diff --git a/engine/pom.xml b/engine/pom.xml
index 16b4772b..917902ec 100644
--- a/engine/pom.xml
+++ b/engine/pom.xml
@@ -74,6 +74,12 @@
       <artifactId>zeebe-process-test-filters</artifactId>
       <scope>test</scope>
     </dependency>
+
+    <dependency>
+      <groupId>org.mockito</groupId>
+      <artifactId>mockito-core</artifactId>
+      <scope>test</scope>
+    </dependency>
   </dependencies>
 
 </project>
diff --git a/engine/src/main/java/io/camunda/zeebe/process/test/engine/EngineStateMonitor.java b/engine/src/main/java/io/camunda/zeebe/process/test/engine/EngineStateMonitor.java
index 308e9d63..4f9d86b7 100644
--- a/engine/src/main/java/io/camunda/zeebe/process/test/engine/EngineStateMonitor.java
+++ b/engine/src/main/java/io/camunda/zeebe/process/test/engine/EngineStateMonitor.java
@@ -11,7 +11,7 @@
 import java.util.TimerTask;
 
 /**
- * Monitor that monitos whether the engine is busy or in idle state. Busy state is a state in which
+ * Monitor that monitors whether the engine is busy or in idle state. Busy state is a state in which
  * the engine is actively writing new events to the logstream. Idle state is a state in which
  * the process engine makes no progress and is waiting for new commands or events to trigger</br>
  *
diff --git a/engine/src/test/java/io/camunda/zeebe/process/test/engine/EngineStateMonitorTest.java b/engine/src/test/java/io/camunda/zeebe/process/test/engine/EngineStateMonitorTest.java
new file mode 100644
index 00000000..9ba2f638
--- /dev/null
+++ b/engine/src/test/java/io/camunda/zeebe/process/test/engine/EngineStateMonitorTest.java
@@ -0,0 +1,178 @@
+package io.camunda.zeebe.process.test.engine;
+
+
+import static org.assertj.core.api.AssertionsForClassTypes.assertThat;
+import static org.mockito.Mockito.mock;
+import static org.mockito.Mockito.when;
+
+import io.camunda.zeebe.logstreams.log.LogStreamReader;
+import io.camunda.zeebe.logstreams.log.LoggedEvent;
+import java.util.concurrent.CompletableFuture;
+import java.util.concurrent.ExecutionException;
+import java.util.concurrent.TimeUnit;
+import java.util.concurrent.TimeoutException;
+import org.junit.jupiter.api.Test;
+
+class EngineStateMonitorTest {
+
+  @Test
+  void testCallbackIsCalledWhenEngineIsAlreadyIdle()
+      throws ExecutionException, InterruptedException, TimeoutException {
+    // given
+    final InMemoryLogStorage logStorage = mock(InMemoryLogStorage.class);
+    final TestLogStreamReader logStreamReader = new TestLogStreamReader();
+    final EngineStateMonitor monitor = new EngineStateMonitor(logStorage, logStreamReader);
+
+    // when
+    final CompletableFuture<Void> callbackFuture = new CompletableFuture<>();
+    final Runnable callback = () -> callbackFuture.complete(null);
+    monitor.addOnIdleCallback(callback);
+
+    // then
+    callbackFuture.get(50L, TimeUnit.MILLISECONDS);
+    assertThat(callbackFuture).isCompleted();
+  }
+
+  @Test
+  void testCallbackIsCalledWhenIdleStateIsReached()
+      throws ExecutionException, InterruptedException, TimeoutException {
+    // given
+    final InMemoryLogStorage logStorage = mock(InMemoryLogStorage.class);
+    final TestLogStreamReader logStreamReader = new TestLogStreamReader();
+    final EngineStateMonitor monitor = new EngineStateMonitor(logStorage, logStreamReader);
+    changeToBusyState(monitor, logStreamReader);
+
+    // when
+    final CompletableFuture<Void> callbackFuture = new CompletableFuture<>();
+    final Runnable callback = () -> callbackFuture.complete(null);
+    monitor.addOnIdleCallback(callback);
+
+    // then
+    callbackFuture.get(1L, TimeUnit.SECONDS);
+    assertThat(callbackFuture).isCompleted();
+  }
+
+  @Test
+  void testCallbackIsCalledWhenEngineIsAlreadyBusy()
