diff --git a/CHANGELOG.md b/CHANGELOG.md
index 45c1db4131..1682d248b4 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -7,6 +7,7 @@ This file is used to list changes made in each version of the AWS ParallelCluste
 ------
 
 **ENHANCEMENTS**
+- Add the configuration parameter `DeploymentSettings/DefaultUserHome` to allow users to move the default user's home directory to `/local/home` instead of `/home` (default).
 - Add support for installing Intel OneAPI Base Toolkit and HPC Toolkit, and Intel Python.
   - Intel OneAPI Base Toolkits: 2023.2.0
   - Intel OneAPI HPC Toolkits: 2023.2.0
diff --git a/cookbooks/aws-parallelcluster-environment/kitchen.environment-config.yml b/cookbooks/aws-parallelcluster-environment/kitchen.environment-config.yml
index d9cdd098dd..9e6f5eb351 100644
--- a/cookbooks/aws-parallelcluster-environment/kitchen.environment-config.yml
+++ b/cookbooks/aws-parallelcluster-environment/kitchen.environment-config.yml
@@ -752,3 +752,39 @@ suites:
       dependencies:
         - recipe:aws-parallelcluster-platform::directories
         - resource:spack:setup
+  - name: default_user_local_home_head_node
+    run_list:
+      - recipe[aws-parallelcluster-tests::setup]
+      - recipe[aws-parallelcluster-environment::config_default_user_home]
+    verifier:
+      controls:
+        - local_default_user_home
+    attributes:
+      cluster:
+        node_type: 'HeadNode'
+        scheduler: 'slurm'
+        default_user_home: 'local'
+  - name: default_user_local_home_compute
+    run_list:
+      - recipe[aws-parallelcluster-tests::setup]
+      - recipe[aws-parallelcluster-environment::config_default_user_home]
+    verifier:
+      controls:
+        - local_default_user_home
+    attributes:
+      cluster:
+        node_type: 'ComputeFleet'
+        scheduler: 'slurm'
+        default_user_home: 'local'
+  - name: default_user_local_home_login
+    run_list:
+      - recipe[aws-parallelcluster-tests::setup]
+      - recipe[aws-parallelcluster-environment::config_default_user_home]
+    verifier:
+      controls:
+        - local_default_user_home
+    attributes:
+      cluster:
+        node_type: 'LoginNode'
+        scheduler: 'slurm'
+        default_user_home: 'local'
diff --git a/cookbooks/aws-parallelcluster-environment/recipes/init.rb b/cookbooks/aws-parallelcluster-environment/recipes/init.rb
index 820f12e3df..225ce76fc2 100644
--- a/cookbooks/aws-parallelcluster-environment/recipes/init.rb
+++ b/cookbooks/aws-parallelcluster-environment/recipes/init.rb
@@ -17,6 +17,9 @@
   action :configure
 end
 
