diff --git a/tests/test_memory/test_episodic_memory.py b/tests/test_memory/test_episodic_memory.py
new file mode 100644
index 0000000..bb387f0
--- /dev/null
+++ b/tests/test_memory/test_episodic_memory.py
@@ -0,0 +1,124 @@
+import json
+from collections import deque
+from unittest.mock import MagicMock
+
+import pytest
+
+from mesa_llm.memory.episodic_memory import EpisodicMemory
+from mesa_llm.memory.memory import MemoryEntry
+
+
+@pytest.fixture
+def mock_agent():
+    agent = MagicMock(name="MockLLMAgent")
+
+    # Create a MagicMock for the LLM's response
+    mock_response = MagicMock()
+
+    # This line *defines* the full nested path on the mock
+    mock_response.choices[0].message.content = json.dumps({"grade": 3})
+
+    # Set this as the return value
+    agent.llm.generate.return_value = mock_response
+
+    agent.model.steps = 100
+    return agent
+
+
+class TestEpisodicMemory:
+    """Core functionality test"""
+
+    def test_memory_init(self, mock_agent):
+        """Test EpisodicMemory class initialization with defaults and custom values"""
+        memory = EpisodicMemory(
+            agent=mock_agent,
+            max_capacity=10,
+            considered_entries=5,
+            llm_model="provider/test_model",
+        )
+
+        assert memory.agent == mock_agent
+        assert memory.max_capacity == 10
+        assert memory.considered_entries == 5
+        assert isinstance(memory.memory_entries, deque)
+        assert memory.memory_entries.maxlen == 10
+        assert memory.system_prompt is not None
+        """FYI: The above line may not always work; use the one below if needed."""
+        # assert isinstance(memory.system_prompt,str), memory.system_prompt.strip() != ""
+
+    def test_add_memory_entry(self, mock_agent):
+        """Test adding memories to Episodic memory"""
+        memory = EpisodicMemory(agent=mock_agent, llm_model="provider/test_model")
+
+        # Test basic addition with observation
+        memory.add_to_memory("observation", {"step": 1, "content": "Test content"})
+
+        # Test with planning
+        memory.add_to_memory("planning", {"plan": "Test plan", "importance": "high"})
+
+        # Test with action
+        memory.add_to_memory("action", {"action": "Test action"})
+
+        # Should be empty step_content initially
+        assert memory.step_content != {}
+
+    def test_grade_event_importance(self, mock_agent):
+        """Test grading event importance"""
+        memory = EpisodicMemory(agent=mock_agent, llm_model="provider/test_model")
+
+        # 1. Set up a specific grade for this test
+        mock_response = MagicMock()
+        mock_response.choices[0].message.content = json.dumps({"grade": 5})
+        mock_agent.llm.generate.return_value = mock_response
+
+        # 2. Call the method
+        grade = memory.grade_event_importance("observation", {"data": "critical info"})
+
+        # 3. Assert the grade is correct
+        assert grade == 5
+
+        # 4. Assert the LLM was called correctly
+        mock_agent.llm.generate.assert_called_once()
+
+        # Check that the system prompt was set on the llm object
+        assert memory.llm.system_prompt == memory.system_prompt
+
+    def test_retrieve_top_k_entries(self, mock_agent):
+        """Test the sorting logic for retrieving entries (importance - recency_penalty)."""
+        memory = EpisodicMemory(agent=mock_agent, llm_model="provider/test_model")
+        # Set current step
+        mock_agent.model.steps = 100
+
+        # Manually add entries to bypass grading and control scores
+        # score = importance - (current_step - entry_step)
+
+        # score = 5 - (100 - 98) = 3
+        entry_a = MemoryEntry(
+            content={"importance": 5, "id": "A"}, step=98, agent=mock_agent
+        )
+        # score = 1 - (100 - 99) = 0
+        entry_b = MemoryEntry(
+            content={"importance": 1, "id": "B"}, step=99, agent=mock_agent
+        )
+        # score = 4 - (100 - 90) = -6
+        entry_c = MemoryEntry(
+            content={"importance": 4, "id": "C"}, step=90, agent=mock_agent
+        )
+        # score = 4 - (100 - 95) = -1
+        entry_d = MemoryEntry(
+            content={"importance": 4, "id": "D"}, step=95, agent=mock_agent
+        )
+
+        memory.memory_entries.extend([entry_a, entry_b, entry_c, entry_d])
+
+        # Retrieve top 3 (k=3)
+        top_entries = memory.retrieve_top_k_entries(3)
+
+        # Expected order: A (3), B (0), D (-1)
+        assert len(top_entries) == 3
+        assert top_entries[0].content["id"] == "A"
+        assert top_entries[1].content["id"] == "B"
+        assert top_entries[2].content["id"] == "D"
+
+        # Entry C (score -6) should be omitted
+        assert "C" not in [e.content["id"] for e in top_entries]