diff --git a/internal/cli/cli.go b/internal/cli/cli.go
index c91f02d6c..491522dce 100644
--- a/internal/cli/cli.go
+++ b/internal/cli/cli.go
@@ -1028,10 +1028,18 @@ func pluginTestCommand(l *log.Logger, args []string, toolVersion, ref string) {
 		failTest(l, "list-all did not return any version")
 	}
 
-	// grab first version returned by list-all callback if no version provided as
-	// a CLI argument
+	// Resolve version: if empty use first from list-all; if "latest" or
+	// "latest:<query>" resolve via the plugin's latest-stable callback.
 	if toolVersion == "" {
 		toolVersion = allVersions[0]
+	} else if toolVersion == "latest" || strings.HasPrefix(toolVersion, "latest:") {
+		query := strings.TrimPrefix(toolVersion, "latest")
+		query = strings.TrimPrefix(query, ":")
+		resolved, err := versions.Latest(plugin, query)
+		if err != nil || resolved == "" {
+			failTest(l, "could not get latest version")
+		}
+		toolVersion = resolved
 	}
 
 	err = versions.InstallOneVersion(conf, plugin, toolVersion, false, os.Stdout, os.Stderr)
diff --git a/test/fixtures/dummy_plugin/bin/install b/test/fixtures/dummy_plugin/bin/install
index 1d511dafe..850e2edd3 100755
--- a/test/fixtures/dummy_plugin/bin/install
+++ b/test/fixtures/dummy_plugin/bin/install
@@ -2,7 +2,7 @@
 
 # We want certain versions to fail installation for various reasons in the tests
 check_dummy_versions() {
-  local bad_versions=" other-dummy "
+  local bad_versions=" other-dummy latest "
   if [[ "$bad_versions" == *" $ASDF_INSTALL_VERSION "* ]]; then
     echo "Dummy couldn't install version: $ASDF_INSTALL_VERSION (on purpose)"
     exit 1
diff --git a/test/plugin_test_command.bats b/test/plugin_test_command.bats
index 389f8bb2d..2e66ac74f 100644
--- a/test/plugin_test_command.bats
+++ b/test/plugin_test_command.bats
@@ -32,3 +32,8 @@ teardown() {
   run asdf plugin test dummy "${BASE_DIR}/repo-dummy" --asdf-tool-version 1.0.0 --asdf-plugin-gitref master
   [ "$status" -eq 0 ]
 }
+
+@test "plugin_test_command resolves latest version when --asdf-tool-version latest is provided" {
+  run asdf plugin test dummy "${BASE_DIR}/repo-dummy" --asdf-tool-version latest
+  [ "$status" -eq 0 ]
+}