diff --git a/Makefile b/Makefile
index f5b328ecf..e8188fc61 100644
--- a/Makefile
+++ b/Makefile
@@ -20,6 +20,17 @@ install-serverless-latest-release: ## Install serverless from latest release
 	kubectl apply -f https://github.com/kyma-project/serverless-manager/releases/latest/download/default-serverless-cr.yaml -n kyma-system
 	make -C ${OPERATOR_ROOT} check-serverless-installation
 
+.PHONY: install-serverless-local-sources
+install-serverless-local-sources:
+	$(eval IMG_VERSION=local-$(shell date +'%Y%m%d-%H%M%S'))
+	IMG_VERSION=${IMG_VERSION} ./hack/build_all.sh
+
+	$(eval IMG=europe-docker.pkg.dev/kyma-project/dev/serverless-operator:${IMG_VERSION})
+	IMG_DIRECTORY="dev" IMG_VERSION=${IMG_VERSION} IMG=${IMG} make -C ${OPERATOR_ROOT} docker-build-local
+
+	k3d image import "${IMG}" -c kyma
+	IMG=${IMG} make install-serverless-custom-operator
+
 .PHONY: remove-serverless
 remove-serverless: ## Remove serverless-cr and serverless operator
 	make -C ${OPERATOR_ROOT} remove-serverless undeploy
diff --git a/hack/build_all.sh b/hack/build_all.sh
new file mode 100755
index 000000000..3a0f5c92b
--- /dev/null
+++ b/hack/build_all.sh
@@ -0,0 +1,15 @@
+#!/bin/bash
+set -e
+HACK_DIR="./hack"
+
+echo "New tag: $IMG_VERSION"
+(cd "${HACK_DIR}" && pwd && docker compose build)
+
+for i in $(yq '.services[].image' ${HACK_DIR}/docker-compose.yaml); do
+  IMAGE_NAME=$(echo "${i}" | cut -d ":" -f 1)
+  NEW_IMAGE_NAME="${IMAGE_NAME}:${IMG_VERSION}"
+  docker tag "${i}" "${NEW_IMAGE_NAME}"
+  set -x
+  k3d image import "${NEW_IMAGE_NAME}" -c kyma
+  set +x
+done
diff --git a/hack/docker-compose.yaml b/hack/docker-compose.yaml
new file mode 100644
index 000000000..367fb6630
--- /dev/null
+++ b/hack/docker-compose.yaml
@@ -0,0 +1,39 @@
+services:
+  # serverless
+  function_controller:
+    image: europe-docker.pkg.dev/kyma-project/dev/function-controller:local
+    platform: "linux/amd64"
+    build:
+      context: ../
+      dockerfile: components/serverless/deploy/manager/Dockerfile
+  function_build_init:
+    image: europe-docker.pkg.dev/kyma-project/dev/function-build-init:local
+    platform: "linux/amd64"
+    build:
+      context: ../
+      dockerfile: components/serverless/deploy/jobinit/Dockerfile
+  # runtimes
+  function_runtime_nodejs18:
+    image: europe-docker.pkg.dev/kyma-project/dev/function-runtime-nodejs18:local
+    platform: "linux/amd64"
+    build:
+      context: ../components/runtimes/nodejs
+      dockerfile: nodejs18/Dockerfile
+  function_runtime_nodejs20:
+    image: europe-docker.pkg.dev/kyma-project/dev/function-runtime-nodejs20:local
+    platform: "linux/amd64"
+    build:
+      context: ../components/runtimes/nodejs
+      dockerfile: nodejs20/Dockerfile
+  function_runtime_python39:
+    image: europe-docker.pkg.dev/kyma-project/dev/function-runtime-python39:local
+    platform: "linux/amd64"
+    build:
+      context: ../components/runtimes/python
+      dockerfile: python39/Dockerfile
+  function_runtime_python312:
+    image: europe-docker.pkg.dev/kyma-project/dev/function-runtime-python312:local
+    platform: "linux/amd64"
+    build:
+      context: ../components/runtimes/python
+      dockerfile: python312/Dockerfile
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