diff --git a/src/__tests__/integration/fixtures/bitgo/addKey.backup.json b/src/__tests__/integration/fixtures/bitgo/addKey.backup.json
new file mode 100644
index 00000000..5c512b69
--- /dev/null
+++ b/src/__tests__/integration/fixtures/bitgo/addKey.backup.json
@@ -0,0 +1,7 @@
+{
+  "id": "backup-key-id",
+  "pub": "xpub_backup",
+  "keyType": "independent",
+  "source": "backup",
+  "type": "independent"
+}
diff --git a/src/__tests__/integration/fixtures/bitgo/addKey.bitgo.json b/src/__tests__/integration/fixtures/bitgo/addKey.bitgo.json
new file mode 100644
index 00000000..7409ec2e
--- /dev/null
+++ b/src/__tests__/integration/fixtures/bitgo/addKey.bitgo.json
@@ -0,0 +1,10 @@
+{
+  "id": "bitgo-key-id",
+  "pub": "xpub_bitgo",
+  "keyType": "independent",
+  "source": "bitgo",
+  "type": "independent",
+  "isBitGo": true,
+  "isTrust": false,
+  "hsmType": "institutional"
+}
diff --git a/src/__tests__/integration/fixtures/bitgo/addKey.user.json b/src/__tests__/integration/fixtures/bitgo/addKey.user.json
new file mode 100644
index 00000000..be3f19d5
--- /dev/null
+++ b/src/__tests__/integration/fixtures/bitgo/addKey.user.json
@@ -0,0 +1,7 @@
+{
+  "id": "user-key-id",
+  "pub": "xpub_user",
+  "keyType": "independent",
+  "source": "user",
+  "type": "independent"
+}
diff --git a/src/__tests__/integration/fixtures/bitgo/createWallet.json b/src/__tests__/integration/fixtures/bitgo/createWallet.json
new file mode 100644
index 00000000..93ae0afe
--- /dev/null
+++ b/src/__tests__/integration/fixtures/bitgo/createWallet.json
@@ -0,0 +1,42 @@
+{
+  "id": "test-wallet-id",
+  "coin": "tbtc",
+  "label": "test-wallet",
+  "m": 2,
+  "n": 3,
+  "keys": ["user-key-id", "backup-key-id", "bitgo-key-id"],
+  "keySignatures": {},
+  "type": "advanced",
+  "multisigType": "onchain",
+  "isCold": true,
+  "enterprise": "test-enterprise",
+  "organization": "test-org",
+  "bitgoOrg": "BitGo Inc",
+  "tags": ["test-wallet-id", "test-enterprise"],
+  "disableTransactionNotifications": false,
+  "freeze": {},
+  "deleted": false,
+  "approvalsRequired": 1,
+  "coinSpecific": {},
+  "admin": {},
+  "allowBackupKeySigning": false,
+  "clientFlags": [],
+  "recoverable": false,
+  "startDate": "2025-01-01T00:00:00.000Z",
+  "hasLargeNumberOfAddresses": false,
+  "config": {},
+  "balanceString": "0",
+  "confirmedBalanceString": "0",
+  "spendableBalanceString": "0",
+  "pendingApprovals": [],
+  "receiveAddress": {
+    "id": "addr-id",
+    "address": "0xexampleaddress",
+    "chain": 0,
+    "index": 0,
+    "coin": "tbtc",
+    "wallet": "test-wallet-id",
+    "coinSpecific": {}
+  },
+  "users": [{ "user": "user-id", "permissions": ["admin", "spend", "view"] }]
+}
diff --git a/src/__tests__/integration/generateWallet.integ.test.ts b/src/__tests__/integration/generateWallet.integ.test.ts
new file mode 100644
index 00000000..afd0ebcd
--- /dev/null
+++ b/src/__tests__/integration/generateWallet.integ.test.ts
@@ -0,0 +1,120 @@
+import 'should';
+import { startServices, IntegServices } from './helpers/setup';
+import { LOCALHOST } from './helpers/servers';
+import { SigningMode } from '../../shared/types';
