diff --git a/src/core/prompts/__tests__/system.test.ts b/src/core/prompts/__tests__/system.test.ts
new file mode 100644
index 0000000..602c0c9
--- /dev/null
+++ b/src/core/prompts/__tests__/system.test.ts
@@ -0,0 +1,112 @@
+import fs from 'fs/promises'
+import path from 'path'
+import os from 'os'
+import { addCustomInstructions } from '../system'
+
+// Mock external dependencies
+jest.mock('os-name', () => () => 'macOS')
+jest.mock('default-shell', () => '/bin/zsh')
+jest.mock('os', () => ({
+  homedir: () => '/Users/test',
+  ...jest.requireActual('os')
+}))
+
+describe('system.ts', () => {
+  let tempDir: string
+
+  beforeEach(async () => {
+    // Create a temporary directory for test files
+    tempDir = await fs.mkdtemp(path.join(os.tmpdir(), 'cline-test-'))
+  })
+
+  afterEach(async () => {
+    // Clean up temporary directory after each test
+    await fs.rm(tempDir, { recursive: true, force: true })
+  })
+
+  describe('addCustomInstructions', () => {
+    it('should include content from .clinerules and .cursorrules if present', async () => {
+      // Create test rule files
+      await fs.writeFile(path.join(tempDir, '.clinerules'), 'Always write tests\nUse TypeScript')
+      await fs.writeFile(path.join(tempDir, '.cursorrules'), 'Format code before committing')
+
+      const customInstructions = 'Base instructions'
+      const result = await addCustomInstructions(customInstructions, tempDir)
+
+      // Verify all instructions are included
+      expect(result).toContain('Base instructions')
+      expect(result).toContain('Always write tests')
+      expect(result).toContain('Use TypeScript')
+      expect(result).toContain('Format code before committing')
+      expect(result).toContain('Rules from .clinerules:')
+      expect(result).toContain('Rules from .cursorrules:')
+    })
+
+    it('should handle missing rule files gracefully', async () => {
+      const customInstructions = 'Base instructions'
+      const result = await addCustomInstructions(customInstructions, tempDir)
+
+      // Should only contain base instructions
+      expect(result).toContain('Base instructions')
+      expect(result).not.toContain('Rules from')
+    })
+
+    it('should handle empty rule files', async () => {
+      // Create empty rule files
+      await fs.writeFile(path.join(tempDir, '.clinerules'), '')
+      await fs.writeFile(path.join(tempDir, '.cursorrules'), '')
+
+      const customInstructions = 'Base instructions'
+      const result = await addCustomInstructions(customInstructions, tempDir)
+
+      // Should only contain base instructions
+      expect(result).toContain('Base instructions')
+      expect(result).not.toContain('Rules from')
+    })
+
+    it('should handle whitespace-only rule files', async () => {
+      // Create rule files with only whitespace
+      await fs.writeFile(path.join(tempDir, '.clinerules'), '  \n  \t  ')
+      await fs.writeFile(path.join(tempDir, '.cursorrules'), ' \n ')
+
+      const customInstructions = 'Base instructions'
+      const result = await addCustomInstructions(customInstructions, tempDir)
+
+      // Should only contain base instructions
+      expect(result).toContain('Base instructions')
+      expect(result).not.toContain('Rules from')
+    })
+
+    it('should handle one rule file present and one missing', async () => {
+      // Create only .clinerules
+      await fs.writeFile(path.join(tempDir, '.clinerules'), 'Always write tests')
+
+      const customInstructions = 'Base instructions'
+      const result = await addCustomInstructions(customInstructions, tempDir)
+
+      // Should contain base instructions and .clinerules content
+      expect(result).toContain('Base instructions')
+      expect(result).toContain('Always write tests')
+      expect(result).toContain('Rules from .clinerules:')
+      expect(result).not.toContain('Rules from .cursorrules:')
+    })
+
+    it('should handle empty custom instructions with rule files', async () => {
+      await fs.writeFile(path.join(tempDir, '.clinerules'), 'Always write tests')
+      await fs.writeFile(path.join(tempDir, '.cursorrules'), 'Format code before committing')
+
+      const result = await addCustomInstructions('', tempDir)
+
+      // Should contain rule file content even with empty custom instructions
+      expect(result).toContain('Always write tests')
+      expect(result).toContain('Format code before committing')
+      expect(result).toContain('Rules from .clinerules:')
+      expect(result).toContain('Rules from .cursorrules:')
+    })
+
+    it('should return empty string when no instructions or rules exist', async () => {
+      const result = await addCustomInstructions('', tempDir)
+      expect(result).toBe('')
+    })
+  })
+})