diff --git a/test/e2e/capi_test.go b/test/e2e/capi_test.go
index c498b45a623..296820e0ccf 100644
--- a/test/e2e/capi_test.go
+++ b/test/e2e/capi_test.go
@@ -33,6 +33,7 @@ import (
 
 var _ = Describe("Running the Cluster API E2E tests", func() {
 	BeforeEach(func() {
+		Expect(e2eConfig.Variables).To(HaveKey(capi_e2e.CNIPath))
 		rgName := fmt.Sprintf("capz-e2e-%s", util.RandomString(6))
 		Expect(os.Setenv(AzureResourceGroup, rgName)).NotTo(HaveOccurred())
 		Expect(os.Setenv(AzureVNetName, fmt.Sprintf("%s-vnet", rgName))).NotTo(HaveOccurred())
diff --git a/test/e2e/config/azure-dev.yaml b/test/e2e/config/azure-dev.yaml
index 4824069ec3e..7a2bc9796a2 100644
--- a/test/e2e/config/azure-dev.yaml
+++ b/test/e2e/config/azure-dev.yaml
@@ -91,6 +91,7 @@ variables:
   COREDNS_VERSION_UPGRADE_TO: "1.6.7"
   KUBERNETES_VERSION_UPGRADE_TO: "${KUBERNETES_VERSION_UPGRADE_TO:-v1.19.7}"
   KUBERNETES_VERSION_UPGRADE_FROM: "${KUBERNETES_VERSION_UPGRADE_FROM:-v1.18.15}"
+  CNI: "${PWD}/templates/addons/calico.yaml"
   REDACT_LOG_SCRIPT: "${PWD}/hack/log/redact.sh"
   EXP_AKS: "true"
   EXP_MACHINE_POOL: "true"
diff --git a/test/e2e/e2e_suite_test.go b/test/e2e/e2e_suite_test.go
index 94a8935b41c..3776ff7dae9 100644
--- a/test/e2e/e2e_suite_test.go
+++ b/test/e2e/e2e_suite_test.go
@@ -46,6 +46,7 @@ import (
 	"k8s.io/apimachinery/pkg/runtime"
 	"k8s.io/apimachinery/pkg/runtime/schema"
 	infrav1 "sigs.k8s.io/cluster-api-provider-azure/api/v1alpha4"
+	capi_e2e "sigs.k8s.io/cluster-api/test/e2e"
 	"sigs.k8s.io/cluster-api/test/framework"
 	"sigs.k8s.io/cluster-api/test/framework/bootstrap"
 	"sigs.k8s.io/cluster-api/test/framework/clusterctl"
@@ -345,6 +346,12 @@ func createClusterctlLocalRepository(config *clusterctl.E2EConfig, repositoryFol
 		RepositoryFolder: repositoryFolder,
 	}
 
+	// Ensuring a CNI file is defined in the config and register a FileTransformation to inject the referenced file as in place of the CNI_RESOURCES envSubst variable.
+	Expect(config.Variables).To(HaveKey(capi_e2e.CNIPath), "Missing %s variable in the config", capi_e2e.CNIPath)
+	cniPath := config.GetVariable(capi_e2e.CNIPath)
+	Expect(cniPath).To(BeAnExistingFile(), "The %s variable should resolve to an existing file", capi_e2e.CNIPath)
+	createRepositoryInput.RegisterClusterResourceSetConfigMapTransformation(cniPath, capi_e2e.CNIResources)
+
 	clusterctlConfig := clusterctl.CreateRepository(context.TODO(), createRepositoryInput)
 	Expect(clusterctlConfig).To(BeAnExistingFile(), "The clusterctl config file does not exists in the local repository %s", repositoryFolder)
 	return clusterctlConfig