diff --git a/services/surfaceflinger/tests/unittests/Android.bp b/services/surfaceflinger/tests/unittests/Android.bp
index 87c3c65..a5b508a 100644
--- a/services/surfaceflinger/tests/unittests/Android.bp
+++ b/services/surfaceflinger/tests/unittests/Android.bp
@@ -105,6 +105,7 @@
         "SurfaceFlinger_DisplayTransactionCommitTest.cpp",
         "SurfaceFlinger_GetDisplayNativePrimariesTest.cpp",
         "SurfaceFlinger_HotplugTest.cpp",
+        "SurfaceFlinger_MultiDisplayLeaderTest.cpp",
         "SurfaceFlinger_NotifyPowerBoostTest.cpp",
         "SurfaceFlinger_OnInitializeDisplaysTest.cpp",
         "SurfaceFlinger_PowerHintTest.cpp",
diff --git a/services/surfaceflinger/tests/unittests/DisplayTransactionTestHelpers.h b/services/surfaceflinger/tests/unittests/DisplayTransactionTestHelpers.h
index 23a8bd1..57d1d9c 100644
--- a/services/surfaceflinger/tests/unittests/DisplayTransactionTestHelpers.h
+++ b/services/surfaceflinger/tests/unittests/DisplayTransactionTestHelpers.h
@@ -503,14 +503,16 @@
     static constexpr auto GET_IDENTIFICATION_DATA = getInternalEdid;
 };
 
-template <bool hasIdentificationData>
-struct ExternalDisplay {
-    static constexpr auto CONNECTION_TYPE = ui::DisplayConnectionType::External;
+template <ui::DisplayConnectionType connectionType, bool hasIdentificationData>
+struct SecondaryDisplay {
+    static constexpr auto CONNECTION_TYPE = connectionType;
     static constexpr Primary PRIMARY = Primary::FALSE;
     static constexpr uint8_t PORT = 254;
     static constexpr HWDisplayId HWC_DISPLAY_ID = 1002;
     static constexpr bool HAS_IDENTIFICATION_DATA = hasIdentificationData;
-    static constexpr auto GET_IDENTIFICATION_DATA = getExternalEdid;
+    static constexpr auto GET_IDENTIFICATION_DATA =
+            connectionType == ui::DisplayConnectionType::Internal ? getInternalEdid
+                                                                  : getExternalEdid;
 };
 
 struct TertiaryDisplay {
@@ -521,7 +523,16 @@
 };
 
 using PrimaryDisplayVariant = PhysicalDisplayVariant<PrimaryDisplay<false>, 3840, 2160>;
-using ExternalDisplayVariant = PhysicalDisplayVariant<ExternalDisplay<false>, 1920, 1280>;
+
+using InnerDisplayVariant = PhysicalDisplayVariant<PrimaryDisplay<true>, 1840, 2208>;
+using OuterDisplayVariant =
+        PhysicalDisplayVariant<SecondaryDisplay<ui::DisplayConnectionType::Internal, true>, 1080,
+                               2092>;
+
+using ExternalDisplayVariant =
+        PhysicalDisplayVariant<SecondaryDisplay<ui::DisplayConnectionType::External, false>, 1920,
+                               1280>;
+
 using TertiaryDisplayVariant = PhysicalDisplayVariant<TertiaryDisplay, 1600, 1200>;
 
