diff --git a/.coveragerc b/.coveragerc
new file mode 100644
index 000000000..a051fd819
--- /dev/null
+++ b/.coveragerc
@@ -0,0 +1,28 @@
+[coverage:run]
+source = yt_dlp, devscripts
+omit = 
+    */extractor/lazy_extractors.py
+    */__pycache__/*
+    */test/*
+    */yt_dlp/compat/_deprecated.py
+    */yt_dlp/compat/_legacy.py
+data_file = .coverage
+
+[coverage:report]
+exclude_lines =
+    pragma: no cover
+    def __repr__
+    raise NotImplementedError
+    if __name__ == .__main__.:
+    pass
+    raise ImportError
+    except ImportError:
+    warnings\.warn
+    if TYPE_CHECKING:
+
+[coverage:html]
+directory = .coverage-reports/html
+title = yt-dlp Coverage Report
+
+[coverage:xml]
+output = .coverage-reports/coverage.xml
diff --git a/.github/workflows/coverage.yml b/.github/workflows/coverage.yml
new file mode 100644
index 000000000..cdb45e09e
--- /dev/null
+++ b/.github/workflows/coverage.yml
@@ -0,0 +1,65 @@
+name: Code Coverage
+
+on:
+  push:
+    branches: [ master ]
+  pull_request:
+    branches: [ master ]
+  workflow_dispatch:
+
+jobs:
+  coverage:
+    runs-on: ubuntu-latest
+    steps:
+      - uses: actions/checkout@v4
+
+      - name: Set up Python
+        uses: actions/setup-python@v5
+        with:
+          python-version: '3.11'
+          cache: pip
+
+      - name: Install dependencies
+        run: |
+          python -m pip install --upgrade pip
+          pip install -e ".[dev]"
+          pip install pytest-cov
+
+      - name: Run coverage tests in parallel
+        run: |
+          # Create a simple script to run coverage tests in parallel
+          cat > run_parallel_coverage.py << 'EOF'
+          import concurrent.futures
+          import subprocess
+          import sys
+
+          def run_coverage(args):
+              test_path, module_path = args
+              cmd = ['python', '-m', 'devscripts.run_coverage', test_path, module_path]
+              return subprocess.run(cmd, check=True)
+
+          coverage_tests = [
+              ('test/test_utils.py', 'yt_dlp.utils'),
+              ('test/test_YoutubeDL.py', 'yt_dlp.YoutubeDL')
+          ]
+
+          with concurrent.futures.ThreadPoolExecutor(max_workers=3) as executor:
+              futures = [executor.submit(run_coverage, test) for test in coverage_tests]
+              for future in concurrent.futures.as_completed(futures):
+                  try:
+                      future.result()
+                  except subprocess.CalledProcessError as e:
+                      print(f"Error running coverage: {e}")
+                      sys.exit(1)
+          EOF
+
+          # Run the script
+          python run_parallel_coverage.py
+
+      - name: Archive coverage results
+        uses: actions/upload-artifact@v4
+        with:
+          name: coverage-report
+          path: |
+            .coverage-reports/html/
+            .coverage-reports/coverage.xml
\ No newline at end of file
diff --git a/.gitignore b/.gitignore
index 40bb34d2a..2d83ad513 100644
--- a/.gitignore
+++ b/.gitignore
@@ -129,3 +129,6 @@ yt-dlp.zip
 # Plugins
 ytdlp_plugins/
 yt-dlp-plugins
+
+# Coverage
+/.coverage-reports/
diff --git a/devscripts/cov-combine b/devscripts/cov-combine
new file mode 100755
index 000000000..eb8fe11cb
--- /dev/null
+++ b/devscripts/cov-combine
@@ -0,0 +1,5 @@
+#!/bin/sh
+# This script is a helper for the Hatch test coverage command
+# It's called by `hatch test --cover`
+
+coverage combine "$@"
\ No newline at end of file
diff --git a/devscripts/run_coverage.py b/devscripts/run_coverage.py
new file mode 100755
index 000000000..86abd59eb
--- /dev/null
+++ b/devscripts/run_coverage.py
@@ -0,0 +1,103 @@
+#!/usr/bin/env python3
+
+# Script to run coverage tests for yt-dlp
+#
+# Usage:
+#   python -m devscripts.run_coverage [test_path] [module_path] [additional pytest args]
+#
+# Examples:
+#   python -m devscripts.run_coverage                         # Test everything
+#   python -m devscripts.run_coverage test/devscripts         # Test devscripts
+#   python -m devscripts.run_coverage test/test_utils.py yt_dlp.utils  # Test specific module
+#   python -m devscripts.run_coverage test/test_utils.py "yt_dlp.utils,yt_dlp.YoutubeDL"  # Test multiple modules
+#   python -m devscripts.run_coverage test -v                 # With verbosity
+#
+# Using hatch:
+#   hatch run hatch-test:run-cov [args]                       # Same arguments as above
+#   hatch test --cover                                        # Run all tests with coverage
+#
