diff --git a/pkg/live/helpers_test.go b/pkg/live/helpers_test.go
index a62b49aa37..30262783d4 100644
--- a/pkg/live/helpers_test.go
+++ b/pkg/live/helpers_test.go
@@ -100,5 +100,23 @@ apiVersion: custom.io/v1
 kind: Custom
 metadata:
   name: cr
+`
+	localConfig = `
+apiVersion: v1
+kind: ConfigMap
+metadata:
+  name: cm
+  annotations:
+    config.kubernetes.io/local-config: "true"
+data: {}
+`
+	notLocalConfig = `
+apiVersion: v1
+kind: ConfigMap
+metadata:
+  name: cm
+  annotations:
+    config.kubernetes.io/local-config: "false"
+data: {}
 `
 )
diff --git a/pkg/live/rgpath.go b/pkg/live/rgpath.go
index 3e439241eb..44b355d479 100644
--- a/pkg/live/rgpath.go
+++ b/pkg/live/rgpath.go
@@ -10,6 +10,7 @@ import (
 	"k8s.io/apimachinery/pkg/apis/meta/v1/unstructured"
 	"sigs.k8s.io/cli-utils/pkg/manifestreader"
 	"sigs.k8s.io/kustomize/kyaml/kio"
+	"sigs.k8s.io/kustomize/kyaml/kio/filters"
 	"sigs.k8s.io/kustomize/kyaml/kio/kioutil"
 	"sigs.k8s.io/kustomize/kyaml/yaml"
 )
@@ -51,7 +52,7 @@ func (r *ResourceGroupPathManifestReader) Read() ([]*unstructured.Unstructured,
 		if err != nil {
 			return objs, err
 		}
-		if fcPaths.Has(relPath) {
+		if fcPaths.Has(relPath) && !isExplicitNotLocalConfig(n) {
 			continue
 		}
 
@@ -66,6 +67,7 @@ func (r *ResourceGroupPathManifestReader) Read() ([]*unstructured.Unstructured,
 		objs = append(objs, u)
 	}
 
+	objs = filterLocalConfig(objs)
 	err = manifestreader.SetNamespaces(r.Mapper, objs, r.Namespace, r.EnforceNamespace)
 	return objs, err
 }
@@ -100,3 +102,33 @@ func kyamlNodeToUnstructured(n *yaml.RNode) (*unstructured.Unstructured, error)
 		Object: m,
 	}, nil
 }
+
+const NoLocalConfigAnnoVal = "false"
+
+// isExplicitNotLocalConfig checks whether the resource has been explicitly
+// label as NOT being local config. It checks for the config.kubernetes.io/local-config
+// annotation with a value of "false".
+func isExplicitNotLocalConfig(n *yaml.RNode) bool {
+	if val, found := n.GetAnnotations()[filters.LocalConfigAnnotation]; found {
+		if val == NoLocalConfigAnnoVal {
+			return true
+		}
+	}
+	return false
+}
+
+// filterLocalConfig returns a new slice of Unstructured where all resources
+// that are designated as local config have been filtered out. It does this
+// by looking at the config.kubernetes.io/local-config annotation. Any value
+// except "false" is considered to mean the resource is local config.
+func filterLocalConfig(objs []*unstructured.Unstructured) []*unstructured.Unstructured {
+	var filteredObjs []*unstructured.Unstructured
+	for _, obj := range objs {
+		annoVal, found := obj.GetAnnotations()[filters.LocalConfigAnnotation]
+		if found && annoVal != NoLocalConfigAnnoVal {
+			continue
+		}
+		filteredObjs = append(filteredObjs, obj)
+	}
+	return filteredObjs
+}
diff --git a/pkg/live/rgpath_test.go b/pkg/live/rgpath_test.go
index f7a287e5cb..2f453b7aaf 100644
--- a/pkg/live/rgpath_test.go
+++ b/pkg/live/rgpath_test.go
@@ -97,6 +97,32 @@ func TestPathManifestReader_Read(t *testing.T) {
 				},
 			},
 		},
+		"Function config resources which are marked as not being local config remains": {
+			manifests: map[string]string{
+				"Kptfile":           kptFileWithPipeline,
+				"deployment-a.yaml": deploymentA,
+				"cm.yaml":           notLocalConfig,
+			},
+			namespace: "test-namespace",
+			expectedObjs: []object.ObjMetadata{
+				{
+					GroupKind: schema.GroupKind{
+						Group: "",
+						Kind:  "ConfigMap",
+					},
+					Name:      "cm",
+					Namespace: "test-namespace",
+				},
+				{
+					GroupKind: schema.GroupKind{
+						Group: "apps",
+						Kind:  "Deployment",
+					},
+					Name:      "test-deployment",
+					Namespace: "test-namespace",
+				},
+			},
+		},
 		"CR and CRD in the same set is ok": {
 			manifests: map[string]string{
 				"crd.yaml": crd,
@@ -127,6 +153,23 @@ func TestPathManifestReader_Read(t *testing.T) {
 			namespace:      "test-namespace",
 			expectedErrMsg: "unknown resource types: Custom.custom.io",
 		},
+		"local-config is filtered out": {
+			manifests: map[string]string{
+				"deployment-a.yaml": deploymentA,
+				"lc.yaml":           localConfig,
+			},
+			namespace: "test-namespace",
+			expectedObjs: []object.ObjMetadata{
+				{
+					GroupKind: schema.GroupKind{
+						Group: "apps",
+						Kind:  "Deployment",
+					},
+					Name:      "test-deployment",
+					Namespace: "test-namespace",
+				},
+			},
+		},
 	}
 
 	for tn, tc := range testCases {