diff --git a/spec/enterprise/services/captain/llm/assistant_chat_service_spec.rb b/spec/enterprise/services/captain/llm/assistant_chat_service_spec.rb
new file mode 100644
index 000000000..4520a30ba
--- /dev/null
+++ b/spec/enterprise/services/captain/llm/assistant_chat_service_spec.rb
@@ -0,0 +1,160 @@
+require 'rails_helper'
+
+RSpec.describe Captain::Llm::AssistantChatService do
+  let(:captain_assistant) { create(:captain_assistant) }
+  let(:service) { described_class.new(assistant: captain_assistant) }
+  let(:client) { instance_double(OpenAI::Client) }
+
+  before do
+    create(:installation_config, name: 'CAPTAIN_OPEN_AI_API_KEY', value: 'test-key')
+    allow(OpenAI::Client).to receive(:new).and_return(client)
+  end
+
+  describe '#generate_response' do
+    let(:input) { 'How can I help you?' }
+    let(:previous_messages) { [{ role: 'user', content: 'Previous message' }] }
+    let(:openai_response) do
+      {
+        'choices' => [
+          {
+            'message' => {
+              'content' => {
+                reasoning: 'This is a helpful response',
+                response: 'I can assist you with your questions.'
+              }.to_json
+            }
+          }
+        ]
+      }
+    end
+
+    context 'when successful' do
+      before do
+        allow(client).to receive(:chat).and_return(openai_response)
+      end
+
+      it 'generates a response with input' do
+        response = service.generate_response(input)
+        expect(response).to eq({
+                                 'reasoning' => 'This is a helpful response',
+                                 'response' => 'I can assist you with your questions.'
+                               })
+      end
+
+      it 'generates a response with input and previous messages' do
+        response = service.generate_response(input, previous_messages)
+        expect(response).to eq({
+                                 'reasoning' => 'This is a helpful response',
+                                 'response' => 'I can assist you with your questions.'
+                               })
+      end
+
+      it 'includes previous messages in the chat parameters' do
+        service.generate_response(input, previous_messages)
+        expect(client).to have_received(:chat) do |params|
+          messages = params[:parameters][:messages]
+          expect(messages).to include(
+            hash_including(role: 'user', content: 'Previous message')
+          )
+        end
+      end
+
+      it 'includes system message in the chat parameters' do
+        service.generate_response(input)
+        expect(client).to have_received(:chat) do |params|
+          messages = params[:parameters][:messages]
+          expect(messages.first[:role]).to eq('system')
+          expect(messages.first[:content]).to include(captain_assistant.config['product_name'])
+        end
+      end
+    end
+
+    context 'when input is empty' do
+      let(:input) { '' }
+
+      before do
+        allow(client).to receive(:chat).and_return(openai_response)
+      end
+
+      it 'does not add empty input to messages' do
+        service.generate_response(input)
+        expect(client).to have_received(:chat) do |params|
+          messages = params[:parameters][:messages]
+          expect(messages.pluck(:role)).not_to include('user')
+        end
+      end
+    end
+
+    context 'with documentation search' do
+      let(:openai_response_with_tool) do
+        {
+          'choices' => [
+            {
+              'message' => {
+                'tool_calls' => [
+                  {
+                    'id' => 'call_123',
+                    'function' => {
+                      'name' => 'search_documentation',
+                      'arguments' => { 'search_query' => 'test query' }.to_json
+                    }
+                  }
+                ]
+              }
+            }
+          ]
+        }
+      end
+
+      let(:search_results) { "Question: Test\nAnswer: Test answer" }
+
+      before do
+        allow(client).to receive(:chat).and_return(openai_response_with_tool, openai_response)
+        allow(service).to receive(:fetch_documentation).and_return(search_results)
+      end
+
+      it 'handles documentation search tool calls' do
+        response = service.generate_response(input)
+        expect(response).to eq({
+                                 'reasoning' => 'This is a helpful response',
+                                 'response' => 'I can assist you with your questions.'
+                               })
+        expect(client).to have_received(:chat).twice
+      end
+    end
+  end
+
+  describe '#chat_parameters' do
+    before do
+      allow(client).to receive(:chat).and_return(
+        {
+          'choices' => [
+            {
+              'message' => {
+                'content' => {
+                  reasoning: 'Test reasoning',
+                  response: 'Test response'
+                }.to_json
+              }
+            }
+          ]
+        }
+      )
+    end
+
+    it 'includes correct model and response format' do
+      service.generate_response('test')
+      expect(client).to have_received(:chat) do |params|
+        parameters = params[:parameters]
+        expect(parameters[:model]).to eq('gpt-4o-mini')
+        expect(parameters[:response_format]).to eq({ type: 'json_object' })
+        expect(parameters[:tools]).to include(
+          hash_including(
+            type: 'function',
+            function: hash_including(name: 'search_documentation')
+          )
+        )
+      end
+    end
+  end
+end
diff --git a/spec/factories/captain/assistant.rb b/spec/factories/captain/assistant.rb
index d567abf09..b1a0005ed 100644
--- a/spec/factories/captain/assistant.rb
+++ b/spec/factories/captain/assistant.rb
@@ -3,5 +3,6 @@ FactoryBot.define do
     sequence(:name) { |n| "Assistant #{n}" }
     description { 'Test description' }
     association :account
+    config { { 'product_name' => 'Test Product', 'feature_memory' => true, 'feature_faq' => true } }
   end
 end