diff --git a/examples/configs/recipes/llm/grpo-llama3.2-1b-instruct-1n8g-megatron_generation.yaml b/examples/configs/recipes/llm/grpo-llama3.2-1b-instruct-1n8g-megatron_generation.yaml
new file mode 100644
index 000000000..bb641388d
--- /dev/null
+++ b/examples/configs/recipes/llm/grpo-llama3.2-1b-instruct-1n8g-megatron_generation.yaml
@@ -0,0 +1,36 @@
+defaults: ../../grpo_math_1B.yaml
+grpo:
+  max_num_steps: 500
+checkpointing:
+  enabled: false
+  checkpoint_dir: results/grpo-llama3.2-1b-instruct-1n8g-megatron_generation
+  save_period: 100
+policy:
+  model_name: meta-llama/Llama-3.2-1B-Instruct
+  tokenizer:
+    name: meta-llama/Llama-3.2-1B-Instruct
+  optimizer: null
+  megatron_cfg:
+    enabled: true
+    scheduler:
+      lr_warmup_iters: 50
+  dtensor_cfg:
+    enabled: false
+  make_sequence_length_divisible_by: 1
+  generation:
+    backend: megatron
+    max_new_tokens: 512
+    vllm_cfg:
+      max_model_len: 512
+data:
+  max_input_seq_length: 512
+logger:
+  log_dir: logs/grpo-llama3.2-1b-instruct-1n8g-megatron_generation
+  wandb_enabled: true
+  tensorboard_enabled: true
+  wandb:
+    project: nemo-rl
+    name: grpo-llama3.2-1b-instruct-1n8g-megatron_generation
+cluster:
+  gpus_per_node: 8
+
diff --git a/nemo_rl/algorithms/grpo.py b/nemo_rl/algorithms/grpo.py
index a9d9a1eb6..9041bfe27 100644
--- a/nemo_rl/algorithms/grpo.py
+++ b/nemo_rl/algorithms/grpo.py
@@ -511,7 +511,8 @@ def setup(
 
     # prepare refit info
     state_dict_info = policy.prepare_refit_info()
-    policy_generation.prepare_refit_info(state_dict_info)
+    if policy_generation is not None:
+        policy_generation.prepare_refit_info(state_dict_info)
 
     loss_fn = ClippedPGLossFn(loss_config)
 
diff --git a/nemo_rl/models/policy/megatron_policy_worker.py b/nemo_rl/models/policy/megatron_policy_worker.py
index 3bf211be5..cd67cbdf2 100644
--- a/nemo_rl/models/policy/megatron_policy_worker.py
+++ b/nemo_rl/models/policy/megatron_policy_worker.py
@@ -75,9 +75,6 @@
 from megatron.core.inference.text_generation_controllers.text_generation_controller import (
     TextGenerationController,
 )
-from megatron.core.inference.text_generation_server.run_mcore_engine import (
-    run_mcore_engine,
-)
 from megatron.core.models.gpt import GPTModel
 from megatron.core.optimizer import ChainedOptimizer
 from megatron.core.parallel_state import (
@@ -1755,6 +1752,12 @@ def generate(
         """
         no_grad = torch.no_grad()
         no_grad.__enter__()
+
+        if self.should_disable_forward_pre_hook:
+            self.model = self.move_model(
+                self.model, "cuda", move_params=True, move_grads=False
+            )
+
         self.model.config.flash_decode = True
         # Verify input is right padded
         assert isinstance(data, BatchedDataDict), (
@@ -1783,9 +1786,11 @@ def generate(
         )
 
         from megatron.core.inference.contexts import StaticInferenceContext
+        from megatron.core.inference.inference_request import InferenceRequest
         from megatron.core.inference.model_inference_wrappers.gpt.gpt_inference_wrapper import (
             GPTInferenceWrapper,
         )
+        from megatron.core.inference.sampling_params import SamplingParams
 
         inference_context = StaticInferenceContext.from_config(inference_wrapper_config)
 
@@ -1801,21 +1806,57 @@ def generate(
             max_batch_size=self.cfg["generation_batch_size"],
         )
 
