diff --git a/hack/local-up-cluster.sh b/hack/local-up-cluster.sh
index 98a0a6b958e..4c6b855331b 100755
--- a/hack/local-up-cluster.sh
+++ b/hack/local-up-cluster.sh
@@ -65,6 +65,7 @@ KUBECTL=${KUBECTL:-cluster/kubectl.sh}
 WAIT_FOR_URL_API_SERVER=${WAIT_FOR_URL_API_SERVER:-20}
 ENABLE_DAEMON=${ENABLE_DAEMON:-false}
 HOSTNAME_OVERRIDE=${HOSTNAME_OVERRIDE:-"127.0.0.1"}
+EXTERNAL_CLOUD_PROVIDER=${EXTERNAL_CLOUD_PROVIDER:-false}
 CLOUD_PROVIDER=${CLOUD_PROVIDER:-""}
 CLOUD_CONFIG=${CLOUD_CONFIG:-""}
 FEATURE_GATES=${FEATURE_GATES:-"AllAlpha=false"}
@@ -532,9 +533,14 @@ function start_apiserver {
     kube::util::create_client_certkey "${CONTROLPLANE_SUDO}" "${CERT_DIR}" 'client-ca' kube-aggregator system:kube-aggregator system:masters
     kube::util::write_client_kubeconfig "${CONTROLPLANE_SUDO}" "${CERT_DIR}" "${ROOT_CA_FILE}" "${API_HOST}" "${API_SECURE_PORT}" kube-aggregator
 
+    cloud_config_arg="--cloud-provider=${CLOUD_PROVIDER} --cloud-config=${CLOUD_CONFIG}"
+    if [[ "${EXTERNAL_CLOUD_PROVIDER:-}" == "true" ]]; then
+      cloud_config_arg="--cloud-provider=external"
+    fi
 
     APISERVER_LOG=${LOG_DIR}/kube-apiserver.log
-    ${CONTROLPLANE_SUDO} "${GO_OUT}/hyperkube" apiserver ${swagger_arg} ${audit_arg} ${authorizer_arg} ${priv_arg} ${runtime_config}\
+    ${CONTROLPLANE_SUDO} "${GO_OUT}/hyperkube" apiserver ${swagger_arg} ${audit_arg} ${authorizer_arg} ${priv_arg} ${runtime_config} \
+      ${cloud_config_arg} \
       ${advertise_address} \
       --v=${LOG_LEVEL} \
       --vmodule="${LOG_SPEC}" \
@@ -556,8 +562,6 @@ function start_apiserver {
       --service-cluster-ip-range="${SERVICE_CLUSTER_IP_RANGE}" \
       --feature-gates="${FEATURE_GATES}" \
       --external-hostname="${EXTERNAL_HOSTNAME}" \
-      --cloud-provider="${CLOUD_PROVIDER}" \
-      --cloud-config="${CLOUD_CONFIG}" \
       --requestheader-username-headers=X-Remote-User \
       --requestheader-group-headers=X-Remote-Group \
       --requestheader-extra-headers-prefix=X-Remote-Extra- \
@@ -601,6 +605,11 @@ function start_controller_manager {
       node_cidr_args="--allocate-node-cidrs=true --cluster-cidr=10.1.0.0/16 "
     fi
 
+    cloud_config_arg=cloud_config_arg="--cloud-provider=${CLOUD_PROVIDER} --cloud-config=${CLOUD_CONFIG}"
+    if [[ "${EXTERNAL_CLOUD_PROVIDER:-}" == "true" ]]; then
+      cloud_config_arg="--cloud-provider=external"
+    fi
+
     CTLRMGR_LOG=${LOG_DIR}/kube-controller-manager.log
     ${CONTROLPLANE_SUDO} "${GO_OUT}/hyperkube" controller-manager \
       --v=${LOG_LEVEL} \
@@ -613,8 +622,7 @@ function start_controller_manager {
       ${node_cidr_args} \
       --pvclaimbinder-sync-period="${CLAIM_BINDER_SYNC_PERIOD}" \
       --feature-gates="${FEATURE_GATES}" \
-      --cloud-provider="${CLOUD_PROVIDER}" \
-      --cloud-config="${CLOUD_CONFIG}" \
+      ${cloud_config_arg} \
       --kubeconfig "$CERT_DIR"/controller.kubeconfig \
       --use-service-account-credentials \
       --controllers="${KUBE_CONTROLLERS}" \
@@ -622,6 +630,35 @@ function start_controller_manager {
     CTLRMGR_PID=$!
 }
 
