diff --git a/test/functional/feature_fee_estimation.py b/test/functional/feature_fee_estimation.py
index ffc87f8b8ba..8cc74772849 100755
--- a/test/functional/feature_fee_estimation.py
+++ b/test/functional/feature_fee_estimation.py
@@ -128,6 +128,14 @@ def make_tx(wallet, utxo, feerate):
         fee_rate=Decimal(feerate * 1000) / COIN,
     )
 
+def check_fee_estimates_btw_modes(node, expected_conservative, expected_economical):
+    fee_est_conservative = node.estimatesmartfee(1, estimate_mode="conservative")['feerate']
+    fee_est_economical = node.estimatesmartfee(1, estimate_mode="economical")['feerate']
+    fee_est_default = node.estimatesmartfee(1)['feerate']
+    assert_equal(fee_est_conservative, expected_conservative)
+    assert_equal(fee_est_economical, expected_economical)
+    assert_equal(fee_est_default, expected_economical)
+
 
 class EstimateFeeTest(BitcoinTestFramework):
     def set_test_params(self):
@@ -382,6 +390,40 @@ class EstimateFeeTest(BitcoinTestFramework):
         self.start_node(0,extra_args=["-acceptstalefeeestimates"])
         assert_equal(self.nodes[0].estimatesmartfee(1)["feerate"], fee_rate)
 
+    def clear_estimates(self):
+        self.log.info("Restarting node with fresh estimation")
+        self.stop_node(0)
+        fee_dat = self.nodes[0].chain_path / "fee_estimates.dat"
+        os.remove(fee_dat)
+        self.start_node(0)
+        self.connect_nodes(0, 1)
+        self.connect_nodes(0, 2)
+        assert_equal(self.nodes[0].estimatesmartfee(1)["errors"], ["Insufficient data or no feerate found"])
+
+    def broadcast_and_mine(self, broadcaster, miner, feerate, count):
+        """Broadcast and mine some number of transactions with a specified fee rate."""
+        for _ in range(count):
+            self.wallet.send_self_transfer(from_node=broadcaster, fee_rate=feerate)
+        self.sync_mempools()
+        self.generate(miner, 1)
+
+    def test_estimation_modes(self):
+        low_feerate = Decimal("0.001")
+        high_feerate = Decimal("0.005")
+        tx_count = 24
+        # Broadcast and mine high fee transactions for the first 12 blocks.
+        for _ in range(12):
+            self.broadcast_and_mine(self.nodes[1], self.nodes[2], high_feerate, tx_count)
+        check_fee_estimates_btw_modes(self.nodes[0], high_feerate, high_feerate)
+
+        # We now track 12 blocks; short horizon stats will start decaying.
+        # Broadcast and mine low fee transactions for the next 4 blocks.
+        for _ in range(4):
+            self.broadcast_and_mine(self.nodes[1], self.nodes[2], low_feerate, tx_count)
+        # conservative mode will consider longer time horizons while economical mode does not
+        # Check the fee estimates for both modes after mining low fee transactions.
+        check_fee_estimates_btw_modes(self.nodes[0], high_feerate, low_feerate)
+
 
     def run_test(self):
         self.log.info("This test is time consuming, please be patient")
@@ -420,17 +462,15 @@ class EstimateFeeTest(BitcoinTestFramework):
         self.log.info("Test reading old fee_estimates.dat")
         self.test_old_fee_estimate_file()
 
-        self.log.info("Restarting node with fresh estimation")
-        self.stop_node(0)
-        fee_dat = os.path.join(self.nodes[0].chain_path, "fee_estimates.dat")
-        os.remove(fee_dat)
-        self.start_node(0)
-        self.connect_nodes(0, 1)
-        self.connect_nodes(0, 2)
+        self.clear_estimates()
 
         self.log.info("Testing estimates with RBF.")
         self.sanity_check_rbf_estimates(self.confutxo + self.memutxo)
 
+        self.clear_estimates()
+        self.log.info("Test estimatesmartfee modes")
+        self.test_estimation_modes()
+
         self.log.info("Testing that fee estimation is disabled in blocksonly.")
         self.restart_node(0, ["-blocksonly"])
         assert_raises_rpc_error(