diff --git a/api/environments/migrations/0035_add_use_identity_overrides_in_local_eval.py b/api/environments/migrations/0035_add_use_identity_overrides_in_local_eval.py
new file mode 100644
index 000000000000..33514ab7c193
--- /dev/null
+++ b/api/environments/migrations/0035_add_use_identity_overrides_in_local_eval.py
@@ -0,0 +1,46 @@
+# Generated by Django 4.2.15 on 2024-09-04 05:40
+
+from django.db import migrations, models
+
+
+class Migration(migrations.Migration):
+
+    dependencies = [
+        ("environments", "0034_alter_environment_project"),
+    ]
+
+    operations = [
+        migrations.AddField(
+            model_name="environment",
+            name="use_identity_overrides_in_local_eval",
+            field=models.BooleanField(
+                default=False,
+                help_text="When enabled, identity overrides will be included in the environment document",
+            ),
+        ),
+        migrations.AddField(
+            model_name="historicalenvironment",
+            name="use_identity_overrides_in_local_eval",
+            field=models.BooleanField(
+                default=False,
+                help_text="When enabled, identity overrides will be included in the environment document",
+            ),
+        ),
+        # Update the default to true for new environments
+        migrations.AlterField(
+            model_name="environment",
+            name="use_identity_overrides_in_local_eval",
+            field=models.BooleanField(
+                default=True,
+                help_text="When enabled, identity overrides will be included in the environment document",
+            ),
+        ),
+        migrations.AlterField(
+            model_name="historicalenvironment",
+            name="use_identity_overrides_in_local_eval",
+            field=models.BooleanField(
+                default=True,
+                help_text="When enabled, identity overrides will be included in the environment document",
+            ),
+        ),
+    ]
diff --git a/api/environments/models.py b/api/environments/models.py
index dd58ce9fa605..f85b6851d877 100644
--- a/api/environments/models.py
+++ b/api/environments/models.py
@@ -131,9 +131,12 @@ class Environment(
         help_text="If true, will hide sensitive data(e.g: traits, description etc) from the SDK endpoints",
     )
 
-    objects = EnvironmentManager()
-
     use_v2_feature_versioning = models.BooleanField(default=False)
+    use_identity_overrides_in_local_eval = models.BooleanField(
+        default=True,
+        help_text="When enabled, identity overrides will be included in the environment document",
+    )
+    objects = EnvironmentManager()
 
     class Meta:
         ordering = ["id"]
diff --git a/api/environments/serializers.py b/api/environments/serializers.py
index df033f80dec2..dffc9d13b468 100644
--- a/api/environments/serializers.py
+++ b/api/environments/serializers.py
@@ -53,6 +53,7 @@ class Meta:
             "use_identity_composite_key_for_hashing",
             "hide_sensitive_data",
             "use_v2_feature_versioning",
+            "use_identity_overrides_in_local_eval",
         )
         read_only_fields = ("use_v2_feature_versioning",)
 
diff --git a/api/poetry.lock b/api/poetry.lock
index 5651e6e22fb7..d5d5e9e7be57 100644
--- a/api/poetry.lock
+++ b/api/poetry.lock
@@ -1370,12 +1370,12 @@ resolved_reference = "f3809f6d592b2c6cfdfa88e0b345ce722ac47727"
 
 [[package]]
 name = "flagsmith-flag-engine"
-version = "5.1.1"
+version = "5.2.0"
 description = "Flag engine for the Flagsmith API."
 optional = false
 python-versions = "*"
 files = [
-    {file = "flagsmith-flag-engine-5.1.1.tar.gz", hash = "sha256:a97d001ac50fcddee273a25d8c88442b33797fde5b4d657f3e83e1493aa4f536"},
+    {file = "flagsmith-flag-engine-5.2.0.tar.gz", hash = "sha256:247da79a9fee55a55de1440fcd112de9b56cef9d5feb8c783319a9e0620e3a72"},
 ]
 
