diff --git a/agent-inject/agent/agent.go b/agent-inject/agent/agent.go
index 99ffb04a..dc32fde8 100644
--- a/agent-inject/agent/agent.go
+++ b/agent-inject/agent/agent.go
@@ -33,6 +33,8 @@ const (
 	DefaultAgentCacheExitOnErr              = false
 	DefaultAgentUseLeaderElector            = false
 	DefaultAgentInjectToken                 = false
+	DefaultAgentSidecarType                 = "agent"
+	DefaultProxyUseAutoAuthToken            = true
 	DefaultTemplateConfigExitOnRetryFailure = true
 	DefaultServiceAccountMount              = "/var/run/secrets/vault.hashicorp.com/serviceaccount"
 	DefaultEnableQuit                       = false
@@ -121,6 +123,13 @@ type Agent struct {
 	// container(s).
 	ConfigMapName string
 
+	// SidecarType is the type of the sidecar container that is injected into the pod
+	SidecarType string
+
+	// Use the auto auth token in the sidecar proxy, usable only when SidecarType is set to "proxy"
+	// acceptable values are boolean true / false and "force"
+	ProxyUseAutoAuthToken interface{}
+
 	// Vault is the structure holding all the Vault specific configurations.
 	Vault Vault
 
@@ -347,6 +356,8 @@ func New(pod *corev1.Pod) (*Agent, error) {
 	agent := &Agent{
 		Annotations:               pod.Annotations,
 		ConfigMapName:             pod.Annotations[AnnotationAgentConfigMap],
+		SidecarType:               pod.Annotations[AnnotationAgentSidecarType],
+		ProxyUseAutoAuthToken:     pod.Annotations[AnnotationAgentProxyUseAutoAuthToken],
 		ImageName:                 pod.Annotations[AnnotationAgentImage],
 		DefaultTemplate:           pod.Annotations[AnnotationAgentInjectDefaultTemplate],
 		LimitsCPU:                 pod.Annotations[AnnotationAgentLimitsCPU],
@@ -396,6 +407,9 @@ func New(pod *corev1.Pod) (*Agent, error) {
 		return agent, err
 	}
 
+	agent.SidecarType = agent.sidecarType()
+	agent.ProxyUseAutoAuthToken = agent.proxyUseAutoAuthToken()
+
 	agent.Vault.AgentTelemetryConfig = agent.telemetryConfig()
 
 	agent.InitFirst, err = agent.initFirst()
@@ -723,6 +737,9 @@ func (a *Agent) Validate() error {
 			return errors.New("no Vault address found")
 		}
 	}
+	if a.SidecarType != "" && !(a.SidecarType == "agent" || a.SidecarType == "proxy") {
+		return errors.New(fmt.Sprintf("Invalid sidecar type, expected one of agent / proxy, got %s", a.SidecarType))
+	}
 	return nil
 }
 
diff --git a/agent-inject/agent/annotations.go b/agent-inject/agent/annotations.go
index c904be6c..59543a0c 100644
--- a/agent-inject/agent/annotations.go
+++ b/agent-inject/agent/annotations.go
@@ -17,6 +17,16 @@ import (
 )
 
 const (
+	// AnnotationAgentSidecarType is the key of the annotation that controls whether
+	// a Vault agent or Vault proxy is injected into the pod
+	// Should be set to one of "agent" / "proxy", defaults to "agent".
+	AnnotationAgentSidecarType = "vault.hashicorp.com/sidecar-type"
+
+	// AnnotationAgentProxyUseAutoAuthToken is the key of the annotation that controls whether
+	// the auto auth token should be used in the vault proxy.
+	// configures the "use_auto_auth_token" key in the "api_proxy" stanza.
+	AnnotationAgentProxyUseAutoAuthToken = "vault.hashicorp.com/sidecar-proxy-use-auto-auth-token"
+
 	// AnnotationAgentStatus is the key of the annotation that is added to
 	// a pod after an injection is done.
 	// There's only one valid status we care about: "injected".
@@ -884,3 +894,24 @@ func (a *Agent) authConfig() map[string]interface{} {
 
