diff --git a/src/composition-api/reactivity/computed.ts b/src/composition-api/reactivity/computed.ts
index 91924b24d..b9daf8abf 100644
--- a/src/composition-api/reactivity/computed.ts
+++ b/src/composition-api/reactivity/computed.ts
@@ -18,3 +18,7 @@ export interface WritableComputedOptions<T> {
   get: ComputedGetter<T>
   set: ComputedSetter<T>
 }
+
+export function computed() {
+  // TODO
+}
diff --git a/src/composition-api/reactivity/effect.ts b/src/composition-api/reactivity/effect.ts
index 895e20301..e6bcaaeb1 100644
--- a/src/composition-api/reactivity/effect.ts
+++ b/src/composition-api/reactivity/effect.ts
@@ -52,3 +52,6 @@ export class ReactiveEffect<T = any> {
     this.active = false
   }
 }
+
+// since we are not exposing this in Vue 2, it's used only for internal testing.
+export const effect = (fn: () => any) => new ReactiveEffect(fn)
diff --git a/src/composition-api/reactivity/reactive.ts b/src/composition-api/reactivity/reactive.ts
index 1cd310a85..db0ce06af 100644
--- a/src/composition-api/reactivity/reactive.ts
+++ b/src/composition-api/reactivity/reactive.ts
@@ -1,5 +1,6 @@
 import { observe, Observer } from 'core/observer'
-import { Ref, UnwrapRefSimple } from './ref'
+import { def, isPrimitive, warn } from 'core/util'
+import type { Ref, UnwrapRefSimple, RawSymbol } from './ref'
 
 export const enum ReactiveFlags {
   SKIP = '__v_skip',
@@ -25,7 +26,10 @@ export function reactive<T extends object>(target: T): UnwrapNestedRefs<T>
 export function reactive(target: object) {
   // if trying to observe a readonly proxy, return the readonly version.
   if (!isReadonly(target)) {
-    observe(target)
+    const ob = observe(target)
+    if (__DEV__ && !ob && (target == null || isPrimitive(target))) {
+      warn(`value cannot be made reactive: ${String(target)}`)
+    }
   }
   return target
 }
@@ -42,3 +46,15 @@ export function isReadonly(value: unknown): boolean {
   // TODO
   return !!(value && (value as Target).__v_isReadonly)
 }
+
+export function toRaw<T>(observed: T): T {
+  // TODO for readonly
+  return observed
+}
+
+export function markRaw<T extends object>(
+  value: T
+): T & { [RawSymbol]?: true } {
+  def(value, ReactiveFlags.SKIP, true)
+  return value
+}
diff --git a/src/composition-api/reactivity/ref.ts b/src/composition-api/reactivity/ref.ts
index 960b198ba..b0c9c4a0e 100644
--- a/src/composition-api/reactivity/ref.ts
+++ b/src/composition-api/reactivity/ref.ts
@@ -1,5 +1,5 @@
 import { defineReactive } from 'core/observer/index'
-import { isReactive, ShallowReactiveMarker } from './reactive'
+import { isReactive, type ShallowReactiveMarker } from './reactive'
 import type { IfAny } from 'typescript/utils'
 import Dep from 'core/observer/dep'
 import { warn, isArray } from 'core/util'
diff --git a/src/core/instance/init.ts b/src/core/instance/init.ts
index 6a58c432d..aaf55a35d 100644
--- a/src/core/instance/init.ts
+++ b/src/core/instance/init.ts
@@ -26,8 +26,11 @@ export function initMixin(Vue: Component) {
       mark(startTag)
     }
 
-    // a flag to avoid this being observed
+    // a flag to mark this as a Vue instance without having to do instanceof
+    // check
     vm._isVue = true
+    // avoid instances from being observed
+    vm.__v_skip = true
     // merge options
     if (options && options._isComponent) {
       // optimize internal component instantiation
diff --git a/src/core/observer/index.ts b/src/core/observer/index.ts
index 8a2da69e1..7f688d423 100644
--- a/src/core/observer/index.ts
+++ b/src/core/observer/index.ts