 [package.dependencies]
@@ -2150,16 +2150,6 @@ files = [
     {file = "MarkupSafe-2.1.3-cp311-cp311-musllinux_1_1_x86_64.whl", hash = "sha256:5bbe06f8eeafd38e5d0a4894ffec89378b6c6a625ff57e3028921f8ff59318ac"},
     {file = "MarkupSafe-2.1.3-cp311-cp311-win32.whl", hash = "sha256:dd15ff04ffd7e05ffcb7fe79f1b98041b8ea30ae9234aed2a9168b5797c3effb"},
     {file = "MarkupSafe-2.1.3-cp311-cp311-win_amd64.whl", hash = "sha256:134da1eca9ec0ae528110ccc9e48041e0828d79f24121a1a146161103c76e686"},
-    {file = "MarkupSafe-2.1.3-cp312-cp312-macosx_10_9_universal2.whl", hash = "sha256:f698de3fd0c4e6972b92290a45bd9b1536bffe8c6759c62471efaa8acb4c37bc"},
-    {file = "MarkupSafe-2.1.3-cp312-cp312-macosx_10_9_x86_64.whl", hash = "sha256:aa57bd9cf8ae831a362185ee444e15a93ecb2e344c8e52e4d721ea3ab6ef1823"},
-    {file = "MarkupSafe-2.1.3-cp312-cp312-manylinux_2_17_aarch64.manylinux2014_aarch64.whl", hash = "sha256:ffcc3f7c66b5f5b7931a5aa68fc9cecc51e685ef90282f4a82f0f5e9b704ad11"},
-    {file = "MarkupSafe-2.1.3-cp312-cp312-manylinux_2_17_x86_64.manylinux2014_x86_64.whl", hash = "sha256:47d4f1c5f80fc62fdd7777d0d40a2e9dda0a05883ab11374334f6c4de38adffd"},
-    {file = "MarkupSafe-2.1.3-cp312-cp312-manylinux_2_5_i686.manylinux1_i686.manylinux_2_17_i686.manylinux2014_i686.whl", hash = "sha256:1f67c7038d560d92149c060157d623c542173016c4babc0c1913cca0564b9939"},
-    {file = "MarkupSafe-2.1.3-cp312-cp312-musllinux_1_1_aarch64.whl", hash = "sha256:9aad3c1755095ce347e26488214ef77e0485a3c34a50c5a5e2471dff60b9dd9c"},
-    {file = "MarkupSafe-2.1.3-cp312-cp312-musllinux_1_1_i686.whl", hash = "sha256:14ff806850827afd6b07a5f32bd917fb7f45b046ba40c57abdb636674a8b559c"},
-    {file = "MarkupSafe-2.1.3-cp312-cp312-musllinux_1_1_x86_64.whl", hash = "sha256:8f9293864fe09b8149f0cc42ce56e3f0e54de883a9de90cd427f191c346eb2e1"},
-    {file = "MarkupSafe-2.1.3-cp312-cp312-win32.whl", hash = "sha256:715d3562f79d540f251b99ebd6d8baa547118974341db04f5ad06d5ea3eb8007"},
-    {file = "MarkupSafe-2.1.3-cp312-cp312-win_amd64.whl", hash = "sha256:1b8dd8c3fd14349433c79fa8abeb573a55fc0fdd769133baac1f5e07abf54aeb"},
     {file = "MarkupSafe-2.1.3-cp37-cp37m-macosx_10_9_x86_64.whl", hash = "sha256:8e254ae696c88d98da6555f5ace2279cf7cd5b3f52be2b5cf97feafe883b58d2"},
     {file = "MarkupSafe-2.1.3-cp37-cp37m-manylinux_2_17_aarch64.manylinux2014_aarch64.whl", hash = "sha256:cb0932dc158471523c9637e807d9bfb93e06a95cbf010f1a38b98623b929ef2b"},
     {file = "MarkupSafe-2.1.3-cp37-cp37m-manylinux_2_17_x86_64.manylinux2014_x86_64.whl", hash = "sha256:9402b03f1a1b4dc4c19845e5c749e3ab82d5078d16a2a4c2cd2df62d57bb0707"},
@@ -3343,7 +3333,6 @@ files = [
     {file = "PyYAML-6.0.1-cp311-cp311-win_amd64.whl", hash = "sha256:bf07ee2fef7014951eeb99f56f39c9bb4af143d8aa3c21b1677805985307da34"},
     {file = "PyYAML-6.0.1-cp312-cp312-macosx_10_9_x86_64.whl", hash = "sha256:855fb52b0dc35af121542a76b9a84f8d1cd886ea97c84703eaa6d88e37a2ad28"},
     {file = "PyYAML-6.0.1-cp312-cp312-macosx_11_0_arm64.whl", hash = "sha256:40df9b996c2b73138957fe23a16a4f0ba614f4c0efce1e9406a184b6d07fa3a9"},
-    {file = "PyYAML-6.0.1-cp312-cp312-manylinux_2_17_aarch64.manylinux2014_aarch64.whl", hash = "sha256:a08c6f0fe150303c1c6b71ebcd7213c2858041a7e01975da3a99aed1e7a378ef"},
     {file = "PyYAML-6.0.1-cp312-cp312-manylinux_2_17_x86_64.manylinux2014_x86_64.whl", hash = "sha256:6c22bec3fbe2524cde73d7ada88f6566758a8f7227bfbf93a408a9d86bcc12a0"},
     {file = "PyYAML-6.0.1-cp312-cp312-musllinux_1_1_x86_64.whl", hash = "sha256:8d4e9c88387b0f5c7d5f281e55304de64cf7f9c0021a3525bd3b1c542da3b0e4"},
     {file = "PyYAML-6.0.1-cp312-cp312-win32.whl", hash = "sha256:d483d2cdf104e7c9fa60c544d92981f12ad66a457afae824d146093b8c294c54"},
@@ -4187,4 +4176,4 @@ files = [
 [metadata]
 lock-version = "2.0"
 python-versions = ">=3.11, <3.13"
-content-hash = "5c0c058d06a663f5fc5ac21721d16de133bb73782ddaaa42316b4f1a1e2a7726"
+content-hash = "992535d7cf696ab58b19e8fa256392af1265d516865b3d9e93aeddc954245184"
diff --git a/api/pyproject.toml b/api/pyproject.toml
index 4c8649690edc..9fbede74bf50 100644
--- a/api/pyproject.toml
+++ b/api/pyproject.toml
@@ -142,7 +142,7 @@ environs = "~9.2.0"
 django-lifecycle = "~1.0.0"
 drf-writable-nested = "~0.6.2"
 django-filter = "~2.4.0"
-flagsmith-flag-engine = "^5.1.1"
+flagsmith-flag-engine = "^5.2.0"
 boto3 = "~1.28.78"
 slack-sdk = "~3.9.0"
 asgiref = "~3.8.1"
diff --git a/api/tests/integration/conftest.py b/api/tests/integration/conftest.py
index 5173596ab746..806703c2d0bd 100644
--- a/api/tests/integration/conftest.py
+++ b/api/tests/integration/conftest.py
@@ -432,6 +432,7 @@ def identity_document(
     }
     return {
         "composite_key": f"{environment_api_key}_user_1_test",
+        "dashboard_alias": None,
         "identity_traits": identity_traits,
         "identity_features": [
             _environment_feature_state_1_document,
@@ -457,6 +458,7 @@ def identity_document_without_fs(environment_api_key, identity_traits):
         "environment_api_key": environment_api_key,
         "identity_uuid": "59efa2a7-6a45-46d6-b953-a7073a90eacf",
         "django_id": None,
+        "dashboard_alias": None,
     }
 
