The development of smart ships has become a hotspot in the shipping industry and the field of navigation all over the world, which may bring new technology and innovation into the current shipping business. The core of the technology development for smart ships is to construct a complete software and hardware system from decision-making to autonomous control, which realizes the evolution from manual to autonomous navigation. The breakthrough of core technology and the development of software and hardware systems are inseparable from comprehensive procedures and standards for tests and measurements. This paper starts with the state-of-the-art of research on functional testing of smart ships. A brief review of existing testbeds is given. Afterward, the status of functional testing methods for unmanned vehicles is reported. A methodology of virtual simulation tests, modelscale tests, and full-scale tests of smart ships are proposed. Accordingly, a virtual-real interaction platform for functional testing of smart ships is designed by the ship type, the navigation environment, the navigation scenario, the man-machine interaction, the data acquisition, the integration platform, and the performance evaluation. Finally, this paper proposes a method that is adapted from the Turing test to evaluate the smart navigation function for smart ships. The proposed method aims to alleviate the difficulty of verifying the intelligence of smart ships.