diff --git a/test/powershell/Language/Scripting/CommandErrorHandling.Tests.ps1 b/test/powershell/Language/Scripting/CommandErrorHandling.Tests.ps1
new file mode 100644
index 00000000000..fe2ed803ecf
--- /dev/null
+++ b/test/powershell/Language/Scripting/CommandErrorHandling.Tests.ps1
@@ -0,0 +1,470 @@
+# Copyright (c) Microsoft Corporation.
+# Licensed under the MIT License.
+
+Describe 'Command error handling in general' -Tag 'CI' {
+
+    BeforeAll {
+        $pwsh = [PowerShell]::Create()
+        $pwsh.AddScript(@'
+
+    function ThrowTerminatingError {
+        [CmdletBinding()]
+        param()
+
+        $ex = [System.ArgumentException]::new('terminating-exception')
+        $er = [System.Management.Automation.ErrorRecord]::new($ex, 'ThrowTerminatingError:error', 'InvalidArgument', $null)
+        $PSCmdlet.ThrowTerminatingError($er)
+
+        Write-Verbose -Verbose "verbose-message"
+    }
+
+    function ErrorActionStop {
+        [CmdletBinding()]
+        param()
+
+        Get-Command NonExist -ErrorAction Stop
+        Write-Verbose -Verbose "verbose-message"
+    }
+
+    function ThrowException {
+        [CmdletBinding()]
+        param()
+
+        throw 'throw-exception'
+        Write-Verbose -Verbose "verbose-message"
+    }
+
+    function WriteErrorAPI {
+        [CmdletBinding()]
+        param()
+
+        $ex = [System.ArgumentException]::new('arg-exception')
+        $er = [System.Management.Automation.ErrorRecord]::new($ex, 'WriteErrorAPI:error', 'InvalidArgument', $null)
+        $PSCmdlet.WriteError($er)
+
+        Write-Verbose -Verbose "verbose-message"
+    }
+
+    function WriteErrorCmdlet {
+        [CmdletBinding()]
+        param()
+
+        Write-Error 'write-error-cmdlet'
+        Write-Verbose -Verbose "verbose-message"
+    }
+
+    function MethodInvocationThrowException {
+        [CmdletBinding()]
+        param()
+
+        ## This method call throws exception.
+        $iss = [initialsessionstate]::Create()
+        $iss.ImportPSModule($null)
+
+        Write-Verbose -Verbose "verbose-message"
+    }
+
+    function ExpressionThrowException {
+        [CmdletBinding()]
+        param()
+
+        1/0 ## throw exception.
+        Write-Verbose -Verbose "verbose-message"
+    }
+
+'@).Invoke()
+
+        function RunCommand {
+            param(
+                [string] $Command,
+                [ValidateSet('Continue', 'Ignore', 'SilentlyContinue', 'Stop')]
+                [string] $ErrorAction
+            )
+
+            $pwsh.Commands.Clear()
+            $pwsh.Streams.ClearStreams()
+            $pwsh.AddCommand($command).AddParameter('ErrorAction', $ErrorAction).Invoke()
+        }
+
+        function RunScript {
+            param([string] $Script)
+
+            $pwsh.Commands.Clear()
+            $pwsh.Streams.ClearStreams()
+            $pwsh.AddScript($Script).Invoke()
+        }
+
+        function GetLastError {
+            $pwsh.Commands.Clear()
+            $pwsh.AddCommand('Get-Error').Invoke()
+        }
+
+        function ClearDollarError {
+            $pwsh.Commands.Clear()
+            $pwsh.AddScript('$Error.Clear()').Invoke()
+        }
+    }
+
+    AfterAll {
+        $pwsh.Dispose()
+    }
+
+    Context 'Terminating error' {
+
+        It "'ThrowTerminatingError' should always stop execution even when the error action is '<ErrorAction>'" -TestCases @(
+            @{ ErrorAction = 'Continue' }
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            $failure = $null
+
+            try {
+                RunCommand -Command 'ThrowTerminatingError' -ErrorAction $ErrorAction
+            } catch {
+                $failure = $_
+            }
+
+            $failure | Should -Not -BeNullOrEmpty
+            $failure.Exception | Should -BeOfType 'System.Management.Automation.MethodInvocationException'
+            $failure.Exception.InnerException | Should -BeOfType 'System.Management.Automation.CmdletInvocationException'
+            $failure.Exception.InnerException.InnerException | Should -BeOfType 'System.ArgumentException'
+            $failure.Exception.InnerException.InnerException.Message | Should -BeExactly 'terminating-exception'
+
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+        }
+
+        It "'-ErrorAction Stop' should always stop execution even when the error action is '<ErrorAction>'" -TestCases @(
+            @{ ErrorAction = 'Continue' }
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            $failure = $null
+
+            try {
+                RunCommand -Command 'ErrorActionStop' -ErrorAction $ErrorAction
+            } catch {
+                $failure = $_