 
diff --git a/api/tests/unit/edge_api/identities/conftest.py b/api/tests/unit/edge_api/identities/conftest.py
index d1fc3b3b0cb6..ab0aed1bdc83 100644
--- a/api/tests/unit/edge_api/identities/conftest.py
+++ b/api/tests/unit/edge_api/identities/conftest.py
@@ -41,6 +41,7 @@ def identity_document_without_fs(environment):
         "environment_api_key": environment.api_key,
         "identity_uuid": "59efa2a7-6a45-46d6-b953-a7073a90eacf",
         "django_id": None,
+        "dashboard_alias": None,
     }
 
 
diff --git a/api/tests/unit/edge_api/identities/test_unit_edge_api_identities_tasks.py b/api/tests/unit/edge_api/identities/test_unit_edge_api_identities_tasks.py
index d5b6d29cea51..3b3907073c38 100644
--- a/api/tests/unit/edge_api/identities/test_unit_edge_api_identities_tasks.py
+++ b/api/tests/unit/edge_api/identities/test_unit_edge_api_identities_tasks.py
@@ -257,6 +257,7 @@ def test_sync_identity_document_features_removes_deleted_features(
             "feature_state_value": "feature_1_value",
             "featurestate_uuid": "4a8fbe06-d4cd-4686-a184-d924844bb422",
             "django_id": 1,
+            "dashboard_alias": None,
             "feature": {
                 "name": "feature_that_does_not_exists",
                 "type": "STANDARD",
diff --git a/api/tests/unit/environments/test_unit_environments_views.py b/api/tests/unit/environments/test_unit_environments_views.py
index c03448bee9b2..39486bd3c06d 100644
--- a/api/tests/unit/environments/test_unit_environments_views.py
+++ b/api/tests/unit/environments/test_unit_environments_views.py
@@ -521,6 +521,7 @@ def test_should_create_environments(
     assert response.status_code == status.HTTP_201_CREATED
     assert response.json()["description"] == description
     assert response.json()["use_mv_v2_evaluation"] is True
+    assert response.json()["use_identity_overrides_in_local_eval"] is True
     assert response.json()["use_identity_composite_key_for_hashing"] is True
 