@@ -120,7 +120,7 @@ export function observe(value: any, asRootData?: boolean): Observer | void {
     !isServerRendering() &&
     (isArray(value) || isPlainObject(value)) &&
     Object.isExtensible(value) &&
-    !value._isVue
+    !value.__v_skip
   ) {
     ob = new Observer(value)
   }
diff --git a/test/helpers/to-have-warned.ts b/test/helpers/to-have-warned.ts
index 2aca2bdcf..cba4bc0ca 100644
--- a/test/helpers/to-have-warned.ts
+++ b/test/helpers/to-have-warned.ts
@@ -27,7 +27,7 @@ expect.extend({
   toHaveBeenWarnedLast(received: string) {
     asserted.add(received)
     const passed =
-      warn.mock.calls[warn.mock.calls.length - 1][0].includes(received)
+      warn.mock.calls[warn.mock.calls.length - 1]?.[0].includes(received)
     if (passed) {
       return {
         pass: true,
diff --git a/test/unit/features/composition-api/reactivity/reactive.spec.ts b/test/unit/features/composition-api/reactivity/reactive.spec.ts
new file mode 100644
index 000000000..5d03554ef
--- /dev/null
+++ b/test/unit/features/composition-api/reactivity/reactive.spec.ts
@@ -0,0 +1,284 @@
+import { ref, isRef } from 'vca/reactivity/ref'
+import { reactive, isReactive, toRaw, markRaw } from 'vca/reactivity/reactive'
+import { effect } from 'vca/reactivity/effect'
+import { set } from 'core/observer'
+// TODO import { computed } from 'vca/reactivity/computed'
+
+describe('reactivity/reactive', () => {
+  test('Object', () => {
+    const original = { foo: 1 }
+    const observed = reactive(original)
+    // @discrepancy Vue 2 does not create proxy objects
+    // expect(observed).not.toBe(original)
+    expect(isReactive(observed)).toBe(true)
+    // @discrepancy Vue 2 does not create proxy objects
+    // expect(isReactive(original)).toBe(false)
+    // get
+    expect(observed.foo).toBe(1)
+    // has
+    expect('foo' in observed).toBe(true)
+    // ownKeys
+    expect(Object.keys(observed)).toEqual(['foo'])
+  })
+
+  test('proto', () => {
+    const obj = {}
+    const reactiveObj = reactive(obj)
+    expect(isReactive(reactiveObj)).toBe(true)
+    // read prop of reactiveObject will cause reactiveObj[prop] to be reactive
+    // @ts-ignore
+    const prototype = reactiveObj['__proto__']
+    const otherObj = { data: ['a'] }
+    expect(isReactive(otherObj)).toBe(false)
+    const reactiveOther = reactive(otherObj)
+    expect(isReactive(reactiveOther)).toBe(true)
+    expect(reactiveOther.data[0]).toBe('a')
+  })
+
+  test('nested reactives', () => {
+    const original = {
+      nested: {
+        foo: 1
+      },
+      array: [{ bar: 2 }]
+    }
+    const observed = reactive(original)
+    expect(isReactive(observed.nested)).toBe(true)
+    expect(isReactive(observed.array)).toBe(true)
+    expect(isReactive(observed.array[0])).toBe(true)
+  })
+
+  // @discrepancy Vue 2 does not support collections
+  // test('observing subtypes of IterableCollections(Map, Set)', () => {
+  //   // subtypes of Map
+  //   class CustomMap extends Map {}
+  //   const cmap = reactive(new CustomMap())
+
+  //   expect(cmap instanceof Map).toBe(true)
+  //   expect(isReactive(cmap)).toBe(true)
+
+  //   cmap.set('key', {})
+  //   expect(isReactive(cmap.get('key'))).toBe(true)
+
+  //   // subtypes of Set
+  //   class CustomSet extends Set {}
+  //   const cset = reactive(new CustomSet())
+
+  //   expect(cset instanceof Set).toBe(true)
+  //   expect(isReactive(cset)).toBe(true)
+
+  //   let dummy
+  //   effect(() => (dummy = cset.has('value')))
+  //   expect(dummy).toBe(false)
