diff --git a/CHANGELOG.rst b/CHANGELOG.rst
index 62a1a1b9cc..f1d6df1b7a 100644
--- a/CHANGELOG.rst
+++ b/CHANGELOG.rst
@@ -7,6 +7,7 @@ CHANGELOG
 
 * doc-fix: Change ``distribution`` to ``distributions``
 * bug-fix: Increase docker-compose http timeout and health check timeout to 120.
+* feature: Local Mode: Add support for intermediate output to a local directory.
 
 1.16.1.post1
 ============
diff --git a/src/sagemaker/local/image.py b/src/sagemaker/local/image.py
index 77ecffc1e5..30b56ce885 100644
--- a/src/sagemaker/local/image.py
+++ b/src/sagemaker/local/image.py
@@ -104,7 +104,8 @@ def train(self, input_data_config, output_data_config, hyperparameters, job_name
         os.mkdir(shared_dir)
 
         data_dir = self._create_tmp_folder()
-        volumes = self._prepare_training_volumes(data_dir, input_data_config, hyperparameters)
+        volumes = self._prepare_training_volumes(data_dir, input_data_config, output_data_config,
+                                                 hyperparameters)
 
         # Create the configuration files for each container that we will create
         # Each container will map the additional local volumes (if any).
@@ -281,7 +282,8 @@ def write_config_files(self, host, hyperparameters, input_data_config):
         _write_json_file(os.path.join(config_path, 'resourceconfig.json'), resource_config)
         _write_json_file(os.path.join(config_path, 'inputdataconfig.json'), json_input_data_config)
 
-    def _prepare_training_volumes(self, data_dir, input_data_config, hyperparameters):
+    def _prepare_training_volumes(self, data_dir, input_data_config, output_data_config,
+                                  hyperparameters):
         shared_dir = os.path.join(self.container_root, 'shared')
         model_dir = os.path.join(self.container_root, 'model')
         volumes = []
@@ -309,6 +311,14 @@ def _prepare_training_volumes(self, data_dir, input_data_config, hyperparameters
                 # Also mount a directory that all the containers can access.
                 volumes.append(_Volume(shared_dir, '/opt/ml/shared'))
 
+        parsed_uri = urlparse(output_data_config['S3OutputPath'])
+        if parsed_uri.scheme == 'file' \
+                and sagemaker.rl.estimator.SAGEMAKER_OUTPUT_LOCATION in hyperparameters:
+            intermediate_dir = os.path.join(parsed_uri.path, 'output', 'intermediate')
+            if not os.path.exists(intermediate_dir):
+                os.makedirs(intermediate_dir)
+            volumes.append(_Volume(intermediate_dir, '/opt/ml/output/intermediate'))
+
         return volumes
 
     def _prepare_serving_volumes(self, model_location):
diff --git a/tests/unit/test_image.py b/tests/unit/test_image.py
index 5a2cbb39fe..a5306c0d75 100644
--- a/tests/unit/test_image.py
+++ b/tests/unit/test_image.py
@@ -396,6 +396,41 @@ def test_train_local_code(tmpdir, sagemaker_session):
                 assert '%s:/opt/ml/shared' % shared_folder_path in volumes
 
 
+@patch('sagemaker.local.local_session.LocalSession', Mock())
+@patch('sagemaker.local.image._stream_output', Mock())
+@patch('sagemaker.local.image._SageMakerContainer._cleanup', Mock())
+@patch('sagemaker.local.data.get_data_source_instance', Mock())
+@patch('subprocess.Popen', Mock())
+def test_train_local_intermediate_output(tmpdir, sagemaker_session):
+    directories = [str(tmpdir.mkdir('container-root')), str(tmpdir.mkdir('data'))]
+    with patch('sagemaker.local.image._SageMakerContainer._create_tmp_folder',
+               side_effect=directories):
+        instance_count = 2
+        image = 'my-image'
+        sagemaker_container = _SageMakerContainer('local', instance_count, image,
+                                                  sagemaker_session=sagemaker_session)
+
+        output_path = str(tmpdir.mkdir('customer_intermediate_output'))
+        output_data_config = {'S3OutputPath': 'file://%s' % output_path}
+        hyperparameters = {'sagemaker_s3_output': output_path}
+
+        sagemaker_container.train(
+            INPUT_DATA_CONFIG, output_data_config, hyperparameters, TRAINING_JOB_NAME)
+
+        docker_compose_file = os.path.join(sagemaker_container.container_root,
+                                           'docker-compose.yaml')
+        intermediate_folder_path = os.path.join(output_path, 'output/intermediate')
+
+        with open(docker_compose_file, 'r') as f:
+            config = yaml.load(f)
+            assert len(config['services']) == instance_count
+            for h in sagemaker_container.hosts:
+                assert config['services'][h]['image'] == image
+                assert config['services'][h]['command'] == 'train'
+                volumes = config['services'][h]['volumes']
+                assert '%s:/opt/ml/output/intermediate' % intermediate_folder_path in volumes
+
+
 def test_container_has_gpu_support(tmpdir, sagemaker_session):
     instance_count = 1
     image = 'my-image'