diff --git a/CHANGELOG.md b/CHANGELOG.md
index 02aca343a2..931298f0ea 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -67,6 +67,9 @@ Breaking changes:
 * (py_wheel) Produce deterministic wheel files and make `RECORD` file entries
   follow the order of files written to the `.whl` archive.
 
+* (gazelle) Generate a single `py_test` target when `gazelle:python_generation_mode project`
+  is used.
+
 ### Added
 
 * (bzlmod) Added `.whl` patching support via `patches` and `patch_strip`
diff --git a/gazelle/python/generate.go b/gazelle/python/generate.go
index ede4d2a222..0e47ed7fda 100644
--- a/gazelle/python/generate.go
+++ b/gazelle/python/generate.go
@@ -371,7 +371,7 @@ func (py *Python) GenerateRules(args language.GenerateArgs) language.GenerateRes
 			addModuleDependencies(deps).
 			generateImportsAttribute()
 	}
-	if hasPyTestEntryPointFile || hasPyTestEntryPointTarget {
+	if hasPyTestEntryPointFile || hasPyTestEntryPointTarget || cfg.CoarseGrainedGeneration() {
 		if hasPyTestEntryPointFile {
 			// Only add the pyTestEntrypointFilename to the pyTestFilenames if
 			// the file exists on disk.
diff --git a/gazelle/python/testdata/monorepo/coarse_grained/BUILD.out b/gazelle/python/testdata/monorepo/coarse_grained/BUILD.out
index 0357705d5a..3a331112e9 100644
--- a/gazelle/python/testdata/monorepo/coarse_grained/BUILD.out
+++ b/gazelle/python/testdata/monorepo/coarse_grained/BUILD.out
@@ -1,4 +1,4 @@
-load("@rules_python//python:defs.bzl", "py_library")
+load("@rules_python//python:defs.bzl", "py_library", "py_test")
 
 # gazelle:python_extension enabled
 # gazelle:python_root
@@ -18,3 +18,12 @@ py_library(
     visibility = ["//:__subpackages__"],
     deps = ["@root_pip_deps//rootboto3"],
 )
+
+py_test(
+    name = "coarse_grained_test",
+    srcs = [
+        "bar/bar_test.py",
+        "foo/bar/bar_test.py",
+    ],
+    main = "__test__.py",
+)
diff --git a/gazelle/python/testdata/monorepo/coarse_grained/bar/bar_test.py b/gazelle/python/testdata/monorepo/coarse_grained/bar/bar_test.py
new file mode 100644
index 0000000000..e69de29bb2
diff --git a/gazelle/python/testdata/monorepo/coarse_grained/foo/bar/bar_test.py b/gazelle/python/testdata/monorepo/coarse_grained/foo/bar/bar_test.py
new file mode 100644
index 0000000000..e69de29bb2