diff --git a/extensions/sql-bindings/src/services/azureFunctionsService.ts b/extensions/sql-bindings/src/services/azureFunctionsService.ts
index 7a9f4b417e..1e713c8402 100644
--- a/extensions/sql-bindings/src/services/azureFunctionsService.ts
+++ b/extensions/sql-bindings/src/services/azureFunctionsService.ts
@@ -201,7 +201,7 @@ export async function createAzureFunction(node?: ITreeNodeInfo): Promise<void> {
 				.withAdditionalProperties(propertyBag)
 				.withConnectionInfo(connectionInfo).send();
 		}
-		// addtional execution step that will be used by vscode-azurefunctions to execute only when creating a new azure function project
+		// additional execution step that will be used by vscode-azurefunctions to execute only when creating a new azure function project
 		let connectionStringExecuteStep = createAddConnectionStringStep(projectFolder, connectionInfo, connectionStringInfo.connectionStringSettingName);
 
 		// create C# Azure Function with SQL Binding
diff --git a/extensions/sql-bindings/src/test/addConnectionStringStep.test.ts b/extensions/sql-bindings/src/test/addConnectionStringStep.test.ts
new file mode 100644
index 0000000000..1f0ecb8562
--- /dev/null
+++ b/extensions/sql-bindings/src/test/addConnectionStringStep.test.ts
@@ -0,0 +1,90 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the Source EULA. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+import * as vscode from 'vscode';
+import * as should from 'should';
+import * as sinon from 'sinon';
+import * as path from 'path';
+import * as fs from 'fs';
+import * as TypeMoq from 'typemoq';
+import * as constants from '../common/constants';
+import * as azureFunctionUtils from '../common/azureFunctionsUtils';
+import * as utils from '../common/utils';
+
+import { createAddConnectionStringStep } from '../createNewProject/addConnectionStringStep';
+import { createTestCredentials, createTestUtils, TestUtils } from './testUtils';
+import { IConnectionInfo } from 'vscode-mssql';
+
+const rootFolderPath = 'test';
+const localSettingsPath: string = path.join(rootFolderPath, 'local.settings.json');
+let testUtils: TestUtils;
+describe('Add Connection String Execute Step', () => {
+	beforeEach(function (): void {
+		testUtils = createTestUtils();
+	});
+	it('Should add a connection string to the local.settings.json file when creating a new Azure Functions project through execute step', async () => {
+		// add spies to check the functions are called
+		let testConnectionString = 'testConnectionString';
+		let getSettingsFileSpy = sinon.spy(azureFunctionUtils, 'getSettingsFile').withArgs(rootFolderPath);
+		let addConnectionStringSpy = sinon.spy(azureFunctionUtils, 'addConnectionStringToConfig').withArgs(testConnectionString, rootFolderPath);
+
+		// promptConnectionStringPasswordAndUpdateConnectionString stubs
+		sinon.stub(utils, 'getVscodeMssqlApi').resolves(testUtils.vscodeMssqlIExtension.object);
+		let connectionInfo: IConnectionInfo = createTestCredentials();// Mocks promptForConnection
+		let connectionDetails = { options: connectionInfo };
+		// setup AzureWizardExecuteStep class
+		let testExecuteStep = createAddConnectionStringStep(rootFolderPath, connectionInfo, constants.sqlConnectionStringSetting);
+
+		// getConnectionString should return a connection string with the password
+		testUtils.vscodeMssqlIExtension.setup(x => x.getConnectionString(connectionDetails, true, false)).returns(() => Promise.resolve(testConnectionString));
+		// Include Password Prompt - Yes to include password
+		let quickPickStub = sinon.stub(vscode.window, 'showQuickPick').onFirstCall().returns(Promise.resolve(constants.yesString) as any);
