diff --git a/Makefile b/Makefile
index ad6c1f0492..6c4751841f 100644
--- a/Makefile
+++ b/Makefile
@@ -158,6 +158,8 @@ e2e-templates: ## Generate e2e cluster templates
 	"$(KUSTOMIZE)" --load-restrictor LoadRestrictionsNone build $(E2E_TEMPLATE_DIR)/kustomization/pci > $(E2E_TEMPLATE_DIR)/cluster-template-pci.yaml
 	# for DHCP overrides
 	"$(KUSTOMIZE)" --load-restrictor LoadRestrictionsNone build $(E2E_TEMPLATE_DIR)/kustomization/dhcp-overrides > $(E2E_TEMPLATE_DIR)/cluster-template-dhcp-overrides.yaml
+	# for IPAM template
+	"$(KUSTOMIZE)" --load-restrictor LoadRestrictionsNone build $(E2E_TEMPLATE_DIR)/kustomization/ipam > $(E2E_TEMPLATE_DIR)/cluster-template-ipam.yaml
 
 .PHONY: test-integration
 test-integration: e2e-image
diff --git a/test/e2e/config/vsphere-dev.yaml b/test/e2e/config/vsphere-dev.yaml
index 2f1674350e..2f4d428e9d 100644
--- a/test/e2e/config/vsphere-dev.yaml
+++ b/test/e2e/config/vsphere-dev.yaml
@@ -96,6 +96,19 @@ providers:
           - old: "imagePullPolicy: Always"
             new: "imagePullPolicy: IfNotPresent"
 
+  - name: incluster
+    type: IPAMProvider
+    versions:
+      - name: v0.1.0
+        value: https://github.com/telekom/cluster-api-ipam-provider-in-cluster/releases/download/v0.1.0-alpha.1/ipam-components.yaml
+        type: "url"
+        contract: v1beta1
+        files:
+          - sourcePath: "../data/cluster-api-ipam-provider-in-cluster/metadata.yaml"
+        replacements:
+          - old: "imagePullPolicy: Always"
+            new: "imagePullPolicy: IfNotPresent"
+
   - name: vsphere
     type: InfrastructureProvider
     versions:
@@ -126,6 +139,7 @@ providers:
           - sourcePath: "../../../test/e2e/data/infrastructure-vsphere/cluster-template-pci.yaml"
           - sourcePath: "../../../test/e2e/data/infrastructure-vsphere/cluster-template-remote-management.yaml"
           - sourcePath: "../../../test/e2e/data/infrastructure-vsphere/cluster-template-storage-policy.yaml"
+          - sourcePath: "../../../test/e2e/data/infrastructure-vsphere/cluster-template-ipam.yaml"
           - sourcePath: "../../../test/e2e/data/infrastructure-vsphere/cluster-template-topology.yaml"
           - sourcePath: "../../../test/e2e/data/infrastructure-vsphere/cluster-template-dhcp-overrides.yaml"
           - sourcePath: "../../../test/e2e/data/infrastructure-vsphere/clusterclass-quick-start.yaml"
@@ -170,6 +184,12 @@ variables:
   # CAPV feature flags
   EXP_NODE_ANTI_AFFINITY: "true"
   EXP_NODE_LABELING: "true"
+  # Node IPAM settings
+  NODE_IPAM_POOL_SUBNET: 192.168.116.1/24
+  NODE_IPAM_POOL_GATEWAY: 192.168.116.1
+  NODE_IPAM_POOL_START: 192.168.116.151
+  NODE_IPAM_POOL_END: 192.168.116.200
+  NODE_IPAM_NAMESERVER: 10.142.7.1
 
 intervals:
   default/wait-controllers: ["5m", "10s"]
diff --git a/test/e2e/data/cluster-api-ipam-provider-in-cluster/metadata.yaml b/test/e2e/data/cluster-api-ipam-provider-in-cluster/metadata.yaml
