diff --git a/images/test/Dockerfile b/images/test/Dockerfile
index 55f1fc5415..3ca81f9e01 100644
--- a/images/test/Dockerfile
+++ b/images/test/Dockerfile
@@ -10,6 +10,10 @@ RUN pip install --upgrade pip && \
 COPY pkg /src
 COPY images/test/run.sh /src/run.sh
 
+COPY pkg/cortex/serve/log_config.yaml /src/cortex/serve/log_config.yaml
+ENV CORTEX_LOG_LEVEL DEBUG
+ENV CORTEX_LOG_CONFIG_FILE /src/cortex/serve/log_config.yaml
+
 RUN pip install --no-deps /src/cortex/serve/ && \
     rm -rf /root/.cache/pip*
 
diff --git a/images/test/run.sh b/images/test/run.sh
index 699ba49ab8..041aa905da 100644
--- a/images/test/run.sh
+++ b/images/test/run.sh
@@ -18,6 +18,12 @@
 err=0
 trap 'err=1' ERR
 
+function substitute_env_vars() {
+    file_to_run_substitution=$1
+    python -c "from cortex_internal.lib import util; import os; util.expand_environment_vars_on_file('$file_to_run_substitution')"
+}
+
+substitute_env_vars $CORTEX_LOG_CONFIG_FILE
 pytest lib/test
 
 test $err = 0
diff --git a/pkg/cortex/serve/cortex_internal.requirements.txt b/pkg/cortex/serve/cortex_internal.requirements.txt
index eb6b745471..a7232acde2 100644
--- a/pkg/cortex/serve/cortex_internal.requirements.txt
+++ b/pkg/cortex/serve/cortex_internal.requirements.txt
@@ -1,3 +1,4 @@
+grpcio==1.32.0
 boto3==1.14.53
 google-cloud-storage==1.32.0
 datadog==0.39.0
diff --git a/pkg/cortex/serve/cortex_internal/lib/api/batching.py b/pkg/cortex/serve/cortex_internal/lib/api/batching.py
index bde2edd637..29e0a040bc 100644
--- a/pkg/cortex/serve/cortex_internal/lib/api/batching.py
+++ b/pkg/cortex/serve/cortex_internal/lib/api/batching.py
@@ -12,6 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
+import itertools
 import threading as td
 import time
 import traceback
@@ -21,26 +22,32 @@
 
 from starlette.responses import Response
 
-from ..exceptions import UserRuntimeException
-from ..log import logger
+from cortex_internal.lib.exceptions import UserRuntimeException
+from cortex_internal.lib.log import logger
 
 
 class DynamicBatcher:
-    def __init__(self, predictor_impl: Callable, max_batch_size: int, batch_interval: int):
+    def __init__(
+        self,
+        predictor_impl: Callable,
+        max_batch_size: int,
+        batch_interval: int,
+        test_mode: bool = False,
+    ):
         self.predictor_impl = predictor_impl
 
         self.batch_max_size = max_batch_size
         self.batch_interval = batch_interval  # measured in seconds
+        self.test_mode = test_mode  # only for unit testing
+        self._test_batch_lengths = []  # only when unit testing
 
-        # waiter prevents new threads from modifying the input batch while a batch prediction is in progress
-        self.waiter = td.Event()
-        self.waiter.set()
-
-        self.barrier = td.Barrier(self.batch_max_size + 1, action=self.waiter.clear)
+        self.barrier = td.Barrier(self.batch_max_size + 1)
 
         self.samples = {}
         self.predictions = {}
-        td.Thread(target=self._batch_engine).start()
+        td.Thread(target=self._batch_engine, daemon=True).start()
+
+        self.sample_id_generator = itertools.count()
 
     def _batch_engine(self):
         while True:
@@ -54,10 +61,10 @@ def _batch_engine(self):
                 pass
 
             self.predictions = {}
-
+            sample_ids = self._get_sample_ids(self.batch_max_size)
             try:
                 if self.samples:
-                    batch = self._make_batch(self.samples)
+                    batch = self._make_batch(sample_ids)
 
                     predictions = self.predictor_impl.predict(**batch)
                     if not isinstance(predictions, list):
@@ -65,32 +72,37 @@ def _batch_engine(self):
                             f"please return a list when using server side batching, got {type(predictions)}"
                         )
 
-                    self.predictions = dict(zip(self.samples.keys(), predictions))
+                    if self.test_mode:
+                        self._test_batch_lengths.append(len(predictions))
+
+                    self.predictions = dict(zip(sample_ids, predictions))
             except Exception as e:
-                self.predictions = {thread_id: e for thread_id in self.samples}
+                self.predictions = {sample_id: e for sample_id in sample_ids}
                 logger.error(traceback.format_exc())
             finally:
-                self.samples = {}
+                for sample_id in sample_ids:
+                    del self.samples[sample_id]
                 self.barrier.reset()
-                self.waiter.set()
 
-    @staticmethod
-    def _make_batch(samples: Dict[int, Dict[str, Any]]) -> Dict[str, List[Any]]:
+    def _get_sample_ids(self, max_number: int) -> List[int]:
+        if len(self.samples) <= max_number:
+            return list(self.samples.keys())
+        return sorted(self.samples)[:max_number]
+
+    def _make_batch(self, sample_ids: List[int]) -> Dict[str, List[Any]]:
         batched_samples = defaultdict(list)
-        for thread_id in samples:
-            for key, sample in samples[thread_id].items():
+        for sample_id in sample_ids:
+            for key, sample in self.samples[sample_id].items():
                 batched_samples[key].append(sample)
 
         return dict(batched_samples)
 