+# move the default user dir out of /home if the config param is set to 'local'
+include_recipe "aws-parallelcluster-environment::config_default_user_home"
+
 case node['cluster']['shared_storage_type']
 when 'efs'
   include_recipe "aws-parallelcluster-environment::mount_internal_use_efs"
diff --git a/cookbooks/aws-parallelcluster-environment/recipes/init/config_default_user_home.rb b/cookbooks/aws-parallelcluster-environment/recipes/init/config_default_user_home.rb
new file mode 100644
index 0000000000..200a96c70c
--- /dev/null
+++ b/cookbooks/aws-parallelcluster-environment/recipes/init/config_default_user_home.rb
@@ -0,0 +1,48 @@
+# frozen_string_literal: true
+
+#
+# Copyright:: 2024 Amazon.com, Inc. or its affiliates. All Rights Reserved.
+#
+# Licensed under the Apache License, Version 2.0 (the "License"). You may not use this file except in compliance with the
+# License. A copy of the License is located at
+#
+# http://aws.amazon.com/apache2.0/
+#
+# or in the "LICENSE.txt" file accompanying this file. This file is distributed on an "AS IS" BASIS, WITHOUT WARRANTIES
+# OR CONDITIONS OF ANY KIND, express or implied. See the License for the specific language governing permissions and
+# limitations under the License.
+
+return if node['cluster']['default_user_home'] == 'shared'
+
+# Backup the cluster user's default home directory
+bash "Backup #{node['cluster']['cluster_user_home']}" do
+  user 'root'
+  group 'root'
+  code <<-EOH
+    set -e
+    if [ -d /tmp#{node['cluster']['cluster_user_home']} ]; then
+      echo "/tmp#{node['cluster']['cluster_user_home']} exists!"
+      exit 1
+    else
+      mkdir -p /tmp#{node['cluster']['cluster_user_home']}
+    fi
+    rsync -a #{node['cluster']['cluster_user_home']}/ /tmp#{node['cluster']['cluster_user_home']}
+  EOH
+end
+
+# move the cluster user's default home directory
+bash "Move #{node['cluster']['cluster_user_home']}" do
+  user 'root'
+  group 'root'
+  code <<-EOH
+    set -e
+    mkdir -p #{node['cluster']['cluster_user_local_home']}
+    rsync -a /tmp#{node['cluster']['cluster_user_home']}/ #{node['cluster']['cluster_user_local_home']}
+    usermod -d #{node['cluster']['cluster_user_local_home']} #{node['cluster']['cluster_user']}
+    chown -R #{node['cluster']['cluster_user']}: #{node['cluster']['cluster_user_local_home']}
+    rm -rf /tmp#{node['cluster']['cluster_user_home']}
+    rm -rf #{node['cluster']['cluster_user_home']}
+  EOH
+end
+
+node.override['cluster']['cluster_user_home'] = node['cluster']['cluster_user_local_home']
diff --git a/cookbooks/aws-parallelcluster-environment/spec/unit/recipes/config_default_user_home_spec.rb b/cookbooks/aws-parallelcluster-environment/spec/unit/recipes/config_default_user_home_spec.rb
new file mode 100644
index 0000000000..da2623c3f6
--- /dev/null
+++ b/cookbooks/aws-parallelcluster-environment/spec/unit/recipes/config_default_user_home_spec.rb
@@ -0,0 +1,42 @@
+require 'spec_helper'
+
+describe 'aws-parallelcluster-environment::config_default_user_home' do
+  for_all_oses do |platform, version|
+    context "on #{platform}#{version}" do
+      context 'when local' do
+        cached(:chef_run) do
+          runner = runner(platform: platform, version: version) do |node|
+            node.override['cluster']['default_user_home'] = "local"
+            node.override['cluster']['cluster_user_home'] = "/home/user"
+            node.override['cluster']['cluster_user_local_home'] = "/local/home/user"
+          end
+          runner.converge(described_recipe)
+        end
+        cached(:node) { chef_run.node }
+
+        it 'runs the recipe' do
+          is_expected.to run_bash("Backup /home/user")
+          is_expected.to run_bash("Move /home/user")
+          expect(chef_run.node['cluster']['cluster_user_home']).to eq('/local/home/user')
+        end
+      end
+      context 'when shared' do
+        cached(:chef_run) do
+          runner = runner(platform: platform, version: version) do |node|
+            node.override['cluster']['default_user_home'] = "shared"
+            node.override['cluster']['cluster_user_home'] = "/home/user"
+            node.override['cluster']['cluster_user_local_home'] = "/local/home/user"
+          end
+          runner.converge(described_recipe)
+        end
+        cached(:node) { chef_run.node }
+
+        it 'skips the recipe' do
+          is_expected.not_to run_bash("Backup /home/user")
+          is_expected.not_to run_bash("Move /home/user")
+          expect(chef_run.node['cluster']['cluster_user_home']).to eq('/home/user')
+        end
+      end
+    end
+  end
+end
diff --git a/cookbooks/aws-parallelcluster-environment/test/controls/config_default_user_home_spec.rb b/cookbooks/aws-parallelcluster-environment/test/controls/config_default_user_home_spec.rb
new file mode 100644
index 0000000000..c33836d37a
--- /dev/null
+++ b/cookbooks/aws-parallelcluster-environment/test/controls/config_default_user_home_spec.rb
@@ -0,0 +1,29 @@
+# Copyright:: 2023 Amazon.com, Inc. or its affiliates. All Rights Reserved.
+#
+# Licensed under the Apache License, Version 2.0 (the "License").
+# You may not use this file except in compliance with the License. A copy of the License is located at
+#
+# http://aws.amazon.com/apache2.0/
+#
+# or in the "LICENSE.txt" file accompanying this file.
+# This file is distributed on an "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, express or implied.
+# See the License for the specific language governing permissions and limitations under the License.
+
+control 'local_default_user_home' do
+  title 'Check if the home directory is in a local directory'
+
+  only_if { !os_properties.on_docker? }
+
+  describe directory("/local/home") do
+    it { should exist }
+    its('owner') { should eq 'root' }
+    its('group') { should eq 'root' }
+    its('mode') { should cmp '0755' }
+  end
+  describe directory("#{node['cluster']['cluster_user_local_home']}") do
+    it { should exist }
+    its('owner') { should eq "#{node['cluster']['cluster_user']}" }
+    its('group') { should eq "#{node['cluster']['cluster_user']}" }
+    its('mode') { should cmp '0700' }
+  end
+end
diff --git a/cookbooks/aws-parallelcluster-platform/recipes/config/cluster_user.rb b/cookbooks/aws-parallelcluster-platform/recipes/config/cluster_user.rb
index 42043323cf..58e21c855d 100644
--- a/cookbooks/aws-parallelcluster-platform/recipes/config/cluster_user.rb
+++ b/cookbooks/aws-parallelcluster-platform/recipes/config/cluster_user.rb
@@ -12,53 +12,88 @@
 # OR CONDITIONS OF ANY KIND, express or implied. See the License for the specific language governing permissions and
 # limitations under the License.
 
