diff --git a/system_tests/app_engine/test_app_engine.py b/system_tests/app_engine/test_app_engine.py
deleted file mode 100644
index a6ccb71..0000000
--- a/system_tests/app_engine/test_app_engine.py
+++ /dev/null
@@ -1,58 +0,0 @@
-# Copyright 2016 Google Inc.
-#
-# Licensed under the Apache License, Version 2.0 (the "License");
-# you may not use this file except in compliance with the License.
-# You may obtain a copy of the License at
-#
-#      http://www.apache.org/licenses/LICENSE-2.0
-#
-# Unless required by applicable law or agreed to in writing, software
-# distributed under the License is distributed on an "AS IS" BASIS,
-# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
-# See the License for the specific language governing permissions and
-# limitations under the License.
-
-import os
-import subprocess
-
-from google.auth import _cloud_sdk
-import pytest
-
-SKIP_TEST_ENV = 'SKIP_APP_ENGINE_SYSTEM_TEST'
-HERE = os.path.dirname(__file__)
-TEST_APP_DIR = os.path.join(HERE, 'app')
-TEST_APP_SERVICE = 'google-auth-system-tests'
-
-
-def vendor_app_dependencies():
-    """Vendors in the test application's third-party dependencies."""
-    subprocess.check_call(
-        ['pip', 'install', '--target', 'lib', '-r', 'requirements.txt'])
-
-
-def deploy_app():
-    """Deploys the test application using gcloud."""
-    subprocess.check_call(
-        ['gcloud', 'app', 'deploy', '-q', 'app.yaml'])
-
-
-@pytest.fixture
-def app(monkeypatch):
-    monkeypatch.chdir(TEST_APP_DIR)
-
-    vendor_app_dependencies()
-    deploy_app()
-
-    application_id = _cloud_sdk.get_project_id()
-    application_url = 'https://{}-dot-{}.appspot.com'.format(
-        TEST_APP_SERVICE, application_id)
-
-    yield application_url
-
-
-@pytest.mark.skipif(
-    SKIP_TEST_ENV in os.environ,
-    reason='Explicitly skipping App Engine system tests.')
-def test_live_application(app, http_request):
-    response = http_request(method='GET', url=app)
-    assert response.status == 200, response.data.decode('utf-8')
diff --git a/system_tests/app_engine/app/.gitignore b/system_tests/app_engine_test_app/.gitignore
similarity index 100%
rename from system_tests/app_engine/app/.gitignore
rename to system_tests/app_engine_test_app/.gitignore
diff --git a/system_tests/app_engine/app/app.yaml b/system_tests/app_engine_test_app/app.yaml
similarity index 100%
rename from system_tests/app_engine/app/app.yaml
rename to system_tests/app_engine_test_app/app.yaml
diff --git a/system_tests/app_engine/app/appengine_config.py b/system_tests/app_engine_test_app/appengine_config.py
similarity index 100%
rename from system_tests/app_engine/app/appengine_config.py
rename to system_tests/app_engine_test_app/appengine_config.py
diff --git a/system_tests/app_engine/app/main.py b/system_tests/app_engine_test_app/main.py
similarity index 100%
rename from system_tests/app_engine/app/main.py
rename to system_tests/app_engine_test_app/main.py
diff --git a/system_tests/app_engine/app/requirements.txt b/system_tests/app_engine_test_app/requirements.txt
similarity index 100%
rename from system_tests/app_engine/app/requirements.txt
rename to system_tests/app_engine_test_app/requirements.txt
diff --git a/system_tests/nox.py b/system_tests/nox.py
index 67f9900..6429f7b 100644
--- a/system_tests/nox.py
+++ b/system_tests/nox.py
@@ -23,12 +23,13 @@
 """
 
 import os
+import subprocess
 
 from nox.command import which
 import py.path
 
 
-HERE = os.path.dirname(__file__)
+HERE = os.path.abspath(os.path.dirname(__file__))
 DATA_DIR = os.path.join(HERE, 'data')
 SERVICE_ACCOUNT_FILE = os.path.join(DATA_DIR, 'service_account.json')
 AUTHORIZED_USER_FILE = os.path.join(DATA_DIR, 'authorized_user.json')
@@ -36,6 +37,10 @@
 EXPLICIT_PROJECT_ENV = 'GOOGLE_CLOUD_PROJECT'
 EXPECT_PROJECT_ENV = 'EXPECT_PROJECT_ID'
 
+SKIP_GAE_TEST_ENV = 'SKIP_APP_ENGINE_SYSTEM_TEST'
+GAE_APP_URL_TMPL = 'https://{}-dot-{}.appspot.com'
+GAE_TEST_APP_SERVICE = 'google-auth-system-tests'
+
 # The download location for the Cloud SDK
 CLOUD_SDK_DIST_FILENAME = 'google-cloud-sdk.tar.gz'
 CLOUD_SDK_DOWNLOAD_URL = (
@@ -81,7 +86,8 @@
     # This tells gcloud which Python interpreter to use (always use 2.7)
     session.env[CLOUD_SDK_PYTHON_ENV] = CLOUD_SDK_PYTHON
 
-    # If the glcoud already exists, we don't need to do anything else.
+    # If gcloud cli executable already exists, we don't need to do anything
+    # else.
     # Note that because of this we do not attempt to update the sdk -
     # if the CLOUD_SDK_ROOT is cached, it will need to be periodically cleared.
     if py.path.local(GCLOUD).exists():
@@ -208,4 +214,37 @@
 
 def session_app_engine(session):
     session.virtualenv = False
-    session.run('pytest', 'app_engine/test_app_engine.py')
+
+    if SKIP_GAE_TEST_ENV in os.environ:
+        session.log('Skipping App Engine tests.')
+        return
+
+    # Unlike the default tests above, the App Engine system test require a
+    # 'real' gcloud sdk installation that is configured to deploy to an
+    # app engine project.
+    # Grab the project ID from the cloud sdk.
+    project_id = subprocess.check_output([
+        'gcloud', 'config', 'list', 'project', '--format',
+        'value(core.project)']).strip()
+
+    if not project_id:
+        session.error(
+            'The Cloud SDK must be installed and configured to deploy to App '
+            'Engine.')
+
+    application_url = GAE_APP_URL_TMPL.format(
+        GAE_TEST_APP_SERVICE, project_id)
+
+    # Vendor in the test application's dependencies
+    session.chdir(os.path.join(HERE, 'app_engine_test_app'))
+    session.run(
+        'pip', 'install', '--target', 'lib', '-r', 'requirements.txt',
+        silent=True)
+
+    # Deploy the application.
+    session.run('gcloud', 'app', 'deploy', '-q', 'app.yaml')
+
+    # Run the tests
+    session.env['TEST_APP_URL'] = application_url
+    session.chdir(HERE)
+    session.run('pytest', 'test_app_engine.py')
diff --git a/system_tests/test_app_engine.py b/system_tests/test_app_engine.py
new file mode 100644
index 0000000..834f9c8
--- /dev/null
+++ b/system_tests/test_app_engine.py
@@ -0,0 +1,22 @@
+# Copyright 2016 Google Inc.
+#
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+#
+#      http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+
+import os
+
+TEST_APP_URL = os.environ['TEST_APP_URL']
+
+
+def test_live_application(http_request):
+    response = http_request(method='GET', url=TEST_APP_URL)
+    assert response.status == 200, response.data.decode('utf-8')