diff --git a/hack/ci-e2e-lib.sh b/hack/ci-e2e-lib.sh
new file mode 100644
index 0000000000..2bf32ffc8d
--- /dev/null
+++ b/hack/ci-e2e-lib.sh
@@ -0,0 +1,185 @@
+#!/bin/bash
+
+# Copyright 2020 The Kubernetes Authors.
+#
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+#
+#     http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+
+# Note: This is a copy of cluster-api's scripts/ci-e2e-lib.sh.
+
+# k8s::prepareKindestImagesVariables defaults the environment variable KUBERNETES_VERSION_MANAGEMENT
+# depending on what is set in GINKGO_FOCUS.
+# Note: We do this to ensure that the kindest/node image gets built if it does
+# not already exist, e.g. for pre-releases, but only if necessary.
+k8s::prepareKindestImagesVariables() {
+  # Always default KUBERNETES_VERSION_MANAGEMENT because we always create a management cluster out of it.
+  if [[ -z "${KUBERNETES_VERSION_MANAGEMENT:-}" ]]; then
+    KUBERNETES_VERSION_MANAGEMENT=$(grep KUBERNETES_VERSION_MANAGEMENT: < "$E2E_CONF_FILE" | awk -F'"' '{ print $2}')
+    echo "Defaulting KUBERNETES_VERSION_MANAGEMENT to ${KUBERNETES_VERSION_MANAGEMENT} to trigger image build (because env var is not set)"
+  fi
+}
+
+# k8s::prepareKindestImages checks all the e2e test variables representing a Kubernetes version,
+# and makes sure a corresponding kindest/node image is available locally.
+k8s::prepareKindestImages() {
+  if [ -n "${KUBERNETES_VERSION_MANAGEMENT:-}" ]; then
+    k8s::resolveVersion "KUBERNETES_VERSION_MANAGEMENT" "$KUBERNETES_VERSION_MANAGEMENT"
+    export KUBERNETES_VERSION_MANAGEMENT=$resolveVersion
+
+    kind::prepareKindestImage "$resolveVersion"
+  fi
+}
+
+# k8s::resolveVersion resolves kubernetes version labels (e.g. latest) to the corresponding version numbers.
+# The result will be available in the resolveVersion variable which is accessible from the caller.
+#
+# NOTE: this can't be used for kindest/node images pulled from docker hub, given that there are not guarantees that
+# such images are generated in sync with the Kubernetes release process.
+k8s::resolveVersion() {
+  local variableName=$1
+  local version=$2
+
+  resolveVersion=$version
+  if [[ "$version" =~ ^v ]]; then
+    echo "+ $variableName=\"$version\" already a version, no need to resolve"
+    return
+  fi
+
+  if [[ "$version" =~ ^ci/ ]]; then
+    resolveVersion=$(curl -LsS "http://dl.k8s.io/ci/${version#ci/}.txt")
+  else
+    resolveVersion=$(curl -LsS "http://dl.k8s.io/release/${version}.txt")
+  fi
+  echo "+ $variableName=\"$version\" resolved to \"$resolveVersion\""
+}
+
+# kind::prepareKindestImage check if a kindest/image exist, and if yes, pre-pull it; otherwise it builds
+# the kindest image locally
+kind::prepareKindestImage() {
+  local version=$1
+
+  # ALWAYS_BUILD_KIND_IMAGES will default to false if unset.
+  ALWAYS_BUILD_KIND_IMAGES="${ALWAYS_BUILD_KIND_IMAGES:-"false"}"
+
+  # Note: this is needed compared to CAPI due to `set -o nounset` in the parent script.
+  retVal=0
+
+  # Try to pre-pull the image
+  kind::prepullImage "kindest/node:$version"
+
+  # if pre-pull failed, or ALWAYS_BUILD_KIND_IMAGES is true build the images locally.
+ if [[ "$retVal" != 0 ]] || [[ "$ALWAYS_BUILD_KIND_IMAGES" = "true" ]]; then
+    echo "+ building image for Kuberentes $version locally. This is either because the image wasn't available in docker hub or ALWAYS_BUILD_KIND_IMAGES is set to true"
+    kind::buildNodeImage "$version"
+  fi
+}
+
+# kind::buildNodeImage builds a kindest/node images starting from Kubernetes sources.
+# the func expect an input parameter defining the image tag to be used.
+kind::buildNodeImage() {
+  local version=$1
+
+  # move to the Kubernetes repository.
