diff --git a/test/e2e/network/service.go b/test/e2e/network/service.go
index b0030f95142..620b01200ef 100644
--- a/test/e2e/network/service.go
+++ b/test/e2e/network/service.go
@@ -2030,6 +2030,84 @@ var _ = common.SIGDescribe("Services", func() {
 		}
 	})
 
+	ginkgo.It("should respect internalTrafficPolicy=Local Pod to Pod [Feature:ServiceInternalTrafficPolicy]", func() {
+		// windows kube-proxy does not support this feature yet
+		// TODO: remove this skip when windows-based proxies implement internalTrafficPolicy
+		e2eskipper.SkipIfNodeOSDistroIs("windows")
+
+		// This behavior is not supported if Kube-proxy is in "userspace" mode.
+		// So we check the kube-proxy mode and skip this test if that's the case.
+		if proxyMode, err := proxyMode(f); err == nil {
+			if proxyMode == "userspace" {
+				e2eskipper.Skipf("The test doesn't work with kube-proxy in userspace mode")
+			}
+		} else {
+			framework.Logf("Couldn't detect KubeProxy mode - test failure may be expected: %v", err)
+		}
+
+		nodes, err := e2enode.GetBoundedReadySchedulableNodes(cs, 2)
+		framework.ExpectNoError(err)
+		nodeCounts := len(nodes.Items)
+		if nodeCounts < 2 {
+			e2eskipper.Skipf("The test requires at least two ready nodes on %s, but found %v", framework.TestContext.Provider, nodeCounts)
+		}
+		node0 := nodes.Items[0]
+		node1 := nodes.Items[1]
+
+		serviceName := "svc-itp"
+		ns := f.Namespace.Name
+		servicePort := 80
+
+		ginkgo.By("creating a TCP service " + serviceName + " with type=ClusterIP and internalTrafficPolicy=Local in namespace " + ns)
+		local := v1.ServiceInternalTrafficPolicyLocal
+		jig := e2eservice.NewTestJig(cs, ns, serviceName)
+		svc, err := jig.CreateTCPService(func(svc *v1.Service) {
+			svc.Spec.Ports = []v1.ServicePort{
+				{Port: 80, Name: "http", Protocol: v1.ProtocolTCP, TargetPort: intstr.FromInt(80)},
+			}
+			svc.Spec.InternalTrafficPolicy = &local
+		})
+		framework.ExpectNoError(err)
+
+		ginkgo.By("Creating 1 webserver pod to be part of the TCP service")
+		webserverPod0 := e2epod.NewAgnhostPod(ns, "echo-hostname-0", nil, nil, nil, "netexec", "--http-port", strconv.Itoa(servicePort))
+		webserverPod0.Labels = jig.Labels
+		e2epod.SetNodeSelection(&webserverPod0.Spec, e2epod.NodeSelection{Name: node0.Name})
+
+		_, err = cs.CoreV1().Pods(ns).Create(context.TODO(), webserverPod0, metav1.CreateOptions{})
+		framework.ExpectNoError(err)
+		framework.ExpectNoError(e2epod.WaitTimeoutForPodReadyInNamespace(f.ClientSet, webserverPod0.Name, f.Namespace.Name, framework.PodStartTimeout))
+
+		validateEndpointsPortsOrFail(cs, ns, serviceName, portsByPodName{webserverPod0.Name: {servicePort}})
+
+		ginkgo.By("Creating 2 pause pods that will try to connect to the webservers")
+		pausePod0 := e2epod.NewAgnhostPod(ns, "pause-pod-0", nil, nil, nil)
+		e2epod.SetNodeSelection(&pausePod0.Spec, e2epod.NodeSelection{Name: node0.Name})
+
+		pausePod0, err = cs.CoreV1().Pods(ns).Create(context.TODO(), pausePod0, metav1.CreateOptions{})
+		framework.ExpectNoError(err)
+		framework.ExpectNoError(e2epod.WaitTimeoutForPodReadyInNamespace(f.ClientSet, pausePod0.Name, f.Namespace.Name, framework.PodStartTimeout))
+
+		pausePod1 := e2epod.NewAgnhostPod(ns, "pause-pod-1", nil, nil, nil)
+		e2epod.SetNodeSelection(&pausePod1.Spec, e2epod.NodeSelection{Name: node1.Name})
+
+		pausePod1, err = cs.CoreV1().Pods(ns).Create(context.TODO(), pausePod1, metav1.CreateOptions{})
+		framework.ExpectNoError(err)
+		framework.ExpectNoError(e2epod.WaitTimeoutForPodReadyInNamespace(f.ClientSet, pausePod1.Name, f.Namespace.Name, framework.PodStartTimeout))
+
+		// assert 5 times that the first pause pod can connect to the Service locally and the second one errors with a timeout
+		serviceAddress := net.JoinHostPort(svc.Spec.ClusterIP, strconv.Itoa(servicePort))
+		for i := 0; i < 5; i++ {
+			// the first pause pod should be on the same node as the webserver, so it can connect to the local pod using clusterIP
+			execHostnameTest(*pausePod0, serviceAddress, webserverPod0.Name)
+
+			// the second pause pod is on a different node, so it should see a connection error every time
+			cmd := fmt.Sprintf(`curl -q -s --connect-timeout 5 %s/hostname`, serviceAddress)
+			_, err := framework.RunHostCmd(pausePod1.Namespace, pausePod1.Name, cmd)
+			framework.ExpectError(err, "expected error when trying to connect to cluster IP")
+		}
+	})
+
 	/*
 	   Release: v1.18
 	   Testname: Find Kubernetes Service in default Namespace
diff --git a/test/e2e/network/util.go b/test/e2e/network/util.go
index ac4139c809c..50ab6361c4b 100644
--- a/test/e2e/network/util.go
+++ b/test/e2e/network/util.go
@@ -141,6 +141,35 @@ func execSourceIPTest(sourcePod v1.Pod, targetAddr string) (string, string) {
 	return sourcePod.Status.PodIP, host
 }
 
+// execHostnameTest executes curl to access "/hostname" endpoint on target address
+// from given Pod to check the hostname of the target destination.
+func execHostnameTest(sourcePod v1.Pod, targetAddr, targetHostname string) {
+	var (
+		err     error
+		stdout  string
+		timeout = 2 * time.Minute
+	)
+
+	framework.Logf("Waiting up to %v to get response from %s", timeout, targetAddr)
+	cmd := fmt.Sprintf(`curl -q -s --connect-timeout 30 %s/hostname`, targetAddr)
+	for start := time.Now(); time.Since(start) < timeout; time.Sleep(2 * time.Second) {
+		stdout, err = framework.RunHostCmd(sourcePod.Namespace, sourcePod.Name, cmd)
+		if err != nil {
+			framework.Logf("got err: %v, retry until timeout", err)
+			continue
+		}
+		// Need to check output because it might omit in case of error.
+		if strings.TrimSpace(stdout) == "" {
+			framework.Logf("got empty stdout, retry until timeout")
+			continue
+		}
+		break
+	}
+
+	framework.ExpectNoError(err)
+	framework.ExpectEqual(strings.TrimSpace(stdout), targetHostname)
+}
+
 // createSecondNodePortService creates a service with the same selector as config.NodePortService and same HTTP Port
 func createSecondNodePortService(f *framework.Framework, config *e2enetwork.NetworkingTestConfig) (*v1.Service, int) {
 	svc := &v1.Service{