+            }
+
+            $failure | Should -Not -BeNullOrEmpty
+            $failure.Exception | Should -BeOfType 'System.Management.Automation.MethodInvocationException'
+            $failure.Exception.InnerException | Should -BeOfType 'System.Management.Automation.ActionPreferenceStopException'
+            $failure.Exception.InnerException.ErrorRecord.FullyQualifiedErrorId | Should -BeExactly 'CommandNotFoundException,Microsoft.PowerShell.Commands.GetCommandCommand'
+
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+        }
+
+        It "'throw' statement should stop execution when running with the default error action ('Continue')" {
+            $failure = $null
+
+            try {
+                RunCommand -Command 'ThrowException' -ErrorAction 'Continue'
+            } catch {
+                $failure = $_
+            }
+
+            $failure | Should -Not -BeNullOrEmpty
+            $failure.Exception | Should -BeOfType 'System.Management.Automation.MethodInvocationException'
+            $failure.Exception.InnerException | Should -BeOfType 'System.Management.Automation.RuntimeException'
+            $failure.Exception.InnerException.Message | Should -BeExactly 'throw-exception'
+
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+        }
+
+        <# The 'throw' statement is special, in that it can be suppressed by '-ErrorAction SilentlyContinue/Ignore' #>
+        It "'throw' statement doesn't stop execution when the error action is '<ErrorAction>'" -TestCases @(
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            $failure = $null
+
+            try {
+                RunCommand -Command 'ThrowException' -ErrorAction $ErrorAction
+            } catch {
+                $failure = $_
+            }
+
+            $failure | Should -BeNullOrEmpty
+            $pwsh.Streams.Verbose | Should -HaveCount 1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+
+            ## The suppressed 'throw' exception is not written to the error stream, not sure why but it's the current behavior.
+            $pwsh.Streams.Error | Should -HaveCount 0
+
+            ## The suppressed 'throw' exception is kept in '$Error'
+            $err = GetLastError
+            $err | Should -Not -BeNullOrEmpty
+            $err.FullyQualifiedErrorId | Should -BeExactly 'throw-exception'
+        }
+
+        It "'throw' statement should stop execution with the error action '<ErrorAction>' when it's wrapped in 'try/catch'" -TestCases @(
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            RunScript -Script "try { ThrowException -ErrorAction $ErrorAction } catch { Write-Debug -Debug `$_.FullyQualifiedErrorId }"
+
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+            $pwsh.Streams.Debug | Should -HaveCount 1
+            $pwsh.Streams.Debug | Should -BeExactly 'throw-exception'
+        }
+
+        It "'throw' statement should stop execution with the error action '<ErrorAction>' when it's accompanied by 'trap' statement" -TestCases @(
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            RunScript -Script "trap { Write-Debug -Debug `$_.FullyQualifiedErrorId; continue } ThrowException -ErrorAction $ErrorAction"
+
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+            $pwsh.Streams.Debug | Should -HaveCount 1
+            $pwsh.Streams.Debug | Should -BeExactly 'throw-exception'
+        }
+    }
+
+    Context 'Non-terminating error' {
+
+        It "'WriteErrorAPI' doesn't stop execution with the default error action ('Continue')" {
+            RunCommand -Command 'WriteErrorAPI' -ErrorAction Continue
+
+            $pwsh.Streams.Error | Should -HaveCount 1
+            $pwsh.Streams.Error[0].Exception.Message | Should -BeExactly 'arg-exception'
+            $pwsh.Streams.Error[0].FullyQualifiedErrorId | Should -BeExactly 'WriteErrorAPI:error,WriteErrorAPI'
+
+            $pwsh.Streams.Verbose | Should -HaveCount 1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+        }
+
+        It "'WriteErrorAPI' doesn't stop execution with the error action 'Ignore' and the error doesn't get logged in `$Error" {
+            ClearDollarError
+            RunCommand -Command 'WriteErrorAPI' -ErrorAction Ignore
+
+            $pwsh.Streams.Error | Should -HaveCount 0
+            $pwsh.Streams.Verbose | Should -HaveCount 1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+
+            $lastErr = GetLastError
+            $lastErr | Should -BeNullOrEmpty
+        }
+
+        It "'WriteErrorAPI' doesn't stop execution with the error action 'SilentlyContinue' and the error gets logged in `$Error" {
+            ClearDollarError