-    def _enqueue_request(self, **kwargs):
+    def _enqueue_request(self, sample_id: int, **kwargs):
         """
         Enqueue sample for batch inference. This is a blocking method.
         """
-        thread_id = td.get_ident()
 
-        self.waiter.wait()
-        self.samples[thread_id] = kwargs
+        self.samples[sample_id] = kwargs
         try:
             self.barrier.wait()
         except td.BrokenBarrierError:
@@ -101,20 +113,20 @@ def predict(self, **kwargs):
         Queues a request to be batched with other incoming request, waits for the response
         and returns the prediction result. This is a blocking method.
         """
-        self._enqueue_request(**kwargs)
-        prediction = self._get_prediction()
+        sample_id = next(self.sample_id_generator)
+        self._enqueue_request(sample_id, **kwargs)
+        prediction = self._get_prediction(sample_id)
         return prediction
 
-    def _get_prediction(self) -> Any:
+    def _get_prediction(self, sample_id: int) -> Any:
         """
         Return the prediction. This is a blocking method.
         """
-        thread_id = td.get_ident()
-        while thread_id not in self.predictions:
+        while sample_id not in self.predictions:
             time.sleep(0.001)
 
-        prediction = self.predictions[thread_id]
-        del self.predictions[thread_id]
+        prediction = self.predictions[sample_id]
+        del self.predictions[sample_id]
 
         if isinstance(prediction, Exception):
             return Response(
diff --git a/pkg/cortex/serve/cortex_internal/lib/test/dynamic_batching_test.py b/pkg/cortex/serve/cortex_internal/lib/test/dynamic_batching_test.py
new file mode 100644
index 0000000000..1cb3f9574a
--- /dev/null
+++ b/pkg/cortex/serve/cortex_internal/lib/test/dynamic_batching_test.py
@@ -0,0 +1,112 @@
+# Copyright 2021 Cortex Labs, Inc.
+#
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+#
+#     http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+
+
+import threading as td
+import itertools
+import time
+
+import cortex_internal.lib.api.batching as batching
+
+
+class Predictor:
+    def predict(self, payload):
+        time.sleep(0.2)
+        return payload
+
+
+def test_dynamic_batching_while_hitting_max_batch_size():
+    max_batch_size = 32
+    dynamic_batcher = batching.DynamicBatcher(
+        Predictor(), max_batch_size=max_batch_size, batch_interval=0.1, test_mode=True
+    )
+    counter = itertools.count(1)
+    event = td.Event()
+    global_list = []
+
+    def submitter():
+        while not event.is_set():
+            global_list.append(dynamic_batcher.predict(payload=next(counter)))
+            time.sleep(0.1)
+
+    running_threads = []
+    for _ in range(128):
+        thread = td.Thread(target=submitter, daemon=True)
+        thread.start()
+        running_threads.append(thread)
+
+    time.sleep(60)
+    event.set()
+
+    # if this fails, then the submitter threads are getting stuck
+    for thread in running_threads:
+        thread.join(3.0)
+        if thread.is_alive():
+            raise TimeoutError("thread", thread.getName(), "got stuck")
+
+    sum1 = int(len(global_list) * (len(global_list) + 1) / 2)
+    sum2 = sum(global_list)
+    assert sum1 == sum2
+
+    # get the last 80% of batch lengths
+    # we ignore the first 20% because it may take some time for all threads to start making requests
+    batch_lengths = dynamic_batcher._test_batch_lengths
+    batch_lengths = batch_lengths[int(len(batch_lengths) * 0.2) :]
+
+    # verify that the batch size is always equal to the max batch size
+    assert len(set(batch_lengths)) == 1
+    assert max_batch_size in batch_lengths
+
+
+def test_dynamic_batching_while_hitting_max_interval():
+    max_batch_size = 32
+    dynamic_batcher = batching.DynamicBatcher(
+        Predictor(), max_batch_size=max_batch_size, batch_interval=1.0, test_mode=True
+    )
+    counter = itertools.count(1)
+    event = td.Event()
+    global_list = []
+
+    def submitter():
+        while not event.is_set():
+            global_list.append(dynamic_batcher.predict(payload=next(counter)))
+            time.sleep(0.1)
+
+    running_threads = []
+    for _ in range(2):
+        thread = td.Thread(target=submitter, daemon=True)
+        thread.start()
+        running_threads.append(thread)
+
+    time.sleep(30)
+    event.set()
+
+    # if this fails, then the submitter threads are getting stuck
+    for thread in running_threads:
+        thread.join(3.0)
+        if thread.is_alive():
+            raise TimeoutError("thread", thread.getName(), "got stuck")
+
+    sum1 = int(len(global_list) * (len(global_list) + 1) / 2)
+    sum2 = sum(global_list)
+    assert sum1 == sum2
+
+    # get the last 80% of batch lengths
+    # we ignore the first 20% because it may take some time for all threads to start making requests
+    batch_lengths = dynamic_batcher._test_batch_lengths
+    batch_lengths = batch_lengths[int(len(batch_lengths) * 0.2) :]
+
+    # verify that the batch size is always equal to the number of running threads
+    assert len(set(batch_lengths)) == 1
+    assert len(running_threads) in batch_lengths