diff --git a/integration/combination/test_function_with_capacity_provider.py b/integration/combination/test_function_with_capacity_provider.py
new file mode 100644
index 0000000000..203bbac2a0
--- /dev/null
+++ b/integration/combination/test_function_with_capacity_provider.py
@@ -0,0 +1,211 @@
+from unittest.case import skipIf
+
+import pytest
+
+from integration.config.service_names import LAMBDA_MANAGED_INSTANCES
+from integration.helpers.base_test import BaseTest
+from integration.helpers.resource import current_region_does_not_support
+
+
+@skipIf(
+    current_region_does_not_support([LAMBDA_MANAGED_INSTANCES]),
+    "LambdaManagedInstance is not supported in this testing region",
+)
+class TestFunctionWithCapacityProvider(BaseTest):
+    @pytest.fixture(autouse=True)
+    def companion_stack_outputs(self, get_companion_stack_outputs):
+        self.companion_stack_outputs = get_companion_stack_outputs
+
+    def generate_lmi_parameters(self):
+        return [
+            self.generate_parameter("SubnetId", self.companion_stack_outputs["LMISubnetId"]),
+            self.generate_parameter("SecurityGroup", self.companion_stack_outputs["LMISecurityGroupId"]),
+            self.generate_parameter("KMSKeyArn", self.companion_stack_outputs["LMIKMSKeyArn"]),
+        ]
+
+    def verify_capacity_provider_basic_config(self, cp_config, cp_name):
+        """Verify basic capacity provider configuration (state, existence) and return ARN."""
+        self.assertIsNotNone(cp_config, f"{cp_name} should have configuration")
+        self.assertEqual(cp_config["State"], "Active", f"{cp_name} should be in Active state")
+        capacity_provider_arn = cp_config.get("CapacityProviderArn")
+        self.assertIsNotNone(capacity_provider_arn, f"{cp_name} should have a capacity provider ARN")
+        return capacity_provider_arn
+
+    def verify_capacity_provider_vpc_config(self, cp_config, cp_name):
+        """Verify capacity provider VPC configuration matches companion stack outputs."""
+        vpc_config = cp_config.get("VpcConfig")
+        self.assertIsNotNone(vpc_config, f"{cp_name} should have VPC configuration")
+        self.assertIn(
+            self.companion_stack_outputs["LMISubnetId"],
+            vpc_config["SubnetIds"],
+            f"{cp_name} should use the correct subnet",
+        )
+        self.assertIn(
+            self.companion_stack_outputs["LMISecurityGroupId"],
+            vpc_config["SecurityGroupIds"],
+            f"{cp_name} should use the correct security group",
+        )
+
+    def verify_capacity_provider_permissions_config(self, cp_config, cp_name):
+        """Verify capacity provider has permissions configuration with operator role."""
+        permissions_config = cp_config.get("PermissionsConfig")
+        self.assertIsNotNone(permissions_config, f"{cp_name} should have permissions configuration")
+        operator_role_arn = permissions_config.get("CapacityProviderOperatorRoleArn")
+        self.assertIsNotNone(operator_role_arn, f"{cp_name} should have operator role ARN")
+        return operator_role_arn
+
+    def verify_function_capacity_provider_config(self, function_capacity_provider_config):
+        """Verify and extract capacity provider ARN from function configuration."""
+        self.assertIsNotNone(function_capacity_provider_config, "Function should have capacity provider configuration")
+        self.assertIn(
+            "LambdaManagedInstancesCapacityProviderConfig",
+            function_capacity_provider_config,
+            "Function LambdaManagedInstancesCapacityProviderConfig should have LambdaManagedInstancesCapacityProviderConfig",
+        )
+
+        lmi_config = function_capacity_provider_config["LambdaManagedInstancesCapacityProviderConfig"]
+        function_capacity_provider_arn = lmi_config.get("CapacityProviderArn")
+        self.assertIsNotNone(
+            function_capacity_provider_arn, "Function capacity provider config should have a capacity provider ARN"
+        )
+        return function_capacity_provider_arn
+
+    def verify_capacity_provider_arn_match(self, function_capacity_provider_arn, capacity_provider_arn):
+        """Verify that the function references the correct capacity provider ARN."""