+function start_cloud_controller_manager {
+    if [ -z "${CLOUD_CONFIG}" ]; then
+      echo "CLOUD_CONFIG cannot be empty!"
+      exit 1
+    fi
+    if [ ! -f "${CLOUD_CONFIG}" ]; then
+      echo "Cloud config ${CLOUD_CONFIG} doesn't exist"
+      exit 1
+    fi
+
+    node_cidr_args=""
+    if [[ "${NET_PLUGIN}" == "kubenet" ]]; then
+      node_cidr_args="--allocate-node-cidrs=true --cluster-cidr=10.1.0.0/16 "
+    fi
+
+    CLOUD_CTLRMGR_LOG=${LOG_DIR}/cloud-controller-manager.log
+    ${CONTROLPLANE_SUDO} "${GO_OUT}/hyperkube" alpha cloud-controller-manager \
+      --v=${LOG_LEVEL} \
+      --vmodule="${LOG_SPEC}" \
+      ${node_cidr_args} \
+      --feature-gates="${FEATURE_GATES}" \
+      --cloud-provider=${CLOUD_PROVIDER} \
+      --cloud-config=${CLOUD_CONFIG} \
+      --kubeconfig "$CERT_DIR"/controller.kubeconfig \
+      --use-service-account-credentials \
+      --master="https://${API_HOST}:${API_SECURE_PORT}" >"${CLOUD_CTLRMGR_LOG}" 2>&1 &
+    CLOUD_CTLRMGR_PID=$!
+}
+
 function start_kubelet {
     KUBELET_LOG=${LOG_DIR}/kubelet.log
     mkdir -p "${POD_MANIFEST_PATH}" &>/dev/null || sudo mkdir -p "${POD_MANIFEST_PATH}"
@@ -631,6 +668,11 @@ function start_kubelet {
       priv_arg="--allow-privileged "
     fi
 
+    cloud_config_arg=cloud_config_arg="--cloud-provider=${CLOUD_PROVIDER} --cloud-config=${CLOUD_CONFIG}"
+    if [[ "${EXTERNAL_CLOUD_PROVIDER:-}" == "true" ]]; then
+       cloud_config_arg="--cloud-provider=external"
+    fi
+
     mkdir -p "/var/lib/kubelet" &>/dev/null || sudo mkdir -p "/var/lib/kubelet"
     if [[ -z "${DOCKERIZE_KUBELET}" ]]; then
       # Enable dns
@@ -687,8 +729,7 @@ function start_kubelet {
         --rkt-path="${RKT_PATH}" \
         --rkt-stage1-image="${RKT_STAGE1_IMAGE}" \
         --hostname-override="${HOSTNAME_OVERRIDE}" \
-        --cloud-provider="${CLOUD_PROVIDER}" \
-        --cloud-config="${CLOUD_CONFIG}" \
+        ${cloud_config_arg} \
         --address="${KUBELET_HOST}" \
         --kubeconfig "$CERT_DIR"/kubelet.kubeconfig \
         --feature-gates="${FEATURE_GATES}" \
@@ -753,7 +794,7 @@ function start_kubelet {
         -i \
         --cidfile=$KUBELET_CIDFILE \
         gcr.io/google_containers/kubelet \
-        /kubelet --v=${LOG_LEVEL} --containerized ${priv_arg}--chaos-chance="${CHAOS_CHANCE}" --pod-manifest-path="${POD_MANIFEST_PATH}" --hostname-override="${HOSTNAME_OVERRIDE}" --cloud-provider="${CLOUD_PROVIDER}" --cloud-config="${CLOUD_CONFIG}" \ --address="127.0.0.1" --kubeconfig "$CERT_DIR"/kubelet.kubeconfig --port="$KUBELET_PORT"  --enable-controller-attach-detach="${ENABLE_CONTROLLER_ATTACH_DETACH}" &> $KUBELET_LOG &
+        /kubelet --v=${LOG_LEVEL} --containerized ${priv_arg}--chaos-chance="${CHAOS_CHANCE}" --pod-manifest-path="${POD_MANIFEST_PATH}" --hostname-override="${HOSTNAME_OVERRIDE}" ${cloud_config_arg} \ --address="127.0.0.1" --kubeconfig "$CERT_DIR"/kubelet.kubeconfig --port="$KUBELET_PORT"  --enable-controller-attach-detach="${ENABLE_CONTROLLER_ATTACH_DETACH}" &> $KUBELET_LOG &
     fi
 }
 
@@ -850,6 +891,7 @@ if [[ "${START_MODE}" != "kubeletonly" ]]; then
 Logs:
   ${APISERVER_LOG:-}
   ${CTLRMGR_LOG:-}
+  ${CLOUD_CTLRMGR_LOG:-}
   ${PROXY_LOG:-}
   ${SCHEDULER_LOG:-}
 EOF
@@ -936,6 +978,9 @@ if [[ "${START_MODE}" != "kubeletonly" ]]; then
   set_service_accounts
   start_apiserver
   start_controller_manager
+  if [[ "${EXTERNAL_CLOUD_PROVIDER:-}" == "true" ]]; then
+    start_cloud_controller_manager
+  fi
   start_kubeproxy
   start_kubedns
   start_kubedashboard