diff --git a/tests/unit/test_retrieval/test_graph_rag.py b/tests/unit/test_retrieval/test_graph_rag.py
new file mode 100644
index 00000000..3afe1a4f
--- /dev/null
+++ b/tests/unit/test_retrieval/test_graph_rag.py
@@ -0,0 +1,61 @@
+"""
+Tests for GraphRAG retrieval implementation
+"""
+
+import pytest
+from unittest.mock import MagicMock
+
+from trustgraph.retrieval.graph_rag.graph_rag import GraphRag
+
+
+class TestGraphRag:
+    """Test cases for GraphRag class"""
+
+    def test_graph_rag_initialization_with_defaults(self):
+        """Test GraphRag initialization with default verbose setting"""
+        # Create mock clients
+        mock_prompt_client = MagicMock()
+        mock_embeddings_client = MagicMock()
+        mock_graph_embeddings_client = MagicMock()
+        mock_triples_client = MagicMock()
+        
+        # Initialize GraphRag
+        graph_rag = GraphRag(
+            prompt_client=mock_prompt_client,
+            embeddings_client=mock_embeddings_client,
+            graph_embeddings_client=mock_graph_embeddings_client,
+            triples_client=mock_triples_client
+        )
+        
+        # Verify initialization
+        assert graph_rag.prompt_client == mock_prompt_client
+        assert graph_rag.embeddings_client == mock_embeddings_client
+        assert graph_rag.graph_embeddings_client == mock_graph_embeddings_client
+        assert graph_rag.triples_client == mock_triples_client
+        assert graph_rag.verbose is False  # Default value
+        assert graph_rag.label_cache == {}  # Empty cache initially
+
+    def test_graph_rag_initialization_with_verbose(self):
+        """Test GraphRag initialization with verbose enabled"""
+        # Create mock clients
+        mock_prompt_client = MagicMock()
+        mock_embeddings_client = MagicMock()
+        mock_graph_embeddings_client = MagicMock()
+        mock_triples_client = MagicMock()
+        
+        # Initialize GraphRag with verbose=True
+        graph_rag = GraphRag(
+            prompt_client=mock_prompt_client,
+            embeddings_client=mock_embeddings_client,
+            graph_embeddings_client=mock_graph_embeddings_client,
+            triples_client=mock_triples_client,
+            verbose=True
+        )
+        
+        # Verify initialization
+        assert graph_rag.prompt_client == mock_prompt_client
+        assert graph_rag.embeddings_client == mock_embeddings_client
+        assert graph_rag.graph_embeddings_client == mock_graph_embeddings_client
+        assert graph_rag.triples_client == mock_triples_client
+        assert graph_rag.verbose is True
+        assert graph_rag.label_cache == {}  # Empty cache initially
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