+        self.assertEqual(
+            function_capacity_provider_arn,
+            capacity_provider_arn,
+            "Function should reference the correct capacity provider ARN",
+        )
+
+    def test_function_with_capacity_provider_custom_role(self):
+        """Test Lambda function with CapacityProviderConfig using custom operator role."""
+        parameters = self.generate_lmi_parameters()
+        self.create_and_verify_stack("combination/function_lmi_custom", parameters)
+
+        lambda_resources = self.get_stack_resources("AWS::Lambda::Function")
+        self.assertEqual(len(lambda_resources), 1, "Should create exactly one Lambda function")
+
+        capacity_provider_resources = self.get_stack_resources("AWS::Lambda::CapacityProvider")
+        self.assertEqual(len(capacity_provider_resources), 1, "Should create exactly one CapacityProvider")
+
+        lambda_function = lambda_resources[0]
+        function_capacity_provider_config = self.get_function_capacity_provider_config(
+            lambda_function["PhysicalResourceId"]
+        )
+        function_capacity_provider_arn = self.verify_function_capacity_provider_config(
+            function_capacity_provider_config
+        )
+
+        capacity_provider_config = self.get_lambda_capacity_provider_config("MyCapacityProvider")
+        actual_capacity_provider_arn = self.verify_capacity_provider_basic_config(
+            capacity_provider_config, "MyCapacityProvider"
+        )
+        self.verify_capacity_provider_arn_match(function_capacity_provider_arn, actual_capacity_provider_arn)
+
+        capacity_provider_operator_role_arn = self.verify_capacity_provider_permissions_config(
+            capacity_provider_config, "MyCapacityProvider"
+        )
+
+        custom_operator_role_physical_id = self.get_physical_id_by_logical_id("MyCapacityProviderCustomRole")
+        self.assertIsNotNone(custom_operator_role_physical_id, "MyCapacityProviderCustomRole should exist in the stack")
+
+        self.assertIn(
+            custom_operator_role_physical_id,
+            capacity_provider_operator_role_arn,
+            f"Capacity provider should use the custom operator role with physical ID {custom_operator_role_physical_id}",
+        )
+
+    def test_function_with_capacity_provider_default_role(self):
+        """Test Lambda function with CapacityProviderConfig using default operator role."""
+        parameters = self.generate_lmi_parameters()
+        self.create_and_verify_stack("combination/function_lmi_default", parameters)
+
+        lambda_resources = self.get_stack_resources("AWS::Lambda::Function")
+        self.assertEqual(len(lambda_resources), 1, "Should create exactly one Lambda function")
+
+        capacity_provider_resources = self.get_stack_resources("AWS::Lambda::CapacityProvider")
+        self.assertEqual(len(capacity_provider_resources), 2, "Should create exactly two CapacityProviders")
+
+        my_function = lambda_resources[0]
+        function_config = self.get_function_capacity_provider_config(my_function["PhysicalResourceId"])
+        function_capacity_provider_arn = self.verify_function_capacity_provider_config(function_config)
+
+        simple_cp_config = self.get_lambda_capacity_provider_config("SimpleCapacityProvider")
+        simple_cp_arn = self.verify_capacity_provider_basic_config(simple_cp_config, "SimpleCapacityProvider")
+        self.verify_capacity_provider_arn_match(function_capacity_provider_arn, simple_cp_arn)
+
+        self.verify_capacity_provider_vpc_config(simple_cp_config, "SimpleCapacityProvider")
