diff --git a/pkg/test/step.go b/pkg/test/step.go
index 2c0b605d..89d33c3b 100644
--- a/pkg/test/step.go
+++ b/pkg/test/step.go
@@ -4,12 +4,15 @@ import (
 	"context"
 	"errors"
 	"fmt"
+	"os"
 	"path/filepath"
 	"regexp"
 	"strings"
 	"testing"
 	"time"
 
+	"gopkg.in/yaml.v2"
+
 	k8serrors "k8s.io/apimachinery/pkg/api/errors"
 	"k8s.io/apimachinery/pkg/apis/meta/v1/unstructured"
 	"k8s.io/apimachinery/pkg/runtime"
@@ -561,6 +564,11 @@ func (s *Step) LoadYAML(file string) error {
 	for _, apply := range s.Apply {
 		if apply.object.GetObjectKind().GroupVersionKind().Kind == "TestStep" {
 			if testStep, ok := apply.object.(*harness.TestStep); ok {
+				// validate yaml files and teststep fields for TestStep objects
+				err := testStepYamlValidate(testStep, s.Dir)
+				if err != nil {
+					return fmt.Errorf("failed to validate TestStep object from %s, error: %v", file, err)
+				}
 				if s.Step != nil {
 					return fmt.Errorf("more than 1 TestStep not allowed in step %q", s.Name)
 				}
@@ -688,3 +696,71 @@ func hasTimeoutErr(err []error) bool {
 	}
 	return false
 }
+
+func testStepYamlValidate(ts *harness.TestStep, dir string) error {
+	// If apply field is not present, then either command or delete needs to be present,
+	// if both are not specified it should throw an error
+	if len(ts.Apply) == 0 && len(ts.Commands) == 0 && len(ts.Delete) == 0 {
+		return fmt.Errorf("if apply field is not specified either command or delete is expected")
+	}
+
+	// Assert and Error fields require Apply field
+	if (len(ts.Assert) != 0 || len(ts.Error) != 0) && len(ts.Apply) == 0 {
+		return fmt.Errorf("cannot have assert or error field when missing apply field")
+	}
+
+	// Validation for referenced field files
+	for _, Apply := range ts.Apply {
+		err := validateFieldFile(Apply.File, dir)
+		if err != nil {
+			return errors.Join(err, fmt.Errorf("error in apply field"))
+		}
+	}
+	for _, Assert := range ts.Assert {
+		err := validateFieldFile(Assert, dir)
+		if err != nil {
+			return errors.Join(err, fmt.Errorf("error in assert field"))
+		}
+	}
+	for _, Error := range ts.Error {
+		err := validateFieldFile(Error, dir)
+		if err != nil {
+			return errors.Join(err, fmt.Errorf("error in error field"))
+		}
+	}
+
+	return nil
+}
+
+// validateFieldFile checks if the reference file exists
+func validateFieldFile(file string, dir string) error {
+	completeFile := filepath.Join(dir, file)
+	_, err := os.Stat(completeFile)
+	if os.IsNotExist(err) {
+		return fmt.Errorf("the file %s specified in the field does not exist", completeFile)
+	}
+
+	// Check if the file is in yaml format
+	err = validateYAMLFormat(completeFile)
+	if err != nil {
+		return fmt.Errorf("unable to validate yaml format and indentation for file %s", completeFile)
+	}
+
+	return nil
+}
+
+// validateYAMLFormat checks if the yaml file is in correct format and indentation
+func validateYAMLFormat(file string) error {
+	data, err := os.ReadFile(file)
+	if err != nil {
+		return fmt.Errorf("failed to read file %s: %w", file, err)
+	}
+
+	var temp []client.Object
+	err = yaml.Unmarshal(data, &temp)
+	if err != nil {
+		return fmt.Errorf("failed to parse yaml file %s: %w", file, err)
+	}
+
+	return nil
+}