diff --git a/Makefile b/Makefile
index f113e6b2be55..75f70957a3ef 100644
--- a/Makefile
+++ b/Makefile
@@ -44,6 +44,7 @@ TOOLS_BIN_DIR := $(TOOLS_DIR)/bin
 BIN_DIR := bin
 E2E_FRAMEWORK_DIR := test/framework
 CAPD_DIR := test/infrastructure/docker
+OPERATOR_DIR := exp/operator
 RELEASE_NOTES_BIN := bin/release-notes
 RELEASE_NOTES := $(TOOLS_DIR)/$(RELEASE_NOTES_BIN)
 GO_APIDIFF_BIN := bin/go-apidiff
@@ -87,10 +88,6 @@ KUBEADM_BOOTSTRAP_CONTROLLER_IMG ?= $(REGISTRY)/$(KUBEADM_BOOTSTRAP_IMAGE_NAME)
 KUBEADM_CONTROL_PLANE_IMAGE_NAME ?= kubeadm-control-plane-controller
 KUBEADM_CONTROL_PLANE_CONTROLLER_IMG ?= $(REGISTRY)/$(KUBEADM_CONTROL_PLANE_IMAGE_NAME)
 
-# operator
-OPERATOR_IMAGE_NAME ?= cluster-api-operator
-OPERATOR_CONTROLLER_IMG ?= $(REGISTRY)/$(OPERATOR_IMAGE_NAME)
-
 # It is set by Prow GIT_TAG, a git-based tag of the form vYYYYMMDD-hash, e.g., v20210120-v0.3.10-308-gc61521971
 TAG ?= dev
 ARCH ?= amd64
@@ -145,10 +142,6 @@ test-e2e: ## Run the e2e tests
 ## Binaries
 ## --------------------------------------
 
-.PHONY: operator
-operator: ## Build operator binary
-	go build -ldflags "$(LDFLAGS)" -o $(BIN_DIR)/operator sigs.k8s.io/cluster-api/exp/operator
-
 .PHONY: manager-core
 manager-core: ## Build core manager binary
 	go build -ldflags "$(LDFLAGS)" -o $(BIN_DIR)/manager sigs.k8s.io/cluster-api
@@ -237,7 +230,7 @@ generate-go: $(GOBINDATA) ## Runs Go related generate targets
 	$(MAKE) generate-go-core
 	$(MAKE) generate-go-kubeadm-bootstrap
 	$(MAKE) generate-go-kubeadm-control-plane
-	$(MAKE) generate-go-operator
+	$(MAKE) -C $(OPERATOR_DIR) generate-go-operator
 
 .PHONY: generate-go-core
 generate-go-core: $(CONTROLLER_GEN) $(CONVERSION_GEN)
@@ -287,12 +280,6 @@ generate-go-kubeadm-control-plane: $(CONTROLLER_GEN) $(CONVERSION_GEN) ## Runs G
 		--output-file-base=zz_generated.conversion \
 		--go-header-file=./hack/boilerplate/boilerplate.generatego.txt
 
-.PHONY: generate-go-operator
-generate-go-operator: $(CONTROLLER_GEN) ## Runs Go related generate targets for the operator
-	$(CONTROLLER_GEN) \
-		object:headerFile=./hack/boilerplate/boilerplate.generatego.txt \
-		paths=./exp/operator/api/...
-
 .PHONY: generate-bindata
 generate-bindata: $(KUSTOMIZE) $(GOBINDATA) clean-bindata $(CLOUDINIT_GENERATED) ## Generate code for embedding the clusterctl api manifest
 	# Package manifest YAML into a single file.
@@ -315,7 +302,7 @@ generate-manifests: ## Generate manifests e.g. CRD, RBAC etc.
 	$(MAKE) generate-core-manifests
 	$(MAKE) generate-kubeadm-bootstrap-manifests
 	$(MAKE) generate-kubeadm-control-plane-manifests
-	$(MAKE) generate-operator-manifests
+	$(MAKE) -C $(OPERATOR_DIR) generate-operator-manifests
 