+      throws ExecutionException, InterruptedException, TimeoutException {
+    // given
+    final InMemoryLogStorage logStorage = mock(InMemoryLogStorage.class);
+    final TestLogStreamReader logStreamReader = new TestLogStreamReader();
+    final EngineStateMonitor monitor = new EngineStateMonitor(logStorage, logStreamReader);
+    changeToBusyState(monitor, logStreamReader);
+    // We need to set the position of the reader high enough the so hasNext() resolves to false. If
+    // we don't do this adding the callback will make the engine idle because of the
+    // forwardToLastEvent() method in the EngineStateMonitor, and the callback will never get called
+    logStreamReader.setPosition(100L);
+
+    // when
+    final CompletableFuture<Void> callbackFuture = new CompletableFuture<>();
+    final Runnable callback = () -> callbackFuture.complete(null);
+    monitor.addOnProcessingCallback(callback);
+
+    // then
+    callbackFuture.get(1L, TimeUnit.SECONDS);
+    assertThat(callbackFuture).isCompleted();
+  }
+
+  @Test
+  void testCallbackIsCalledWhenBusyStateIsReached()
+      throws ExecutionException, InterruptedException, TimeoutException {
+    // given
+    final InMemoryLogStorage logStorage = mock(InMemoryLogStorage.class);
+    final TestLogStreamReader logStreamReader = new TestLogStreamReader();
+    final EngineStateMonitor monitor = new EngineStateMonitor(logStorage, logStreamReader);
+
+    final CompletableFuture<Void> callbackFuture = new CompletableFuture<>();
+    final Runnable callback = () -> callbackFuture.complete(null);
+    monitor.addOnProcessingCallback(callback);
+
+    // when
+    changeToBusyState(monitor, logStreamReader);
+
+    // then
+    callbackFuture.get(1L, TimeUnit.SECONDS);
+    assertThat(callbackFuture).isCompleted();
+  }
+
+  private void changeToIdleState(final EngineStateMonitor monitor, final TestLogStreamReader reader) {
+    // We use onCommit here because it is an easy way to trigger the EngineStateMonitor to check the
+    // engine state and trigger the callbacks
+    reader.setPosition(reader.getLastEventPosition());
+    monitor.onCommit();
+  }
+
+  private void changeToBusyState(final EngineStateMonitor monitor, final TestLogStreamReader reader) {
+    // We use onReplayed here because it is an easy way to update the lastProcessedEventPosition of
+    // the EngineStateMonitor
+    final long position = reader.getLastEventPosition() + 1;
+    monitor.onReplayed(position, -1L);
+    reader.setLastEventPosition(position);
+  }
+
+  private class TestLogStreamReader implements LogStreamReader {
+
+    private long position = 0L;
+    private long lastEventPosition = 0L;
+
+    long getLastEventPosition() {
+      return lastEventPosition;
+    }
+
+    void setLastEventPosition(final long position) {
+      lastEventPosition = position;
+    }
+
+    void setPosition(final long position) {
+      this.position = position;
+    }
+
+    @Override
+    public boolean seekToNextEvent(final long position) {
+      return false;
+    }
+
+    @Override
+    public boolean seek(final long position) {
+      return false;
+    }
+
+    @Override
+    public void seekToFirstEvent() {
+
+    }
+
+    @Override
+    public long seekToEnd() {
+      return 0;
+    }
+
+    @Override
+    public long getPosition() {
+      return position;
+    }
+
+    @Override
+    public LoggedEvent peekNext() {
+      return null;
+    }
+
+    @Override
+    public void close() {
+
+    }
+
+    @Override
+    public boolean hasNext() {
+      return position < lastEventPosition;
+    }
+
+    @Override
+    public LoggedEvent next() {
+      position++;
+      final LoggedEvent event = mock(LoggedEvent.class);
+      when(event.getPosition()).thenReturn(position);
+      return event;
+    }
+  }
+}