diff --git a/src/instructor-toolbar/masquerade-widget/MasqueradeWidget.jsx b/src/instructor-toolbar/masquerade-widget/MasqueradeWidget.jsx
index 554703fcfd..71df83cea3 100644
--- a/src/instructor-toolbar/masquerade-widget/MasqueradeWidget.jsx
+++ b/src/instructor-toolbar/masquerade-widget/MasqueradeWidget.jsx
@@ -22,7 +22,8 @@ class MasqueradeWidget extends Component {
     this.state = {
       autoFocus: false,
       masquerade: 'Staff',
-      options: [],
+      active: {},
+      available: [],
       shouldShowUserNameInput: false,
       masqueradeUsername: null,
     };
@@ -58,21 +59,42 @@ class MasqueradeWidget extends Component {
   }
 
   onSuccess(data) {
-    const options = this.parseAvailableOptions(data);
+    const { active, available } = this.parseAvailableOptions(data);
     this.setState({
-      options,
+      active,
+      available,
     });
   }
 
+  getOptions() {
+    const options = this.state.available.map((group) => (
+      <MasqueradeWidgetOption
+        groupId={group.groupId}
+        groupName={group.name}
+        key={group.name}
+        role={group.role}
+        selected={this.state.active}
+        userName={group.userName}
+        userPartitionId={group.userPartitionId}
+        userNameInputToggle={(...args) => this.toggle(...args)}
+        onSubmit={(payload) => this.onSubmit(payload)}
+      />
+    ));
+    return options;
+  }
+
   clearError() {
     this.props.onError('');
   }
 
-  toggle(show) {
+  toggle(show, groupId, groupName, role, userName, userPartitionId) {
     this.setState(prevState => ({
       autoFocus: true,
-      masquerade: 'Specific Student...',
+      masquerade: groupName,
       shouldShowUserNameInput: show === undefined ? !prevState.shouldShowUserNameInput : show,
+      active: {
+        ...prevState.active, groupId, role, userName, userPartitionId,
+      },
     }));
   }
 
@@ -80,19 +102,6 @@ class MasqueradeWidget extends Component {
     const data = postData || {};
     const active = data.active || {};
     const available = data.available || [];
-    const options = available.map((group) => (
-      <MasqueradeWidgetOption
-        groupId={group.groupId}
-        groupName={group.name}
-        key={group.name}
-        role={group.role}
-        selected={active}
-        userName={group.userName}
-        userPartitionId={group.userPartitionId}
-        userNameInputToggle={(...args) => this.toggle(...args)}
-        onSubmit={(payload) => this.onSubmit(payload)}
-      />
-    ));
     if (active.userName) {
       this.setState({
         autoFocus: false,
@@ -105,14 +114,13 @@ class MasqueradeWidget extends Component {
     } else if (active.role === 'student') {
       this.setState({ masquerade: 'Learner' });
     }
-    return options;
+    return { active, available };
   }
 