 .PHONY: generate-core-manifests
 generate-core-manifests: $(CONTROLLER_GEN) ## Generate manifests for the core provider e.g. CRD, RBAC etc.
@@ -360,18 +347,6 @@ generate-kubeadm-control-plane-manifests: $(CONTROLLER_GEN) ## Generate manifest
 		output:webhook:dir=./controlplane/kubeadm/config/webhook \
 		webhook
 
-.PHONY: generate-operator-manifests
-generate-operator-manifests: $(CONTROLLER_GEN) ## Generate manifests for the operator e.g. CRD, RBAC etc.
-	$(CONTROLLER_GEN) \
-		paths=./exp/operator/api/... \
-		paths=./exp/operator/controllers/... \
-		crd:crdVersions=v1 \
-		rbac:roleName=manager-role \
-		output:crd:dir=./exp/operator/config/crd/bases \
-		output:rbac:dir=./exp/operator/config/rbac \
-		output:webhook:dir=./exp/operator/config/webhook \
-		webhook
-
 .PHONY: modules
 modules: ## Runs go mod to ensure modules are up to date.
 	go mod tidy
@@ -415,9 +390,9 @@ docker-build-kubeadm-control-plane: ## Build the docker image for kubeadm contro
 
 .PHONY: docker-build-operator
 docker-build-operator: ## Build the docker image for management cluster operator
-	DOCKER_BUILDKIT=1 docker build --build-arg goproxy=$(GOPROXY) --build-arg ARCH=$(ARCH) --build-arg package=./exp/operator --build-arg ldflags="$(LDFLAGS)" . -t $(OPERATOR_CONTROLLER_IMG)-$(ARCH):$(TAG)
-	$(MAKE) set-manifest-image MANIFEST_IMG=$(OPERATOR_CONTROLLER_IMG)-$(ARCH) MANIFEST_TAG=$(TAG) TARGET_RESOURCE="./exp/operator/config/default/manager_image_patch.yaml"
-	$(MAKE) set-manifest-pull-policy TARGET_RESOURCE="./exp/operator/config/default/manager_pull_policy.yaml"
+	$(MAKE) -C $(OPERATOR_DIR) docker-build-operator
+	$(MAKE) set-manifest-image MANIFEST_IMG=$(OPERATOR_CONTROLLER_IMG)-$(ARCH) MANIFEST_TAG=$(TAG) TARGET_RESOURCE="./$(OPERATOR_DIR)/config/default/manager_image_patch.yaml"
+	$(MAKE) set-manifest-pull-policy TARGET_RESOURCE="$(OPERATOR_DIR)/config/default/manager_pull_policy.yaml"
 
 .PHONY: docker-push
 docker-push: ## Push the docker images
@@ -474,11 +449,8 @@ docker-push-kubeadm-control-plane-manifest: ## Push the fat manifest docker imag
 
 .PHONY: docker-push-operator-manifest
 docker-push-operator-manifest: ## Push the fat manifest docker image for the operator image.
-	## Minimum docker version 18.06.0 is required for creating and pushing manifest images.
-	docker manifest create --amend $(OPERATOR_CONTROLLER_IMG):$(TAG) $(shell echo $(ALL_ARCH) | sed -e "s~[^ ]*~$(OPERATOR_CONTROLLER_IMG)\-&:$(TAG)~g")
-	@for arch in $(ALL_ARCH); do docker manifest annotate --arch $${arch} ${OPERATOR_CONTROLLER_IMG}:${TAG} ${OPERATOR_CONTROLLER_IMG}-$${arch}:${TAG}; done
-	docker manifest push --purge $(OPERATOR_CONTROLLER_IMG):$(TAG)
-	$(MAKE) set-manifest-image MANIFEST_IMG=$(OPERATOR_CONTROLLER_IMG) MANIFEST_TAG=$(TAG) TARGET_RESOURCE="./exp/operator/config/default/manager_image_patch.yaml"
+	$(MAKE) -C "./$(OPERATOR_DIR)/" docker-push-operator-manifest
+	$(MAKE) set-manifest-image MANIFEST_IMG=$(OPERATOR_CONTROLLER_IMG) MANIFEST_TAG=$(TAG) TARGET_RESOURCE="./$(OPERATOR_DIR)/config/default/manager_image_patch.yaml"
 	$(MAKE) set-manifest-pull-policy TARGET_RESOURCE="./exp/goperator/config/default/manager_pull_policy.yaml"
 
