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Reference: [Reference: https://docs.mulesoft.com/mule-runtime/3.9/testing-strategies, As per general IT testing practice and MuleSoft recommended practice, Integration and Performance tests should be done on full end to end setup for right evaluation. Which means all end systems should be connected while doing the tests. So, these options are OUT and we are left with Unit Tests and Functional Tests., As per attached reference documentation from MuleSoft:, Unit Tests - are limited to the code that can be realistically exercised without the need to run it inside Mule itself. So good candidates are Small pieces of modular code, Sub Flows, Custom transformers, Custom components, Custom expression evaluators etc., Functional Tests - are those that most extensively exercise your application configuration. In these tests, you have the freedom and tools for simulating happy and unhappy paths. You also have the possibility to create stubs for target services and make them success or fail to easily simulate happy and unhappy paths respectively., As the scenario in the question demands for API implementation to be tested before deployment to Staging and also clearly indicates that there is enough/ sufficient amount of mock data to test the various components of API implementations with no active connections to the backend systems, Unit Tests are the one to be used to incorporate this mocked data., ]