diff --git a/tests/functional/flakes/develop.sh b/tests/functional/flakes/develop.sh
deleted file mode 100644
index 81b3e6b78..000000000
--- a/tests/functional/flakes/develop.sh
+++ /dev/null
@@ -1,71 +0,0 @@
-source ../common.sh
-
-clearStore
-rm -rf $TEST_HOME/.cache $TEST_HOME/.config $TEST_HOME/.local
-
-# Create flake under test.
-cp ../shell-hello.nix ../config.nix $TEST_HOME/
-cat <<EOF >$TEST_HOME/flake.nix
-{
-    inputs.nixpkgs.url = "$TEST_HOME/nixpkgs";
-    outputs = {self, nixpkgs}: {
-      packages.$system.hello = (import ./config.nix).mkDerivation {
-        name = "hello";
-        outputs = [ "out" "dev" ];
-        meta.outputsToInstall = [ "out" ];
-        buildCommand = "";
-      };
-    };
-}
-EOF
-
-# Create fake nixpkgs flake.
-mkdir -p $TEST_HOME/nixpkgs
-cp ../config.nix ../nix-shell/shell.nix $TEST_HOME/nixpkgs
-cat <<EOF >$TEST_HOME/nixpkgs/flake.nix
-{
-    outputs = {self}: {
-      legacyPackages.$system.bashInteractive = (import ./shell.nix {}).bashInteractive;
-    };
-}
-EOF
-
-cd $TEST_HOME
-
-# Test whether `nix develop` passes through environment variables.
-[[ "$(
-    ENVVAR=a nix develop --no-write-lock-file .#hello <<EOF
-echo "\$ENVVAR"
-EOF
-)" = "a" ]]
-
-# Test whether `nix develop --ignore-environment` does _not_ pass through environment variables.
-[[ -z "$(
-    ENVVAR=a nix develop --ignore-environment --no-write-lock-file .#hello <<EOF
-echo "\$ENVVAR"
-EOF
-)" ]]
-
-# Determine the bashInteractive executable.
-nix build --no-write-lock-file './nixpkgs#bashInteractive' --out-link ./bash-interactive
-BASH_INTERACTIVE_EXECUTABLE="$PWD/bash-interactive/bin/bash"
-
-# Test whether `nix develop` sets `SHELL` to nixpkgs#bashInteractive shell.
-[[ "$(
-    SHELL=custom nix develop --no-write-lock-file .#hello <<EOF
-echo "\$SHELL"
-EOF
-)" -ef "$BASH_INTERACTIVE_EXECUTABLE" ]]
-
-# Test whether `nix develop` with ignore environment sets `SHELL` to nixpkgs#bashInteractive shell.
-[[ "$(
-    SHELL=custom nix develop --ignore-environment --no-write-lock-file .#hello <<EOF
-echo "\$SHELL"
-EOF
-)" -ef "$BASH_INTERACTIVE_EXECUTABLE" ]]
-
-# Test whether `nix develop` sets `IN_NIX_SHELL`
-[[ "$(nix develop --no-write-lock-file .#hello -c sh -c 'echo $IN_NIX_SHELL')" = "impure" ]]
-[[ "$(nix develop --no-write-lock-file --ignore-environment .#hello -c /bin/sh -c 'echo $IN_NIX_SHELL')" = "impure" ]]
-
-clearStore
diff --git a/tests/functional/meson.build b/tests/functional/meson.build
index 23b1d55be..8cf8ff32c 100644
--- a/tests/functional/meson.build
+++ b/tests/functional/meson.build
@@ -33,7 +33,6 @@ functional_tests_scripts = [
   'init.sh',
   'test-infra.sh',
   'flakes/flakes.sh',
-  'flakes/develop.sh',
   'flakes/develop-r8854.sh',
   'flakes/mercurial.sh',
   'flakes/follow-paths.sh',
diff --git a/tests/functional2/flakes/test_develop.py b/tests/functional2/flakes/test_develop.py
new file mode 100644
index 000000000..ebe0680ba
--- /dev/null
+++ b/tests/functional2/flakes/test_develop.py
@@ -0,0 +1,109 @@
+from testlib.fixtures.nix import Nix
+from testlib.fixtures.file_helper import with_files, File, EnvTemplate, CopyFile
+from testlib.environ import environ
+from testlib.utils import get_global_asset
+from pathlib import Path
+import pytest
+
+system = environ.get("system")
+
+files = {
+    "flake.nix": EnvTemplate(f"""{{
+        inputs.nixpkgs.url = "@HOME@/nixpkgs";
+        outputs = {{self, nixpkgs}}: {{
+          packages.{system}.hello = (import ./config.nix).mkDerivation {{
+            name = "hello";
+            outputs = [ "out" "dev" ];
+            meta.outputsToInstall = [ "out" ];
+            buildCommand = "";
+          }};
+        }};
+    }}"""),
+    "config.nix": get_global_asset("config.nix"),
+    "shell-hello.nix": CopyFile("assets/shell-hello.nix"),
+    "nixpkgs": {
+        "flake.nix": File(f"""{{
+            outputs = {{self}}: {{
+              legacyPackages.{system}.bashInteractive = (import ./shell.nix {{}}).bashInteractive;
+            }};
+        }}"""),
+        "config.nix": get_global_asset("config.nix"),
+        "shell.nix": get_global_asset("shell.nix"),
+    },
+}
+
+
+@pytest.fixture(autouse=True)
+def common_init(nix: Nix):
+    nix.settings.add_xp_feature("nix-command", "flakes")
+
+
+@with_files(files)
+class TestDevelop:
+    def test_env_passthrough(self, nix: Nix):
+        nix.env["ENVVAR"] = "a"
+
+        result = (
+            nix.nix(["develop", "--no-write-lock-file", ".#hello"])
+            .with_stdin(b'echo "$ENVVAR"')
+            .run()
+            .ok()