+import type { GenerateWalletResponseBody } from '../../masterBitgoExpress/routers/generateWalletRoute';
+
+describe('Generate wallet: LOCAL signing', () => {
+  let services: IntegServices;
+
+  before(async () => {
+    services = await startServices();
+  });
+
+  after(async () => {
+    await services.teardown();
+  });
+
+  beforeEach(() => {
+    services.keyProvider.calls.length = 0;
+    services.bitgo.calls.length = 0;
+  });
+
+  it('generates a tbtc onchain wallet end-to-end', async () => {
+    const res = await fetch(
+      `http://${LOCALHOST}:${services.mbePort}/api/v1/tbtc/advancedwallet/generate`,
+      {
+        method: 'POST',
+        headers: { 'Content-Type': 'application/json', Authorization: 'Bearer test-token' },
+        body: JSON.stringify({
+          enterprise: 'test-enterprise',
+          label: 'test-wallet',
+          multisigType: 'onchain',
+        }),
+      },
+    );
+
+    res.status.should.equal(200);
+    const body = (await res.json()) as GenerateWalletResponseBody;
+    body.should.have.property('wallet');
+    body.wallet.should.have.property('id', 'test-wallet-id');
+
+    /** In local mode, AWM stores keys via POST /key — POST /key/generate must NOT be called */
+    const keyProviderStoreCalls = services.keyProvider.calls.filter((c) => c.path === '/key');
+    keyProviderStoreCalls.should.have.length(2);
+
+    const keyProviderGenerateCalls = services.keyProvider.calls.filter(
+      (c) => c.path === '/key/generate',
+    );
+    keyProviderGenerateCalls.should.have.length(0);
+
+    /** BitGo received 3 keychain adds */
+    const bitgoKeyCalls = services.bitgo.calls.filter(
+      (c) => c.method === 'POST' && c.path.endsWith('/key'),
+    );
+    bitgoKeyCalls.should.have.length(3);
+
+    /** and 1 wallet add */
+    const walletAddCalls = services.bitgo.calls.filter((c) => c.path.endsWith('/wallet/add'));
+    walletAddCalls.should.have.length(1);
+  });
+});
+
+describe('Generate wallet: EXTERNAL signing', () => {
+  let services: IntegServices;
+
+  before(async () => {
+    services = await startServices({ signingMode: SigningMode.EXTERNAL });
+  });
+
+  after(async () => {
+    await services.teardown();
+  });
+
+  beforeEach(() => {
+    services.keyProvider.calls.length = 0;
+    services.bitgo.calls.length = 0;
+  });
+
+  it('generates a tbtc onchain wallet — key provider generates keys (external signing mode)', async () => {
+    const res = await fetch(
+      `http://${LOCALHOST}:${services.mbePort}/api/v1/tbtc/advancedwallet/generate`,
+      {
+        method: 'POST',
+        headers: { 'Content-Type': 'application/json', Authorization: 'Bearer test-token' },
+        body: JSON.stringify({
+          enterprise: 'test-enterprise',
+          label: 'test-wallet',
+          multisigType: 'onchain',
+        }),
+      },
+    );
+
+    res.status.should.equal(200);
+    const body = (await res.json()) as GenerateWalletResponseBody;
+    body.should.have.property('wallet');
+    body.wallet.should.have.property('id', 'test-wallet-id');
+
+    /**
+     * In external mode, AWM delegates key generation to the key provider.
