A method for inspecting functionality of a display device and a test equipment are provided. The method for inspecting functionality of the display device is utilized in a test equipment of an auto-test system. The method includes controlling an image capturing device to capture a test image shown on a screen of the display device for generating a captured image, acquiring an encoded pattern from the captured image and decoding the encoded pattern, wherein the test image is a source image generated by an image providing device superposed with the encoded pattern, determining whether the encoded pattern is successfully decoded to generate a resultant data, and comparing the resultant data with reference data to generate a comparison result after the encoded pattern is successfully decoded, wherein the reference data comprises information associated with the test image and information associated with system configuration of the display device.