diff --git a/src/modalities/inference/text/config.py b/src/modalities/inference/text/config.py
index 3f5f2e5a2..8b1310fe5 100644
--- a/src/modalities/inference/text/config.py
+++ b/src/modalities/inference/text/config.py
@@ -18,6 +18,9 @@ class TextInferenceComponentConfig(BaseModel):
     temperature: Optional[float] = 1.0
     eod_token: Optional[str] = "<eod>"
     device: PydanticPytorchDeviceType
+    system_prompt_path: Optional[str] = ""
+    chat_template: str
+    prompt_template: str
 
     @field_validator("device", mode="before")
     def parse_device(cls, device) -> PydanticPytorchDeviceType:
diff --git a/src/modalities/inference/text/inference_component.py b/src/modalities/inference/text/inference_component.py
index 939ccadc0..1bfd69531 100644
--- a/src/modalities/inference/text/inference_component.py
+++ b/src/modalities/inference/text/inference_component.py
@@ -13,6 +13,8 @@ def __init__(
         self,
         model: nn.Module,
         tokenizer: TokenizerWrapper,
+        system_prompt_path: str,
+        chat_template: str,
         prompt_template: str,
         sequence_length: int,
         temperature: float,
@@ -24,10 +26,28 @@ def __init__(
         self.model.eval()
         self.tokenizer = tokenizer
         self.eod_token = eod_token
+        self.chat_template = chat_template
         self.prompt_template = prompt_template
         self.temperature = temperature
         self.sequence_length = sequence_length
         self.device = device
+        self.system_prompt = self._load_system_prompt(system_prompt_path)
+
+    def _load_system_prompt(self, system_prompt_path: str) -> str:
+        if not system_prompt_path:
+            print("ℹ️  No system prompt file specified")
+            return ""
+        try:
+            with open(system_prompt_path, "r", encoding="utf-8") as f:
+                content = f.read().strip()
+            print(f"✅ Loaded system prompt from: {system_prompt_path}")
+            return content
+        except FileNotFoundError:
+            print(f"⚠️  System prompt file not found: {system_prompt_path}, using empty prompt")
+            return ""
+        except Exception as e:
+            print(f"❌ Error loading system prompt: {e}, using empty prompt")
+            return ""
 
     def generate_tokens(
         self,
@@ -38,11 +58,15 @@ def generate_tokens(
         input_token_ids = torch.IntTensor(token_ids_list).to(self.device).unsqueeze(0)
         input_dict = {"input_ids": input_token_ids}
 
-        print("--------------------PROMPT--------------------")
+        print("\n" + "=" * 60)
+        print("🤖 PROMPT")
+        print("=" * 60)
         context_decoded = self.tokenizer.decode(token_ids_list)
-        print("Prompt: ", context_decoded, end="")
+        print(context_decoded)
 
-        print("\n\n--------------------OUTPUT--------------------\n")
+        print("\n" + "=" * 60)
+        print("💬 RESPONSE")
+        print("=" * 60)
         generated_token_ids = []
         generated_text_old = ""
         for _ in range(max_new_tokens):
@@ -61,7 +85,8 @@ def generate_tokens(
             generated_text_new = self.tokenizer.decode(generated_token_ids)
 
             if idx_next_str == self.eod_token:
-                print("\n<reached end of document token>", end="")
+                print("\n\n" + "─" * 40)
+                print("✅ Reached end of document token")
                 break
             else:
                 diff_text = generated_text_new[len(generated_text_old) :]
@@ -71,14 +96,51 @@ def generate_tokens(
                 token_ids_list.append(token_id)
                 input_token_ids = torch.IntTensor(token_ids_list).to(self.device).unsqueeze(0)
                 input_dict = {"input_ids": input_token_ids}
-        print("\n max tokens reached", end="")
+        else:
+            print("\n\n" + "─" * 40)
+            print("⚠️  Maximum tokens reached")
 