+  //   cset.add('value')
+  //   expect(dummy).toBe(true)
+  //   cset.delete('value')
+  //   expect(dummy).toBe(false)
+  // })
+
+  // test('observing subtypes of WeakCollections(WeakMap, WeakSet)', () => {
+  //   // subtypes of WeakMap
+  //   class CustomMap extends WeakMap {}
+  //   const cmap = reactive(new CustomMap())
+
+  //   expect(cmap instanceof WeakMap).toBe(true)
+  //   expect(isReactive(cmap)).toBe(true)
+
+  //   const key = {}
+  //   cmap.set(key, {})
+  //   expect(isReactive(cmap.get(key))).toBe(true)
+
+  //   // subtypes of WeakSet
+  //   class CustomSet extends WeakSet {}
+  //   const cset = reactive(new CustomSet())
+
+  //   expect(cset instanceof WeakSet).toBe(true)
+  //   expect(isReactive(cset)).toBe(true)
+
+  //   let dummy
+  //   effect(() => (dummy = cset.has(key)))
+  //   expect(dummy).toBe(false)
+  //   cset.add(key)
+  //   expect(dummy).toBe(true)
+  //   cset.delete(key)
+  //   expect(dummy).toBe(false)
+  // })
+
+  test('observed value should proxy mutations to original (Object)', () => {
+    const original: any = { foo: 1 }
+    const observed = reactive(original)
+    // set
+    observed.bar = 1
+    expect(observed.bar).toBe(1)
+    expect(original.bar).toBe(1)
+    // delete
+    delete observed.foo
+    expect('foo' in observed).toBe(false)
+    expect('foo' in original).toBe(false)
+  })
+
+  test('original value change should reflect in observed value (Object)', () => {
+    const original: any = { foo: 1 }
+    const observed = reactive(original)
+    // set
+    original.bar = 1
+    expect(original.bar).toBe(1)
+    expect(observed.bar).toBe(1)
+    // delete
+    delete original.foo
+    expect('foo' in original).toBe(false)
+    expect('foo' in observed).toBe(false)
+  })
+
+  test('setting a property with an unobserved value should wrap with reactive', () => {
+    const observed = reactive<{ foo?: object }>({})
+    const raw = {}
+    set(observed, 'foo', raw)
+    // @discrepancy not a proxy
+    // expect(observed.foo).not.toBe(raw)
+    expect(isReactive(observed.foo)).toBe(true)
+  })
+
+  test('observing already observed value should return same Proxy', () => {
+    const original = { foo: 1 }
+    const observed = reactive(original)
+    const observed2 = reactive(observed)
+    expect(observed2).toBe(observed)
+  })
+
+  test('observing the same value multiple times should return same Proxy', () => {
+    const original = { foo: 1 }
+    const observed = reactive(original)
+    const observed2 = reactive(original)
+    expect(observed2).toBe(observed)
+  })
+
+  test('should not pollute original object with Proxies', () => {
+    const original: any = { foo: 1 }
+    const original2 = { bar: 2 }
+    const observed = reactive(original)
+    const observed2 = reactive(original2)
+    observed.bar = observed2
+    expect(observed.bar).toBe(observed2)
+    expect(original.bar).toBe(original2)
+  })
+
+  test('toRaw', () => {
+    const original = { foo: 1 }
+    const observed = reactive(original)
+    expect(toRaw(observed)).toBe(original)
+    expect(toRaw(original)).toBe(original)
+  })
+
+  test('toRaw on object using reactive as prototype', () => {
+    const original = reactive({})
+    const obj = Object.create(original)
+    const raw = toRaw(obj)
+    expect(raw).toBe(obj)
+    expect(raw).not.toBe(toRaw(original))
+  })
+
+  test('should not unwrap Ref<T>', () => {
+    const observedNumberRef = reactive(ref(1))
+    const observedObjectRef = reactive(ref({ foo: 1 }))
+
