diff --git a/images/capi/ansible/roles/kubernetes/files/usr/libexec/kubernetes/kubelet-resource-sizing.sh b/images/capi/ansible/roles/kubernetes/files/usr/libexec/kubernetes/kubelet-resource-sizing.sh
index 864b0aa76d..4535510634 100755
--- a/images/capi/ansible/roles/kubernetes/files/usr/libexec/kubernetes/kubelet-resource-sizing.sh
+++ b/images/capi/ansible/roles/kubernetes/files/usr/libexec/kubernetes/kubelet-resource-sizing.sh
@@ -5,6 +5,7 @@
 
 #RPM and DEB systems kubelet sysconfig PATH
 KUBELET_SYSCONFIG_FILES=( "/etc/sysconfig/kubelet" "/etc/default/kubelet" )
+KUBELET_CONFIG="/var/lib/kubelet/kubelet.conf.d/kubelet-resource-sizing.json"
 
 for KUBELET_SYSCONFIG in "${KUBELET_SYSCONFIG_FILES[@]}"
 do
@@ -13,7 +14,7 @@ do
     # shellcheck source=/dev/null
     . "${KUBELET_SYSCONFIG}"
     # If system-reserved is already set by user, ignore
-    if grep -q 'KUBELET_EXTRA_ARGS=.*--system-reserved' "${KUBELET_SYSCONFIG}"; then
+    if grep -q 'systemReserved' "${KUBELET_SYSCONFIG}"; then
       exit 0
     fi
   fi
@@ -98,7 +99,7 @@ CPU_CORE_RESERVATION_MICROCORES=(
 )
 
 # Calculate the CPU reservation
-cpu_milicores_to_reserve() {
+cpu_millicores_to_reserve() {
   local cpu_microcores_reserved=0
 
   for ((i = 0; i < schedulable_cores_no; i++)); do
@@ -113,13 +114,16 @@ cpu_milicores_to_reserve() {
   echo "$cpu_microcores_reserved" | awk '{result = $1 / 10; if (result != int(result)) result++; printf "%d\n", result}'
 }
 
-mkdir -p /run/kubelet
-# Check if system-reserved already exists
-if grep '.*--system-reserved' <<< "${KUBELET_EXTRA_ARGS}"; then
-  # If system-reserved is already set by a previous run, replace old value with new one and write to /run/kubelet/extra-args.env
-  system_reserved=$(sed -E "s|--system-reserved=cpu=[0-9]+m,memory=[0-9]+Mi|--system-reserved=cpu=$(cpu_milicores_to_reserve)m,memory=$(memory_reservation_mebibytes)Mi|" <<< "${KUBELET_EXTRA_ARGS}")
-  echo "KUBELET_EXTRA_ARGS=${system_reserved} >/run/kubelet/extra-args.env"
-else
-  # If not append system-reserved to KUBELET_EXTRA_ARGS and write to /run/kubelet/extra-args.env
-  echo "KUBELET_EXTRA_ARGS=${KUBELET_EXTRA_ARGS} --system-reserved=cpu=$(cpu_milicores_to_reserve)m,memory=$(memory_reservation_mebibytes)Mi" >/run/kubelet/extra-args.env
+mkdir -p /var/lib/kubelet/kubelet.conf.d
+
+# Initialize config file if it doesn't exist
+if [ ! -f "$KUBELET_CONFIG" ]; then
+  echo "{}" > "$KUBELET_CONFIG"
 fi
+
+# Get the computed values from the functions
+memory_reservation_mebibytes=$(memory_reservation_mebibytes)
+cpu_millicores_to_reserve=$(cpu_millicores_to_reserve)
+
+echo "$(jq --arg memory_reservation_mebibytes "${memory_reservation_mebibytes}Mi" --arg cpu_millicores_to_reserve "${cpu_millicores_to_reserve}m" \
+    '. += {"apiVersion": "kubelet.config.k8s.io/v1beta1","kind": "KubeletConfiguration", "systemReserved": {"cpu": $cpu_millicores_to_reserve, "ephemeral-storage": "1Gi", "memory": $memory_reservation_mebibytes}}' "$KUBELET_CONFIG")" > "$KUBELET_CONFIG"
diff --git a/images/capi/ansible/roles/kubernetes/tasks/main.yml b/images/capi/ansible/roles/kubernetes/tasks/main.yml
index c2e563d0fe..60d259dd36 100644
--- a/images/capi/ansible/roles/kubernetes/tasks/main.yml
+++ b/images/capi/ansible/roles/kubernetes/tasks/main.yml
@@ -84,6 +84,19 @@
     mode: "0644"
   when: kubernetes_enable_automatic_resource_sizing | bool
 
