diff --git a/hack/modify-test-images.sh b/hack/modify-test-images.sh
index ee240ddbde..b43ee421bf 100755
--- a/hack/modify-test-images.sh
+++ b/hack/modify-test-images.sh
@@ -4,3 +4,4 @@ SED_BIN=${SED_BIN:-sed}
 
 ${SED_BIN} -i "s#local/opentelemetry-operator-targetallocator:e2e#${TARGETALLOCATOR_IMG}#g" tests/e2e/smoke-targetallocator/00-install.yaml
 ${SED_BIN} -i "s#local/opentelemetry-operator-targetallocator:e2e#${TARGETALLOCATOR_IMG}#g" tests/e2e/targetallocator-features/00-install.yaml
+${SED_BIN} -i "s#local/opentelemetry-operator-targetallocator:e2e#${TARGETALLOCATOR_IMG}#g" tests/e2e/prometheus-config-validation/*.yaml
diff --git a/tests/e2e/prometheus-config-validation/00-assert.yaml b/tests/e2e/prometheus-config-validation/00-assert.yaml
new file mode 100644
index 0000000000..3f4f177968
--- /dev/null
+++ b/tests/e2e/prometheus-config-validation/00-assert.yaml
@@ -0,0 +1,25 @@
+apiVersion: apps/v1
+kind: StatefulSet
+metadata:
+  name: promreceiver-allocatorconfig-collector
+status:
+  replicas: 1
+  readyReplicas: 1
+---
+apiVersion: apps/v1
+kind: Deployment
+metadata:
+  name: promreceiver-allocatorconfig-targetallocator
+status:
+  replicas: 1
+  readyReplicas: 1
+---
+# Print TA and operator logs if test fails
+apiVersion: kuttl.dev/v1beta1
+kind: TestAssert
+collectors:
+  - selector: app.kubernetes.io/component=opentelemetry-targetallocator
+  - selector: app.kubernetes.io/component=opentelemetry-collector
+  - selector: app.kubernetes.io/name=opentelemetry-operator
+    namespace: opentelemetry-operator-system
+    container: manager
diff --git a/tests/e2e/prometheus-config-validation/00-promreceiver-allocatorconfig.yaml b/tests/e2e/prometheus-config-validation/00-promreceiver-allocatorconfig.yaml
new file mode 100644
index 0000000000..b53f21314b
--- /dev/null
+++ b/tests/e2e/prometheus-config-validation/00-promreceiver-allocatorconfig.yaml
@@ -0,0 +1,69 @@
+apiVersion: v1
+kind: ServiceAccount
+metadata:
+  name: ta
+automountServiceAccountToken: true
+---
+apiVersion: rbac.authorization.k8s.io/v1
+kind: Role
+metadata:
+  name: pod-view
+rules:
+- apiGroups: [""]
+  resources: [ "pods" ]
+  verbs: [ "get", "list", "watch"]
+---
+apiVersion: kuttl.dev/v1beta1
+kind: TestStep
+commands:
+  - command: kubectl -n $NAMESPACE create rolebinding default-view-$NAMESPACE --role=pod-view --serviceaccount=$NAMESPACE:ta
+---
+apiVersion: opentelemetry.io/v1alpha1
+kind: OpenTelemetryCollector
+metadata:
+  name: promreceiver-allocatorconfig
+spec:
+  mode: statefulset
+  targetAllocator:
+    enabled: true
+    image: "local/opentelemetry-operator-targetallocator:e2e"
+    serviceAccount: ta
+    prometheusCR:
+      enabled: true
+
+  config: |
+    receivers:
+      jaeger:
+          protocols:
+            grpc:
+
+      # Collect own metrics
+      prometheus:
+        config:
+          scrape_configs:
+            - job_name: 'otel-collector'
+              scrape_interval: 10s
+              static_configs:
+                - targets: [ '0.0.0.0:8888' ]
+        target_allocator:
+          endpoint: http://promreceiver-allocatorconfig-targetallocator
+          interval: 30s
+          collector_id: ${POD_NAME}
+
+    processors:
+
+    exporters:
+      logging:
+    extensions:
+      health_check:
+    service:
+      telemetry:
+        metrics:
+          address: :8888
+      extensions:
+        - health_check
+      pipelines:
+        traces:
+          receivers: [jaeger]
+          processors: []
+          exporters: [logging]
diff --git a/tests/e2e/prometheus-config-validation/01-assert.yaml b/tests/e2e/prometheus-config-validation/01-assert.yaml
new file mode 100644
index 0000000000..07d50c63c4