+        )
+        assert result.stdout_s == "a\n"
+
+    def test_no_env_passthrough_on_ignore_environment(self, nix: Nix):
+        nix.env["ENVVAR"] = "a"
+
+        result = (
+            nix.nix(["develop", "--ignore-environment", "--no-write-lock-file", ".#hello"])
+            .with_stdin(b'echo "$ENVVAR"')
+            .run()
+            .ok()
+        )
+        assert result.stdout_s == "\n"
+
+    class TestShell:
+        @pytest.fixture(autouse=True)
+        def shell_init(self, nix: Nix, files: Path):  # noqa: ARG002
+            nix.nix(
+                [
+                    "build",
+                    "--no-write-lock-file",
+                    "./nixpkgs#bashInteractive",
+                    "--out-link",
+                    "./bash-interactive",
+                ]
+            ).run().ok()
+            self.bash_interactive = nix.env.dirs.home / "bash-interactive/bin/bash"
+
+            nix.env["SHELL"] = "custom"
+
+        @pytest.mark.parametrize("extra_args", [[], ["--ignore-environment"]])
+        def test_shell_is_bash_interactive(self, nix: Nix, extra_args: list[str]):
+            result = (
+                nix.nix(["develop", *extra_args, "--no-write-lock-file", ".#hello"])
+                .with_stdin(b'echo "$SHELL"')
+                .run()
+                .ok()
+            )
+            assert Path(result.stdout_s.strip()).samefile(self.bash_interactive)
+
+    @pytest.mark.parametrize("extra_args", [[], ["--ignore-environment"]])
+    def test_sets_in_nix_shell(self, nix: Nix, extra_args: list[str]):
+        result = (
+            nix.nix(
+                [
+                    "develop",
+                    "--no-write-lock-file",
+                    *extra_args,
+                    ".#hello",
+                    "-c",
+                    "sh",
+                    "-c",
+                    "echo $IN_NIX_SHELL",
+                ]
+            )
+            .run()
+            .ok()
+        )
+        assert result.stdout_s == "impure\n"
diff --git a/tests/functional2/testlib/global_assets/shell.nix b/tests/functional2/testlib/global_assets/shell.nix
new file mode 100644
index 000000000..dc756d0f5
--- /dev/null
+++ b/tests/functional2/testlib/global_assets/shell.nix
@@ -0,0 +1,94 @@
+{ inNixShell ? false, contentAddressed ? false, fooContents ? "foo" }:
+
+let cfg = import ./config.nix; in
+with cfg;
+
+let
+  mkDerivation =
+    if contentAddressed then
+      args: cfg.mkDerivation ({
+        __contentAddressed = true;
+        outputHashMode = "recursive";
+        outputHashAlgo = "sha256";
+      } // args)
+    else cfg.mkDerivation;
+in
+
+let pkgs = rec {
+  setupSh = builtins.toFile "setup" ''
+    export VAR_FROM_STDENV_SETUP=foo
+    for pkg in $buildInputs; do
+      export PATH=$PATH:$pkg/bin
+    done
+
+    # mimic behavior of stdenv for `$out` etc. for structured attrs.
+    if [ -n "''${NIX_ATTRS_SH_FILE}" ]; then
+      for o in "''${!outputs[@]}"; do
+        eval "''${o}=''${outputs[$o]}"
+        export "''${o}"
+      done
+    fi
+
+    declare -a arr1=(1 2 "3 4" 5)
+    declare -a arr2=(x $'\n' $'x\ny')
+    fun() {
+      echo blabla
+    }
+  '';
+
+  stdenv = mkDerivation {
+    name = "stdenv";
+    buildCommand = ''
+      mkdir -p $out
+      ln -s ${setupSh} $out/setup
+    '';
+  };
+
+  shellDrv = mkDerivation {
+    name = "shellDrv";
+    builder = "/does/not/exist";
+    VAR_FROM_NIX = "bar";
+    ASCII_PERCENT = "%";
+    ASCII_AT = "@";
+    ASCII_ESC = "";
+    TEST_inNixShell = if inNixShell then "true" else "false";
+    inherit stdenv;
+    outputs = ["dev" "out"];
+  };
+
+  # Used by nix-shell -p
+  runCommand = name: args: buildCommand: mkDerivation (args // {
+    inherit name buildCommand stdenv;
+  });
+
+  foo = runCommand "foo" {} ''
+    mkdir -p $out/bin
+    echo '#!${shell}' >> $out/bin/foo
+    echo 'echo ${fooContents}' >> $out/bin/foo
+    chmod a+rx $out/bin/foo
+    ln -s ${shell} $out/bin/bash
+  '';
+
+  bar = runCommand "bar" {} ''
+    mkdir -p $out/bin
+    echo '#!${shell}' > $out/bin/bar
+    echo 'echo bar' >> $out/bin/bar
+    chmod a+rx $out/bin/bar
+  '';
+
+  bash = shell;
+  bashInteractive = runCommand "bash" {} ''
+    mkdir -p $out/bin
+    ln -s ${shell} $out/bin/bash
+  '';
+
+  # ruby "interpreter" that outputs "$@"
+  ruby = runCommand "ruby" {} ''
+    mkdir -p $out/bin
+    echo '#!${shell}' > $out/bin/ruby
+    echo 'printf %s "$*"' >> $out/bin/ruby
+    chmod a+rx $out/bin/ruby
+  '';
+
+  inherit pkgs;
+}; in pkgs