+     */
+    const keyProviderGenerateCalls = services.keyProvider.calls.filter(
+      (c) => c.path === '/key/generate',
+    );
+    keyProviderGenerateCalls.should.have.length(2);
+
+    /** POST /key should NOT be called — AWM never generates keys locally in external mode */
+    const keyProviderStoreCalls = services.keyProvider.calls.filter((c) => c.path === '/key');
+    keyProviderStoreCalls.should.have.length(0);
+
+    /** BitGo receives 3 keychain adds */
+    const bitgoKeyCalls = services.bitgo.calls.filter(
+      (c) => c.method === 'POST' && c.path.endsWith('/key'),
+    );
+    bitgoKeyCalls.should.have.length(3);
+
+    /** and 1 wallet add */
+    const walletAddCalls = services.bitgo.calls.filter((c) => c.path.endsWith('/wallet/add'));
+    walletAddCalls.should.have.length(1);
+  });
+});
diff --git a/src/__tests__/integration/health.integ.test.ts b/src/__tests__/integration/health.integ.test.ts
index 2ec54fbc..e58357a4 100644
--- a/src/__tests__/integration/health.integ.test.ts
+++ b/src/__tests__/integration/health.integ.test.ts
@@ -3,9 +3,9 @@ import * as http from 'http';
 import { app as awmApp } from '../../advancedWalletManagerApp';
 import { app as mbeApp } from '../../masterBitGoExpressApp';
 import { AppMode, TlsMode, SigningMode } from '../../shared/types';
-import { listen, close } from './helpers/servers';
+import { listen, close, LOCALHOST } from './helpers/servers';
 
-describe('integration — health checks', () => {
+describe('Integration Test — health checks', () => {
   let awmServer: http.Server;
   let mbeServer: http.Server;
   let awmPort: number;
@@ -18,10 +18,10 @@ describe('integration — health checks', () => {
         tlsMode: TlsMode.DISABLED,
         signingMode: SigningMode.LOCAL,
         port: 0,
-        bind: '127.0.0.1',
+        bind: LOCALHOST,
         timeout: 30000,
         httpLoggerFile: '',
-        keyProviderUrl: 'http://127.0.0.1:3082',
+        keyProviderUrl: `http://${LOCALHOST}:3082`,
       }),
     );
     awmPort = await listen(awmServer);
@@ -31,12 +31,12 @@ describe('integration — health checks', () => {
         appMode: AppMode.MASTER_EXPRESS,
         tlsMode: TlsMode.DISABLED,
         port: 0,
-        bind: '127.0.0.1',
+        bind: LOCALHOST,
         timeout: 30000,
         httpLoggerFile: '',
         env: 'test',
         disableEnvCheck: true,
-        advancedWalletManagerUrl: `http://127.0.0.1:${awmPort}`,
+        advancedWalletManagerUrl: `http://${LOCALHOST}:${awmPort}`,
         awmServerCertAllowSelfSigned: true,
       }),
     );
@@ -49,12 +49,14 @@ describe('integration — health checks', () => {
   });
 
   it('AWM /ping returns 200', async () => {
-    const res = await fetch(`http://127.0.0.1:${awmPort}/ping`, { method: 'POST' });
+    const res = await fetch(`http://${LOCALHOST}:${awmPort}/ping`, { method: 'POST' });
     res.status.should.equal(200);
   });
 
   it('MBE /advancedwallet/ping returns 200', async () => {
-    const res = await fetch(`http://127.0.0.1:${mbePort}/advancedwallet/ping`, { method: 'POST' });
+    const res = await fetch(`http://${LOCALHOST}:${mbePort}/advancedwallet/ping`, {
+      method: 'POST',
+    });
     res.status.should.equal(200);
   });
 });
diff --git a/src/__tests__/integration/helpers/mockBitgoServer.ts b/src/__tests__/integration/helpers/mockBitgoServer.ts
new file mode 100644
index 00000000..f2e02185
--- /dev/null
+++ b/src/__tests__/integration/helpers/mockBitgoServer.ts
@@ -0,0 +1,61 @@
+import * as http from 'http';
+import * as path from 'path';
+import express from 'express';
+import { listen, close } from './servers';
+
+export interface MockBitgoCall {
+  method: string;
+  path: string;
+  body: unknown;
+}
+
+export interface MockBitgoServer {
+  port: number;
+  calls: MockBitgoCall[];
+  close(): Promise<void>;
+}
+
+const FIXTURES_DIR = path.resolve(__dirname, '../fixtures/bitgo');
