new file mode 100644
--- /dev/null
+++ b/services/sync/tests/unit/systemaddon-search.xml
@@ -0,0 +1,27 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<searchresults total_results="1">
+  <addon id="5618">
+  <name>System Add-on Test</name>
+  <type id="1">Extension</type>
+  <guid>system1@tests.mozilla.org</guid>
+  <slug>addon11</slug>
+  <version>1.0</version>
+
+  <compatible_applications><application>
+      <name>Firefox</name>
+      <application_id>1</application_id>
+      <min_version>3.6</min_version>
+      <max_version>*</max_version>
+      <appID>xpcshell@tests.mozilla.org</appID>
+    </application></compatible_applications>
+  <all_compatible_os><os>ALL</os></all_compatible_os>
+
+  <install os="ALL" size="999">http://127.0.0.1:8888/system.xpi</install>
+    <created epoch="1252903662">
+      2009-09-14T04:47:42Z
+    </created>
+    <last_updated epoch="1315255329">
+      2011-09-05T20:42:09Z
+    </last_updated>
+    </addon>
+</searchresults>

--- a/services/sync/tests/unit/test_addons_store.js
+++ b/services/sync/tests/unit/test_addons_store.js
@@ -5,25 +5,43 @@
 
 Cu.import("resource://gre/modules/Log.jsm");
 Cu.import("resource://gre/modules/Preferences.jsm");
 Cu.import("resource://services-sync/addonutils.js");
 Cu.import("resource://services-sync/engines/addons.js");
 Cu.import("resource://services-sync/service.js");
 Cu.import("resource://services-sync/util.js");
 Cu.import("resource://testing-common/services/sync/utils.js");
+Cu.import("resource://gre/modules/FileUtils.jsm");
 
 const HTTP_PORT = 8888;
 
 var prefs = new Preferences();
 
 prefs.set("extensions.getAddons.get.url", "http://localhost:8888/search/guid:%IDS%");
 prefs.set("extensions.install.requireSecureOrigin", false);
 
+const SYSTEM_ADDON_ID = "system1@tests.mozilla.org";
+let systemAddonFile;
+
+// The system add-on must be installed before AddonManager is started.
+function loadSystemAddon() {
+  let addonFilename = SYSTEM_ADDON_ID + ".xpi";
+  const distroDir = FileUtils.getDir("ProfD", ["sysfeatures", "app0"], true);
+  do_get_file(ExtensionsTestPath("/data/system_addons/system1_1.xpi")).copyTo(distroDir, addonFilename);
+  systemAddonFile = FileUtils.File(distroDir.path);
+  systemAddonFile.append(addonFilename);
+  systemAddonFile.lastModifiedTime = Date.now();
+  // As we're not running in application, we need to setup the features directory
+  // used by system add-ons.
+  registerDirectory("XREAppFeat", distroDir);
+}
+
 loadAddonTestFunctions();
+loadSystemAddon();
 startupManager();
 
 Service.engineManager.register(AddonsEngine);
 var engine     = Service.engineManager.get("addons");
 var tracker    = engine._tracker;
 var store      = engine._store;
 var reconciler = engine._reconciler;
 
@@ -54,29 +72,34 @@ function createAndStartHTTPServer(port) 
 
     server.registerFile("/search/guid:bootstrap1%40tests.mozilla.org",
                         do_get_file("bootstrap1-search.xml"));
     server.registerFile("/bootstrap1.xpi", do_get_file(bootstrap1XPI));
 
     server.registerFile("/search/guid:missing-xpi%40tests.mozilla.org",
                         do_get_file("missing-xpi-search.xml"));
 
+    server.registerFile("/search/guid:system1%40tests.mozilla.org",
+                        do_get_file("systemaddon-search.xml"));
+    server.registerFile("/system.xpi", systemAddonFile);
+
     server.start(port);
 
     return server;
   } catch (ex) {
     _("Got exception starting HTTP server on port " + port);
     _("Error: " + Log.exceptionStr(ex));
     do_throw(ex);
   }
 }
 
 function run_test() {
   initTestLogging("Trace");
   Log.repository.getLogger("Sync.Engine.Addons").level = Log.Level.Trace;
+  Log.repository.getLogger("Sync.Tracker.Addons").level = Log.Level.Trace;
   Log.repository.getLogger("Sync.AddonsRepository").level =
     Log.Level.Trace;
 
   reconciler.startListening();
 
   // Don't flush to disk in the middle of an event listener!
   // This causes test hangs on WinXP.
   reconciler._shouldPersist = false;
@@ -419,16 +442,56 @@ add_test(function test_create_bad_instal
   //do_check_eq(0, failed.length);
 
   let addon = getAddonFromAddonManagerByID(id);
   do_check_eq(null, addon);
 
   server.stop(run_next_test);
 });
 
+add_test(function test_ignore_system() {
+  _("Ensure we ignore system addons");
+  // Our system addon should not appear in getAllIDs
+  engine._refreshReconcilerState();
+  let num = 0;
+  for (let guid in store.getAllIDs()) {
+    num += 1;
+    let addon = reconciler.getAddonStateFromSyncGUID(guid);
+    do_check_neq(addon.id, SYSTEM_ADDON_ID);
+  }
+  do_check_true(num > 1, "should have seen at least one.")
+  run_next_test();
+});
+
+add_test(function test_incoming_system() {
+  _("Ensure we handle incoming records that refer to a system addon");
+  // eg, loop initially had a normal addon but it was then "promoted" to be a
+  // system addon but wanted to keep the same ID. The server record exists due
+  // to this.
+
+  // before we start, ensure the system addon isn't disabled.
+  do_check_false(getAddonFromAddonManagerByID(SYSTEM_ADDON_ID).userDisabled);
+
+  // Now simulate an incoming record with the same ID as the system addon,
+  // but flagged as disabled - it should not be applied.
+  let server = createAndStartHTTPServer(HTTP_PORT);
+  // We make the incoming record flag the system addon as disabled - it should
+  // be ignored.
+  let guid = Utils.makeGUID();
+  let record = createRecordForThisApp(guid, SYSTEM_ADDON_ID, false, false);
+
+  let failed = store.applyIncomingBatch([record]);
+  do_check_eq(0, failed.length);
+
+  // The system addon should still not be userDisabled.
+  do_check_false(getAddonFromAddonManagerByID(SYSTEM_ADDON_ID).userDisabled);
+
+  server.stop(run_next_test);
+});
+
 add_test(function test_wipe() {
   _("Ensures that wiping causes add-ons to be uninstalled.");
 
   let addon1 = installAddon("test_bootstrap1_1");
 
   store.wipe();
 
   let addon = getAddonFromAddonManagerByID(addon1.id);

--- a/services/sync/tests/unit/xpcshell.ini
+++ b/services/sync/tests/unit/xpcshell.ini
@@ -6,16 +6,17 @@ skip-if = toolkit == 'gonk'
 support-files =
   addon1-search.xml
   bootstrap1-search.xml
   fake_login_manager.js
   missing-sourceuri.xml
   missing-xpi-search.xml
   places_v10_from_v11.sqlite
   rewrite-search.xml
+  systemaddon-search.xml
   !/services/common/tests/unit/head_helpers.js
   !/toolkit/mozapps/extensions/test/xpcshell/head_addons.js
 
 # The manifest is roughly ordered from low-level to high-level. When making
 # systemic sweeping changes, this makes it easier to identify errors closer to
 # the source.
 
 # Ensure we can import everything.