Centrifugal compressors find their use in many areas especially in turbochargers which are used extensively in automobiles and in aircrafts and defence systems. This paper presents the design of a complete test facility for testing centrifugal compressors. It starts with design of a Combustor - the driving unit for the test facility. The Centrifugal compressor being tested is a part of a turbocharger. The combustor feeds the Turbine side of the test section with hot gases for running the compressor at desired speeds. This particular choice eliminates the need for the inclusion of heavy speed reducing gears when an electric motor is used as the driving unit. The designed combustor was numerically simulated and subsequently optimized for the given working conditions. The simulated results showed good agreement with the target criteria. Further, the choice and placement of the measuring instruments for the entire test rig and their permissible deviations are listed and finally the basic operating sequence for the entire rig is also drafted for in-house development of automation of the entire test rig thereby making it a complete guide for the setting up of such facility, hitherto establishing a complete guideline of all subsystems which will enable in building such similar facilities in varying magnitudes in the future.