+
+function loadFixture(name: string): unknown {
+  return require(`${FIXTURES_DIR}/${name}.json`);
+}
+
+export async function startMockBitgoServer(): Promise<MockBitgoServer> {
+  const calls: MockBitgoCall[] = [];
+
+  const app = express();
+  app.use(express.json());
+
+  app.use((req, _res, next) => {
+    calls.push({ method: req.method, path: req.path, body: req.body });
+    next();
+  });
+
+  /** SDK calls this on every BitGo instance initialisation */
+  app.get('/api/v1/client/constants', (_req, res) => {
+    res.json({ ttl: 3600, constants: {} });
+  });
+
+  /** Add keychain — source distinguishes user / backup / bitgo */
+  app.post('/api/v2/:coin/key', (req, res) => {
+    const { coin } = req.params;
+    const source = req.body?.source;
+    const fixtureName =
+      source === 'user' ? 'addKey.user' : source === 'backup' ? 'addKey.backup' : 'addKey.bitgo';
+    const fixture = loadFixture(fixtureName) as Record<string, unknown>;
+    return res.json({ ...fixture, coin });
+  });
+
+  /** Create wallet */
+  app.post('/api/v2/:coin/wallet/add', (req, res) => {
+    const { coin } = req.params;
+    const fixture = loadFixture('createWallet') as Record<string, unknown>;
+    res.json({ ...fixture, coin });
+  });
+
+  const server = http.createServer(app);
+  const port = await listen(server);
+
+  return { port, calls, close: () => close(server) };
+}
diff --git a/src/__tests__/integration/helpers/mockKeyProviderServer.ts b/src/__tests__/integration/helpers/mockKeyProviderServer.ts
new file mode 100644
index 00000000..69dd3d7d
--- /dev/null
+++ b/src/__tests__/integration/helpers/mockKeyProviderServer.ts
@@ -0,0 +1,74 @@
+import * as http from 'http';
+import express from 'express';
+import { BitGoAPI } from '@bitgo-beta/sdk-api';
+import { Hteth } from '@bitgo-beta/sdk-coin-eth';
+import { Tbtc } from '@bitgo-beta/sdk-coin-btc';
+import { listen, close } from './servers';
+
+export interface MockKeyProviderCall {
+  method: string;
+  path: string;
+  body: unknown;
+}
+
+export interface MockKeyProviderServer {
+  port: number;
+  calls: MockKeyProviderCall[];
+  close(): Promise<void>;
+}
+
+interface StoredKey {
+  prv: string;
+  source: string;
+  type: string;
+}
+
+/**
+ * @returns BitGo Instance with coins registered
+ */
+function createBitgoInstance(): BitGoAPI {
+  const instance = new BitGoAPI({ env: 'test' });
+  instance.register('hteth', Hteth.createInstance);
+  instance.register('tbtc', Tbtc.createInstance);
+  return instance;
+}
+
+function generateKeypair(coin: string): { pub: string; prv: string } {
+  const keychain = createBitgoInstance().coin(coin).keychains().create();
+  if (!keychain.pub || !keychain.prv)
+    throw new Error(`Failed to generate keypair for coin: ${coin}`);
+  return { pub: keychain.pub, prv: keychain.prv };
+}
+
+export async function startMockKeyProviderServer(): Promise<MockKeyProviderServer> {
+  const calls: MockKeyProviderCall[] = [];
+  const keyStore = new Map<string, StoredKey>();
+
+  const app = express();
+  app.use(express.json());
+
+  app.use((req, _res, next) => {
+    calls.push({ method: req.method, path: req.path, body: req.body });
+    next();
+  });
+
+  /** External signing mode — key provider generates the key */
+  app.post('/key/generate', (req, res) => {
+    const { coin, source, type } = req.body;
+    const { pub, prv } = generateKeypair(coin);
+    keyStore.set(pub, { prv, source, type });
+    res.json({ pub, coin, source, type });
+  });
+
+  /** Local signing mode — AWM generates the key and sends it here for storage */
+  app.post('/key', (req, res) => {
+    const { pub, prv, coin, source, type } = req.body;
+    keyStore.set(pub, { prv, source, type });
+    res.json({ pub, coin, source, type });
+  });
+
+  const server = http.createServer(app);
+  const port = await listen(server);
+
+  return { port, calls, close: () => close(server) };