+# Important:
+#   - Always run this script from the project root directory
+#   - Test paths are relative to the project root
+#   - Module paths use Python import syntax (with dots)
+#   - Coverage reports are generated in .coverage-reports/
+
+import sys
+import subprocess
+from pathlib import Path
+
+script_dir = Path(__file__).parent
+repo_root = script_dir.parent
+
+
+def main():
+    args = sys.argv[1:]
+
+    if not args:
+        # Default to running all tests
+        test_path = 'test'
+        module_path = 'yt_dlp'
+    elif len(args) == 1:
+        test_path = args[0]
+        # Try to guess the module path from the test path
+        if test_path.startswith('test/'):
+            module_path = 'yt_dlp'
+        else:
+            module_path = 'yt_dlp'
+    else:
+        test_path = args[0]
+        module_path = args[1]
+
+    # Initialize coverage reports directory
+    cov_dir = repo_root / '.coverage-reports'
+    cov_dir.mkdir(exist_ok=True)
+    html_dir = cov_dir / 'html'
+    html_dir.mkdir(exist_ok=True)
+
+    # Run pytest with coverage
+    cmd = [
+        'python', '-m', 'pytest',
+        f'--cov={module_path}',
+        '--cov-config=.coveragerc',
+        '--cov-report=term-missing',
+        test_path,
+    ]
+
+    if len(args) > 2:
+        cmd.extend(args[2:])
+
+    print(f'Running coverage on {test_path} for module(s) {module_path}')
+    print(f'Command: {" ".join(cmd)}')
+
+    try:
+        result = subprocess.run(cmd, check=True)
+
+        # Generate reports after the test run in parallel
+        import concurrent.futures
+
+        def generate_html_report():
+            return subprocess.run([
+                'python', '-m', 'coverage', 'html',
+            ], check=True)
+
+        def generate_xml_report():
+            return subprocess.run([
+                'python', '-m', 'coverage', 'xml',
+            ], check=True)
+
+        with concurrent.futures.ThreadPoolExecutor(max_workers=2) as executor:
+            html_future = executor.submit(generate_html_report)
+            xml_future = executor.submit(generate_xml_report)
+            # Wait for both tasks to complete
+            concurrent.futures.wait([html_future, xml_future])
+
+        print(f'\nCoverage reports saved to {cov_dir.as_posix()}')
+        print(f'HTML report: {cov_dir.as_posix()}/html/index.html')
+        return result.returncode
+    except subprocess.CalledProcessError as e:
+        print(f'Error running coverage: {e}')
+        return e.returncode
+
+
+if __name__ == '__main__':
+    sys.exit(main())
diff --git a/pyproject.toml b/pyproject.toml
index 3775251e1..7fdb265a5 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -80,6 +80,7 @@ static-analysis = [
 test = [
     "pytest~=8.1",
     "pytest-rerunfailures~=14.0",
+    "pytest-cov~=6.0",
 ]
 pyinstaller = [
     "pyinstaller>=6.13.0",  # Windows temp cleanup fixed in 6.13.0
@@ -160,11 +161,12 @@ features = ["test"]
 dependencies = [
     "pytest-randomly~=3.15",
     "pytest-xdist[psutil]~=3.5",
+    "pytest-cov~=6.0",
 ]
 
 [tool.hatch.envs.hatch-test.scripts]
 run = "python -m devscripts.run_tests {args}"
-run-cov = "echo Code coverage not implemented && exit 1"
+run-cov = "python -m devscripts.run_coverage {args}"
 
 [[tool.hatch.envs.hatch-test.matrix]]
 python = [
diff --git a/test/README.md b/test/README.md
new file mode 100644
index 000000000..26942a515
--- /dev/null
+++ b/test/README.md
@@ -0,0 +1,39 @@
+# yt-dlp Tests
+
+This directory contains tests for the yt-dlp codebase.
+
+## Running Tests
+
+### Using hatch (requires `pip install hatch`)
+
+```bash
+# Run tests for a specific test file
+hatch run hatch-test:run test/test_utils.py
+
+# Run a specific test class or method
+hatch run hatch-test:run test/test_utils.py::TestUtil
+hatch run hatch-test:run test/test_utils.py::TestUtil::test_url_basename
+
+# Run with verbosity
+hatch run hatch-test:run -- test/test_utils.py -v
+```
+
+### Using pytest directly
+
+```bash
+# Run a specific test file
+python -m pytest test/test_utils.py
+
+# Run a specific test class or method
+python -m pytest test/test_utils.py::TestUtil
+python -m pytest test/test_utils.py::TestUtil::test_url_basename
+
+# Run with verbosity
+python -m pytest -v test/test_utils.py
+```
+
+**Important:** Always run tests from the project root directory, not from a subdirectory.
+
+## Code Coverage
+
+For information on running tests with code coverage, see the documentation in `.coverage-reports/README.md`.
\ No newline at end of file