diff --git a/tools/build_api.py b/tools/build_api.py
index 615024e91c..f3d0629a9c 100644
--- a/tools/build_api.py
+++ b/tools/build_api.py
@@ -26,7 +26,7 @@ from os.path import join, exists, basename, abspath
 from os import getcwd
 from time import time
 
-from tools.utils import mkdir, run_cmd, run_cmd_ext, NotSupportedException
+from tools.utils import mkdir, run_cmd, run_cmd_ext, NotSupportedException, ToolException
 from tools.paths import MBED_TARGETS_PATH, MBED_LIBRARIES, MBED_API, MBED_HAL, MBED_COMMON
 from tools.targets import TARGET_NAMES, TARGET_MAP
 from tools.libraries import Library
diff --git a/tools/test.py b/tools/test.py
index 64f6fc5810..2099a66123 100644
--- a/tools/test.py
+++ b/tools/test.py
@@ -129,49 +129,63 @@ if __name__ == '__main__':
             
             build_report = {}
             build_properties = {}
-            
-            # Build sources
-            lib_build_res = build_library(base_source_paths, options.build_dir, target, options.tool,
-                                            options=options.options,
-                                            jobs=options.jobs,
-                                            clean=options.clean,
-                                            report=build_report,
-                                            properties=build_properties,
-                                            name="mbed-os",
-                                            macros=options.macros,
-                                            archive=False)
-            
-            # Build all the tests
-            test_build = build_tests(tests, [options.build_dir], options.build_dir, target, options.tool,
-                    options=options.options,
-                    clean=options.clean,
-                    report=build_report,
-                    properties=build_properties,
-                    macros=options.macros,
-                    jobs=options.jobs)
-            
-            # If a path to a test spec is provided, write it to a file
-            if options.test_spec:
-                test_spec_data = test_spec_from_test_build(test_build)
+
+            library_build_success = True
+            try:
+                # Build sources
+                build_library(base_source_paths, options.build_dir, target, options.tool,
+                                                options=options.options,
+                                                jobs=options.jobs,
+                                                clean=options.clean,
+                                                report=build_report,
+                                                properties=build_properties,
+                                                name="mbed-os",
+                                                macros=options.macros,
+                                                archive=False)
+            except Exception, e:
+                library_build_success = False
+                print "Failed to build library"
+                print e
                 
-                # Create the target dir for the test spec if necessary
-                # mkdir will not create the dir if it already exists
-                test_spec_dir = os.path.dirname(options.test_spec)
-                if test_spec_dir:
-                    mkdir(test_spec_dir)
+            if library_build_success:
+                # Build all the tests
+                test_build_success, test_build = build_tests(tests, [options.build_dir], options.build_dir, target, options.tool,
+                        options=options.options,
+                        clean=options.clean,
+                        report=build_report,
+                        properties=build_properties,
+                        macros=options.macros,
+                        jobs=options.jobs)
+                        
+                if not test_build_success:
+                    print "Failed to build some tests, check build log for details"
                 
-                try:
-                    with open(options.test_spec, 'w') as f:
-                        f.write(json.dumps(test_spec_data, indent=2))
-                except IOError, e:
-                    print "[ERROR] Error writing test spec to file"
-                    print e
+                # If a path to a test spec is provided, write it to a file
+                if options.test_spec:
+                    test_spec_data = test_spec_from_test_build(test_build)
+                    
+                    # Create the target dir for the test spec if necessary
+                    # mkdir will not create the dir if it already exists
+                    test_spec_dir = os.path.dirname(options.test_spec)
+                    if test_spec_dir:
+                        mkdir(test_spec_dir)
+                    
+                    try:
+                        with open(options.test_spec, 'w') as f:
+                            f.write(json.dumps(test_spec_data, indent=2))
+                    except IOError, e:
+                        print "[ERROR] Error writing test spec to file"
+                        print e
             
             # If a path to a JUnit build report spec is provided, write it to a file
             if options.build_report_junit:
                 report_exporter = ReportExporter(ResultExporterType.JUNIT)
                 report_exporter.report_to_file(build_report, options.build_report_junit, test_suite_properties=build_properties)
-        sys.exit()
+        
+        if library_build_success and test_build_success:
+            sys.exit(0)
+        else:
+            sys.exit(1)
 
     except KeyboardInterrupt, e:
         print "\n[CTRL+c] exit"
diff --git a/tools/test_api.py b/tools/test_api.py
index c1e76944e1..177490c4a0 100644
--- a/tools/test_api.py
+++ b/tools/test_api.py
@@ -2029,7 +2029,10 @@ def build_tests(tests, base_source_paths, build_path, target, toolchain_name,
         options=None, clean=False, notify=None, verbose=False, jobs=1,
         macros=None, silent=False, report=None, properties=None):
     """Given the data structure from 'find_tests' and the typical build parameters,
-    build all the tests and return a test build data structure"""
+    build all the tests
+    
+    Returns a tuple of the build result (True or False) followed by the test
+    build data structure"""
     
     test_build = {
         "platform": target.name,
@@ -2040,6 +2043,8 @@ def build_tests(tests, base_source_paths, build_path, target, toolchain_name,
         "tests": {}
     }
     
+    result = True
+    
     for test_name, test_path in tests.iteritems():
         test_build_path = os.path.join(build_path, test_path)
         src_path = base_source_paths + [test_path]
@@ -2056,6 +2061,7 @@ def build_tests(tests, base_source_paths, build_path, target, toolchain_name,
                                      verbose=verbose)
 
         except Exception, e:
+            result = False
             continue
         
         # If a clean build was carried out last time, disable it for the next build.
@@ -2080,7 +2086,7 @@ def build_tests(tests, base_source_paths, build_path, target, toolchain_name,
     test_builds["%s-%s" % (target.name, toolchain_name)] = test_build
     
     
-    return test_builds
+    return result, test_builds
     
 
 def test_spec_from_test_build(test_builds):