diff --git a/pkg/envoy/cds/cluster_test.go b/pkg/envoy/cds/cluster_test.go
index 1f39768880..2b8d12f9ec 100644
--- a/pkg/envoy/cds/cluster_test.go
+++ b/pkg/envoy/cds/cluster_test.go
@@ -1,23 +1,30 @@
 package cds
 
 import (
+	"net"
 	"testing"
 
 	xds_cluster "github.com/envoyproxy/go-control-plane/envoy/config/cluster/v3"
-
+	xds_core "github.com/envoyproxy/go-control-plane/envoy/config/core/v3"
+	xds_endpoint "github.com/envoyproxy/go-control-plane/envoy/config/endpoint/v3"
 	"github.com/golang/mock/gomock"
-	. "github.com/onsi/ginkgo"
-	. "github.com/onsi/gomega"
+	"github.com/golang/protobuf/ptypes"
+	"github.com/golang/protobuf/ptypes/wrappers"
 	tassert "github.com/stretchr/testify/assert"
 
+	"github.com/openservicemesh/osm/pkg/catalog"
 	"github.com/openservicemesh/osm/pkg/configurator"
+	"github.com/openservicemesh/osm/pkg/constants"
+	"github.com/openservicemesh/osm/pkg/endpoint"
+	"github.com/openservicemesh/osm/pkg/envoy"
+	"github.com/openservicemesh/osm/pkg/service"
 	"github.com/openservicemesh/osm/pkg/tests"
 )
 
 func TestGetUpstreamServiceCluster(t *testing.T) {
 	assert := tassert.New(t)
 
-	mockCtrl := gomock.NewController(GinkgoT())
+	mockCtrl := gomock.NewController(t)
 	mockConfigurator := configurator.NewMockConfigurator(mockCtrl)
 	downstreamSvc := tests.BookbuyerService
 	upstreamSvc := tests.BookstoreV1Service
@@ -56,3 +63,88 @@ func TestGetUpstreamServiceCluster(t *testing.T) {
 		})
 	}
 }
+
+func TestGetLocalServiceCluster(t *testing.T) {
+	assert := tassert.New(t)
+
+	clusterName := "bookbuyer-local"
+	proxyService := service.MeshService{
+		Name:      "bookbuyer",
+		Namespace: "bookbuyer-ns",
+	}
+
+	mockCtrl := gomock.NewController(t)
+	mockCatalog := catalog.NewMockMeshCataloger(mockCtrl)
+
+	testCases := []struct {
+		name                        string
+		endpoints                   []endpoint.Endpoint
+		expectedLocalityLbEndpoints []*xds_endpoint.LocalityLbEndpoints
+		expectedLbPolicy            xds_cluster.Cluster_LbPolicy
+		expectedProtocolSelection   xds_cluster.Cluster_ClusterProtocolSelection
+	}{
+		{
+			name:      "when service returns one endpoint",
+			endpoints: []endpoint.Endpoint{tests.Endpoint},
+			expectedLocalityLbEndpoints: []*xds_endpoint.LocalityLbEndpoints{
+				{
+					Locality: &xds_core.Locality{
+						Zone: "zone",
+					},
+					LbEndpoints: []*xds_endpoint.LbEndpoint{{
+						HostIdentifier: &xds_endpoint.LbEndpoint_Endpoint{
+							Endpoint: &xds_endpoint.Endpoint{
+								Address: envoy.GetAddress(constants.WildcardIPAddr, uint32(tests.ServicePort)),
+							},
+						},
+						LoadBalancingWeight: &wrappers.UInt32Value{
+							Value: constants.ClusterWeightAcceptAll, // Local cluster accepts all traffic
+						},
+					}},
+				},
+			},
+		},
+		{
+			name: "when service returns two endpoints with same port",
+			endpoints: []endpoint.Endpoint{tests.Endpoint, {
+				IP:   net.ParseIP("1.2.3.4"),
+				Port: endpoint.Port(tests.ServicePort),
+			}},
+			expectedLocalityLbEndpoints: []*xds_endpoint.LocalityLbEndpoints{
+				{
+					Locality: &xds_core.Locality{
+						Zone: "zone",
+					},
+					LbEndpoints: []*xds_endpoint.LbEndpoint{{
+						HostIdentifier: &xds_endpoint.LbEndpoint_Endpoint{
+							Endpoint: &xds_endpoint.Endpoint{
+								Address: envoy.GetAddress(constants.WildcardIPAddr, uint32(tests.ServicePort)),
+							},
+						},
+						LoadBalancingWeight: &wrappers.UInt32Value{
+							Value: constants.ClusterWeightAcceptAll, // Local cluster accepts all traffic
+						},
+					}},
+				},
+			},
+		},
+	}
+
+	for _, tc := range testCases {
+		t.Run(tc.name, func(t *testing.T) {
+			mockCatalog.EXPECT().ListEndpointsForService(proxyService).Return(tc.endpoints, nil).Times(1)
+			cluster, err := getLocalServiceCluster(mockCatalog, proxyService, clusterName)
+			assert.Nil(err)
+			assert.Equal(clusterName, cluster.Name)
+			assert.Equal(clusterName, cluster.AltStatName)
+			assert.Equal(ptypes.DurationProto(clusterConnectTimeout), cluster.ConnectTimeout)
+			assert.Equal(xds_cluster.Cluster_ROUND_ROBIN, cluster.LbPolicy)
+			assert.Equal(&xds_cluster.Cluster_Type{Type: xds_cluster.Cluster_STRICT_DNS}, cluster.ClusterDiscoveryType)
+			assert.Equal(true, cluster.RespectDnsTtl)
+			assert.Equal(xds_cluster.Cluster_V4_ONLY, cluster.DnsLookupFamily)
+			assert.Equal(xds_cluster.Cluster_USE_DOWNSTREAM_PROTOCOL, cluster.ProtocolSelection)
+			assert.Equal(len(tc.expectedLocalityLbEndpoints), len(cluster.LoadAssignment.Endpoints))
+			//assert.Equal(tc.expectedLocalityLbEndpoints, cluster.LoadAssignment.Endpoints)
+		})
+	}
+}