diff --git a/tests/index/version.c b/tests/index/version.c
index c3cb0cd..fc139f6 100644
--- a/tests/index/version.c
+++ b/tests/index/version.c
@@ -62,3 +62,63 @@
 
 	git_index_free(index);
 }
+
+void test_index_version__v4_uses_path_compression(void)
+{
+	git_index_entry entry;
+	git_index *index;
+	char path[250], buf[1];
+	struct stat st;
+	char i, j;
+
+	memset(path, 'a', sizeof(path));
+	memset(buf, 'a', sizeof(buf));
+
+	memset(&entry, 0, sizeof(entry));
+	entry.path = path;
+	entry.mode = GIT_FILEMODE_BLOB;
+
+	g_repo = cl_git_sandbox_init("indexv4");
+	cl_git_pass(git_repository_index(&index, g_repo));
+
+	/* write 676 paths of 250 bytes length */
+	for (i = 'a'; i <= 'z'; i++) {
+		for (j = 'a'; j < 'z'; j++) {
+			path[ARRAY_SIZE(path) - 3] = i;
+			path[ARRAY_SIZE(path) - 2] = j;
+			path[ARRAY_SIZE(path) - 1] = '\0';
+			cl_git_pass(git_index_add_frombuffer(index, &entry, buf, sizeof(buf)));
+		}
+	}
+
+	cl_git_pass(git_index_write(index));
+	cl_git_pass(p_stat(git_index_path(index), &st));
+
+	/*
+	 * Without path compression, the written paths would at
+	 * least take
+	 *
+	 *    (entries * pathlen) = len
+	 *    (676 * 250) = 169000
+	 *
+	 *  bytes. As index v4 uses suffix-compression and our
+	 *  written paths only differ in the last two entries,
+	 *  this number will be much smaller, e.g.
+	 *
+	 *    (1 * pathlen) + (675 * 2) = len
+	 *    676 + 1350 = 2026
+	 *
+	 *    bytes.
+	 *
+	 *    Note that the above calculations do not include
+	 *    additional metadata of the index, e.g. OIDs or
+	 *    index extensions. Including those we get an index
+	 *    of approx. 200kB without compression and 40kB with
+	 *    compression. As this is a lot smaller than without
+	 *    compression, we can verify that path compression is
+	 *    used.
+	 */
+	cl_assert_(st.st_size < 75000, "path compression not enabled");
+
+	git_index_free(index);
+}