     def run(self):
-        prompt = TextInferenceComponent._get_prompt(self.prompt_template)
-        try:
-            self.generate_tokens(context=prompt)
-        except KeyboardInterrupt:
-            print("closing app...")
+        print("\n" + "🚀 Modalities Chat Interface ".center(60, "="))
+        print("=" * 60)
+
+        while True:
+            try:
+                user_prompt = self._get_prompt(self.prompt_template)
+                full_prompt = self.chat_template.format(system_prompt=self.system_prompt, user_prompt=user_prompt)
+
+                temp_input = input("\n🌡️  Enter temperatures (comma-separated) or press Enter for default [0.8]: ")
+
+                if not temp_input.strip():
+                    temperatures = [0.8]
+                    print("Using default temperature: 0.8")
+                else:
+                    try:
+                        temperatures = [float(t.strip()) for t in temp_input.split(",")]
+                        if not temperatures:
+                            raise ValueError("No temperatures provided.")
+                    except ValueError:
+                        print("\n❌ Invalid input. Please enter comma-separated numbers or press Enter for default.\n")
+                        continue
+
+                for i, temp in enumerate(temperatures):
+                    if len(temperatures) > 1:
+                        print(f"\n\n{'🎯 GENERATION ' + str(i+1) + f' (Temperature: {temp})'.center(60, '=')}")
+                    else:
+                        print(f"\n\n{'🎯 GENERATING (Temperature: ' + str(temp) + ')'.center(60, '=')}")
+                    self.temperature = temp
+                    try:
+                        self.generate_tokens(context=full_prompt)
+                    except KeyboardInterrupt:
+                        print("\n\n👋 Generation interrupted by user.")
+                        continue
+
+                print("\n\n" + "🏁 ALL GENERATIONS COMPLETE".center(60, "="))
+                print("=" * 60)
+
+            except KeyboardInterrupt:
+                print("\n\n👋 Closing app... Goodbye!")
+                break
 