 .PHONY: set-manifest-pull-policy
@@ -531,11 +503,11 @@ manifest-modification: # Set the manifest images to the staging/production bucke
 		TARGET_RESOURCE="./controlplane/kubeadm/config/default/manager_image_patch.yaml"
 	$(MAKE) set-manifest-image \
 		MANIFEST_IMG=$(PROD_REGISTRY)/$(OPERATOR_IMAGE_NAME) MANIFEST_TAG=$(RELEASE_TAG) \
-		TARGET_RESOURCE="./exp/operator/config/default/manager_image_patch.yaml"
+		TARGET_RESOURCE="./$(OPERATOR_DIR)/config/default/manager_image_patch.yaml"
 	$(MAKE) set-manifest-pull-policy PULL_POLICY=IfNotPresent TARGET_RESOURCE="./config/default/manager_pull_policy.yaml"
 	$(MAKE) set-manifest-pull-policy PULL_POLICY=IfNotPresent TARGET_RESOURCE="./bootstrap/kubeadm/config/default/manager_pull_policy.yaml"
 	$(MAKE) set-manifest-pull-policy PULL_POLICY=IfNotPresent TARGET_RESOURCE="./controlplane/kubeadm/config/default/manager_pull_policy.yaml"
-	$(MAKE) set-manifest-pull-policy PULL_POLICY=IfNotPresent TARGET_RESOURCE="./exp/operator/config/default/manager_pull_policy.yaml"
+	$(MAKE) set-manifest-pull-policy PULL_POLICY=IfNotPresent TARGET_RESOURCE="./$(OPERATOR_DIR)/config/default/manager_pull_policy.yaml"
 
 .PHONY: release-manifests
 release-manifests: $(RELEASE_DIR) $(KUSTOMIZE) ## Builds the manifests to publish with a release
@@ -546,7 +518,7 @@ release-manifests: $(RELEASE_DIR) $(KUSTOMIZE) ## Builds the manifests to publis
 	# Build control-plane-components.
 	$(KUSTOMIZE) build controlplane/kubeadm/config/default > $(RELEASE_DIR)/control-plane-components.yaml
 	# Build operator components.
-	$(KUSTOMIZE) build exp/operator/config/default > $(RELEASE_DIR)/operator-components.yaml
+	$(KUSTOMIZE) build $(OPERATOR_DIR)/config/default > $(RELEASE_DIR)/operator-components.yaml
 