   render() {
     const {
       autoFocus,
       masquerade,
-      options,
       shouldShowUserNameInput,
       masqueradeUsername,
     } = this.state;
@@ -126,7 +134,7 @@ class MasqueradeWidget extends Component {
               {masquerade}
             </Dropdown.Toggle>
             <Dropdown.Menu>
-              {options}
+              {this.getOptions()}
             </Dropdown.Menu>
           </Dropdown>
         </div>
diff --git a/src/instructor-toolbar/masquerade-widget/MasqueradeWidget.test.jsx b/src/instructor-toolbar/masquerade-widget/MasqueradeWidget.test.jsx
new file mode 100644
index 0000000000..7349858a37
--- /dev/null
+++ b/src/instructor-toolbar/masquerade-widget/MasqueradeWidget.test.jsx
@@ -0,0 +1,137 @@
+import React from 'react';
+import { getAllByRole } from '@testing-library/dom';
+import { act } from '@testing-library/react';
+import { getConfig } from '@edx/frontend-platform';
+import MockAdapter from 'axios-mock-adapter';
+import { getAuthenticatedHttpClient } from '@edx/frontend-platform/auth';
+import MasqueradeWidget from './MasqueradeWidget';
+import {
+  render, screen, fireEvent, initializeTestStore, waitFor, logUnhandledRequests,
+} from '../../setupTest';
+
+const originalConfig = jest.requireActual('@edx/frontend-platform').getConfig();
+jest.mock('@edx/frontend-platform', () => ({
+  ...jest.requireActual('@edx/frontend-platform'),
+  getConfig: jest.fn(),
+}));
+getConfig.mockImplementation(() => originalConfig);
+
+describe('Masquerade Widget Dropdown', () => {
+  let mockData;
+  let courseware;
+  let mockResponse;
+  let axiosMock;
+  let masqueradeUrl;
+  const masqueradeOptions = [
+    {
+      name: 'Staff',
+      role: 'staff',
+    },
+    {
+      name: 'Specific Student...',
+      role: 'student',
+      user_name: '',
+    },
+    {
+      group_id: 1,
+      name: 'Audit',
+      role: 'student',
+      user_partition_id: 50,
+    },
+  ];
+
+  beforeAll(async () => {
+    const store = await initializeTestStore();
+    courseware = store.getState().courseware;
+    axiosMock = new MockAdapter(getAuthenticatedHttpClient());
+    masqueradeUrl = `${getConfig().LMS_BASE_URL}/courses/${courseware.courseId}/masquerade`;
+    mockData = {
+      courseId: courseware.courseId,
+      onError: () => {},
+    };
+  });
+
+  beforeEach(() => {
+    mockResponse = {
+      success: true,
+      active: {
+        course_key: courseware.courseId,
+        group_id: null,
+        role: 'staff',
+        user_name: null,
+        user_partition_id: null,
+        group_name: null,
+      },
+      available: masqueradeOptions,
+    };
+    axiosMock.reset();
+    axiosMock.onGet(masqueradeUrl).reply(200, mockResponse);
+    logUnhandledRequests(axiosMock);
+  });
+
+  it('renders masquerade name correctly', async () => {
+    render(<MasqueradeWidget {...mockData} />);
+    await waitFor(() => expect(axiosMock.history.get).toHaveLength(1));
+    expect(screen.getByRole('button')).toHaveTextContent('Staff');
+  });
+
+  masqueradeOptions.forEach((option) => {
+    it(`marks role ${option.role} as active`, async () => {
+      const active = {
+        course_key: courseware.courseId,
+        group_id: option.group_id ?? null,
+        role: option.role,
+        user_name: option.user_name ?? null,
+        user_partition_id: option.user_partition_id ?? null,
+        group_name: null,
+      };
+
+      mockResponse = {
+        success: true,
+        active,
+        available: masqueradeOptions,
+      };
+
+      axiosMock.reset();
+      axiosMock.onGet(masqueradeUrl).reply(200, mockResponse);
+
+      const { container } = render(<MasqueradeWidget {...mockData} />);
+      const dropdownToggle = container.querySelector('.dropdown-toggle');
+      await act(async () => {
+        await fireEvent.click(dropdownToggle);
+      });
+      const dropdownMenu = container.querySelector('.dropdown-menu');
+      getAllByRole(dropdownMenu, 'button', { hidden: true }).forEach(button => {
+        if (button.textContent === option.name) {
+          expect(button).toHaveClass('active');
+        } else {
+          expect(button).not.toHaveClass('active');
+        }
+      });
+    });
+  });
+
+  it('handles the clicks with toggle', async () => {
+    const { container } = render(<MasqueradeWidget {...mockData} />);
+    await waitFor(() => expect(axiosMock.history.get).toHaveLength(1));
+
+    const dropdownToggle = container.querySelector('.dropdown-toggle');
+    await act(async () => {
+      await fireEvent.click(dropdownToggle);
+    });
+    const dropdownMenu = container.querySelector('.dropdown-menu');
+    const studentOption = getAllByRole(dropdownMenu, 'button', { hidden: true }).filter(
+      button => (button.textContent === 'Specific Student...'),
+    )[0];
+    await act(async () => {