+        self.verify_capacity_provider_permissions_config(simple_cp_config, "SimpleCapacityProvider")
+
+        advanced_cp_config = self.get_lambda_capacity_provider_config("AdvancedCapacityProvider")
+        self.verify_capacity_provider_basic_config(advanced_cp_config, "AdvancedCapacityProvider")
+        self.verify_capacity_provider_vpc_config(advanced_cp_config, "AdvancedCapacityProvider")
+        self.verify_capacity_provider_permissions_config(advanced_cp_config, "AdvancedCapacityProvider")
+
+        instance_requirements = advanced_cp_config.get("InstanceRequirements")
+        self.assertIsNotNone(instance_requirements, "AdvancedCapacityProvider should have instance requirements")
+        self.assertIn(
+            "x86_64",
+            instance_requirements.get("Architectures", []),
+            "AdvancedCapacityProvider should have x86_64 architecture",
+        )
+        allowed_types = instance_requirements.get("AllowedInstanceTypes", [])
+        self.assertIn("m5.large", allowed_types, "AdvancedCapacityProvider should allow m5.large")
+        self.assertIn("m5.xlarge", allowed_types, "AdvancedCapacityProvider should allow m5.xlarge")
+        self.assertIn("m5.2xlarge", allowed_types, "AdvancedCapacityProvider should allow m5.2xlarge")
+
+        scaling_config = advanced_cp_config.get("CapacityProviderScalingConfig")
+        self.assertIsNotNone(scaling_config, "AdvancedCapacityProvider should have scaling configuration")
+        self.assertEqual(
+            scaling_config.get("MaxVCpuCount"), 64, "AdvancedCapacityProvider should have MaxVCpuCount of 64"
+        )
+        scaling_policies = scaling_config.get("ScalingPolicies", [])
+        self.assertTrue(len(scaling_policies) > 0, "AdvancedCapacityProvider should have scaling policies")
+        cpu_policy = next(
+            (
+                p
+                for p in scaling_policies
+                if p.get("PredefinedMetricType") == "LambdaCapacityProviderAverageCPUUtilization"
+            ),
+            None,
+        )
+        self.assertIsNotNone(cpu_policy, "AdvancedCapacityProvider should have CPU utilization scaling policy")
+        self.assertEqual(
+            cpu_policy.get("TargetValue"), 70.0, "AdvancedCapacityProvider should have CPU utilization target of 70"
+        )
+
+        self.assertEqual(
+            advanced_cp_config.get("KmsKeyArn"),
+            self.companion_stack_outputs["LMIKMSKeyArn"],
+            "AdvancedCapacityProvider should use the correct KMS key",
+        )
+
+    def get_function_capacity_provider_config(self, function_name, alias_name=None):
+        lambda_client = self.client_provider.lambda_client
+
+        try:
+            # Build the function identifier - include alias if provided
+            function_identifier = f"{function_name}:{alias_name}" if alias_name else function_name
+            # Get the function configuration
+            response = lambda_client.get_function_configuration(FunctionName=function_identifier)
+            # Return the CapacityProviderConfig if it exists
+            return response.get("CapacityProviderConfig")
+        except Exception as e:
+            # Log the error and return None for graceful handling
+            print(f"Error getting function capacity provider config: {e}")
+            return None
+
+    def get_lambda_capacity_provider_config(self, capacity_provider_logical_id):
+        lambda_client = self.client_provider.lambda_client
+
+        try:
+            # Get the physical ID from the logical ID
+            capacity_provider_name = self.get_physical_id_by_logical_id(capacity_provider_logical_id)
