diff --git a/src/sagemaker_containers/_files.py b/src/sagemaker_containers/_files.py
index 302aa27..abfd31b 100644
--- a/src/sagemaker_containers/_files.py
+++ b/src/sagemaker_containers/_files.py
@@ -132,6 +132,9 @@ def download_and_extract(uri, path):  # type: (str, str) -> None
                 if os.path.exists(path):
                     shutil.rmtree(path)
                 shutil.move(uri, path)
+            elif tarfile.is_tarfile(uri):
+                with tarfile.open(name=uri, mode='r:gz') as t:
+                    t.extractall(path=path)
             else:
                 shutil.copy2(uri, path)
 
diff --git a/test/__init__.py b/test/__init__.py
index 80ff03c..ca696d5 100644
--- a/test/__init__.py
+++ b/test/__init__.py
@@ -150,22 +150,28 @@ def add_file(self, file):  # type: (File) -> UserModule
     def url(self):  # type: () -> str
         return os.path.join('s3://', self.bucket, self.key)
 
-    def upload(self):  # type: () -> UserModule
-        with _files.tmpdir() as tmpdir:
-            tar_name = os.path.join(tmpdir, 'sourcedir.tar.gz')
-            with tarfile.open(tar_name, mode='w:gz') as tar:
-                for _file in self._files:
-                    name = os.path.join(tmpdir, _file.name)
-                    with open(name, 'w+') as f:
+    def create_tar(self, dir_path=None):
+        dir_path = dir_path or os.path.dirname(os.path.realpath(__file__))
+        tar_name = os.path.join(dir_path, 'sourcedir.tar.gz')
+        with tarfile.open(tar_name, mode='w:gz') as tar:
+            for _file in self._files:
+                name = os.path.join(dir_path, _file.name)
+                with open(name, 'w+') as f:
+
+                    if isinstance(_file.data, six.string_types):
+                        data = _file.data
+                    else:
+                        data = '\n'.join(_file.data)
 
-                        if isinstance(_file.data, six.string_types):
-                            data = _file.data
-                        else:
-                            data = '\n'.join(_file.data)
+                    f.write(data)
+                tar.add(name=name, arcname=_file.name)
+                os.remove(name)
 
-                        f.write(data)
-                    tar.add(name=name, arcname=_file.name)
+        return tar_name
 
+    def upload(self):  # type: () -> UserModule
+        with _files.tmpdir() as tmpdir:
+            tar_name = self.create_tar(dir_path=tmpdir)
             self._s3.Object(self.bucket, self.key).upload_file(tar_name)
         return self
 
diff --git a/test/functional/test_download_and_import.py b/test/functional/test_download_and_import.py
index a882347..3affcf8 100644
--- a/test/functional/test_download_and_import.py
+++ b/test/functional/test_download_and_import.py
@@ -13,6 +13,7 @@
 from __future__ import absolute_import
 
 import importlib
+import os
 import shlex
 import subprocess
 import textwrap
@@ -157,3 +158,17 @@ def test_import_module_with_s3_script_with_error(user_module_name):
 
     with pytest.raises(errors.ImportModuleError):
         modules.import_module(user_module.url, user_module_name, cache=False)
+
+
+@pytest.mark.parametrize('user_module',
+                         [test.UserModule(USER_SCRIPT_WITH_REQUIREMENTS).add_file(SETUP_FILE),
+                          test.UserModule(USER_SCRIPT_WITH_REQUIREMENTS)])
+def test_import_module_with_local_tar_via_download_and_extract(user_module, user_module_name):
+    user_module = user_module.add_file(REQUIREMENTS_FILE)
+    tar_name = user_module.create_tar()
+
+    module = modules.import_module(tar_name, name=user_module_name, cache=False)
+
+    assert module.say() == REQUIREMENTS_TXT_ASSERT_STR
+
+    os.remove(tar_name)
diff --git a/test/unit/test_files.py b/test/unit/test_files.py
index 92d1b90..713e26d 100644
--- a/test/unit/test_files.py
+++ b/test/unit/test_files.py
@@ -13,6 +13,7 @@
 import itertools
 import logging
 import os
+import tarfile
 
 from mock import mock_open, patch
 import pytest
@@ -113,7 +114,7 @@ def test_write_failure_file():
 @patch('os.path.isdir', lambda x: True)
 @patch('shutil.rmtree')
 @patch('shutil.move')
-def test_download_and_and_extract_source_dir(move, rmtree, s3_download):
+def test_download_and_extract_source_dir(move, rmtree, s3_download):
     uri = _env.channel_path('code')
     _files.download_and_extract(uri, _env.code_dir)
     s3_download.assert_not_called()
@@ -125,9 +126,24 @@ def test_download_and_and_extract_source_dir(move, rmtree, s3_download):
 @patch('sagemaker_containers._files.s3_download')
 @patch('os.path.isdir', lambda x: False)
 @patch('shutil.copy2')
-def test_download_and_and_extract_file(copy, s3_download):
-    uri = _env.channel_path('code')
+def test_download_and_extract_file(copy, s3_download):
+    uri = __file__
     _files.download_and_extract(uri, _env.code_dir)
 
     s3_download.assert_not_called()
     copy.assert_called_with(uri, _env.code_dir)
+
+
+@patch('sagemaker_containers._files.s3_download')
+@patch('os.path.isdir', lambda x: False)
+@patch('tarfile.TarFile.extractall')
+def test_download_and_extract_tar(extractall, s3_download):
+    t = tarfile.open(name='test.tar.gz', mode='w:gz')
+    t.close()
+    uri = t.name
+    _files.download_and_extract(uri, _env.code_dir)
+
+    s3_download.assert_not_called()
+    extractall.assert_called_with(path=_env.code_dir)
+
+    os.remove(uri)
diff --git a/test/unit/test_intermediate_output.py b/test/unit/test_intermediate_output.py
index cf451ca..e0baefc 100644
--- a/test/unit/test_intermediate_output.py
+++ b/test/unit/test_intermediate_output.py
@@ -37,6 +37,7 @@ def test_wrong_output():
 
 
 @patch('inotify_simple.INotify', MagicMock())
+@patch('boto3.client', MagicMock())
 def test_daemon_process():
     intemediate_sync = _intermediate_output.start_sync(S3_BUCKET, REGION)
     assert intemediate_sync.daemon is True