 // A virtual display not supported by the HWC.
diff --git a/services/surfaceflinger/tests/unittests/SurfaceFlinger_MultiDisplayLeaderTest.cpp b/services/surfaceflinger/tests/unittests/SurfaceFlinger_MultiDisplayLeaderTest.cpp
new file mode 100644
index 0000000..9c58943
--- /dev/null
+++ b/services/surfaceflinger/tests/unittests/SurfaceFlinger_MultiDisplayLeaderTest.cpp
@@ -0,0 +1,81 @@
+/*
+ * Copyright 2023 The Android Open Source Project
+ *
+ * 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.
+ */
+
+#undef LOG_TAG
+#define LOG_TAG "LibSurfaceFlingerUnittests"
+
+#include "DisplayTransactionTestHelpers.h"
+
+#include <gmock/gmock.h>
+#include <gtest/gtest.h>
+
+namespace android {
+namespace {
+
+struct MultiDisplayLeaderTest : DisplayTransactionTest {
+    static constexpr bool kWithMockScheduler = false;
+    MultiDisplayLeaderTest() : DisplayTransactionTest(kWithMockScheduler) {}
+};
+
+TEST_F(MultiDisplayLeaderTest, foldable) {
+    injectMockScheduler(InnerDisplayVariant::DISPLAY_ID::get());
+
+    // Inject inner and outer displays with uninitialized power modes.
+    sp<DisplayDevice> innerDisplay, outerDisplay;
+    constexpr bool kInitPowerMode = false;
+    {
+        InnerDisplayVariant::injectHwcDisplay<kInitPowerMode>(this);
+        auto injector = InnerDisplayVariant::makeFakeExistingDisplayInjector(this);
+        injector.setPowerMode(std::nullopt);
+        injector.setRefreshRateSelector(mFlinger.scheduler()->refreshRateSelector());
+        innerDisplay = injector.inject();
+    }
+    {
+        OuterDisplayVariant::injectHwcDisplay<kInitPowerMode>(this);
+        auto injector = OuterDisplayVariant::makeFakeExistingDisplayInjector(this);
+        injector.setPowerMode(std::nullopt);
+        outerDisplay = injector.inject();
+    }
+
+    // When the device boots, the inner display should be the leader.
+    ASSERT_EQ(mFlinger.scheduler()->leaderDisplayId(), innerDisplay->getPhysicalId());
+
+    // ...and should still be after powering on.
+    mFlinger.setPowerModeInternal(innerDisplay, PowerMode::ON);
+    ASSERT_EQ(mFlinger.scheduler()->leaderDisplayId(), innerDisplay->getPhysicalId());
+
+    // The outer display should become the leader after folding.
+    mFlinger.setPowerModeInternal(innerDisplay, PowerMode::OFF);
+    mFlinger.setPowerModeInternal(outerDisplay, PowerMode::ON);
+    ASSERT_EQ(mFlinger.scheduler()->leaderDisplayId(), outerDisplay->getPhysicalId());
+
+    // The inner display should become the leader after unfolding.
+    mFlinger.setPowerModeInternal(outerDisplay, PowerMode::OFF);
+    mFlinger.setPowerModeInternal(innerDisplay, PowerMode::ON);
+    ASSERT_EQ(mFlinger.scheduler()->leaderDisplayId(), innerDisplay->getPhysicalId());
+
+    // The inner display should stay the leader if both are powered on.
+    // TODO(b/256196556): The leader should depend on the displays' VSYNC phases.
+    mFlinger.setPowerModeInternal(outerDisplay, PowerMode::ON);
+    ASSERT_EQ(mFlinger.scheduler()->leaderDisplayId(), innerDisplay->getPhysicalId());
+
+    // The outer display should become the leader if designated.
+    mFlinger.scheduler()->setLeaderDisplay(outerDisplay->getPhysicalId());
+    ASSERT_EQ(mFlinger.scheduler()->leaderDisplayId(), outerDisplay->getPhysicalId());
+}
+
+} // namespace
+} // namespace android
diff --git a/services/surfaceflinger/tests/unittests/SurfaceFlinger_SetPowerModeInternalTest.cpp b/services/surfaceflinger/tests/unittests/SurfaceFlinger_SetPowerModeInternalTest.cpp
index a0aaa68..e5f7e65 100644
--- a/services/surfaceflinger/tests/unittests/SurfaceFlinger_SetPowerModeInternalTest.cpp
+++ b/services/surfaceflinger/tests/unittests/SurfaceFlinger_SetPowerModeInternalTest.cpp
@@ -484,38 +484,5 @@
     transitionDisplayCommon<ExternalDisplayPowerCase<TransitionOnToUnknownVariant>>();
 }
 
-// TODO(b/262417075)
-TEST_F(SetPowerModeInternalTest, DISABLED_designatesLeaderDisplay) {
-    using Case = SimplePrimaryDisplayCase;
-
-    // --------------------------------------------------------------------
-    // Preconditions
-
-    // Inject a primary display with uninitialized power mode.
-    constexpr bool kInitPowerMode = false;
-    Case::Display::injectHwcDisplay<kInitPowerMode>(this);
-    auto injector = Case::Display::makeFakeExistingDisplayInjector(this);
-    injector.setPowerMode(std::nullopt);
-    const auto display = injector.inject();
-
-    // --------------------------------------------------------------------
-    // Invocation
-
-    // FakeDisplayDeviceInjector registers the display with Scheduler, so it has already been
-    // designated as the leader. Set an arbitrary leader to verify that `setPowerModeInternal`
-    // designates a leader regardless of any preceding `Scheduler::registerDisplay` call(s).
-    constexpr PhysicalDisplayId kPlaceholderId = PhysicalDisplayId::fromPort(42);
-    ASSERT_NE(display->getPhysicalId(), kPlaceholderId);
-    mFlinger.scheduler()->setLeaderDisplay(kPlaceholderId);
-
-    mFlinger.setPowerModeInternal(display, PowerMode::ON);
-
-    // --------------------------------------------------------------------
-    // Postconditions
-
-    // The primary display should be designated as the leader.
-    EXPECT_EQ(mFlinger.scheduler()->leaderDisplayId(), display->getPhysicalId());
-}
-
 } // namespace
 } // namespace android