername  = "fake-kratos-username"
+	FakePassword  = "fake-kratos-password"
 )
 
 var _ Client = new(FakeKratos)
@@ -29,8 +35,11 @@ func (f *FakeKratos) DisableSession(_ context.Context, identityProviderSessionID
 	return nil
 }
 
-func (f *FakeKratos) Authenticate(context.Context, string, string) error {
-	panic("missing")
+func (f *FakeKratos) Authenticate(_ context.Context, username, password string) error {
+	if username == FakeUsername && password == FakePassword {
+		return nil
+	}
+	return fosite.ErrNotFound
 }
 
 func (f *FakeKratos) Reset() {
diff --git a/internal/kratos/kratos.go b/internal/kratos/kratos.go
index 4bfbfcd4bcd..898fc54b480 100644
--- a/internal/kratos/kratos.go
+++ b/internal/kratos/kratos.go
@@ -11,6 +11,7 @@ import (
 	"github.com/pkg/errors"
 	"go.opentelemetry.io/otel/attribute"
 
+	"github.com/ory/fosite"
 	"github.com/ory/hydra/v2/driver/config"
 	"github.com/ory/hydra/v2/x"
 	client "github.com/ory/kratos-client-go"
@@ -68,8 +69,11 @@ func (k *Default) Authenticate(ctx context.Context, name, secret string) (err er
 			Password:   secret,
 		},
 	}).Execute()
+	if err != nil {
+		return fosite.ErrNotFound.WithWrap(err)
+	}
 
-	return err
+	return nil
 }
 
 func (k *Default) DisableSession(ctx context.Context, identityProviderSessionID string) (err error) {
diff --git a/oauth2/oauth2_rop_test.go b/oauth2/oauth2_rop_test.go
new file mode 100644
index 00000000000..73946a25539
--- /dev/null
+++ b/oauth2/oauth2_rop_test.go
@@ -0,0 +1,65 @@
+// Copyright © 2022 Ory Corp
+// SPDX-License-Identifier: Apache-2.0
+
+package oauth2_test
+
+import (
+	"context"
+	"testing"
+
+	"github.com/google/uuid"
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+	"golang.org/x/oauth2"
+
+	"github.com/ory/fosite/compose"
+	hydra "github.com/ory/hydra/v2/client"
+	"github.com/ory/hydra/v2/fositex"
+	"github.com/ory/hydra/v2/internal"
+	"github.com/ory/hydra/v2/internal/kratos"
+	"github.com/ory/hydra/v2/internal/testhelpers"
+	"github.com/ory/x/contextx"
+)
+
+func TestResourceOwnerPasswordGrant(t *testing.T) {
+	ctx := context.Background()
+	fakeKratos := kratos.NewFake()
+	reg := internal.NewMockedRegistry(t, &contextx.Default{})
+	reg.WithKratos(fakeKratos)
+	reg.WithExtraFositeFactories([]fositex.Factory{compose.OAuth2ResourceOwnerPasswordCredentialsFactory})
+	_, adminTS := testhelpers.NewOAuth2Server(ctx, t, reg)
+
+	secret := uuid.New().String()
+	client := &hydra.Client{
+		Secret:     secret,
+		GrantTypes: []string{"password"},
+	}
+	require.NoError(t, reg.ClientManager().CreateClient(ctx, client))
+
+	oauth2Config := &oauth2.Config{
+		ClientID:     client.GetID(),
+		ClientSecret: secret,
+		Endpoint: oauth2.Endpoint{
+			AuthURL:   reg.Config().OAuth2AuthURL(ctx).String(),
+			TokenURL:  reg.Config().OAuth2TokenURL(ctx).String(),
+			AuthStyle: oauth2.AuthStyleInHeader,
+		},
+	}
+
+	t.Run("case=get ROP grant token with valid username and password", func(t *testing.T) {
+		token, err := oauth2Config.PasswordCredentialsToken(ctx, kratos.FakeUsername, kratos.FakePassword)
+		require.NoError(t, err)
+		require.NotEmpty(t, token.AccessToken)
+		i := testhelpers.IntrospectToken(t, oauth2Config, token.AccessToken, adminTS)
+		assert.True(t, i.Get("active").Bool(), "%s", i)
+		assert.EqualValues(t, oauth2Config.ClientID, i.Get("client_id").String(), "%s", i)
+	})
+
+	t.Run("case=access denied for invalid password", func(t *testing.T) {
+		_, err := oauth2Config.PasswordCredentialsToken(ctx, kratos.FakeUsername, "invalid")
+		retrieveError := new(oauth2.RetrieveError)
+		require.Error(t, err)
+		require.ErrorAs(t, err, &retrieveError)
+		assert.Contains(t, retrieveError.ErrorDescription, "Unable to authenticate the provided username and password credentials")
+	})
+}