 	return authConfig
 }
+
+func (a *Agent) sidecarType() string {
+	if a.SidecarType != "" && !(a.SidecarType == "agent" || a.SidecarType == "proxy") {
+		return a.SidecarType
+	}
+	return DefaultAgentSidecarType
+}
+
+func (a *Agent) proxyUseAutoAuthToken() interface{} {
+    switch a.ProxyUseAutoAuthToken.(type) {
+        case bool:
+            return a.ProxyUseAutoAuthToken.(bool)
+        case string:
+            if a.ProxyUseAutoAuthToken == "force" {
+                return a.ProxyUseAutoAuthToken.(string)
+            }
+        default:
+            return DefaultProxyUseAutoAuthToken
+    }
+    return nil
+}
diff --git a/agent-inject/agent/config.go b/agent-inject/agent/config.go
index 387aa897..e3df7085 100644
--- a/agent-inject/agent/config.go
+++ b/agent-inject/agent/config.go
@@ -33,6 +33,7 @@ type Config struct {
 	DisableIdleConnections []string        `json:"disable_idle_connections,omitempty"`
 	DisableKeepAlives      []string        `json:"disable_keep_alives,omitempty"`
 	Telemetry              *Telemetry      `json:"telemetry,omitempty"`
+	ApiProxy               *ApiProxy       `json:"api_proxy,omitempty"`
 }
 
 // Vault contains configuration for connecting to Vault servers
@@ -108,6 +109,12 @@ type Cache struct {
 	Persist          *CachePersist `json:"persist,omitempty"`
 }
 
+type ApiProxy struct {
+    UseAutoAuthToken   interface{} `json:"use_auto_auth_token,omitempty"`
+    EnforceConsistency string      `json:enforce_consistency,omitempty`
+    WhenInconsistent   string      `json:when_inconsistent,omitempty`
+}
+
 // CachePersist defines the configuration for persistent caching in Vault Agent
 type CachePersist struct {
 	Type                    string `json:"type"`
@@ -283,6 +290,13 @@ func (a *Agent) newConfig(init bool) ([]byte, error) {
 		}
 	}
 
+    // adds the api_proxy stanza to the configuration
+	if a.SidecarType == "proxy" {
+	   config.ApiProxy = &ApiProxy{
+	       UseAutoAuthToken: a.ProxyUseAutoAuthToken,
+	   }
+	}
+
 	// If EnableQuit is true, set it on the listener. If a listener hasn't been
 	// defined, set it on a new one. Also add a simple cache stanza since that's
 	// required for an agent listener.
diff --git a/agent-inject/agent/config_test.go b/agent-inject/agent/config_test.go
index 69c857e4..8878ec1c 100644
--- a/agent-inject/agent/config_test.go
+++ b/agent-inject/agent/config_test.go
@@ -809,7 +809,7 @@ func TestConfigTelemetry(t *testing.T) {
 				"vault.hashicorp.com/agent-telemetry-stackdriver_location":                   "useast-1",
 				"vault.hashicorp.com/agent-telemetry-stackdriver_namespace":                  "foo",
 				"vault.hashicorp.com/agent-telemetry-stackdriver_debug_logs":                 "false",
-				"vault.hashicorp.com/agent-telemetry-prefix_filter":                          `["+vault.token", "-vault.expire", "+vault.expire.num_leases"]`, 
+				"vault.hashicorp.com/agent-telemetry-prefix_filter":                          `["+vault.token", "-vault.expire", "+vault.expire.num_leases"]`,
 			},
 			&Telemetry{
 				UsageGaugePeriod:                   "10m",
diff --git a/agent-inject/agent/container_init_sidecar.go b/agent-inject/agent/container_init_sidecar.go
index 82f1a2c3..2ac45138 100644
--- a/agent-inject/agent/container_init_sidecar.go
+++ b/agent-inject/agent/container_init_sidecar.go
@@ -50,7 +50,7 @@ func (a *Agent) ContainerInitSidecar() (corev1.Container, error) {
 		volumeMounts = append(volumeMounts, a.copyVolumeMounts(a.CopyVolumeMounts)...)
 	}
 