-        # detokenize the prompts
-        # detokenized_prompts = [
-        # self.tokenizer.decode(prompt)
-        # for prompt in data.get("input_ids")
-        # ]
-        # apply chat template
-        out = run_mcore_engine(
-            engine=inference_engine,
-            # prompts = detokenized_prompts,
-            prompt_tokens_tensor=data["input_ids"],
-            prompt_lengths_tensor=data["input_lengths"],
-            tokens_to_generate=self.cfg["generation"]["max_new_tokens"]  # type: ignore
-            - data["input_ids"].size(1),
+        input_ids = data["input_ids"]
+        tokens_to_generate = self.cfg["generation"]["max_new_tokens"] - input_ids.size(
+            1
         )
-        # print(out)
+
+        prompt_tokens_tensor = input_ids
+        prompt_lengths_tensor = data["input_lengths"]
+
+        # Handle None values for top_k - convert to integer as required by Megatron
+        top_k_cfg = self.cfg["generation"]["top_k"]
+        top_k_val = 1 if greedy else (int(top_k_cfg) if top_k_cfg is not None else 0)
+
+        # Use temperature 0.0 for greedy, 1.0 otherwise
+        temperature = 0.0 if greedy else 1.0
+
+        top_p_cfg = self.cfg["generation"]["top_p"]
+        top_p_val = (
+            0.0 if greedy else (float(top_p_cfg) if top_p_cfg is not None else 0.0)
+        )
+
+        sampling_params = SamplingParams(
+            temperature=temperature,
+            top_k=top_k_val,
+            top_p=top_p_val,
+            return_segments=False,
+            return_log_probs=True,
+            num_tokens_to_generate=tokens_to_generate,
+            top_n_logprobs=0,
+            return_prompt_top_n_logprobs=False,
+        )
+        requests = []
+        for p, prompt_len in zip(
+            prompt_tokens_tensor, prompt_lengths_tensor, strict=True
+        ):
+            tokenized_prompt = p[:prompt_len].cpu().numpy().tolist()
+            detokenized_prompt = self.tokenizer.decode(tokenized_prompt)
+            req = InferenceRequest(
+                prompt=detokenized_prompt,
+                prompt_tokens=tokenized_prompt,
+                sampling_params=sampling_params,
+                request_id=inference_engine.get_new_request_id(),
+            )
+            requests.append(req)
+
+        result = inference_engine.generate(inference_requests=requests)
+
+        out = {
+            "text": [x.prompt + x.generated_text for x in result],
+            "tokens": [x.prompt_tokens + x.generated_tokens.tolist() for x in result],
+            "logprobs": [x.prompt_log_probs + x.generated_log_probs for x in result],
+        }
 