new file mode 100644
index 0000000000..11facb297c
--- /dev/null
+++ b/test/e2e/data/cluster-api-ipam-provider-in-cluster/metadata.yaml
@@ -0,0 +1,6 @@
+apiVersion: clusterctl.cluster.x-k8s.io/v1alpha3
+kind: Metadata
+releaseSeries:
+  - major: 0
+    minor: 1
+    contract: v1beta1
diff --git a/test/e2e/data/infrastructure-vsphere/kustomization/ipam/ipam-template.yaml b/test/e2e/data/infrastructure-vsphere/kustomization/ipam/ipam-template.yaml
new file mode 100644
index 0000000000..c5045a4e5c
--- /dev/null
+++ b/test/e2e/data/infrastructure-vsphere/kustomization/ipam/ipam-template.yaml
@@ -0,0 +1,34 @@
+---
+apiVersion: infrastructure.cluster.x-k8s.io/v1beta1
+kind: VSphereMachineTemplate
+metadata:
+  name: ${CLUSTER_NAME}
+  namespace: ${NAMESPACE}
+spec:
+  template:
+    spec:
+      network:
+        devices:
+          - nameservers: ["${NODE_IPAM_NAMESERVER}"]
+            addressesFromPools:
+            - name: inclusterippool
+              apiGroup: ipam.cluster.x-k8s.io
+              kind: InClusterIPPool
+            networkName: '${VSPHERE_NETWORK}'
+---
+apiVersion: infrastructure.cluster.x-k8s.io/v1beta1
+kind: VSphereMachineTemplate
+metadata:
+  name: ${CLUSTER_NAME}-worker
+  namespace: ${NAMESPACE}
+spec:
+  template:
+    spec:
+      network:
+        devices:
+          - nameservers: ["${NODE_IPAM_NAMESERVER}"]
+            addressesFromPools:
+            - name: inclusterippool
+              apiGroup: ipam.cluster.x-k8s.io
+              kind: InClusterIPPool
+            networkName: '${VSPHERE_NETWORK}'
diff --git a/test/e2e/data/infrastructure-vsphere/kustomization/ipam/kustomization.yaml b/test/e2e/data/infrastructure-vsphere/kustomization/ipam/kustomization.yaml
new file mode 100644
index 0000000000..4354857ef6
--- /dev/null
+++ b/test/e2e/data/infrastructure-vsphere/kustomization/ipam/kustomization.yaml
@@ -0,0 +1,7 @@
+apiVersion: kustomize.config.k8s.io/v1beta1
+kind: Kustomization
+resources:
+  - ../base
+  - pool.yaml
+patchesStrategicMerge:
+  - ipam-template.yaml
diff --git a/test/e2e/data/infrastructure-vsphere/kustomization/ipam/pool.yaml b/test/e2e/data/infrastructure-vsphere/kustomization/ipam/pool.yaml
new file mode 100644
index 0000000000..7f3aa94b79
--- /dev/null
+++ b/test/e2e/data/infrastructure-vsphere/kustomization/ipam/pool.yaml
@@ -0,0 +1,11 @@
+---
+apiVersion: ipam.cluster.x-k8s.io/v1alpha1
+kind: InClusterIPPool
+metadata:
+  name: inclusterippool
+  namespace: ${NAMESPACE}
+spec:
+  subnet: ${NODE_IPAM_POOL_SUBNET}
+  gateway: ${NODE_IPAM_POOL_GATEWAY}
+  start: ${NODE_IPAM_POOL_START}
+  end: ${NODE_IPAM_POOL_END}
diff --git a/test/e2e/ipam_test.go b/test/e2e/ipam_test.go
new file mode 100644
index 0000000000..1d1d5b244b
--- /dev/null
+++ b/test/e2e/ipam_test.go
@@ -0,0 +1,110 @@
+/*
+Copyright 2022 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.