--- /dev/null
+++ b/tests/e2e/prometheus-config-validation/01-assert.yaml
@@ -0,0 +1,28 @@
+## Uncomment this after https://github.com/open-telemetry/opentelemetry-operator/issues/958 is resolved
+## Unfortunately kuttl doesn't have a way to skip tests
+
+# apiVersion: apps/v1
+# kind: StatefulSet
+# metadata:
+#   name: labeldrop-collector
+# status:
+#   replicas: 1
+#   readyReplicas: 1
+# ---
+# apiVersion: apps/v1
+# kind: Deployment
+# metadata:
+#   name: labeldrop-targetallocator
+# status:
+#   replicas: 1
+#   readyReplicas: 1
+# ---
+# # Print TA and operator logs if test fails
+# apiVersion: kuttl.dev/v1beta1
+# kind: TestAssert
+# collectors:
+#   - selector: app.kubernetes.io/component=opentelemetry-targetallocator
+#   - selector: app.kubernetes.io/component=opentelemetry-collector
+#   - selector: app.kubernetes.io/name=opentelemetry-operator
+#     namespace: opentelemetry-operator-system
+#     container: manager
diff --git a/tests/e2e/prometheus-config-validation/01-promreceiver-labeldrop.yaml b/tests/e2e/prometheus-config-validation/01-promreceiver-labeldrop.yaml
new file mode 100644
index 0000000000..1b57d96073
--- /dev/null
+++ b/tests/e2e/prometheus-config-validation/01-promreceiver-labeldrop.yaml
@@ -0,0 +1,49 @@
+## Uncomment this after https://github.com/open-telemetry/opentelemetry-operator/issues/958 is resolved
+## Unfortunately kuttl doesn't have a way to skip tests
+
+# apiVersion: opentelemetry.io/v1alpha1
+# kind: OpenTelemetryCollector
+# metadata:
+#   name: labeldrop
+# spec:
+#   mode: statefulset
+#   targetAllocator:
+#     enabled: true
+#     image: "local/opentelemetry-operator-targetallocator:e2e"
+#     serviceAccount: ta
+#     prometheusCR:
+#       enabled: true
+
+#   config: |
+#     receivers:
+#       jaeger:
+#           protocols:
+#             grpc:
+
+#       # Collect own metrics
+#       prometheus:
+#         config:
+#           scrape_configs:
+#             - job_name: 'otel-collector'
+#               scrape_interval: 10s
+#               static_configs:
+#                 - targets: [ '0.0.0.0:8888' ]
+#               metric_relabel_configs:
+#                 - action: labeldrop
+#                   regex: (id|name)
+                
+#         target_allocator:
+#           endpoint: http://labeldrop-targetallocator
+#           interval: 30s
+#           collector_id: ${POD_NAME}
+
+#     processors:
+
+#     exporters:
+#       logging:
+#     service:
+#       pipelines:
+#         traces:
+#           receivers: [jaeger]
+#           processors: []
+#           exporters: [logging]
diff --git a/tests/e2e/prometheus-config-validation/02-assert.yaml b/tests/e2e/prometheus-config-validation/02-assert.yaml
new file mode 100644
index 0000000000..33727878de
--- /dev/null
+++ b/tests/e2e/prometheus-config-validation/02-assert.yaml
@@ -0,0 +1,25 @@
+apiVersion: apps/v1
+kind: StatefulSet
+metadata:
+  name: promreceiver-allocatorconfig-extra-collector
+status:
+  replicas: 1
+  readyReplicas: 1
+---
+apiVersion: apps/v1
+kind: Deployment
+metadata:
+  name: promreceiver-allocatorconfig-extra-targetallocator
+status:
+  replicas: 1
+  readyReplicas: 1
+---
+# Print TA and operator logs if test fails
+apiVersion: kuttl.dev/v1beta1
+kind: TestAssert
+collectors:
+  - selector: app.kubernetes.io/component=opentelemetry-targetallocator
+  - selector: app.kubernetes.io/component=opentelemetry-collector
+  - selector: app.kubernetes.io/name=opentelemetry-operator
+    namespace: opentelemetry-operator-system
+    container: manager
diff --git a/tests/e2e/prometheus-config-validation/02-promreceiver-allocatorconfig-extra.yaml b/tests/e2e/prometheus-config-validation/02-promreceiver-allocatorconfig-extra.yaml