+            RunCommand -Command 'WriteErrorAPI' -ErrorAction SilentlyContinue
+
+            $pwsh.Streams.Error | Should -HaveCount 0
+            $pwsh.Streams.Verbose | Should -HaveCount 1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+
+            $lastErr = GetLastError
+            $lastErr | Should -Not -BeNullOrEmpty
+            $lastErr.Exception.Message | Should -BeExactly 'arg-exception'
+            $lastErr.FullyQualifiedErrorId | Should -BeExactly 'WriteErrorAPI:error,WriteErrorAPI'
+        }
+
+        It "'WriteErrorCmdlet' doesn't stop execution with the default error action ('Continue')" {
+            RunCommand -Command 'WriteErrorCmdlet' -ErrorAction Continue
+
+            $pwsh.Streams.Error | Should -HaveCount 1
+            $pwsh.Streams.Error[0].Exception.Message | Should -BeExactly 'write-error-cmdlet'
+            $pwsh.Streams.Error[0].FullyQualifiedErrorId | Should -BeExactly 'Microsoft.PowerShell.Commands.WriteErrorException,WriteErrorCmdlet'
+
+            $pwsh.Streams.Verbose | Should -HaveCount 1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+        }
+
+        It "'WriteErrorCmdlet' doesn't stop execution with the error action 'Ignore' and the error doesn't get logged in `$Error" {
+            ClearDollarError
+            RunCommand -Command 'WriteErrorCmdlet' -ErrorAction Ignore
+
+            $pwsh.Streams.Error | Should -HaveCount 0
+            $pwsh.Streams.Verbose | Should -HaveCount 1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+
+            $lastErr = GetLastError
+            $lastErr | Should -BeNullOrEmpty
+        }
+
+        It "'WriteErrorCmdlet' doesn't stop execution with the error action 'SilentlyContinue' and the error gets logged in `$Error" {
+            ClearDollarError
+            RunCommand -Command 'WriteErrorCmdlet' -ErrorAction SilentlyContinue
+
+            $pwsh.Streams.Error | Should -HaveCount 0
+            $pwsh.Streams.Verbose | Should -HaveCount 1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+
+            $lastErr = GetLastError
+            $lastErr | Should -Not -BeNullOrEmpty
+            $lastErr.Exception.Message | Should -BeExactly 'write-error-cmdlet'
+            $lastErr.FullyQualifiedErrorId | Should -BeExactly 'Microsoft.PowerShell.Commands.WriteErrorException,WriteErrorCmdlet'
+        }
+    }
+
+    Context 'Exception thrown from the method invocation or expression' {
+
+        #region MethodInvocationThrowException
+
+        It "'MethodInvocationThrowException' emits non-terminating error with the default error action ('Continue')" {
+            RunCommand -Command 'MethodInvocationThrowException' -ErrorAction 'Continue'
+
+            $pwsh.Streams.Error | Should -HaveCount 1
+            $pwsh.Streams.Error[0].FullyQualifiedErrorId | Should -BeExactly 'ArgumentNullException'
+
+            $pwsh.Streams.Verbose | Should -HaveCount  1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+        }
+
+        It "'MethodInvocationThrowException' emits no error with the error action '<ErrorAction>'" -TestCases @(
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            RunCommand -Command 'MethodInvocationThrowException' -ErrorAction $ErrorAction
+
+            $pwsh.Streams.Error | Should -HaveCount 0
+            $pwsh.Streams.Verbose | Should -HaveCount 1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+
+            ## The suppressed exception is kept in '$Error'
+            $err = GetLastError
+            $err | Should -Not -BeNullOrEmpty
+            $err.FullyQualifiedErrorId | Should -BeExactly 'ArgumentNullException'
+        }
+
+        It "'MethodInvocationThrowException' emits terminating error with the error action 'Stop'" {
+            $failure = $null
+
+            try {
+                RunCommand -Command 'MethodInvocationThrowException' -ErrorAction Stop
+            } catch {
+                $failure = $_
+            }
+
+            $failure | Should -Not -BeNullOrEmpty
+            $failure.Exception | Should -BeOfType 'System.Management.Automation.MethodInvocationException'
+            $failure.Exception.InnerException | Should -BeOfType 'System.Management.Automation.CmdletInvocationException'
+            $failure.Exception.InnerException.InnerException.InnerException | Should -BeOfType 'System.ArgumentNullException'
+
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+        }
+
+        It "'MethodInvocationThrowException' emits terminating error with the error action '<ErrorAction>' when it's wrapped in 'try/catch'" -TestCases @(
+            @{ ErrorAction = 'Continue' }
