diff --git a/make/e2e-setup.mk b/make/e2e-setup.mk
index b6a0e6073..0756445ea 100644
--- a/make/e2e-setup.mk
+++ b/make/e2e-setup.mk
@@ -55,6 +55,12 @@ IMAGE_kind_arm64 := $(IMAGE_kind_amd64)
 # Once that is done, we can consume this variable from ./make/config/lib.sh
 SERVICE_IP_PREFIX = 10.0.0
 
+# This variable is exported so that the the Vault addon in the E2E tests can set
+# the image reference of the locally loaded Docker image when it installs the
+# Vault Helm chart.
+# The Vault Docker image is loaded into kind by `make e2e-setup`.
+export E2E_VAULT_IMAGE := $(LOCALIMAGE_vaultretagged)
+
 .PHONY: e2e-setup-kind
 ## Create a Kubernetes cluster using Kind, which is required for `make e2e`.
 ## The Kind image is pre-pulled to avoid 'kind create' from blocking other make
diff --git a/test/e2e/framework/addon/vault/vault.go b/test/e2e/framework/addon/vault/vault.go
index d99343dff..8c4ebb27e 100644
--- a/test/e2e/framework/addon/vault/vault.go
+++ b/test/e2e/framework/addon/vault/vault.go
@@ -30,6 +30,7 @@ import (
 	"math/big"
 	"net"
 	"os"
+	"strings"
 	"time"
 
 	corev1 "k8s.io/api/core/v1"
@@ -47,12 +48,6 @@ import (
 const (
 	vaultHelmChartRepo    = "https://helm.releases.hashicorp.com"
 	vaultHelmChartVersion = "0.24.1"
-	// This local Vault image is only used when the tests are run using make,
-	// because it downloads the Vault image, saves it in the scratch folder on
-	// the filesystem, and copies it to the cluster-under-test before the E2E
-	// tests get executed.
-	vaultImageRepository = "local/vault"
-	vaultImageTag        = "local"
 )
 
 // Vault describes the configuration details for an instance of Vault
@@ -205,11 +200,11 @@ func (v *Vault) Setup(cfg *config.Config, leaderData ...internal.AddonTransferab
 	// the tests on their chosen cluster, in which case we do not override the
 	// Vault image and the default chart image will be downloaded and run
 	// instead.
-	// MAKELEVEL is always set by make so that it can know whether it is being
-	// called recursively, so we use that variable as a marker to know whether
-	// the tests are being executed from our Makefile. See
-	// https://www.gnu.org/software/make/manual/html_node/Variables_002fRecursion.html
-	if os.Getenv("MAKELEVEL") != "" {
+	// E2E_VAULT_IMAGE is exported by `make/e2e-setup.mk`.
+	if vaultImage := os.Getenv("E2E_VAULT_IMAGE"); vaultImage != "" {
+		parts := strings.Split(vaultImage, ":")
+		vaultImageRepository := parts[0]
+		vaultImageTag := parts[1]
 		v.chart.Vars = append(
 			v.chart.Vars,
 			[]chart.StringTuple{