diff --git a/core/src/test/java/io/temporal/samples/hello/HelloUpdateAndCancellationTest.java b/core/src/test/java/io/temporal/samples/hello/HelloUpdateAndCancellationTest.java
new file mode 100644
index 000000000..b6eec1fec
--- /dev/null
+++ b/core/src/test/java/io/temporal/samples/hello/HelloUpdateAndCancellationTest.java
@@ -0,0 +1,210 @@
+package io.temporal.samples.hello;
+
+import io.temporal.activity.*;
+import io.temporal.api.enums.v1.WorkflowIdConflictPolicy;
+import io.temporal.client.*;
+import io.temporal.failure.ActivityFailure;
+import io.temporal.failure.CanceledFailure;
+import io.temporal.testing.TestWorkflowRule;
+import io.temporal.workflow.*;
+import java.time.Duration;
+import java.util.concurrent.TimeUnit;
+import org.junit.Assert;
+import org.junit.Rule;
+import org.junit.Test;
+
+public class HelloUpdateAndCancellationTest {
+  @Rule
+  public TestWorkflowRule testWorkflowRule =
+      TestWorkflowRule.newBuilder()
+          .setWorkflowTypes(TestWorkflowImpl.class)
+          .setActivityImplementations(new TestActivitiesImpl())
+          .build();
+
+  @Test
+  public void testUpdateAndWorkflowCancellation() {
+    // Start workflow with UpdateWithStart then cancel workflow before activity completes
+    TestWorkflow workflow =
+        testWorkflowRule
+            .getWorkflowClient()
+            .newWorkflowStub(
+                TestWorkflow.class,
+                WorkflowOptions.newBuilder()
+                    .setWorkflowId("test-workflow-cancel")
+                    .setTaskQueue(testWorkflowRule.getTaskQueue())
+                    .setWorkflowIdConflictPolicy(
+                        WorkflowIdConflictPolicy.WORKFLOW_ID_CONFLICT_POLICY_USE_EXISTING)
+                    .build());
+
+    WorkflowUpdateHandle<String> updateHandle =
+        WorkflowClient.startUpdateWithStart(
+            workflow::mileStoneCompleted,
+            UpdateOptions.<String>newBuilder()
+                .setWaitForStage(WorkflowUpdateStage.ACCEPTED)
+                .build(),
+            new WithStartWorkflowOperation<>(workflow::execute));
+
+    testWorkflowRule
+        .getTestEnvironment()
+        .registerDelayedCallback(
+            Duration.ofSeconds(3),
+            () -> {
+              WorkflowStub.fromTyped(workflow).cancel("canceled by test");
+            });
+
+    String updateResult = updateHandle.getResult();
+    Assert.assertEquals("milestone canceled", updateResult);
+
+    try {
+      WorkflowStub.fromTyped(workflow).getResult(String.class);
+      Assert.fail("Workflow Execution should have been canceled");
+    } catch (WorkflowFailedException e) {
+      // Our workflow should have been canceled
+      Assert.assertEquals(CanceledFailure.class, e.getCause().getClass());
+    }
+  }
+
+  @Test
+  public void testUpdateAndActivityCancellation() {
+    // Start workflow with UpdateWithStart then cancel the activity only by sending signal to
+    // execution
+    TestWorkflow workflow =
+        testWorkflowRule
+            .getWorkflowClient()
+            .newWorkflowStub(
+                TestWorkflow.class,
+                WorkflowOptions.newBuilder()
+                    .setWorkflowId("test-activity-cancel")
+                    .setTaskQueue(testWorkflowRule.getTaskQueue())
+                    .setWorkflowIdConflictPolicy(
+                        WorkflowIdConflictPolicy.WORKFLOW_ID_CONFLICT_POLICY_USE_EXISTING)
+                    .build());
+
+    WorkflowUpdateHandle<String> updateHandle =
+        WorkflowClient.startUpdateWithStart(
+            workflow::mileStoneCompleted,
+            UpdateOptions.<String>newBuilder()
+                .setWaitForStage(WorkflowUpdateStage.ACCEPTED)
+                .build(),