new file mode 100644
index 0000000000..f6190e439a
--- /dev/null
+++ b/tests/e2e/prometheus-config-validation/02-promreceiver-allocatorconfig-extra.yaml
@@ -0,0 +1,53 @@
+---
+apiVersion: opentelemetry.io/v1alpha1
+kind: OpenTelemetryCollector
+metadata:
+  name: promreceiver-allocatorconfig-extra
+spec:
+  mode: statefulset
+  targetAllocator:
+    enabled: true
+    image: "local/opentelemetry-operator-targetallocator:e2e"
+    serviceAccount: ta
+    prometheusCR:
+      enabled: true
+
+  config: |
+    receivers:
+      jaeger:
+          protocols:
+            grpc:
+
+      # Collect own metrics
+      prometheus:
+        config:
+          scrape_configs:
+            - job_name: 'otel-collector'
+              scrape_interval: 10s
+              static_configs:
+                - targets: [ '0.0.0.0:8888' ]
+        target_allocator:
+          endpoint: http://promreceiver-allocatorconfig-extra-targetallocator
+          interval: 30s
+          collector_id: ${POD_NAME}
+          http_sd_config:
+            refresh_interval: 10s
+
+    processors:
+
+    exporters:
+      logging:
+    extensions:
+      health_check:
+    service:
+      telemetry:
+        metrics:
+          address: :8888
+      extensions:
+        - health_check
+      pipelines:
+        traces:
+          receivers: [jaeger]
+          processors: []
+          exporters: [logging]
+
diff --git a/tests/e2e/prometheus-config-validation/03-assert.yaml b/tests/e2e/prometheus-config-validation/03-assert.yaml
new file mode 100644
index 0000000000..b9c6d5d5eb
--- /dev/null
+++ b/tests/e2e/prometheus-config-validation/03-assert.yaml
@@ -0,0 +1,25 @@
+apiVersion: apps/v1
+kind: StatefulSet
+metadata:
+  name: promreceiver-nopromconfig-collector
+status:
+  replicas: 1
+  readyReplicas: 1
+---
+apiVersion: apps/v1
+kind: Deployment
+metadata:
+  name: promreceiver-nopromconfig-targetallocator
+status:
+  replicas: 1
+  readyReplicas: 1
+---
+# Print TA and operator logs if test fails
+apiVersion: kuttl.dev/v1beta1
+kind: TestAssert
+collectors:
+  - selector: app.kubernetes.io/component=opentelemetry-targetallocator
+  - selector: app.kubernetes.io/component=opentelemetry-collector
+  - selector: app.kubernetes.io/name=opentelemetry-operator
+    namespace: opentelemetry-operator-system
+    container: manager
diff --git a/tests/e2e/prometheus-config-validation/03-promreceiver-nopromconfig.yaml b/tests/e2e/prometheus-config-validation/03-promreceiver-nopromconfig.yaml
new file mode 100644
index 0000000000..5420bb58a6
--- /dev/null
+++ b/tests/e2e/prometheus-config-validation/03-promreceiver-nopromconfig.yaml
@@ -0,0 +1,48 @@
+---
+apiVersion: opentelemetry.io/v1alpha1
+kind: OpenTelemetryCollector
+metadata:
+  name: promreceiver-nopromconfig
+spec:
+  mode: statefulset
+  targetAllocator:
+    enabled: true
+    image: "local/opentelemetry-operator-targetallocator:e2e"
+    serviceAccount: ta
+    prometheusCR:
+      enabled: true
+
+  config: |
+    receivers:
+      jaeger:
+          protocols:
+            grpc:
+
+      prometheus:
+        config:
+          scrape_configs: []
+        target_allocator:
+          endpoint: http://promreceiver-nopromconfig-targetallocator
+          interval: 30s
+          collector_id: ${POD_NAME}
+          http_sd_config:
+            refresh_interval: 10s
+
+    processors:
+
+    exporters:
+      logging:
+    extensions:
+      health_check:
+    service:
+      telemetry:
+        metrics:
+          address: :8888
+      extensions:
+        - health_check
+      pipelines:
+        traces:
+          receivers: [jaeger]
+          processors: []
+          exporters: [logging]
+