mymodule.py

#!/usr/bin/python
# Let's call this file 'mymodule.py'

# When run from the 'shell application' created by setuptools,
#+only doctests for `main()` get run, while `to_be_tested()` is
#+ignored `mymoduleapp -test`.
# Testing for both functions works, when run direcly as shell 
# script, e.g. as `./mymodule.py --test`
# Used python version: Python 2.7.12 (setuptools 20.7.0)

import sys

def to_be_tested():
    '''\
    >>> to_be_tested()
    2
    '''
    return 1 # Would fail, but doesn't get tested

def main():
    if '--test' in sys.argv: # Test all functions above
        import doctest
        doctest.testmod(verbose=True) # Doesn't work
        exit(0)

if __name__ == '__main__':
    main()

setup.py

#!/usr/bin/python
from setuptools import setup

setup(
    name             = 'mymodule',
    version          = 1,
    author_email     = '[email protected]',
    py_modules       = ['mymodule'],
    entry_points='''
        [console_scripts]
        mymoduleapp=mymodule:main
    '''
)