 	## Build cluster-api-components (aggregate of all of the above).
 	cat $(RELEASE_DIR)/core-components.yaml > $(RELEASE_DIR)/cluster-api-components.yaml
diff --git a/exp/operator/Makefile b/exp/operator/Makefile
new file mode 100644
index 000000000000..74545e78bdac
--- /dev/null
+++ b/exp/operator/Makefile
@@ -0,0 +1,115 @@
+# Copyright 2021 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.
+
+# If you update this file, please follow
+# https://suva.sh/posts/well-documented-makefiles
+
+# Ensure Make is run with bash shell as some syntax below is bash-specific
+SHELL:=/usr/bin/env bash
+
+# Path to main repo
+ROOT = ../../
+
+.DEFAULT_GOAL:=help
+
+# Use GOPROXY environment variable if set
+GOPROXY := $(shell go env GOPROXY)
+ifeq ($(GOPROXY),)
+GOPROXY := https://proxy.golang.org
+endif
+export GOPROXY
+
+# Active module mode, as we use go modules to manage dependencies
+export GO111MODULE=on
+
+# This option is for running docker manifest command
+export DOCKER_CLI_EXPERIMENTAL := enabled
+
+# Directories
+TOOLS_DIR := $(ROOT)/hack/tools
+TOOLS_BIN_DIR := $(TOOLS_DIR)/bin
+
+export PATH := $(abspath $(TOOLS_BIN_DIR)):$(PATH)
+
+# Binaries.
+# Need to use abspath so we can invoke these from subdirectories
+CONTROLLER_GEN := $(abspath $(TOOLS_BIN_DIR)/controller-gen)
+
+# Define Docker related variables. Releases should modify and double check these vars.
+REGISTRY ?= gcr.io/$(shell gcloud config get-value project)
+
+# Image name
+OPERATOR_IMAGE_NAME ?= cluster-api-operator
+OPERATOR_CONTROLLER_IMG ?= $(REGISTRY)/$(OPERATOR_IMAGE_NAME)
+
+# It is set by Prow GIT_TAG, a git-based tag of the form vYYYYMMDD-hash, e.g., v20210120-v0.3.10-308-gc61521971
+TAG ?= dev
+ARCH ?= amd64
+ALL_ARCH = amd64 arm arm64 ppc64le s390x
+
+# Set build time variables including version details
+LDFLAGS := $(shell $(ROOT)/hack/version.sh)
+
+all: generate-go-operator generate-operator-manifests operator 
+
+help:  ## Display this help
+	@awk 'BEGIN {FS = ":.*##"; printf "\nUsage:\n  make \033[36m<target>\033[0m\n"} /^[0-9A-Za-z_-]+:.*?##/ { printf "  \033[36m%-45s\033[0m %s\n", $$1, $$2 } /^##@/ { printf "\n\033[1m%s\033[0m\n", substr($$0, 5) } ' $(MAKEFILE_LIST)
+
+## --------------------------------------
+## Binaries
+## --------------------------------------
+
+.PHONY: operator
+operator: ## Build operator binary
+	go build -ldflags "$(LDFLAGS)" -o $(BIN_DIR)/operator sigs.k8s.io/cluster-api/exp/operator
+
+$(CONTROLLER_GEN): $(TOOLS_DIR)/go.mod # Build controller-gen from tools folder.
+cd $(TOOLS_DIR); go build -tags=tools -o $(BIN_DIR)/controller-gen sigs.k8s.io/controller-tools/cmd/controller-gen
+
+## --------------------------------------
+## Generate / Manifests
+## --------------------------------------
+
+.PHONY: generate-go-operator
+generate-go-operator: $(CONTROLLER_GEN) ## Runs Go related generate targets for the operator
+	$(CONTROLLER_GEN) \
+		object:headerFile=$(ROOT)/hack/boilerplate/boilerplate.generatego.txt \
+		paths=./api/...
+
+.PHONY: generate-operator-manifests
+generate-operator-manifests: $(CONTROLLER_GEN) ## Generate manifests for the operator e.g. CRD, RBAC etc.
+	$(CONTROLLER_GEN) \
+		paths=./api/... \
+		paths=./controllers/... \
+		crd:crdVersions=v1 \
+		rbac:roleName=manager-role \
+		output:crd:dir=./config/crd/bases \
+		output:rbac:dir=./config/rbac \
+		output:webhook:dir=./config/webhook \
+		webhook
+
+## --------------------------------------
+## Docker
+## --------------------------------------
+
+.PHONY: docker-build-operator
+docker-build-operator: ## Build the docker image for management cluster operator
+	DOCKER_BUILDKIT=1 docker build --build-arg goproxy=$(GOPROXY) --build-arg ARCH=$(ARCH) --build-arg ldflags="$(LDFLAGS)" $(ROOT) -t $(OPERATOR_CONTROLLER_IMG)-$(ARCH):$(TAG)
+
+.PHONY: docker-push-operator-manifest
+docker-push-operator-manifest: ## Push the fat manifest docker image for the operator image.
+	## Minimum docker version 18.06.0 is required for creating and pushing manifest images.
+	docker manifest create --amend $(OPERATOR_CONTROLLER_IMG):$(TAG) $(shell echo $(ALL_ARCH) | sed -e "s~[^ ]*~$(OPERATOR_CONTROLLER_IMG)\-&:$(TAG)~g")
+	@for arch in $(ALL_ARCH); do docker manifest annotate --arch $${arch} ${OPERATOR_CONTROLLER_IMG}:${TAG} ${OPERATOR_CONTROLLER_IMG}-$${arch}:${TAG}; done
+	docker manifest push --purge $(OPERATOR_CONTROLLER_IMG):$(TAG)