     # and user is admin
@@ -787,6 +788,7 @@ def test_audit_log_entry_created_when_environment_updated(
     banner_colour = "#FF0000"
     hide_disabled_flags = True
     use_identity_composite_key_for_hashing = True
+    use_identity_overrides_in_local_eval = True
     hide_sensitive_data = True
 
     data = {
@@ -796,6 +798,7 @@ def test_audit_log_entry_created_when_environment_updated(
         "banner_colour": banner_colour,
         "hide_disabled_flags": hide_disabled_flags,
         "use_identity_composite_key_for_hashing": use_identity_composite_key_for_hashing,
+        "use_identity_overrides_in_local_eval": use_identity_overrides_in_local_eval,
         "hide_sensitive_data": hide_sensitive_data,
     }
 
@@ -816,6 +819,10 @@ def test_audit_log_entry_created_when_environment_updated(
     assert response.json()["banner_colour"] == banner_colour
     assert response.json()["hide_disabled_flags"] == hide_disabled_flags
     assert response.json()["hide_sensitive_data"] == hide_sensitive_data
+    assert (
+        response.json()["use_identity_overrides_in_local_eval"]
+        == use_identity_overrides_in_local_eval
+    )
     assert (
         response.json()["use_identity_composite_key_for_hashing"]
         == use_identity_composite_key_for_hashing
diff --git a/api/tests/unit/util/mappers/test_unit_mappers_dynamodb.py b/api/tests/unit/util/mappers/test_unit_mappers_dynamodb.py
index 9bd6049dbd25..27c75ed91cdc 100644
--- a/api/tests/unit/util/mappers/test_unit_mappers_dynamodb.py
+++ b/api/tests/unit/util/mappers/test_unit_mappers_dynamodb.py
@@ -76,6 +76,7 @@ def test_map_environment_to_environment_document__call_expected(
         "segment_config": None,
         "updated_at": expected_updated_at,
         "use_identity_composite_key_for_hashing": True,
+        "use_identity_overrides_in_local_eval": True,
         "webhook_config": None,
     }
 
@@ -130,6 +131,7 @@ def test_map_identity_to_identity_document__call_expected(
         "identity_features": [],
         "identity_traits": [{"trait_key": "key1", "trait_value": "value1"}],
         "identity_uuid": mocker.ANY,
+        "dashboard_alias": None,
     }
     assert uuid.UUID(result["identity_uuid"])
 
@@ -195,6 +197,7 @@ def test_map_environment_to_environment_v2_document__call_expected(
         "segment_config": None,
         "updated_at": expected_updated_at,
         "use_identity_composite_key_for_hashing": True,
+        "use_identity_overrides_in_local_eval": True,
         "webhook_config": None,
     }
 