+node.override['cluster']['cluster_user_home'] = node['cluster']['cluster_user_local_home'] if node['cluster']['default_user_home'] == 'local'
+
 case node['cluster']['node_type']
 when 'HeadNode'
   # Setup cluster user
   user node['cluster']['cluster_user'] do
     manage_home true
     comment 'AWS ParallelCluster user'
-    home "/home/#{node['cluster']['cluster_user']}"
+    home "#{node['cluster']['cluster_user_home']}"
     shell '/bin/bash'
   end
 
   # Setup SSH auth for cluster user
   bash "ssh-keygen" do
-    cwd "/home/#{node['cluster']['cluster_user']}"
+    cwd "#{node['cluster']['cluster_user_home']}"
     code <<-KEYGEN
       set -e
       su - #{node['cluster']['cluster_user']} -c \"ssh-keygen -q -t ed25519 -f ~/.ssh/id_ed25519 -N ''\"
     KEYGEN
-    not_if { ::File.exist?("/home/#{node['cluster']['cluster_user']}/.ssh/id_ed25519") }
+    not_if { ::File.exist?("#{node['cluster']['cluster_user_home']}/.ssh/id_ed25519") }
   end
 
   bash "copy_and_perms" do
-    cwd "/home/#{node['cluster']['cluster_user']}"
+    cwd "#{node['cluster']['cluster_user_home']}"
     code <<-PERMS
       set -e
       su - #{node['cluster']['cluster_user']} -c \"cat ~/.ssh/id_ed25519.pub >> ~/.ssh/authorized_keys && chmod 0600 ~/.ssh/authorized_keys && touch ~/.ssh/authorized_keys_cluster\"
     PERMS
-    not_if { ::File.exist?("/home/#{node['cluster']['cluster_user']}/.ssh/authorized_keys_cluster") }
+    not_if { ::File.exist?("#{node['cluster']['cluster_user_home']}/.ssh/authorized_keys_cluster") }
+  end
+
+  bash "share_auth_keys_for_local_default_user_home" do
+    code <<-PERMS
+      set -e
+      cp -p #{node['cluster']['cluster_user_home']}/.ssh/authorized_keys #{node['cluster']['shared_dir']}
+      cp -p #{node['cluster']['cluster_user_home']}/.ssh/authorized_keys #{node['cluster']['shared_dir_login_nodes']}
+    PERMS
+    only_if { node['cluster']['default_user_home'] == 'local' }
   end
 