+  echo "KUBE_ROOT $GOPATH/src/k8s.io/kubernetes"
+  cd "$GOPATH/src/k8s.io/kubernetes" || exit
+
+  # checkouts the Kubernetes branch for the given version.
+  k8s::checkoutBranch "$version"
+
+  # sets the build version that will be applied by the Kubernetes build command called during kind build node-image.
+  k8s::setBuildVersion "$version"
+
+  # build the node image
+  version="${version//+/_}"
+  echo "+ Building kindest/node:$version"
+  kind build node-image --image "kindest/node:$version"
+
+  # move back to Cluster API
+  cd "$REPO_ROOT" || exit
+}
+
+# k8s::checkoutBranch checkouts the Kubernetes branch for the given version.
+k8s::checkoutBranch() {
+  local version=$1
+  echo "+ Checkout branch for Kubernetes $version"
+
+  # checkout the required tag/branch.
+  local buildMetadata
+  buildMetadata=$(echo "${version#v}" | awk '{split($0,a,"+"); print a[2]}')
+  if [[ "$buildMetadata" == "" ]]; then
+    # if there are no release metadata, it means we are looking for a Kubernetes version that
+    # should be already been tagged.
+    echo "+ checkout tag $version"
+    git fetch --all --tags
+    git checkout "tags/$version" -B "$version-branch"
+  else
+    # otherwise we are requiring a Kubernetes version that should be built from HEAD
+    # of one of the existing branches
+    echo "+ checking for existing branches"
+    git fetch --all
+
+    local major
+    local minor
+    major=$(echo "${version#v}" | awk '{split($0,a,"."); print a[1]}')
+    minor=$(echo "${version#v}" | awk '{split($0,a,"."); print a[2]}')
+
+    local releaseBranch
+    releaseBranch="$(git branch -r | grep "release-$major.$minor$" || true)"
+    if [[ "$releaseBranch" != "" ]]; then
+      # if there is already a release branch for the required Kubernetes branch, use it
+      echo "+ checkout $releaseBranch branch"
+      git checkout "$releaseBranch" -B "release-$major.$minor"
+    else
+      # otherwise, we should build from the main branch, which is the branch for the next release
+      # TODO(sbueringer) we can only change this to main after k/k has migrated to main
+      echo "+ checkout master branch"
+      git checkout master
+    fi
+  fi
+}
+
+# k8s::setBuildVersion sets the build version that will be applied by the Kubernetes build command.
+# the func expect an input parameter defining the version to be used.
+k8s::setBuildVersion() {
+  local version=$1
+  echo "+ Setting version for Kubernetes build to $version"
+
+  local major
+  local minor
+  major=$(echo "${version#v}" | awk '{split($0,a,"."); print a[1]}')
+  minor=$(echo "${version#v}" | awk '{split($0,a,"."); print a[2]}')
+
+  cat > build-version << EOL
+export KUBE_GIT_MAJOR=$major
+export KUBE_GIT_MINOR=$minor
+export KUBE_GIT_VERSION=$version
+export KUBE_GIT_TREE_STATE=clean
+export KUBE_GIT_COMMIT=d34db33f
+EOL
+
+  export KUBE_GIT_VERSION_FILE=$PWD/build-version
+}
+
+# kind:prepullImage pre-pull a docker image if no already present locally.
+# The result will be available in the retVal value which is accessible from the caller.
+kind::prepullImage () {
+  local image=$1
+  image="${image//+/_}"
+
+  retVal=0
+  if [[ "$(docker images -q "$image" 2> /dev/null)" == "" ]]; then
+    echo "+ Pulling $image"
+    docker pull "$image" || retVal=$?
+  else
+    echo "+ image $image already present in the system, skipping pre-pull"
+  fi
+}
diff --git a/hack/e2e.sh b/hack/e2e.sh
index 85b9cc12eb..c0fa08e6a5 100755
--- a/hack/e2e.sh
+++ b/hack/e2e.sh
@@ -21,6 +21,9 @@ set -o pipefail # any non-zero exit code in a piped command causes the pipeline
 export PATH=${PWD}/hack/tools/bin:${PATH}
 REPO_ROOT=$(git rev-parse --show-toplevel)
 