+            # Get the capacity provider configuration
+            response = lambda_client.get_capacity_provider(CapacityProviderName=capacity_provider_name)
+            return response.get("CapacityProvider")
+        except Exception as e:
+            # Log the error and return None for graceful handling
+            print(f"Error getting capacity provider config for {capacity_provider_logical_id}: {e}")
+            return None
diff --git a/integration/config/service_names.py b/integration/config/service_names.py
index b4a2c26261..4de385e0ea 100644
--- a/integration/config/service_names.py
+++ b/integration/config/service_names.py
@@ -30,6 +30,7 @@
 STATE_MACHINE_CWE_CWS = "StateMachineCweCws"
 STATE_MACHINE_WITH_APIS = "StateMachineWithApis"
 LAMBDA_URL = "LambdaUrl"
+LAMBDA_MANAGED_INSTANCES = "LambdaManagedInstances"
 LAMBDA_ENV_VARS = "LambdaEnvVars"
 EVENT_INVOKE_CONFIG = "EventInvokeConfig"
 API_KEY = "ApiKey"
diff --git a/integration/resources/expected/combination/function_lmi_custom.json b/integration/resources/expected/combination/function_lmi_custom.json
new file mode 100644
index 0000000000..52c2c0979f
--- /dev/null
+++ b/integration/resources/expected/combination/function_lmi_custom.json
@@ -0,0 +1,18 @@
+[
+  {
+    "LogicalResourceId": "MyCapacityProvider",
+    "ResourceType": "AWS::Lambda::CapacityProvider"
+  },
+  {
+    "LogicalResourceId": "MyCapacityProviderCustomRole",
+    "ResourceType": "AWS::IAM::Role"
+  },
+  {
+    "LogicalResourceId": "MyFunction",
+    "ResourceType": "AWS::Lambda::Function"
+  },
+  {
+    "LogicalResourceId": "MyFunctionRole",
+    "ResourceType": "AWS::IAM::Role"
+  }
+]
diff --git a/integration/resources/expected/combination/function_lmi_default.json b/integration/resources/expected/combination/function_lmi_default.json
new file mode 100644
index 0000000000..b39c5e9422
--- /dev/null
+++ b/integration/resources/expected/combination/function_lmi_default.json
@@ -0,0 +1,26 @@
+[
+  {
+    "LogicalResourceId": "SimpleCapacityProvider",
+    "ResourceType": "AWS::Lambda::CapacityProvider"
+  },
+  {
+    "LogicalResourceId": "SimpleCapacityProviderOperatorRole",
+    "ResourceType": "AWS::IAM::Role"
+  },
+  {
+    "LogicalResourceId": "AdvancedCapacityProvider",
+    "ResourceType": "AWS::Lambda::CapacityProvider"
+  },
+  {
+    "LogicalResourceId": "AdvancedCapacityProviderOperatorRole",
+    "ResourceType": "AWS::IAM::Role"
+  },
+  {
+    "LogicalResourceId": "MyFunction",
+    "ResourceType": "AWS::Lambda::Function"
+  },
+  {
+    "LogicalResourceId": "MyFunctionRole",
+    "ResourceType": "AWS::IAM::Role"
+  }
+]
diff --git a/integration/resources/templates/combination/function_lmi_custom.yaml b/integration/resources/templates/combination/function_lmi_custom.yaml
new file mode 100644
index 0000000000..1f72cacfc4
--- /dev/null
+++ b/integration/resources/templates/combination/function_lmi_custom.yaml
@@ -0,0 +1,85 @@
+Parameters:
+  SubnetId:
+    Type: String
+  SecurityGroup:
+    Type: String
+  KMSKeyArn:
+    Type: String
+
+Resources:
+  MyCapacityProviderCustomRole:
+    Type: AWS::IAM::Role
+    Properties:
+      AssumeRolePolicyDocument:
+        Version: '2012-10-17'
+        Statement:
+        - Effect: Allow
+          Principal:
+            Service: lambda.amazonaws.com
+          Action: sts:AssumeRole
+      Policies:
+      - PolicyName: CapacityProviderOperatorRolePolicy
+        PolicyDocument:
+          Version: '2012-10-17'
+          Statement:
+          - Effect: Allow
+            Action:
+            - ec2:AttachNetworkInterface