+- name: Set Kubelet Configuration Drop-in Directory argument
+  ansible.builtin.lineinfile:
+    path: "{{ systemd_prefix }}/system/kubelet.service.d/10-kubeadm.conf"
+    regexp: '^Environment="KUBELET_CONFIG_ARGS='
+    line: Environment="KUBELET_CONFIG_ARGS=--config=/var/lib/kubelet/config.yaml --config-dir /var/lib/kubelet/kubelet.conf.d"
+  when: kubernetes_semver is version('v1.28.0', '>=') and kubernetes_enable_automatic_resource_sizing | bool
+
+- name: Add KUBELET_CONFIG_DROPIN_DIR_ALPHA environment variable for Kubernetes v1.29 and below
+  ansible.builtin.lineinfile:
+    path: "{{ systemd_prefix }}/system/kubelet.service.d/10-kubeadm.conf"
+    line: Environment="KUBELET_CONFIG_DROPIN_DIR_ALPHA"
+  when: kubernetes_semver is version('v1.28.0', '>=') and kubernetes_semver is version('v1.29.0', '<') and kubernetes_enable_automatic_resource_sizing | bool
+
 - name: Generate kubectl bash completion
   ansible.builtin.shell:
     cmd: "{{ sysusr_prefix }}/bin/kubectl completion bash > {{ sysusr_prefix }}/share/bash-completion/completions/kubectl"
diff --git a/images/capi/ansible/roles/kubernetes/templates/usr/lib/systemd/system/kubelet.service.d/10-kubeadm.conf b/images/capi/ansible/roles/kubernetes/templates/usr/lib/systemd/system/kubelet.service.d/10-kubeadm.conf
index 4f1b8156b9..95712ca4df 100644
--- a/images/capi/ansible/roles/kubernetes/templates/usr/lib/systemd/system/kubelet.service.d/10-kubeadm.conf
+++ b/images/capi/ansible/roles/kubernetes/templates/usr/lib/systemd/system/kubelet.service.d/10-kubeadm.conf
@@ -1,7 +1,11 @@
 # Note: This dropin only works with kubeadm and kubelet v1.11+
 [Service]
 Environment="KUBELET_KUBECONFIG_ARGS=--bootstrap-kubeconfig=/etc/kubernetes/bootstrap-kubelet.conf --kubeconfig=/etc/kubernetes/kubelet.conf"
-Environment="KUBELET_CONFIG_ARGS=--config=/var/lib/kubelet/config.yaml"
+Environment="KUBELET_CONFIG_ARGS=--config=/var/lib/kubelet/config.yaml {% if kubernetes_enable_automatic_resource_sizing | bool  and kubernetes_semver is version('v1.28.0', '>=') %}--config-dir /var/lib/kubelet/kubelet.conf.d{% endif %}"
+# For Kubernetes v1.28 to v1.29, you can only specify --config-dir if you also set the environment variable KUBELET_CONFIG_DROPIN_DIR_ALPHA for the kubelet process (the value of that variable does not matter).
+{% if kubernetes_semver is version('v1.28.0', '>=') and kubernetes_semver is version('v1.29.0', '<') %}
+Environment="KUBELET_CONFIG_DROPIN_DIR_ALPHA"
+{% endif %}
 # This is a file that "kubeadm init" and "kubeadm join" generates at runtime, populating the KUBELET_KUBEADM_ARGS variable dynamically
 EnvironmentFile=-/var/lib/kubelet/kubeadm-flags.env
 # This is a file that the user can use for overrides of the kubelet args as a last resort. Preferably, the user should use