+    expect(isRef(observedNumberRef)).toBe(true)
+    expect(isRef(observedObjectRef)).toBe(true)
+  })
+
+  // TODO
+  // test('should unwrap computed refs', () => {
+  //   // readonly
+  //   const a = computed(() => 1)
+  //   // writable
+  //   const b = computed({
+  //     get: () => 1,
+  //     set: () => {}
+  //   })
+  //   const obj = reactive({ a, b })
+  //   // check type
+  //   obj.a + 1
+  //   obj.b + 1
+  //   expect(typeof obj.a).toBe(`number`)
+  //   expect(typeof obj.b).toBe(`number`)
+  // })
+
+  test('should allow setting property from a ref to another ref', () => {
+    const foo = ref(0)
+    const bar = ref(1)
+    const observed = reactive({ a: foo })
+    let dummy
+    effect(() => {
+      dummy = observed.a
+    })
+    expect(dummy).toBe(0)
+
+    // @ts-ignore
+    observed.a = bar
+    expect(dummy).toBe(1)
+
+    bar.value++
+    expect(dummy).toBe(2)
+  })
+
+  test('non-observable values', () => {
+    const assertValue = (value: any) => {
+      reactive(value)
+      expect(
+        `value cannot be made reactive: ${String(value)}`
+      ).toHaveBeenWarnedLast()
+    }
+
+    // number
+    assertValue(1)
+    // string
+    assertValue('foo')
+    // boolean
+    assertValue(false)
+    // null
+    assertValue(null)
+    // undefined
+    assertValue(undefined)
+    // symbol
+    const s = Symbol()
+    assertValue(s)
+
+    // built-ins should work and return same value
+    const p = Promise.resolve()
+    expect(reactive(p)).toBe(p)
+    const r = new RegExp('')
+    expect(reactive(r)).toBe(r)
+    const d = new Date()
+    expect(reactive(d)).toBe(d)
+  })
+
+  test('markRaw', () => {
+    const obj = reactive({
+      foo: { a: 1 },
+      bar: markRaw({ b: 2 })
+    })
+    expect(isReactive(obj.foo)).toBe(true)
+    expect(isReactive(obj.bar)).toBe(false)
+  })
+
+  test('should not observe non-extensible objects', () => {
+    const obj = reactive({
+      foo: Object.preventExtensions({ a: 1 }),
+      // sealed or frozen objects are considered non-extensible as well
+      bar: Object.freeze({ a: 1 }),
+      baz: Object.seal({ a: 1 })
+    })
+    expect(isReactive(obj.foo)).toBe(false)
+    expect(isReactive(obj.bar)).toBe(false)
+    expect(isReactive(obj.baz)).toBe(false)
+  })
+
+  test('should not observe objects with __v_skip', () => {
+    const original = {
+      foo: 1,
+      __v_skip: true
+    }
+    const observed = reactive(original)
+    expect(isReactive(observed)).toBe(false)
+  })
+})
diff --git a/test/unit/features/composition-api/reactivity/ref.spec.ts b/test/unit/features/composition-api/reactivity/ref.spec.ts
index d696348e2..fd20dae85 100644
--- a/test/unit/features/composition-api/reactivity/ref.spec.ts
+++ b/test/unit/features/composition-api/reactivity/ref.spec.ts
@@ -9,11 +9,9 @@ import {
   customRef,
   Ref
 } from 'vca/reactivity/ref'
-import { ReactiveEffect } from 'vca/reactivity/effect'
+import { effect } from 'vca/reactivity/effect'
 import { isReactive, isShallow, reactive } from 'vca/reactivity/reactive'
 
-const effect = (fn: () => any) => new ReactiveEffect(fn)
-
 describe('reactivity/ref', () => {
   it('should hold a value', () => {
     const a = ref(1)
@@ -117,7 +115,7 @@ describe('reactivity/ref', () => {
     expect((arr[1] as Ref).value).toBe(3)
   })
 
-  // Vue 2 does not observe array properties
+  // @discrepancy Vue 2 does not observe array properties
   // it('should unwrap ref types as props of arrays', () => {
   //   const arr = [ref(0)]
   //   const symbolKey = Symbol('')