diff --git a/tests/test_checkout.py b/tests/test_checkout.py
index 62bc25193..1bb9c29b9 100644
--- a/tests/test_checkout.py
+++ b/tests/test_checkout.py
@@ -4,11 +4,7 @@ import shutil
 import filecmp
 
 from dvc.main import main
-from dvc.data_cloud import file_md5
-from dvc.stage import Stage, CmdOutputNoCacheError, CmdOutputOutsideOfRepoError
-from dvc.stage import CmdOutputDoesNotExistError, CmdOutputIsNotFileError
-from dvc.project import StageNotFoundError
-
+from tests.basic_env import TestDvc
 from tests.test_repro import TestRepro
 
 
@@ -35,3 +31,93 @@ class TestCmdCheckout(TestCheckout):
         ret = main(['checkout'])
         self.assertEqual(ret, 0)
         self._test_checkout()
+
+
+class CheckoutBase(TestDvc):
+    GIT_IGNORE = '.gitignore'
+
+    def commit_data_file(self, fname, content='random text'):
+        with open(fname, 'w') as fd:
+            fd.write(content)
+        self.dvc.add(fname)
+        self.dvc.scm.add([fname + '.dvc', '.gitignore'])
+        self.dvc.scm.commit('adding ' + fname)
+
+    def read_ignored(self):
+        return map(lambda s: s.strip('\n'), open(self.GIT_IGNORE).readlines())
+
+
+class TestRemoveFilesWhenCheckout(CheckoutBase):
+    def test(self):
+        fname = 'file_in_a_branch'
+        branch_master = 'master'
+        branch_1 = 'b1'
+
+        self.dvc.scm.add(self.dvc.scm.untracked_files())
+        self.dvc.scm.commit('add all files')
+
+        # add the file into a separate branch
+        self.dvc.scm.checkout(branch_1, True)
+        main(['checkout'])
+        self.commit_data_file(fname)
+
+        # Checkout back in master
+        self.dvc.scm.checkout(branch_master)
+        self.assertTrue(os.path.exists(fname))
+
+        # Make sure `dvc checkout` removes the file
+        # self.dvc.checkout()
+        main(['checkout'])
+        self.assertFalse(os.path.exists(fname))
+
+
+class TestGitIgnoreBasic(CheckoutBase):
+    def test(self):
+        fname1 = 'file_1'
+        fname2 = 'file_2'
+
+        self.dvc.scm.add(self.dvc.scm.untracked_files())
+        self.dvc.scm.commit('add all files')
+
+        self.assertFalse(os.path.exists(self.GIT_IGNORE))
+
+        self.commit_data_file(fname1)
+        self.commit_data_file(fname2)
+
+        self.assertTrue(os.path.exists(self.GIT_IGNORE))
+
+        ignored = self.read_ignored()
+
+        self.assertEqual(len(ignored), 2)   # FAILS!!!
+
+        self.assertIn(fname1, ignored)
+        self.assertIn(fname2, ignored)      # FAILS!!!
+
+
+class TestGitIgnoreWhenCheckout(CheckoutBase):
+    def test(self):
+        fname_master = 'file_in_a_master'
+        branch_master = 'master'
+        fname_branch = 'file_in_a_branch'
+        branch_1 = 'b1'
+
+        self.dvc.scm.add(self.dvc.scm.untracked_files())
+        self.dvc.scm.commit('add all files')
+        self.commit_data_file(fname_master)
+
+        self.dvc.scm.checkout(branch_1, True)
+        main(['checkout'])
+        self.commit_data_file(fname_branch)
+
+        self.dvc.scm.checkout(branch_master)
+        main(['checkout'])
+
+        ignored = self.read_ignored()
+
+        self.assertEqual(len(ignored), 1)
+        self.assertIn(fname_master, ignored)
+
+        self.dvc.scm.checkout(branch_1)
+        main(['checkout'])
+        ignored = self.read_ignored()
+        self.assertIn(fname_branch, ignored)    # FAILS!!!