+            new WithStartWorkflowOperation<>(workflow::execute));
+
+    testWorkflowRule
+        .getTestEnvironment()
+        .registerDelayedCallback(
+            Duration.ofSeconds(3),
+            () -> {
+              WorkflowStub.fromTyped(workflow).signal("cancelActivity");
+            });
+
+    String updateResult = updateHandle.getResult();
+    Assert.assertEquals("milestone canceled", updateResult);
+
+    try {
+      WorkflowStub.fromTyped(workflow).getResult(String.class);
+      Assert.fail("Workflow Execution should have failed");
+    } catch (WorkflowFailedException e) {
+      // In this case we did not cancel workflow execution but we failed it by throwing
+      // ActivityFailure
+      Assert.assertEquals(ActivityFailure.class, e.getCause().getClass());
+      ActivityFailure af = (ActivityFailure) e.getCause();
+      // Since we canceled the activity still, the cause of ActivityFailure should be
+      // CanceledFailure
+      Assert.assertEquals(CanceledFailure.class, af.getCause().getClass());
+    }
+  }
+
+  @WorkflowInterface
+  public interface TestWorkflow {
+    @WorkflowMethod
+    String execute();
+
+    @UpdateMethod
+    String mileStoneCompleted();
+
+    @SignalMethod
+    void cancelActivity();
+  }
+
+  public static class TestWorkflowImpl implements TestWorkflow {
+    boolean milestoneDone, mileStoneCanceled;
+    CancellationScope scope;
+    TestActivities activities =
+        Workflow.newActivityStub(
+            TestActivities.class,
+            ActivityOptions.newBuilder()
+                .setHeartbeatTimeout(Duration.ofSeconds(3))
+                .setStartToCloseTimeout(Duration.ofSeconds(10))
+                .setCancellationType(ActivityCancellationType.WAIT_CANCELLATION_COMPLETED)
+                .build());
+
+    @Override
+    public String execute() {
+      scope =
+          Workflow.newCancellationScope(
+              () -> {
+                activities.runActivity();
+              });
+
+      try {
+        scope.run();
+        milestoneDone = true;
+        Workflow.await(Workflow::isEveryHandlerFinished);
+        return "workflow completed";
+      } catch (ActivityFailure e) {
+        if (e.getCause() instanceof CanceledFailure) {
+          CancellationScope detached =
+              Workflow.newDetachedCancellationScope(
+                  () -> {
+                    mileStoneCanceled = true;
+                    Workflow.await(Workflow::isEveryHandlerFinished);
+                  });
+          detached.run();
+        }
+        throw e;
+      }
+    }
+
+    @Override
+    public String mileStoneCompleted() {
+      Workflow.await(() -> milestoneDone || mileStoneCanceled);
+      // For sake of testing isEveryHandlerFinished block here for 2 seconds
+      Workflow.sleep(Duration.ofSeconds(2));
+      return milestoneDone ? "milestone completed" : "milestone canceled";
+    }
+
+    @Override
+    public void cancelActivity() {
+      if (scope != null) {
+        scope.cancel("test reason");
+      }
+    }
+  }
+
+  @ActivityInterface
+  public interface TestActivities {
+    void runActivity();
+  }
+
+  public static class TestActivitiesImpl implements TestActivities {
+
+    @Override
+    public void runActivity() {
+      ActivityExecutionContext context = Activity.getExecutionContext();
+      for (int i = 0; i < 9; i++) {
+        sleep(1);
+        try {
+          context.heartbeat(i);
+        } catch (ActivityCompletionException e) {
+          throw e;
+        }
+      }
+    }
+  }
+
+  private static void sleep(int seconds) {
+    try {
+      Thread.sleep(TimeUnit.SECONDS.toMillis(seconds));
+    } catch (InterruptedException e) {
+    }
+  }
+}