   bash "ssh-keyscan" do
-    cwd "/home/#{node['cluster']['cluster_user']}"
+    cwd "#{node['cluster']['cluster_user_home']}"
     code <<-KEYSCAN
       set -e
       su - #{node['cluster']['cluster_user']} -c \"ssh-keyscan #{node['hostname']} > ~/.ssh/known_hosts && chmod 0600 ~/.ssh/known_hosts\"
     KEYSCAN
-    not_if { ::File.exist?("/home/#{node['cluster']['cluster_user']}/.ssh/known_hosts") }
+    not_if { ::File.exist?("#{node['cluster']['cluster_user_home']}/.ssh/known_hosts") }
+  end
+
+when 'ComputeFleet'
+  # Setup cluster user
+  user node['cluster']['cluster_user'] do
+    manage_home false
+    comment 'AWS ParallelCluster user'
+    home "#{node['cluster']['cluster_user_home']}"
+    shell '/bin/bash'
   end
 
-when 'ComputeFleet', 'LoginNode'
+  bash "copy_auth_file" do
+    code <<-PERMS
+      set -e
+      cp -p #{node['cluster']['shared_dir']}/authorized_keys #{node['cluster']['cluster_user_home']}/.ssh/authorized_keys
+    PERMS
+    only_if { node['cluster']['default_user_home'] == 'local' }
+  end
 
+when 'LoginNode'
   # Setup cluster user
   user node['cluster']['cluster_user'] do
     manage_home false
     comment 'AWS ParallelCluster user'
-    home "/home/#{node['cluster']['cluster_user']}"
+    home "#{node['cluster']['cluster_user_home']}"
     shell '/bin/bash'
   end
+
+  bash "copy_auth_file" do
+    code <<-PERMS
+      set -e
+      cp -p #{node['cluster']['shared_dir_login_nodes']}/authorized_keys #{node['cluster']['cluster_user_home']}/.ssh/authorized_keys
+    PERMS
+    only_if { node['cluster']['default_user_home'] == 'local' }
+  end
 else
   raise "node_type must be HeadNode, LoginNode or ComputeFleet"
 end
diff --git a/cookbooks/aws-parallelcluster-shared/attributes/users.rb b/cookbooks/aws-parallelcluster-shared/attributes/users.rb
index 79f0c7a48a..aec18b5aa4 100644
--- a/cookbooks/aws-parallelcluster-shared/attributes/users.rb
+++ b/cookbooks/aws-parallelcluster-shared/attributes/users.rb
@@ -18,3 +18,6 @@
 default['cluster']['munge']['user_id'] = node['cluster']['reserved_base_uid'] + 2
 default['cluster']['munge']['group'] = node['cluster']['munge']['user']
 default['cluster']['munge']['group_id'] = node['cluster']['munge']['user_id']
+
+default['cluster']['cluster_user_home'] = "/home/#{node['cluster']['cluster_user']}"
+default['cluster']['cluster_user_local_home'] = "/local#{node['cluster']['cluster_user_home']}"
diff --git a/cookbooks/aws-parallelcluster-shared/attributes/users_amazon2.rb b/cookbooks/aws-parallelcluster-shared/attributes/users_amazon2.rb
index c3e2344c89..4e329a2153 100644
--- a/cookbooks/aws-parallelcluster-shared/attributes/users_amazon2.rb
+++ b/cookbooks/aws-parallelcluster-shared/attributes/users_amazon2.rb
@@ -1,3 +1,5 @@
 return unless platform?('amazon') && node['platform_version'] == "2"
 