+		// setup stub for setting local app setting with connection string
+		sinon.stub(fs.promises, 'writeFile');
+		sinon.stub(azureFunctionUtils, 'setLocalAppSetting').withArgs(sinon.match.any, sinon.match.any, sinon.match.any).resolves(true);
+
+		// call execute step on the AzureWizardExecuteStep
+		await testExecuteStep.execute(TypeMoq.It.isAny(), TypeMoq.It.isAny());
+
+		should(quickPickStub.calledOnce).be.true('showQuickPick should have been called');
+		should(getSettingsFileSpy.calledOnce).be.true('GetSettingsFile method should be called once');
+		should(addConnectionStringSpy.calledOnce).be.true('addConnectionStringSpy method should be called once');
+		testExecuteStep.shouldExecute(TypeMoq.It.isAny()).should.be.true();
+	});
+
+	it('Should return if no settings file found when creating a new Azure Functions project', async () => {
+		// stubs and spies for methods in the execute step
+		let getSettingsFileSpy = sinon.stub(azureFunctionUtils, 'getSettingsFile').withArgs(rootFolderPath).returns(Promise.resolve(undefined));
+		let connectionInfo: IConnectionInfo = createTestCredentials();// Mocks promptForConnection
+		let quickPickStub = sinon.spy(vscode.window, 'showQuickPick');
+		let addConnectionStringToConfigStub = sinon.spy(azureFunctionUtils, 'addConnectionStringToConfig');
+
+		// call execute step on the AzureWizardExecuteStep
+		let testExecuteStep = createAddConnectionStringStep(rootFolderPath, connectionInfo, constants.sqlConnectionStringSetting);
+		await testExecuteStep.execute(TypeMoq.It.isAny(), TypeMoq.It.isAny());
+
+		should(getSettingsFileSpy.calledOnce).be.true('GetSettingsFile method should be called once');
+		should(quickPickStub.notCalled).be.true('showQuickPick should not be called');
+		should(addConnectionStringToConfigStub.notCalled.should.be.true('addConnectionStringToConfig should not be called'));
+	});
+
+	it('Should return if no connection string is set when creating a new Azure Functions project', async () => {
+		// stubs and spies for methods in the execute step
+		let getSettingsFileSpy = sinon.spy(azureFunctionUtils, 'getSettingsFile').withArgs(rootFolderPath);
+		let connectionInfo: IConnectionInfo = createTestCredentials();// Mocks promptForConnection
+		sinon.stub(azureFunctionUtils, 'promptConnectionStringPasswordAndUpdateConnectionString').withArgs(connectionInfo, localSettingsPath).returns(Promise.resolve(undefined));
+		let addConnectionStringToConfigStub = sinon.spy(azureFunctionUtils, 'addConnectionStringToConfig');
+
+		// call execute step on the AzureWizardExecuteStep
+		let testExecuteStep = createAddConnectionStringStep(rootFolderPath, connectionInfo, constants.sqlConnectionStringSetting);
+		await testExecuteStep.execute(TypeMoq.It.isAny(), TypeMoq.It.isAny());
+
+		should(getSettingsFileSpy.calledOnce).be.true('GetSettingsFile method should be called once');
+		should(addConnectionStringToConfigStub.notCalled.should.be.true('addConnectionStringToConfig should not be called'));
+	});
+
+	afterEach(function (): void {
+		sinon.restore();
+	});
+});
diff --git a/extensions/sql-bindings/src/test/common/azureFunctionsUtils.test.ts b/extensions/sql-bindings/src/test/common/azureFunctionsUtils.test.ts
index f985ef091a..b9646d2c46 100644
--- a/extensions/sql-bindings/src/test/common/azureFunctionsUtils.test.ts
+++ b/extensions/sql-bindings/src/test/common/azureFunctionsUtils.test.ts
@@ -236,7 +236,7 @@ describe('AzureFunctionUtils', function (): void {
 		});
 	});
 
-	afterEach(async function (): Promise<void> {
+	afterEach(function (): void {
 		sinon.restore();
 	});
-});
\ No newline at end of file
+});