diff --git a/api/tests/unit/util/mappers/test_unit_mappers_engine.py b/api/tests/unit/util/mappers/test_unit_mappers_engine.py
index 6e08270cbbf5..6f2f4d15ba97 100644
--- a/api/tests/unit/util/mappers/test_unit_mappers_engine.py
+++ b/api/tests/unit/util/mappers/test_unit_mappers_engine.py
@@ -386,6 +386,7 @@ def test_map_environment_to_engine__return_expected(
         allow_client_traits=environment.allow_client_traits,
         updated_at=environment.updated_at,
         use_identity_composite_key_for_hashing=environment.use_identity_composite_key_for_hashing,
+        use_identity_overrides_in_local_eval=environment.use_identity_overrides_in_local_eval,
         hide_sensitive_data=environment.hide_sensitive_data,
         hide_disabled_flags=environment.hide_disabled_flags,
         amplitude_config=None,
diff --git a/api/tests/unit/util/mappers/test_unit_mappers_sdk.py b/api/tests/unit/util/mappers/test_unit_mappers_sdk.py
index 7363f1e840db..ce849a4485cc 100644
--- a/api/tests/unit/util/mappers/test_unit_mappers_sdk.py
+++ b/api/tests/unit/util/mappers/test_unit_mappers_sdk.py
@@ -65,6 +65,7 @@ def test_map_environment_to_sdk_document__return_expected(
                 "django_id": identity.pk,
                 "environment_api_key": expected_api_key,
                 "identifier": identity.identifier,
+                "dashboard_alias": None,
                 "identity_features": [
                     {
                         "django_id": identity_featurestate.pk,
@@ -105,4 +106,73 @@ def test_map_environment_to_sdk_document__return_expected(
         },
         "updated_at": environment.updated_at,
         "use_identity_composite_key_for_hashing": True,
+        "use_identity_overrides_in_local_eval": True,
+    }
+
+
+def test_map_environment_to_sdk_document__for_environment_with_identity_overrides_in_local_eval_disabled(
+    mocker: "MockerFixture",
+    environment: "Environment",
+    feature_state: "FeatureState",
+    identity: Identity,
+    identity_featurestate: "FeatureState",
+    identity_without_overrides: Identity,
+) -> None:
+    # Given
+    expected_overridden_value = "some-overridden-value"
+    expected_api_key = environment.api_key
+
+    identity_featurestate.feature_state_value.string_value = expected_overridden_value
+    identity_featurestate.feature_state_value.save()
+    identity_featurestate.enabled = True
+    identity_featurestate.save()
+
+    environment.use_identity_overrides_in_local_eval = False
+    environment.save()
+
+    # When
+    result = map_environment_to_sdk_document(environment)
+
+    # Then
+    assert result == {
+        "allow_client_traits": True,
+        "api_key": expected_api_key,
+        "feature_states": [
+            {
+                "django_id": feature_state.pk,
+                "enabled": False,
+                "feature": {
+                    "id": feature_state.feature.pk,
+                    "name": "Test Feature1",
+                    "type": "STANDARD",
+                },
+                "feature_segment": None,
+                "feature_state_value": None,
+                "featurestate_uuid": feature_state.uuid,
+                "multivariate_feature_state_values": [],
+            }
+        ],
+        "identity_overrides": [],
+        "hide_disabled_flags": None,
+        "hide_sensitive_data": False,
+        "id": environment.pk,
+        "name": "Test Environment",
+        "project": {
+            "enable_realtime_updates": False,
+            "hide_disabled_flags": False,
+            "id": environment.project.pk,
+            "name": "Test Project",
+            "organisation": {
+                "feature_analytics": False,
+                "id": environment.project.organisation.pk,
+                "name": "Test Org",
+                "persist_trait_data": True,
+                "stop_serving_flags": False,
+            },
+            "segments": [],
+            "server_key_only_feature_ids": [],
+        },
+        "updated_at": environment.updated_at,
+        "use_identity_composite_key_for_hashing": True,
+        "use_identity_overrides_in_local_eval": False,
     }
diff --git a/api/util/mappers/engine.py b/api/util/mappers/engine.py
index 90150206ed17..9e111d5748d0 100644
--- a/api/util/mappers/engine.py
+++ b/api/util/mappers/engine.py
@@ -326,6 +326,7 @@ def map_environment_to_engine(
         use_identity_composite_key_for_hashing=environment.use_identity_composite_key_for_hashing,
         hide_sensitive_data=environment.hide_sensitive_data,
         hide_disabled_flags=environment.hide_disabled_flags,
+        use_identity_overrides_in_local_eval=environment.use_identity_overrides_in_local_eval,
         #
         # Relationships:
         project=project_model,
diff --git a/api/util/mappers/sdk.py b/api/util/mappers/sdk.py
index bc94def7ae8f..2bc9c4a0ff61 100644
--- a/api/util/mappers/sdk.py
+++ b/api/util/mappers/sdk.py
@@ -29,11 +29,12 @@ def map_environment_to_sdk_document(environment: "Environment") -> SDKDocument:
     """
     # Read relationships.
     identities_with_overrides = {}
-    for feature_state in environment.feature_states.all():
-        if (identity_id := feature_state.identity_id) and (
-            identity_id not in identities_with_overrides
-        ):
-            identities_with_overrides[identity_id] = feature_state.identity
+    if environment.use_identity_overrides_in_local_eval:
+        for feature_state in environment.feature_states.all():
+            if (identity_id := feature_state.identity_id) and (
+                identity_id not in identities_with_overrides
+            ):
+                identities_with_overrides[identity_id] = feature_state.identity
 
     # Get the engine data.
     engine_environment = map_environment_to_engine(environment, with_integrations=False)