+}
diff --git a/src/__tests__/integration/helpers/servers.ts b/src/__tests__/integration/helpers/servers.ts
index b17a3f82..7b2bccca 100644
--- a/src/__tests__/integration/helpers/servers.ts
+++ b/src/__tests__/integration/helpers/servers.ts
@@ -1,10 +1,12 @@
 import * as http from 'http';
 import * as net from 'net';
 
+export const LOCALHOST = '127.0.0.1';
+
 export function listen(server: http.Server): Promise<number> {
   return new Promise((resolve, reject) => {
     server.once('error', reject);
-    server.listen(0, '127.0.0.1', () => {
+    server.listen(0, LOCALHOST, () => {
       resolve((server.address() as net.AddressInfo).port);
     });
   });
diff --git a/src/__tests__/integration/helpers/setup.ts b/src/__tests__/integration/helpers/setup.ts
new file mode 100644
index 00000000..7deea057
--- /dev/null
+++ b/src/__tests__/integration/helpers/setup.ts
@@ -0,0 +1,68 @@
+import * as http from 'http';
+import { app as awmApp } from '../../../advancedWalletManagerApp';
+import { app as mbeApp } from '../../../masterBitGoExpressApp';
+import { AppMode, TlsMode, SigningMode } from '../../../shared/types';
+import { listen, close, LOCALHOST } from './servers';
+import { startMockKeyProviderServer, MockKeyProviderServer } from './mockKeyProviderServer';
+import { startMockBitgoServer, MockBitgoServer } from './mockBitgoServer';
+
+export interface IntegServices {
+  mbePort: number;
+  keyProvider: MockKeyProviderServer;
+  bitgo: MockBitgoServer;
+  teardown(): Promise<void>;
+}
+
+export interface StartServicesOptions {
+  signingMode?: SigningMode;
+}
+
+export async function startServices(opts: StartServicesOptions = {}): Promise<IntegServices> {
+  const signingMode = opts.signingMode ?? SigningMode.LOCAL;
+
+  const keyProvider = await startMockKeyProviderServer();
+  const bitgo = await startMockBitgoServer();
+
+  const awmServer = http.createServer(
+    awmApp({
+      signingMode,
+      appMode: AppMode.ADVANCED_WALLET_MANAGER,
+      tlsMode: TlsMode.DISABLED,
+      port: 0,
+      bind: LOCALHOST,
+      timeout: 30000,
+      httpLoggerFile: '',
+      keyProviderUrl: `http://${LOCALHOST}:${keyProvider.port}`,
+    }),
+  );
+  const awmPort = await listen(awmServer);
+
+  const mbeServer = http.createServer(
+    mbeApp({
+      appMode: AppMode.MASTER_EXPRESS,
+      tlsMode: TlsMode.DISABLED,
+      port: 0,
+      bind: LOCALHOST,
+      timeout: 30000,
+      httpLoggerFile: '',
+      env: 'test',
+      disableEnvCheck: true,
+      advancedWalletManagerUrl: `http://${LOCALHOST}:${awmPort}`,
+      awmServerCertAllowSelfSigned: true,
+      customRootUri: `http://${LOCALHOST}:${bitgo.port}`,
+    }),
+  );
+  const mbePort = await listen(mbeServer);
+
+  return {
+    mbePort,
+    keyProvider,
+    bitgo,
+    async teardown() {
+      await close(mbeServer);
+      await close(awmServer);
+      await keyProvider.close();
+      await bitgo.close();
+    },
+  };
+}
diff --git a/src/masterBitgoExpress/routers/generateWalletRoute.ts b/src/masterBitgoExpress/routers/generateWalletRoute.ts
index d6a9af87..a1fb2c8a 100644
--- a/src/masterBitgoExpress/routers/generateWalletRoute.ts
+++ b/src/masterBitgoExpress/routers/generateWalletRoute.ts
@@ -265,14 +265,18 @@ const BitgoKeychainType = t.intersection([
   }),
 ]);
 
+const GenerateWalletResponseCodec = t.type({
+  wallet: WalletType,
+  userKeychain: UserKeychainType,
+  backupKeychain: UserKeychainType,
+  bitgoKeychain: BitgoKeychainType,
+  responseType: t.string,
+});
+
+export type GenerateWalletResponseBody = t.TypeOf<typeof GenerateWalletResponseCodec>;
+
 const GenerateWalletResponse: HttpResponse = {
-  200: t.type({
-    wallet: WalletType,
-    userKeychain: UserKeychainType,
-    backupKeychain: UserKeychainType,
-    bitgoKeychain: BitgoKeychainType,
-    responseType: t.string,
-  }),
+  200: GenerateWalletResponseCodec,
   ...ErrorResponses,
 };