 default['cluster']['cluster_user'] = 'ec2-user'
+default['cluster']['cluster_user_home'] = "/home/#{node['cluster']['cluster_user']}"
+default['cluster']['cluster_user_local_home'] = "/local#{node['cluster']['cluster_user_home']}"
diff --git a/cookbooks/aws-parallelcluster-shared/attributes/users_centos7.rb b/cookbooks/aws-parallelcluster-shared/attributes/users_centos7.rb
index d3e9442567..1577b16509 100644
--- a/cookbooks/aws-parallelcluster-shared/attributes/users_centos7.rb
+++ b/cookbooks/aws-parallelcluster-shared/attributes/users_centos7.rb
@@ -1,3 +1,5 @@
 return unless platform?('centos') && node['platform_version'].to_i == 7
 
 default['cluster']['cluster_user'] = 'centos'
+default['cluster']['cluster_user_home'] = "/home/#{node['cluster']['cluster_user']}"
+default['cluster']['cluster_user_local_home'] = "/local#{node['cluster']['cluster_user_home']}"
diff --git a/cookbooks/aws-parallelcluster-shared/attributes/users_redhat8.rb b/cookbooks/aws-parallelcluster-shared/attributes/users_redhat8.rb
index e74551dbde..bdd4fc475e 100644
--- a/cookbooks/aws-parallelcluster-shared/attributes/users_redhat8.rb
+++ b/cookbooks/aws-parallelcluster-shared/attributes/users_redhat8.rb
@@ -1,3 +1,5 @@
 return unless platform?('redhat') && node['platform_version'].to_i == 8
 
 default['cluster']['cluster_user'] = 'ec2-user'
+default['cluster']['cluster_user_home'] = "/home/#{node['cluster']['cluster_user']}"
+default['cluster']['cluster_user_local_home'] = "/local#{node['cluster']['cluster_user_home']}"
diff --git a/cookbooks/aws-parallelcluster-shared/attributes/users_rocky8.rb b/cookbooks/aws-parallelcluster-shared/attributes/users_rocky8.rb
index 7d5dbbb588..5f4369b2ee 100644
--- a/cookbooks/aws-parallelcluster-shared/attributes/users_rocky8.rb
+++ b/cookbooks/aws-parallelcluster-shared/attributes/users_rocky8.rb
@@ -1,3 +1,5 @@
 return unless platform?('rocky') && node['platform_version'].to_i == 8
 
 default['cluster']['cluster_user'] = 'rocky'
+default['cluster']['cluster_user_home'] = "/home/#{node['cluster']['cluster_user']}"
+default['cluster']['cluster_user_local_home'] = "/local#{node['cluster']['cluster_user_home']}"
diff --git a/cookbooks/aws-parallelcluster-shared/attributes/users_ubuntu.rb b/cookbooks/aws-parallelcluster-shared/attributes/users_ubuntu.rb
index 9ae757f762..690381ed10 100644
--- a/cookbooks/aws-parallelcluster-shared/attributes/users_ubuntu.rb
+++ b/cookbooks/aws-parallelcluster-shared/attributes/users_ubuntu.rb
@@ -1,3 +1,5 @@
 return unless platform?('ubuntu')
 
 default['cluster']['cluster_user'] = 'ubuntu'
+default['cluster']['cluster_user_home'] = "/home/#{node['cluster']['cluster_user']}"
+default['cluster']['cluster_user_local_home'] = "/local#{node['cluster']['cluster_user_home']}"
diff --git a/kitchen.validate-config.yml b/kitchen.validate-config.yml
index 4e13ae3873..4fe9458392 100644
--- a/kitchen.validate-config.yml
+++ b/kitchen.validate-config.yml
@@ -27,6 +27,7 @@ _common_cluster_attributes: &_common_cluster_attributes
   nvidia:
     enabled: <%= ENV['NVIDIA_ENABLED'] %>
   shared_storage_type: ebs
+  default_user_home: shared
 
 _head_node_cluster_attributes: &_head_node_cluster_attributes
   << : *_common_cluster_attributes