+      await fireEvent.click(studentOption);
+    });
+    getAllByRole(dropdownMenu, 'button', { hidden: true }).forEach(button => {
+      if (button.textContent === 'Specific Student...') {
+        expect(button).toHaveClass('active');
+      } else {
+        expect(button).not.toHaveClass('active');
+      }
+    });
+  });
+});
diff --git a/src/instructor-toolbar/masquerade-widget/MasqueradeWidgetOption.jsx b/src/instructor-toolbar/masquerade-widget/MasqueradeWidgetOption.jsx
index 83a55801f7..5a7107a6b8 100644
--- a/src/instructor-toolbar/masquerade-widget/MasqueradeWidgetOption.jsx
+++ b/src/instructor-toolbar/masquerade-widget/MasqueradeWidgetOption.jsx
@@ -16,6 +16,7 @@ class MasqueradeWidgetOption extends Component {
     event.target.parentNode.parentNode.click();
     const {
       groupId,
+      groupName,
       role,
       userName,
       userPartitionId,
@@ -23,7 +24,7 @@ class MasqueradeWidgetOption extends Component {
     } = this.props;
     const payload = {};
     if (userName || userName === '') {
-      userNameInputToggle(true);
+      userNameInputToggle(true, groupId, groupName, role, userName, userPartitionId);
       return false;
     }
     if (role) {
diff --git a/src/instructor-toolbar/masquerade-widget/MasqueradeWidgetOption.test.jsx b/src/instructor-toolbar/masquerade-widget/MasqueradeWidgetOption.test.jsx
new file mode 100644
index 0000000000..4e6dde1476
--- /dev/null
+++ b/src/instructor-toolbar/masquerade-widget/MasqueradeWidgetOption.test.jsx
@@ -0,0 +1,97 @@
+import React from 'react';
+import { getAllByRole } from '@testing-library/dom';
+import { act } from '@testing-library/react';
+import { getConfig } from '@edx/frontend-platform';
+import MasqueradeWidgetOption from './MasqueradeWidgetOption';
+import {
+  render, fireEvent, initializeTestStore,
+} from '../../setupTest';
+
+const originalConfig = jest.requireActual('@edx/frontend-platform').getConfig();
+jest.mock('@edx/frontend-platform', () => ({
+  ...jest.requireActual('@edx/frontend-platform'),
+  getConfig: jest.fn(),
+}));
+getConfig.mockImplementation(() => originalConfig);
+
+describe('Masquerade Widget Dropdown', () => {
+  let courseware;
+  let mockDataStaff;
+  let mockDataStudent;
+  let active;
+
+  beforeAll(async () => {
+    const store = await initializeTestStore();
+    courseware = store.getState().courseware;
+    active = {
+      courseKey: courseware.courseId,
+      groupId: null,
+      role: 'staff',
+      userName: null,
+      userPartitionId: null,
+      groupName: null,
+    };
+    mockDataStaff = {
+      groupId: null,
+      groupName: 'Staff',
+      key: 'Staff',
+      role: 'staff',
+      selected: active,
+      userName: null,
+      userPartitionId: null,
+      userNameInputToggle: () => {},
+      onSubmit: () => {},
+    };
+    mockDataStudent = {
+      groupId: null,
+      groupName: 'Specific Student...',
+      key: 'Specific Student...',
+      role: 'student',
+      selected: active,
+      userName: '',
+      userPartitionId: null,
+      userNameInputToggle: () => {},
+      onSubmit: () => {},
+    };
+    Object.defineProperty(global, 'location', {
+      configurable: true,
+      value: { reload: jest.fn() },
+    });
+  });
+
+  it('renders masquerade active option correctly', async () => {
+    const { container } = render(<MasqueradeWidgetOption {...mockDataStaff} />);
+    const button = getAllByRole(container, 'button', { hidden: true })[0];
+    expect(button).toHaveTextContent('Staff');
+    expect(button).toHaveClass('active');
+  });
+
+  it('renders masquerade inactive option correctly', async () => {
+    const { container } = render(<MasqueradeWidgetOption {...mockDataStudent} />);
+    const button = getAllByRole(container, 'button', { hidden: true })[0];
+    expect(button).toHaveTextContent('Specific Student...');
+    expect(button).not.toHaveClass('active');
+  });
+
+  it('handles the clicks regular option', () => {
+    const onSubmit = jest.fn().mockImplementation(() => Promise.resolve());
+    const { container } = render(<MasqueradeWidgetOption {...mockDataStaff} onSubmit={onSubmit} />);
+    const button = getAllByRole(container, 'button', { hidden: true })[0];
+    act(() => {
+      fireEvent.click(button);
+    });
+    expect(onSubmit).toHaveBeenCalled();
+  });
+
+  it('handles the clicks student option', () => {
+    const userNameInputToggle = jest.fn().mockImplementation(() => Promise.resolve());
+    const { container } = render(
+      <MasqueradeWidgetOption {...mockDataStudent} userNameInputToggle={userNameInputToggle} />,
+    );
+    const button = getAllByRole(container, 'button', { hidden: true })[0];
+    act(() => {
+      fireEvent.click(button);
+    });
+    expect(userNameInputToggle).toHaveBeenCalled();
+  });
+});