+*/
+
+package e2e
+
+import (
+	"bytes"
+	"fmt"
+	"net"
+	"path/filepath"
+
+	. "github.com/onsi/ginkgo/v2"
+	. "github.com/onsi/gomega"
+	v1 "k8s.io/api/core/v1"
+	"k8s.io/utils/pointer"
+	"sigs.k8s.io/cluster-api/test/framework/clusterctl"
+	"sigs.k8s.io/cluster-api/util"
+)
+
+const (
+	NodeIPAMPoolSubnet = "NODE_IPAM_POOL_SUBNET"
+	NodeIPAMPoolStart  = "NODE_IPAM_POOL_START"
+	NodeIPAMPoolEnd    = "NODE_IPAM_POOL_END"
+)
+
+var _ = Describe("Clusters using FromPools get assigned addresses from IPAM", func() {
+	var namespace *v1.Namespace
+	var start, end string
+
+	BeforeEach(func() {
+		start = e2eConfig.GetVariable(NodeIPAMPoolStart)
+		Expect(net.ParseIP(start)).NotTo(BeNil())
+		end = e2eConfig.GetVariable(NodeIPAMPoolEnd)
+		Expect(net.ParseIP(end)).NotTo(BeNil())
+		Expect(bootstrapClusterProxy).NotTo(BeNil(), "BootstrapClusterProxy can't be nil")
+		namespace = setupSpecNamespace("node-ipam")
+	})
+
+	AfterEach(func() {
+		cleanupSpecNamespace(namespace)
+	})
+
+	It("should create a cluster successfully", func() {
+		clusterName := fmt.Sprintf("cluster-%s", util.RandomString(6))
+
+		By("creating a workload cluster")
+		configCluster := ipamConfigCluster(clusterName, namespace.Name, 1, 1)
+
+		clusterctl.ApplyClusterTemplateAndWait(ctx, clusterctl.ApplyClusterTemplateAndWaitInput{
+			ClusterProxy:                 bootstrapClusterProxy,
+			ConfigCluster:                configCluster,
+			WaitForClusterIntervals:      e2eConfig.GetIntervals("", "wait-cluster"),
+			WaitForControlPlaneIntervals: e2eConfig.GetIntervals("", "wait-control-plane"),
+			WaitForMachineDeployments:    e2eConfig.GetIntervals("", "wait-worker-nodes"),
+		}, &clusterctl.ApplyClusterTemplateAndWaitResult{})
+
+		By("Verifying that the cluster is using IPAM provided IP addresses")
+		list := getVSphereVMsForCluster(clusterName, namespace.Name)
+		Expect(list.Items).NotTo(BeEmpty())
+		for _, vm := range list.Items {
+			path := fmt.Sprintf("/%s/vm/%s/%s", vm.Spec.Datacenter, vm.Spec.Folder, vm.Name)
+			vm, err := vsphereFinder.VirtualMachine(ctx, path)
+			Expect(err).ShouldNot(HaveOccurred())
+			ip, err := vm.WaitForIP(ctx, true)
+			Expect(err).ShouldNot(HaveOccurred())
+			Expect(IPIsInRange(ip, start, end)).To(BeTrue(), fmt.Sprintf("Expected IP %q to be between %q and %q", ip, start, end))
+		}
+	})
+})
+
+func IPIsInRange(ip, rangeStart, rangeEnd string) bool {
+	parsedIP := net.ParseIP(ip)
+	Expect(parsedIP).NotTo(BeNil())
+
+	parsedStart := net.ParseIP(rangeStart)
+	Expect(parsedStart).NotTo(BeNil())
+
+	parsedEnd := net.ParseIP(rangeEnd)
+	Expect(parsedEnd).NotTo(BeNil())
+
+	return bytes.Compare(parsedIP, parsedStart) >= 0 && bytes.Compare(parsedIP, parsedEnd) <= 0
+}
+
+func ipamConfigCluster(clusterName, namespace string, controlPlaneNodeCount, workerNodeCount int64) clusterctl.ConfigClusterInput {
+	return clusterctl.ConfigClusterInput{
+		LogFolder:                filepath.Join(artifactFolder, "clusters", bootstrapClusterProxy.GetName()),
+		ClusterctlConfigPath:     clusterctlConfigPath,
+		KubeconfigPath:           bootstrapClusterProxy.GetKubeconfigPath(),
+		InfrastructureProvider:   clusterctl.DefaultInfrastructureProvider,
+		Flavor:                   "ipam",
+		Namespace:                namespace,
+		ClusterName:              clusterName,
+		KubernetesVersion:        e2eConfig.GetVariable(KubernetesVersion),
+		ControlPlaneMachineCount: pointer.Int64Ptr(controlPlaneNodeCount),
+		WorkerMachineCount:       pointer.Int64Ptr(workerNodeCount),
+	}
+}
diff --git a/test/helpers/framework.go b/test/helpers/framework.go
index 6d182ee74f..69ffbc2cec 100644
--- a/test/helpers/framework.go
+++ b/test/helpers/framework.go
@@ -91,7 +91,10 @@ func InitBootstrapCluster(bootstrapClusterProxy framework.ClusterProxy, config *
 		ClusterProxy:            bootstrapClusterProxy,
 		ClusterctlConfigPath:    clusterctlConfig,
 		InfrastructureProviders: config.InfrastructureProviders(),
-		LogFolder:               filepath.Join(artifactFolder, "clusters", bootstrapClusterProxy.GetName()),
+		IPAMProviders: []string{
+			"incluster:v0.1.0",
+		},
+		LogFolder: filepath.Join(artifactFolder, "clusters", bootstrapClusterProxy.GetName()),
 	}, config.GetIntervals(bootstrapClusterProxy.GetName(), "wait-controllers")...)
 }