-	arg := DefaultContainerArg
+	arg := fmt.Sprintf(DefaultContainerArg, a.SidecarType)
 
 	if a.ConfigMapName != "" {
 		volumeMounts = append(volumeMounts, corev1.VolumeMount{
@@ -58,7 +58,7 @@ func (a *Agent) ContainerInitSidecar() (corev1.Container, error) {
 			MountPath: configVolumePath,
 			ReadOnly:  true,
 		})
-		arg = fmt.Sprintf("touch %s && vault agent -config=%s/config-init.hcl", TokenFile, configVolumePath)
+		arg = fmt.Sprintf("touch %s && vault %s -config=%s/config-init.hcl", TokenFile, a.SidecarType, configVolumePath)
 	}
 
 	if a.Vault.TLSSecret != "" {
diff --git a/agent-inject/agent/container_sidecar.go b/agent-inject/agent/container_sidecar.go
index c89645e0..e2eee9c5 100644
--- a/agent-inject/agent/container_sidecar.go
+++ b/agent-inject/agent/container_sidecar.go
@@ -20,7 +20,7 @@ const (
 	DefaultResourceLimitMem   = "128Mi"
 	DefaultResourceRequestCPU = "250m"
 	DefaultResourceRequestMem = "64Mi"
-	DefaultContainerArg       = "echo ${VAULT_CONFIG?} | base64 -d > /home/vault/config.json && vault agent -config=/home/vault/config.json"
+	DefaultContainerArg       = "echo ${VAULT_CONFIG?} | base64 -d > /home/vault/config.json && vault %s -config=/home/vault/config.json"
 	DefaultRevokeGrace        = 5
 	DefaultAgentLogLevel      = "info"
 	DefaultAgentLogFormat     = "standard"
@@ -62,7 +62,7 @@ func (a *Agent) ContainerSidecar() (corev1.Container, error) {
 		volumeMounts = append(volumeMounts, a.copyVolumeMounts(a.CopyVolumeMounts)...)
 	}
 
-	arg := DefaultContainerArg
+	arg := fmt.Sprintf(DefaultContainerArg, a.SidecarType)
 
 	if a.ConfigMapName != "" {
 		volumeMounts = append(volumeMounts, corev1.VolumeMount{
@@ -70,7 +70,7 @@ func (a *Agent) ContainerSidecar() (corev1.Container, error) {
 			MountPath: configVolumePath,
 			ReadOnly:  true,
 		})
-		arg = fmt.Sprintf("touch %s && vault agent -config=%s/config.hcl", TokenFile, configVolumePath)
+		arg = fmt.Sprintf("touch %s && vault %s -config=%s/config.hcl", TokenFile, a.SidecarType, configVolumePath)
 	}
 
 	if a.Vault.TLSSecret != "" {
diff --git a/agent-inject/agent/container_sidecar_test.go b/agent-inject/agent/container_sidecar_test.go
index de9801b7..f0a4fdf8 100644
--- a/agent-inject/agent/container_sidecar_test.go
+++ b/agent-inject/agent/container_sidecar_test.go
@@ -285,8 +285,9 @@ func TestContainerSidecar(t *testing.T) {
 		t.Errorf("wrong number of args, got %d, should have been %d", len(container.Args), 1)
 	}
 
-	if container.Args[0] != DefaultContainerArg {
-		t.Errorf("arg value wrong, should have been %s, got %s", DefaultContainerArg, container.Args[0])
+	arg := fmt.Sprintf(DefaultContainerArg, agent.SidecarType)
+	if container.Args[0] != arg {
+		t.Errorf("arg value wrong, should have been %s, got %s", arg, container.Args[0])
 	}
 
 	if container.Resources.Limits.Cpu().String() != DefaultResourceLimitCPU {