+            - ec2:CreateTags
+            - ec2:RunInstances
+            Resource:
+            - !Sub arn:${AWS::Partition}:ec2:*:*:instance/*
+            - !Sub arn:${AWS::Partition}:ec2:*:*:network-interface/*
+            - !Sub arn:${AWS::Partition}:ec2:*:*:volume/*
+            Condition:
+              StringEquals:
+                ec2:ManagedResourceOperator: scaler.lambda.amazonaws.com
+          - Effect: Allow
+            Action:
+            - ec2:DescribeAvailabilityZones
+            - ec2:DescribeCapacityReservations
+            - ec2:DescribeInstances
+            - ec2:DescribeInstanceStatus
+            - ec2:DescribeInstanceTypeOfferings
+            - ec2:DescribeInstanceTypes
+            - ec2:DescribeSecurityGroups
+            - ec2:DescribeSubnets
+            Resource: '*'
+          - Effect: Allow
+            Action:
+            - ec2:RunInstances
+            - ec2:CreateNetworkInterface
+            Resource:
+            - !Sub arn:${AWS::Partition}:ec2:*:*:subnet/*
+            - !Sub arn:${AWS::Partition}:ec2:*:*:security-group/*
+          - Effect: Allow
+            Action:
+            - ec2:RunInstances
+            Resource:
+            - !Sub arn:${AWS::Partition}:ec2:*:*:image/*
+            Condition:
+              Bool:
+                ec2:Public: 'true'
+
+  MyCapacityProvider:
+    Type: AWS::Serverless::CapacityProvider
+    Properties:
+      CapacityProviderName: !Sub "${AWS::StackName}-cp"
+      VpcConfig:
+        SubnetIds:
+        - !Ref SubnetId
+        SecurityGroupIds:
+        - !Ref SecurityGroup
+      OperatorRole: !GetAtt MyCapacityProviderCustomRole.Arn
+
+  MyFunction:
+    Type: AWS::Serverless::Function
+    Properties:
+      Runtime: nodejs22.x
+      Handler: index.handler
+      CodeUri: ${codeuri}
+      CapacityProviderConfig:
+        Arn: !GetAtt MyCapacityProvider.Arn
+
+Metadata:
+  SamTransformTest: true
diff --git a/integration/resources/templates/combination/function_lmi_default.yaml b/integration/resources/templates/combination/function_lmi_default.yaml
new file mode 100644
index 0000000000..8137a51b21
--- /dev/null
+++ b/integration/resources/templates/combination/function_lmi_default.yaml
@@ -0,0 +1,52 @@
+Parameters:
+  SubnetId:
+    Type: String
+  SecurityGroup:
+    Type: String
+  KMSKeyArn:
+    Type: String
+
+Resources:
+  SimpleCapacityProvider:
+    Type: AWS::Serverless::CapacityProvider
+    Properties:
+      VpcConfig:
+        SubnetIds:
+        - !Ref SubnetId
+        SecurityGroupIds:
+        - !Ref SecurityGroup
+
+  MyFunction:
+    Type: AWS::Serverless::Function
+    Properties:
+      Runtime: nodejs22.x
+      Handler: index.handler
+      CodeUri: ${codeuri}
+      CapacityProviderConfig:
+        Arn: !GetAtt SimpleCapacityProvider.Arn
+
+  AdvancedCapacityProvider:
+    Type: AWS::Serverless::CapacityProvider
+    Properties:
+      CapacityProviderName: !Sub "${AWS::StackName}-cp"
+      VpcConfig:
+        SubnetIds:
+        - !Ref SubnetId
+        SecurityGroupIds:
+        - !Ref SecurityGroup
+      InstanceRequirements:
+        Architectures:
+        - x86_64
+        AllowedTypes:
+        - m5.large
+        - m5.xlarge
+        - m5.2xlarge
+      ScalingConfig:
+        MaxVCpuCount: 64
+        AverageCPUUtilization: 70
+      KmsKeyArn: !Ref KMSKeyArn
+      Tags:
+        Environment: Test
+
+Metadata:
+  SamTransformTest: true
diff --git a/integration/setup/companion-stack.yaml b/integration/setup/companion-stack.yaml
index 72a1232673..9f67bd3ffd 100644
--- a/integration/setup/companion-stack.yaml
