diff --git a/cmd/localkube/cmd/start.go b/cmd/localkube/cmd/start.go
index 24ddb40de7..16dc99822d 100644
--- a/cmd/localkube/cmd/start.go
+++ b/cmd/localkube/cmd/start.go
@@ -23,6 +23,8 @@ import (
 
 	"github.com/spf13/cobra"
 
+	"k8s.io/kubernetes/pkg/capabilities"
+	"k8s.io/kubernetes/pkg/kubelet/types"
 	"k8s.io/minikube/pkg/localkube"
 )
 
@@ -61,6 +63,19 @@ func SetupServer(s *localkube.LocalkubeServer) {
 			panic(err)
 		}
 	}
+
+	// Setup capabilities. This can only be done once per binary.
+	allSources, _ := types.GetValidatedSources([]string{types.AllSource})
+	c := capabilities.Capabilities{
+		AllowPrivileged: true,
+		PrivilegedSources: capabilities.PrivilegedSources{
+			HostNetworkSources: allSources,
+			HostIPCSources:     allSources,
+			HostPIDSources:     allSources,
+		},
+	}
+	capabilities.Initialize(c)
+
 	// setup etcd
 	etcd, err := s.NewEtcd(localkube.KubeEtcdClientURLs, localkube.KubeEtcdPeerURLs, "kubeetcd", s.GetEtcdDataDirectory())
 	if err != nil {
diff --git a/pkg/localkube/kubelet.go b/pkg/localkube/kubelet.go
index e2ce6f2a62..fae77b81f7 100644
--- a/pkg/localkube/kubelet.go
+++ b/pkg/localkube/kubelet.go
@@ -39,6 +39,7 @@ func StartKubeletServer(lk LocalkubeServer) func() error {
 	config.Containerized = lk.Containerized
 
 	config.AllowPrivileged = true
+	config.Config = "/etc/kubernetes/manifests"
 
 	// Networking
 	config.ClusterDomain = lk.DNSDomain