diff --git a/Makefile b/Makefile
index 492102684..fed6bd818 100644
--- a/Makefile
+++ b/Makefile
@@ -109,6 +109,9 @@ tidy:
 test: generate-all fmt vet envtest tidy external-crd ## Run tests.
 	KUBEBUILDER_ASSETS="$(shell $(ENVTEST) use $(ENVTEST_K8S_VERSION) --bin-dir $(LOCALBIN) -p path)" go test $$(go list ./... | grep -v /e2e) -coverprofile cover.out
 
+# E2E_CONFIG_B64 contains the configuration for e2e testing.
+E2E_CONFIG_B64 ?= ""
+
 # Utilize Kind or modify the e2e tests to load the image locally, enabling
 # compatibility with other vendors.
 .PHONY: test-e2e # Run the e2e tests using a Kind k8s instance as the management cluster.
@@ -116,7 +119,8 @@ test-e2e: cli-install
 	@if [ "$$GINKGO_LABEL_FILTER" ]; then \
 		ginkgo_label_flag="-ginkgo.label-filter=$$GINKGO_LABEL_FILTER"; \
 	fi; \
-	KIND_CLUSTER_NAME="hmc-test" KIND_VERSION=$(KIND_VERSION) go test ./test/e2e/ -v -ginkgo.v -ginkgo.timeout=3h -timeout=3h $$ginkgo_label_flag
+	KIND_CLUSTER_NAME="hmc-test" KIND_VERSION=$(KIND_VERSION) E2E_CONFIG_B64=$(E2E_CONFIG_B64) \
+	go test ./test/e2e/ -v -ginkgo.v -ginkgo.timeout=3h -timeout=3h $$ginkgo_label_flag
 
 .PHONY: lint
 lint: golangci-lint ## Run golangci-lint linter & yamllint
diff --git a/test/e2e/config/config.go b/test/e2e/config/config.go
new file mode 100644
index 000000000..fd3065f4c
--- /dev/null
+++ b/test/e2e/config/config.go
@@ -0,0 +1,80 @@
+// Copyright 2024
+//
+// 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.
+
+package config
+
+import (
+	"encoding/base64"
+	"fmt"
+	"os"
+
+	. "github.com/onsi/ginkgo/v2"
+	. "github.com/onsi/gomega"
+	"gopkg.in/yaml.v3"
+)
+
+type TestingProvider string
+
+const (
+	envVarE2EConfig = "E2E_CONFIG_B64"
+
+	TestingProviderAWS     TestingProvider = "aws"
+	TestingProviderAzure   TestingProvider = "azure"
+	TestingProviderVsphere TestingProvider = "vsphere"
+)
+
+var Config TestingConfig
+
+type TestingConfig = map[TestingProvider]ProviderTestingConfig
+
+type ProviderTestingConfig struct {
+	// Standalone contains the testing configuration for the standalone cluster deployment.
+	Standalone ClusterTestingConfig `yaml:"standalone,omitempty"`
+	// Standalone contains the testing configuration for the hosted cluster deployment.
+	Hosted ClusterTestingConfig `yaml:"hosted,omitempty"`
+}
+
+type ClusterTestingConfig struct {
+	// Upgrade is a boolean parameter that specifies whether the managed cluster upgrade should be tested.
+	Upgrade bool `yaml:"upgrade,omitempty"`
+	// Template is the name of the template to use when deploying a managed cluster.
+	// If unset:
+	// * The latest available template will be chosen
+	// * If upgrade is triggered, the latest available template with available upgrades will be chosen.
+	Template string `yaml:"template,omitempty"`
+	// UpgradeTemplate specifies the name of the template to upgrade to. Ignored if upgrade is set to false.
+	// If unset, the latest template available for the upgrade will be chosen.
+	UpgradeTemplate string `yaml:"upgradeTemplate,omitempty"`
+}
+
+func Parse() error {
+	decodedConfig, err := base64.StdEncoding.DecodeString(os.Getenv(envVarE2EConfig))
+	if err != nil {
+		return err
+	}
+	_, _ = fmt.Fprintf(GinkgoWriter, "E2e testing configuration:\n%s\n", decodedConfig)
+
+	err = yaml.Unmarshal(decodedConfig, &Config)
+	if err != nil {
+		return err
+	}
+	return nil
+}
+
+func (c *ProviderTestingConfig) String() string {
+	prettyConfig, err := yaml.Marshal(c)
+	Expect(err).NotTo(HaveOccurred())
+
+	return string(prettyConfig)
+}