+++ b/integration/setup/companion-stack.yaml
@@ -41,6 +41,106 @@ Resources:
     Type: AWS::S3::Bucket
     DeletionPolicy: Delete
 
+  LMIKMSKey:
+    Type: AWS::KMS::Key
+    Properties:
+      Description: KMS Key for Lambda Capacity Provider Resource
+      KeyPolicy:
+        Version: '2012-10-17'
+        Statement:
+        - Sid: Enable IAM User Permissions
+          Effect: Allow
+          Principal:
+            AWS: !Sub "arn:${AWS::Partition}:iam::${AWS::AccountId}:root"
+          Action: kms:*
+          Resource: '*'
+        - Sid: Allow Lambda service
+          Effect: Allow
+          Principal:
+            Service: lambda.amazonaws.com
+          Action:
+          - kms:Decrypt
+          - kms:DescribeKey
+          Resource: '*'    # Lambda Managed Instances (LMI) VPC Resources
+
+  LMIVpc:
+    Type: AWS::EC2::VPC
+    Properties:
+      CidrBlock: 10.0.0.0/16
+      EnableDnsHostnames: true
+      EnableDnsSupport: true
+      Tags:
+      - Key: Name
+        Value: !Sub "${AWS::StackName}-VPC"
+
+  LMIPrivateSubnet:
+    Type: AWS::EC2::Subnet
+    Properties:
+      VpcId: !Ref LMIVpc
+      CidrBlock: 10.0.1.0/24
+      AvailabilityZone: !Select [0, !GetAZs '']
+      Tags:
+      - Key: Name
+        Value: !Sub "${AWS::StackName}-PrivateSubnet"
+
+  LMIPrivateRouteTable:
+    Type: AWS::EC2::RouteTable
+    Properties:
+      VpcId: !Ref LMIVpc
+      Tags:
+      - Key: Name
+        Value: !Sub "${AWS::StackName}-PrivateRT"
+
+  LMIPrivateSubnetRouteTableAssociation:
+    Type: AWS::EC2::SubnetRouteTableAssociation
+    Properties:
+      SubnetId: !Ref LMIPrivateSubnet
+      RouteTableId: !Ref LMIPrivateRouteTable
+
+  LMISecurityGroup:
+    Type: AWS::EC2::SecurityGroup
+    Properties:
+      GroupDescription: Security group for capacity provider Lambda functions
+      VpcId: !Ref LMIVpc
+      SecurityGroupEgress:
+      - IpProtocol: tcp
+        FromPort: 443
+        ToPort: 443
+        CidrIp: 10.0.0.0/16
+        Description: Allow HTTPS within VPC
+      Tags:
+      - Key: Name
+        Value: !Sub "${AWS::StackName}-LambdaSG"
+
+  VPCEndpointSecurityGroup:
+    Type: AWS::EC2::SecurityGroup
+    Properties:
+      GroupDescription: Security group for VPC endpoints
+      VpcId: !Ref LMIVpc
+      SecurityGroupIngress:
+      - IpProtocol: tcp
+        FromPort: 443
+        ToPort: 443
+        CidrIp: 10.0.0.0/16
+        Description: Allow HTTPS from within VPC
+      Tags:
+      - Key: Name
+        Value: !Sub "${AWS::StackName}-VPCEndpointSG"
+
+  CloudWatchLogsEndpoint:
+    Type: AWS::EC2::VPCEndpoint
+    Properties:
+      VpcId: !Ref LMIVpc
+      ServiceName: !Sub 'com.amazonaws.${AWS::Region}.logs'
+      VpcEndpointType: Interface
+      PrivateDnsEnabled: true
+      SubnetIds:
+      - !Ref LMIPrivateSubnet
+      SecurityGroupIds:
+      - !Ref VPCEndpointSecurityGroup
+      Tags:
+      - Key: Name
+        Value: !Sub "${AWS::StackName}-CloudWatchLogsEndpoint"
 Outputs:
   PreCreatedVpc:
     Description: Pre-created VPC that can be used inside other tests
@@ -66,5 +166,14 @@ Outputs:
     Description: Pre-created S3 Bucket that can be used inside other tests
     Value:
       Ref: PreCreatedS3Bucket
+  LMISubnetId:
+    Description: Private subnet ID for Lambda functions
+    Value: !Ref LMIPrivateSubnet
+  LMISecurityGroupId:
+    Description: Security group ID for Lambda functions
+    Value: !Ref LMISecurityGroup
+  LMIKMSKeyArn:
+    Description: ARN of the KMS key for Capacity Provider
+    Value: !GetAtt LMIKMSKey.Arn
 Metadata:
   SamTransformTest: true