diff --git a/e2e-tests/playwright/lib/src/server/index.ts b/e2e-tests/playwright/lib/src/server/index.ts
index f3561c3805e..5be9379db5a 100644
--- a/e2e-tests/playwright/lib/src/server/index.ts
+++ b/e2e-tests/playwright/lib/src/server/index.ts
@@ -8,3 +8,5 @@ export {initSetup, getAdminClient} from './init';
 export {createRandomPost} from './post';
 export {createNewTeam, createRandomTeam} from './team';
 export {createNewUserProfile, createRandomUser, getDefaultAdminUser, isOutsideRemoteUserHour} from './user';
+export {installAndEnablePlugin, isPluginActive, getPluginStatus} from './plugin';
+//getPluginStatus
diff --git a/e2e-tests/playwright/lib/src/server/plugin.ts b/e2e-tests/playwright/lib/src/server/plugin.ts
new file mode 100644
index 00000000000..a15a827415a
--- /dev/null
+++ b/e2e-tests/playwright/lib/src/server/plugin.ts
@@ -0,0 +1,56 @@
+// Copyright (c) 2015-present Mattermost, Inc. All Rights Reserved.
+// See LICENSE.txt for license information.
+
+import {Client4} from '@mattermost/client';
+import {PluginManifest} from '@mattermost/types/plugins';
+
+export async function isPluginActive(client: Client4, pluginId: string): Promise<boolean> {
+    const plugins = await client.getPlugins();
+    return plugins.active.some((plugin: PluginManifest) => plugin.id === pluginId);
+}
+
+export async function getPluginStatus(
+    client: Client4,
+    pluginId: string,
+): Promise<{isInstalled: boolean; isActive: boolean}> {
+    const plugins = await client.getPlugins();
+
+    const isActive = plugins.active.some((plugin: PluginManifest) => plugin.id === pluginId);
+    const isInactive = plugins.inactive.some((plugin: PluginManifest) => plugin.id === pluginId);
+
+    return {
+        isInstalled: isActive || isInactive,
+        isActive,
+    };
+}
+
+/**
+ * Installs and enables a plugin with smart status checking
+ * - If already active: does nothing
+ * - If already installed: just enables it
+ * - Otherwise: installs from URL, then enables
+ */
+export async function installAndEnablePlugin(
+    client: Client4,
+    pluginUrl: string,
+    pluginId: string,
+    force = true,
+): Promise<void> {
+    // Check current status
+    const status = await getPluginStatus(client, pluginId);
+
+    // If already active, nothing to do
+    if (status.isActive) {
+        return;
+    }
+
+    // If already installed but not active, just enable it
+    if (status.isInstalled) {
+        await client.enablePlugin(pluginId);
+        return;
+    }
+
+    // Not installed - install from URL then enable
+    await client.installPluginFromUrl(pluginUrl, force);
+    await client.enablePlugin(pluginId);
+}
diff --git a/e2e-tests/playwright/lib/src/test_fixture.ts b/e2e-tests/playwright/lib/src/test_fixture.ts
index 89b8e869767..c3fb577f2d3 100644
--- a/e2e-tests/playwright/lib/src/test_fixture.ts
+++ b/e2e-tests/playwright/lib/src/test_fixture.ts
@@ -29,6 +29,8 @@ import {
     isOutsideRemoteUserHour,
     makeClient,
     mergeWithOnPremServerConfig,
+    installAndEnablePlugin,
+    isPluginActive,
 } from './server';
 import {
     toBeFocusedWithFocusVisible,
@@ -89,6 +91,8 @@ export class PlaywrightExtended {
     readonly getAdminClient;
     readonly mergeWithOnPremServerConfig;
     readonly initSetup;
+    readonly installAndEnablePlugin;
+    readonly isPluginActive;
 
     // ./test_action
     readonly toBeFocusedWithFocusVisible;
@@ -149,6 +153,8 @@ export class PlaywrightExtended {
         this.getAdminClient = getAdminClient;
         this.mergeWithOnPremServerConfig = mergeWithOnPremServerConfig;
         this.isOutsideRemoteUserHour = isOutsideRemoteUserHour;
+        this.installAndEnablePlugin = installAndEnablePlugin;
+        this.isPluginActive = isPluginActive;
 
         // ./test_action
         this.toBeFocusedWithFocusVisible = toBeFocusedWithFocusVisible;
diff --git a/e2e-tests/playwright/specs/functional/plugins/demo_plugin_installation.spec.ts b/e2e-tests/playwright/specs/functional/plugins/demo_plugin_installation.spec.ts
new file mode 100644
index 00000000000..8085545b436
--- /dev/null
+++ b/e2e-tests/playwright/specs/functional/plugins/demo_plugin_installation.spec.ts
@@ -0,0 +1,52 @@
+// Copyright (c) 2015-present Mattermost, Inc. All Rights Reserved.
+// See LICENSE.txt for license information.
+
+import {test, expect} from '@mattermost/playwright-lib';
+
+test('should install and enable demo plugin from URL', async ({pw}) => {
+    // Create and navigate to channels page
+    const {adminClient, user} = await pw.initSetup();
+    const {channelsPage} = await pw.testBrowser.login(user);
+
+    await channelsPage.goto();
+    await channelsPage.toBeVisible();
+
+    // Enable public links before installing plugin
+    await adminClient.patchConfig({
+        FileSettings: {EnablePublicLink: true},
+        ServiceSettings: {
+            EnableOnboardingFlow: false,
+            EnableTutorial: false,
+        },
+    });
+
+    // Install and enable
+    await pw.installAndEnablePlugin(
+        adminClient,
+        'https://github.com/mattermost/mattermost-plugin-demo/releases/download/v0.10.3/mattermost-plugin-demo-v0.10.3.tar.gz',
+        'com.mattermost.demo-plugin',
+    );
+
+    // Verify it's active (API validation, no UI)
+    await expect
+        .poll(async () => {
+            return await pw.isPluginActive(adminClient, 'com.mattermost.demo-plugin');
+        })
+        .toBe(true);
+
+    // Optional: Get plugin details
+    const plugins = await adminClient.getPlugins();
+    const demoPlugin = plugins.active.find((p) => p.id === 'com.mattermost.demo-plugin');
+    expect(demoPlugin).toBeDefined();
+
+    // Dismiss overlay again if it reappeared after plugin activation
+    await channelsPage.page.keyboard.press('Escape');
+    await channelsPage.page.waitForTimeout(500);
+
+    // UI Validation: Execute slash command and verify response
+    await channelsPage.postMessage('/demo_plugin true');
+
+    const post = await channelsPage.getLastPost();
+    await post.toBeVisible();
+    await post.toContainText('enabled');
+});