     @staticmethod
     def _get_prompt(template: str) -> str:
diff --git a/tests/test_inference.py b/tests/test_inference.py
new file mode 100644
index 000000000..d6f0079e0
--- /dev/null
+++ b/tests/test_inference.py
@@ -0,0 +1,144 @@
+import tempfile
+from io import StringIO
+from pathlib import Path
+from unittest.mock import patch
+
+import pytest
+import torch
+
+from modalities.config.config import load_app_config_dict
+from modalities.inference.text.inference_component import TextInferenceComponent
+from modalities.models.utils import ModelTypeEnum, get_model_from_config
+from modalities.tokenization.tokenizer_wrapper import PreTrainedHFTokenizer
+
+
+@pytest.fixture
+def gpt2_model_and_tokenizer():
+    config_file_path = Path("tests/test_yaml_configs/gpt2_config_optimizer.yaml")
+    config_dict = load_app_config_dict(config_file_path=config_file_path)
+    model = get_model_from_config(config=config_dict, model_type=ModelTypeEnum.MODEL)
+    tokenizer_path = Path("data/tokenizer/hf_gpt2")
+    tokenizer = PreTrainedHFTokenizer(
+        pretrained_model_name_or_path=tokenizer_path, max_length=None, truncation=None, padding=False
+    )
+    return model, tokenizer
+
+
+@pytest.fixture
+def temp_system_prompt_file():
+    with tempfile.NamedTemporaryFile(mode="w", suffix=".txt", delete=False) as f:
+        f.write("You are a helpful AI assistant.")
+        temp_path = f.name
+    yield temp_path
+    Path(temp_path).unlink()
+
+
+class TestTextInferenceComponent:
+    # Test actual inference with real model and tokenizer
+    def test_actual_inference_greedy_decoding(self, gpt2_model_and_tokenizer):
+        """Test greedy decoding with real model produces deterministic output."""
+        model, tokenizer = gpt2_model_and_tokenizer
+
+        component = TextInferenceComponent(
+            model=model,
+            tokenizer=tokenizer,
+            system_prompt_path="",
+            chat_template="{user_prompt}",
+            prompt_template="{text}",
+            sequence_length=20,
+            temperature=0.0,  # Greedy decoding
+            eod_token="<|endoftext|>",
+            device=torch.device("cpu"),
+        )
+
+        # Run inference twice with same input
+        outputs = []
+        for _ in range(2):
+            with patch("sys.stdout", new_callable=StringIO) as mock_stdout:
+                component.generate_tokens("The weather today is")
+                outputs.append(mock_stdout.getvalue())
+        assert outputs[0] == outputs[1], "Greedy decoding should produce deterministic outputs"
+
+    def test_actual_inference_with_different_temperatures(self, gpt2_model_and_tokenizer):
+        """Test that different temperatures produce different outputs."""
+        model, tokenizer = gpt2_model_and_tokenizer
+
+        def run_inference_with_temperature(temp):
+            component = TextInferenceComponent(
+                model=model,
+                tokenizer=tokenizer,
+                system_prompt_path="",
+                chat_template="{user_prompt}",
+                prompt_template="{text}",
+                sequence_length=15,
+                temperature=temp,
+                eod_token="<|endoftext|>",
+                device=torch.device("cpu"),
+            )
+
+            with patch("sys.stdout", new_callable=StringIO) as mock_stdout:
+                component.generate_tokens("Hello world")
+                return mock_stdout.getvalue()
+
+        # Should produce different outputs
+        torch.manual_seed(42)
+        output_greedy = run_inference_with_temperature(0.0)
+        torch.manual_seed(42)
+        output_sampling = run_inference_with_temperature(1.0)
+
+        assert output_greedy != output_sampling, "Greedy and sampling outputs should be different"
+
+    def test_run_method_multiple_temperatures(self, gpt2_model_and_tokenizer, temp_system_prompt_file):
+        """Test the run() method with multiple temperature inputs."""
+        model, tokenizer = gpt2_model_and_tokenizer
+
+        component = TextInferenceComponent(
+            model=model,
+            tokenizer=tokenizer,
+            system_prompt_path=temp_system_prompt_file,
+            chat_template="System: {system_prompt}\nUser: {user_prompt}\nAssistant:",
+            prompt_template="What is {topic}?",
+            sequence_length=20,
+            temperature=0.7,
+            eod_token="<|endoftext|>",
+            device=torch.device("cpu"),
+        )
+        mock_inputs = ["science", "0.3, 0.8, 1.2", KeyboardInterrupt()]
+        with patch("builtins.input", side_effect=mock_inputs):
+            with patch("sys.stdout", new_callable=StringIO) as mock_stdout:
+                component.run()
+
+        output = mock_stdout.getvalue()
+
+        # Verify multiple generations occurred
+        assert "(Temperature: 0.3)" in output
+        assert "(Temperature: 0.8)" in output
+        assert "(Temperature: 1.2)" in output
+        assert "🏁 ALL GENERATIONS COMPLETE" in output
+
+    def test_run_method_default_temperature(self, gpt2_model_and_tokenizer, temp_system_prompt_file):
+        """Test the run() method with default temperature (empty input)."""
+        model, tokenizer = gpt2_model_and_tokenizer
+
+        component = TextInferenceComponent(
+            model=model,
+            tokenizer=tokenizer,
+            system_prompt_path=temp_system_prompt_file,
+            chat_template="System: {system_prompt}\nUser: {user_prompt}\nAssistant:",
+            prompt_template="What is {topic}?",
+            sequence_length=20,
+            temperature=0.7,
+            eod_token="<|endoftext|>",
+            device=torch.device("cpu"),
+        )
+
+        mock_inputs = ["machine learning", "", KeyboardInterrupt()]
+
+        with patch("builtins.input", side_effect=mock_inputs):
+            with patch("sys.stdout", new_callable=StringIO) as mock_stdout:
+                component.run()
+
+        output = mock_stdout.getvalue()
+
+        # Verify default temperature was used
+        assert "Using default temperature: 0.8" in output