         input_lengths = data["input_lengths"]
         # pad the out "tokens" and "logprobs" and make them into tensors from lists
diff --git a/tests/functional/L1_Functional_Tests_GPU.sh b/tests/functional/L1_Functional_Tests_GPU.sh
index 9de07d28b..aa78afc35 100644
--- a/tests/functional/L1_Functional_Tests_GPU.sh
+++ b/tests/functional/L1_Functional_Tests_GPU.sh
@@ -23,6 +23,7 @@ time uv run --no-sync bash ./tests/functional/sft.sh
 time uv run --no-sync bash ./tests/functional/grpo.sh
 time uv run --no-sync bash ./tests/functional/grpo_async.sh
 time uv run --no-sync bash ./tests/functional/grpo_megatron.sh
+time uv run --no-sync bash ./tests/functional/grpo_megatron_generation.sh
 time uv run --no-sync bash ./tests/functional/grpo_multiturn.sh
 time uv run --no-sync bash ./tests/functional/grpo_non_colocated.sh
 time uv run --no-sync bash ./tests/functional/dpo.sh
diff --git a/tests/functional/grpo_megatron_generation.sh b/tests/functional/grpo_megatron_generation.sh
new file mode 100644
index 000000000..984be7e1a
--- /dev/null
+++ b/tests/functional/grpo_megatron_generation.sh
@@ -0,0 +1,46 @@
+#!/bin/bash
+
+SCRIPT_DIR=$( cd -- "$( dirname -- "${BASH_SOURCE[0]}" )" &> /dev/null && pwd)
+PROJECT_ROOT=$(realpath $SCRIPT_DIR/../..)
+# Mark the current repo as safe, since wandb fetches metadata about the repo
+git config --global --add safe.directory $PROJECT_ROOT
+
+set -eou pipefail
+
+EXP_NAME=$(basename $0 .sh)
+EXP_DIR=$SCRIPT_DIR/$EXP_NAME
+LOG_DIR=$EXP_DIR/logs
+JSON_METRICS=$EXP_DIR/metrics.json
+RUN_LOG=$EXP_DIR/run.log
+export PYTHONPATH=${PROJECT_ROOT}:${PYTHONPATH:-}
+
+rm -rf $EXP_DIR $LOG_DIR
+mkdir -p $EXP_DIR $LOG_DIR
+
+# Using Qwen2.5-0.5B instead of Qwen3-0.6B because the latter is not supported by Megatron yet
+cd $PROJECT_ROOT
+uv run coverage run -a --data-file=$PROJECT_ROOT/tests/.coverage --source=$PROJECT_ROOT/nemo_rl \
+    $PROJECT_ROOT/examples/run_grpo_math.py \
+    --config $PROJECT_ROOT/examples/configs/grpo_math_1B_megatron.yaml \
+    policy.model_name=Qwen/Qwen2.5-0.5B \
+    grpo.num_prompts_per_step=2 \
+    grpo.num_generations_per_prompt=4 \
+    policy.train_global_batch_size=4 \
+    policy.logprob_batch_size=4 \
+    policy.train_micro_batch_size=1 \
+    policy.generation.backend=megatron \
+    cluster.gpus_per_node=2 \
+    grpo.max_num_steps=2 \
+    logger.tensorboard_enabled=true \
+    logger.log_dir=$LOG_DIR \
+    logger.wandb_enabled=false \
+    logger.monitor_gpus=true \
+    checkpointing.enabled=false \
+    $@ \
+    2>&1 | tee $RUN_LOG
+
+uv run tests/json_dump_tb_logs.py $LOG_DIR --output_path $JSON_METRICS
+
+uv run tests/check_metrics.py $JSON_METRICS \
+    'max(data["train/token_mult_prob_error"]) < 1.05'
+
diff --git a/tests/test_suites/llm/grpo-llama3.2-1b-instruct-1n8g-megatron_generation.sh b/tests/test_suites/llm/grpo-llama3.2-1b-instruct-1n8g-megatron_generation.sh
new file mode 100755
index 000000000..08f57cb5a
--- /dev/null
+++ b/tests/test_suites/llm/grpo-llama3.2-1b-instruct-1n8g-megatron_generation.sh
@@ -0,0 +1,42 @@
+#!/bin/bash
+SCRIPT_DIR=$( cd -- "$( dirname -- "${BASH_SOURCE[0]}" )" &> /dev/null && pwd)
+source $SCRIPT_DIR/common.env
+
+# ===== BEGIN CONFIG =====
+NUM_NODES=1
+STEPS_PER_RUN=500
+MAX_STEPS=500
+NUM_RUNS=$(( (MAX_STEPS + STEPS_PER_RUN - 1) / STEPS_PER_RUN ))  # Round up
+NUM_MINUTES=180
+# ===== END CONFIG =====
+
+exit_if_max_steps_reached
+
+# Run the experiment
+cd $PROJECT_ROOT
+uv run examples/run_grpo_math.py \
+    --config $CONFIG_PATH \
+    grpo.max_num_steps=$MAX_STEPS \
+    policy.generation.backend=megatron \
+    logger.log_dir=$LOG_DIR \
+    logger.wandb_enabled=True \
+    logger.wandb.project=nemo-rl \
+    logger.wandb.name=$EXP_NAME \
+    logger.monitor_gpus=True \
+    logger.tensorboard_enabled=True \
+    checkpointing.enabled=True \
+    checkpointing.checkpoint_dir=$CKPT_DIR \
+    $@ \
+    2>&1 | tee $RUN_LOG
+
+# Convert tensorboard logs to json
+uv run tests/json_dump_tb_logs.py $LOG_DIR --output_path $JSON_METRICS
+
+# Only run metrics if the target step is reached
+if [[ $(jq 'to_entries | .[] | select(.key == "train/loss") | .value | keys | map(tonumber) | max' $JSON_METRICS) -ge $MAX_STEPS ]]; then
+    uv run tests/check_metrics.py $JSON_METRICS \
+        'mean(data["train/token_mult_prob_error"]) < 1.1' \
+        'data["train/token_mult_prob_error"]["500"] < 1.1' \
+        'data["train/reward"]["500"] > 0.1' \
+        'mean(data["timing/train/total_step_time"], -6, -1) < 10.5'
+fi
diff --git a/tests/test_suites/nightly.txt b/tests/test_suites/nightly.txt
index 91c24aada..24677186e 100644
--- a/tests/test_suites/nightly.txt
+++ b/tests/test_suites/nightly.txt
@@ -12,6 +12,7 @@ tests/test_suites/llm/grpo-qwen2.5-7b-instruct-4n8g-fsdp2tp4.v3.sh
 
 # Megatron
 tests/test_suites/llm/grpo-llama3.2-1b-instruct-1n8g-megatron.sh
+tests/test_suites/llm/grpo-llama3.2-1b-instruct-1n8g-megatron_generation.sh
 
 # Functional 32b run
 tests/test_suites/llm/grpo-qwen2.5-32b-32n8g-fsdp2tp8-actckpt.v3.sh
diff --git a/tests/unit/models/policy/test_megatron_worker.py b/tests/unit/models/policy/test_megatron_worker.py
index 33fe4f35a..b27dfb706 100644
--- a/tests/unit/models/policy/test_megatron_worker.py
+++ b/tests/unit/models/policy/test_megatron_worker.py
@@ -472,6 +472,7 @@ def generation_setup(request, tiny_llama_model_path):
             tiny_llama_model_path,
             tp=tp,
             pp=pp,
+            precision="bfloat16",  # FlashAttention requires fp16 or bf16
             generation_backend=generation_backend,
         )
 
@@ -538,7 +539,6 @@ def generation_setup(request, tiny_llama_model_path):
             cluster.shutdown()
 
 
-@pytest.mark.skip(reason="Skipping megatron generation tests for now")
 @pytest.mark.timeout(240)
 @pytest.mark.parametrize(
     "generation_setup",