diff --git a/package/com.unity.formats.usd/Tests/Editor/InitUsdTests.cs b/package/com.unity.formats.usd/Tests/Editor/InitUsdTests.cs
new file mode 100644
index 000000000..70a3081a0
--- /dev/null
+++ b/package/com.unity.formats.usd/Tests/Editor/InitUsdTests.cs
@@ -0,0 +1,61 @@
+using System.IO;
+using NUnit.Framework;
+using System.Reflection;
+using Unity.Formats.USD;
+using UnityEngine;
+
+public class InitUsdTests
+{
+    [Test]
+    [Ignore("[USDU-249]")]
+    public void SetupUsdPath_InvalidPath_Error()
+    {
+        var invalidFilePath = "\\NonExisting\\Path\\";
+
+        // SetupUsdPath function is a private function
+        var setUpMethod = GetMethod("SetupUsdPath");
+
+        var expectedError = Assert.Throws<TargetInvocationException>(() => setUpMethod.Invoke(null, new object[] { invalidFilePath }), "Error was expected but not thrown");
+        Assert.IsInstanceOf<FileNotFoundException>(expectedError.InnerException);
+        Assert.AreEqual(string.Format("Could not find file '{0}'.", invalidFilePath), expectedError.InnerException.Message, "Unexpected error message was given");
+    }
+
+    [Test]
+    public void SetupUsdPath_EmptyPath_Error()
+    {
+        // SetupUsdPath function is a private function
+        var setUpMethod = GetMethod("SetupUsdPath");
+
+        var expectedError = Assert.Throws<TargetInvocationException>(() => setUpMethod.Invoke(null, new object[] { "" }), "Error was expected but not thrown");
+        Assert.IsInstanceOf<System.ArgumentException>(expectedError.InnerException);
+        Assert.AreEqual("The specified path is not of a legal form (empty).", expectedError.InnerException.Message, "Unexpected error message was given");
+    }
+
+    [Test]
+    public void InitUsd_Initialize()
+    {
+        // Reset 'm_usdInitialized' for accurate testing
+        ResetInitUsd();
+
+        Assert.True(InitUsd.Initialize(), "USD Initialize failed");
+    }
+
+    [TearDown]
+    public void ResetInitUsd()
+    {
+        var isUsdInitialized = typeof(InitUsd).GetField("m_usdInitialized", (BindingFlags.Static | BindingFlags.NonPublic));
+        isUsdInitialized.SetValue(null, false);
+    }
+
+    private MethodInfo GetMethod(string methodName)
+    {
+        var method = typeof(InitUsd).GetMethod(methodName, (BindingFlags.NonPublic | BindingFlags.Static));
+
+        if (method == null)
+        {
+            Assert.Fail(string.Format("{0} method not found", methodName));
+        }
+
+        return method;
+    }
+}
diff --git a/package/com.unity.formats.usd/Tests/Editor/InitUsdTests.cs.meta b/package/com.unity.formats.usd/Tests/Editor/InitUsdTests.cs.meta
new file mode 100644
index 000000000..5b330c506
--- /dev/null
+++ b/package/com.unity.formats.usd/Tests/Editor/InitUsdTests.cs.meta
@@ -0,0 +1,11 @@
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