+# shellcheck source=./hack/ci-e2e-lib.sh
+source "${REPO_ROOT}/hack/ci-e2e-lib.sh"
+
 RE_VCSIM='\[vcsim\\]'
 
 # In CI, ARTIFACTS is set to a different directory. This stores the value of
@@ -162,21 +165,18 @@ if [[ ! "${GINKGO_FOCUS:-}" =~ $RE_VCSIM ]]; then
   fi
 fi
 
-make envsubst
+make envsubst kind
+
+# Prepare kindest/node images for all the required Kubernetes version; this implies
+# 1. Kubernetes version labels (e.g. latest) to the corresponding version numbers.
+# 2. Pre-pulling the corresponding kindest/node image if available; if not, building the image locally.
+# Following variables are currently checked (if defined):
+# - KUBERNETES_VERSION_MANAGEMENT
+k8s::prepareKindestImagesVariables
+k8s::prepareKindestImages
 
 # Only pre-pull vm-operator image where running in supervisor mode.
 if [[ ${GINKGO_FOCUS:-} =~ \\\[supervisor\\\] ]]; then
-  kind::prepullImage () {
-    local image=$1
-    image="${image//+/_}"
-
-    if [[ "$(docker images -q "$image" 2> /dev/null)" == "" ]]; then
-      echo "+ Pulling $image"
-      docker pull "$image"
-    else
-      echo "+ image $image already present in the system, skipping pre-pull"
-    fi
-  }
    kind::prepullImage "gcr.io/k8s-staging-capi-vsphere/extra/vm-operator:${E2E_VM_OPERATOR_VERSION}"
 fi
 
diff --git a/test/e2e/config/vsphere.yaml b/test/e2e/config/vsphere.yaml
index c169ec60e6..ad695d68d7 100644
--- a/test/e2e/config/vsphere.yaml
+++ b/test/e2e/config/vsphere.yaml
@@ -267,6 +267,7 @@ providers:
 
 variables:
   # Ensure all Kubernetes versions used here are covered in patch-vsphere-template.yaml
+  KUBERNETES_VERSION_MANAGEMENT: "v1.31.0-rc.0"
   KUBERNETES_VERSION: "v1.30.0"
   KUBERNETES_VERSION_UPGRADE_FROM: "v1.29.0"
   KUBERNETES_VERSION_UPGRADE_TO: "v1.30.0"
diff --git a/test/framework/framework.go b/test/framework/framework.go
index 8e8b9eb327..9d24f0a375 100644
--- a/test/framework/framework.go
+++ b/test/framework/framework.go
@@ -191,6 +191,7 @@ func SetupBootstrapCluster(ctx context.Context, config *clusterctl.E2EConfig, sc
 		clusterProvider = bootstrap.CreateKindBootstrapClusterAndLoadImages(ctx, bootstrap.CreateKindBootstrapClusterAndLoadImagesInput{
 			Name:               config.ManagementClusterName,
 			RequiresDockerSock: config.HasDockerProvider(),
+			KubernetesVersion:  config.GetVariable(capi_e2e.KubernetesVersionManagement),
 			Images:             config.Images,
 		})