diff --git a/netwerk/test/unit/test_dns_override_for_localhost.js b/netwerk/test/unit/test_dns_override_for_localhost.js
new file mode 100644
index 000000000000..1784e71597ca
--- /dev/null
+++ b/netwerk/test/unit/test_dns_override_for_localhost.js
@@ -0,0 +1,92 @@
+"use strict";
+
+const dns = Cc["@mozilla.org/network/dns-service;1"].getService(
+  Ci.nsIDNSService
+);
+const override = Cc["@mozilla.org/network/native-dns-override;1"].getService(
+  Ci.nsINativeDNSResolverOverride
+);
+const defaultOriginAttributes = {};
+const threadManager = Cc["@mozilla.org/thread-manager;1"].getService(
+  Ci.nsIThreadManager
+);
+const mainThread = threadManager.currentThread;
+
+class Listener {
+  constructor() {
+    this.promise = new Promise(resolve => {
+      this.resolve = resolve;
+    });
+  }
+
+  onLookupComplete(inRequest, inRecord, inStatus) {
+    this.resolve([inRequest, inRecord, inStatus]);
+  }
+
+  async addresses() {
+    let [inRequest, inRecord, inStatus] = await this.promise;
+    let addresses = [];
+    if (!inRecord) {
+      return addresses; // returns []
+    }
+    inRecord.QueryInterface(Ci.nsIDNSAddrRecord);
+    while (inRecord.hasMore()) {
+      addresses.push(inRecord.getNextAddrAsString());
+    }
+    return addresses;
+  }
+
+  then() {
+    return this.promise.then.apply(this.promise, arguments);
+  }
+}
+Listener.prototype.QueryInterface = ChromeUtils.generateQI(["nsIDNSListener"]);
+
+["localhost", "vhost.localhost"].forEach(domain => {
+  add_task(async function test_() {
+    let listener1 = new Listener();
+    const overrides = ["1.2.3.4", "5.6.7.8"];
+    overrides.forEach(ip_address => {
+      override.addIPOverride(domain, ip_address);
+    });
+
+    // Verify that loopback host names are not overridden.
+    dns.asyncResolve(
+      domain,
+      Ci.nsIDNSService.RESOLVE_TYPE_DEFAULT,
+      0,
+      null,
+      listener1,
+      mainThread,
+      defaultOriginAttributes
+    );
+    Assert.deepEqual(
+      await listener1.addresses(),
+      ["127.0.0.1", "::1"],
+      `${domain} is not overridden`
+    );
+
+    // Verify that if localhost hijacking is enabled, the overrides
+    // registered above are taken into account.
+    Services.prefs.setBoolPref("network.proxy.allow_hijacking_localhost", true);
+    let listener2 = new Listener();
+    dns.asyncResolve(
+      domain,
+      Ci.nsIDNSService.RESOLVE_TYPE_DEFAULT,
+      0,
+      null,
+      listener2,
+      mainThread,
+      defaultOriginAttributes
+    );
+    Assert.deepEqual(
+      await listener2.addresses(),
+      overrides,
+      `${domain} is overridden`
+    );
+    Services.prefs.clearUserPref("network.proxy.allow_hijacking_localhost");
+
+    dns.clearCache(false);
+    override.clearOverrides();
+  });
+});
diff --git a/netwerk/test/unit/xpcshell.ini b/netwerk/test/unit/xpcshell.ini
index 6ea64db8a18f..86dbde906fa5 100644
--- a/netwerk/test/unit/xpcshell.ini
+++ b/netwerk/test/unit/xpcshell.ini
@@ -440,6 +440,8 @@ skip-if = asan || tsan || os == 'win' || os =='android'
 [test_defaultURI.js]
 [test_port_remapping.js]
 [test_dns_override.js]
+[test_dns_override_for_localhost.js]
+skip-if = socketprocess_networking # Bug 1640105
 [test_no_cookies_after_last_pb_exit.js]
 [test_trr_httpssvc.js]
 skip-if = os == "android"