How to skip the rest of tests in the class if one has failed?

I like the general “test-step” idea. I’d term it as “incremental” testing and it makes most sense in functional testing scenarios IMHO.

Here is a an implementation that doesn’t depend on internal details of pytest (except for the official hook extensions). Copy this into your conftest.py:

import pytest

def pytest_runtest_makereport(item, call):
    if "incremental" in item.keywords:
        if call.excinfo is not None:
            parent = item.parent
            parent._previousfailed = item

def pytest_runtest_setup(item):
    previousfailed = getattr(item.parent, "_previousfailed", None)
    if previousfailed is not None:
        pytest.xfail("previous test failed (%s)" % previousfailed.name)

If you now have a “test_step.py” like this:

import pytest

@pytest.mark.incremental
class TestUserHandling:
    def test_login(self):
        pass
    def test_modification(self):
        assert 0
    def test_deletion(self):
        pass

then running it looks like this (using -rx to report on xfail reasons):

(1)hpk@t2:~/p/pytest/doc/en/example/teststep$ py.test -rx
============================= test session starts ==============================
platform linux2 -- Python 2.7.3 -- pytest-2.3.0.dev17
plugins: xdist, bugzilla, cache, oejskit, cli, pep8, cov, timeout
collected 3 items

test_step.py .Fx

=================================== FAILURES ===================================
______________________ TestUserHandling.test_modification ______________________

self = <test_step.TestUserHandling instance at 0x1e0d9e0>

    def test_modification(self):
>       assert 0
E       assert 0

test_step.py:8: AssertionError
=========================== short test summary info ============================
XFAIL test_step.py::TestUserHandling::()::test_deletion
  reason: previous test failed (test_modification)
================ 1 failed, 1 passed, 1 xfailed in 0.02 seconds =================

I am using “xfail” here because skips are rather for wrong environments or missing dependencies, wrong interpreter versions.

Edit: Note that neither your example nor my example would directly work with distributed testing. For this, the pytest-xdist plugin needs to grow a way to define groups/classes to be sent whole-sale to one testing slave instead of the current mode which usually sends test functions of a class to different slaves.