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            RunScript -Script "try { MethodInvocationThrowException -ErrorAction $ErrorAction } catch { Write-Debug -Debug `$_.Exception.InnerException.GetType().FullName }"
+
+            $pwsh.Streams.Error | Should -HaveCount 0
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+            $pwsh.Streams.Debug | Should -HaveCount 1
+            $pwsh.Streams.Debug | Should -BeExactly 'System.ArgumentNullException'
+        }
+
+        It "'MethodInvocationThrowException' emits terminating error with the error action '<ErrorAction>' when it's accompanied by 'trap' statement" -TestCases @(
+            @{ ErrorAction = 'Continue' }
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            RunScript -Script "trap { Write-Debug -Debug `$_.Exception.InnerException.GetType().FullName; continue } MethodInvocationThrowException -ErrorAction $ErrorAction"
+
+            $pwsh.Streams.Error | Should -HaveCount 0
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+            $pwsh.Streams.Debug | Should -HaveCount 1
+            $pwsh.Streams.Debug | Should -BeExactly 'System.ArgumentNullException'
+        }
+
+        #endregion
+
+        #region ExpressionThrowException
+
+        It "'ExpressionThrowException' emits non-terminating error with the default error action ('Continue')" {
+            RunCommand -Command 'ExpressionThrowException' -ErrorAction 'Continue'
+
+            $pwsh.Streams.Error | Should -HaveCount 1
+            $pwsh.Streams.Error[0].Exception.InnerException | Should -BeOfType 'System.DivideByZeroException'
+
+            $pwsh.Streams.Verbose | Should -HaveCount  1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+        }
+
+        It "'ExpressionThrowException' emits no error with the error action '<ErrorAction>'" -TestCases @(
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            RunCommand -Command 'ExpressionThrowException' -ErrorAction $ErrorAction
+
+            $pwsh.Streams.Error | Should -HaveCount 0
+            $pwsh.Streams.Verbose | Should -HaveCount 1
+            $pwsh.Streams.Verbose | Should -BeExactly 'verbose-message'
+
+            ## The suppressed exception is kept in '$Error'
+            $err = GetLastError
+            $err | Should -Not -BeNullOrEmpty
+            $err.Exception.InnerException | Should -BeOfType 'System.DivideByZeroException'
+        }
+
+        It "'ExpressionThrowException' emits terminating error with the error action 'Stop'" {
+            $failure = $null
+
+            try {
+                RunCommand -Command 'ExpressionThrowException' -ErrorAction Stop
+            } catch {
+                $failure = $_
+            }
+
+            $failure | Should -Not -BeNullOrEmpty
+            $failure.Exception | Should -BeOfType 'System.Management.Automation.MethodInvocationException'
+            $failure.Exception.InnerException | Should -BeOfType 'System.Management.Automation.CmdletInvocationException'
+            $failure.Exception.InnerException.InnerException.InnerException | Should -BeOfType 'System.DivideByZeroException'
+
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+        }
+
+        It "'ExpressionThrowException' emits terminating error with the error action '<ErrorAction>' when it's wrapped in 'try/catch'" -TestCases @(
+            @{ ErrorAction = 'Continue' }
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            RunScript -Script "try { ExpressionThrowException -ErrorAction $ErrorAction } catch { Write-Debug -Debug `$_.Exception.InnerException.GetType().FullName }"
+
+            $pwsh.Streams.Error | Should -HaveCount 0
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+            $pwsh.Streams.Debug | Should -HaveCount 1
+            $pwsh.Streams.Debug | Should -BeExactly 'System.DivideByZeroException'
+        }
+
+        It "'ExpressionThrowException' emits terminating error with the error action '<ErrorAction>' when it's accompanied by 'trap' statement" -TestCases @(
+            @{ ErrorAction = 'Continue' }
+            @{ ErrorAction = 'Ignore' }
+            @{ ErrorAction = 'SilentlyContinue' }
+        ) {
+            param ($ErrorAction)
+
+            RunScript -Script "trap { Write-Debug -Debug `$_.Exception.InnerException.GetType().FullName; continue } ExpressionThrowException -ErrorAction $ErrorAction"
+
+            $pwsh.Streams.Error | Should -HaveCount 0
+            $pwsh.Streams.Verbose | Should -HaveCount 0
+            $pwsh.Streams.Debug | Should -HaveCount 1
+            $pwsh.Streams.Debug | Should -BeExactly 'System.DivideByZeroException'
+        }
+
+        #endregion
+    }
+}