diff --git a/src/sagemaker/serve/builder/transformers_builder.py b/src/sagemaker/serve/builder/transformers_builder.py
index 3d84e314df..ead9b7425f 100644
--- a/src/sagemaker/serve/builder/transformers_builder.py
+++ b/src/sagemaker/serve/builder/transformers_builder.py
@@ -132,17 +132,20 @@ def _create_transformers_model(self) -> Type[Model]:
                 vpc_config=self.vpc_config,
             )
 
-        if self.mode == Mode.LOCAL_CONTAINER:
+        if not self.image_uri and self.mode == Mode.LOCAL_CONTAINER:
             self.image_uri = pysdk_model.serving_image_uri(
                 self.sagemaker_session.boto_region_name, "local"
             )
-        else:
+        elif not self.image_uri:
             self.image_uri = pysdk_model.serving_image_uri(
                 self.sagemaker_session.boto_region_name, self.instance_type
             )
 
         logger.info("Detected %s. Proceeding with the the deployment.", self.image_uri)
 
+        if not pysdk_model.image_uri:
+            pysdk_model.image_uri = self.image_uri
+
         self._original_deploy = pysdk_model.deploy
         pysdk_model.deploy = self._transformers_model_builder_deploy_wrapper
         return pysdk_model
@@ -251,13 +254,14 @@ def _set_instance(self, **kwargs):
         if self.mode == Mode.SAGEMAKER_ENDPOINT:
             if self.nb_instance_type and "instance_type" not in kwargs:
                 kwargs.update({"instance_type": self.nb_instance_type})
+                logger.info("Setting instance type to %s", self.nb_instance_type)
             elif self.instance_type and "instance_type" not in kwargs:
                 kwargs.update({"instance_type": self.instance_type})
+                logger.info("Setting instance type to %s", self.instance_type)
             else:
                 raise ValueError(
                     "Instance type must be provided when deploying to SageMaker Endpoint mode."
                 )
-            logger.info("Setting instance type to %s", self.instance_type)
 
     def _get_supported_version(self, hf_config, hugging_face_version, base_fw):
         """Uses the hugging face json config to pick supported versions"""
diff --git a/tests/unit/sagemaker/serve/builder/test_transformers_builder.py b/tests/unit/sagemaker/serve/builder/test_transformers_builder.py
index e17364f22d..b7e3db79d6 100644
--- a/tests/unit/sagemaker/serve/builder/test_transformers_builder.py
+++ b/tests/unit/sagemaker/serve/builder/test_transformers_builder.py
@@ -58,6 +58,10 @@
 mock_schema_builder = MagicMock()
 mock_schema_builder.sample_input = mock_sample_input
 mock_schema_builder.sample_output = mock_sample_output
+MOCK_IMAGE_CONFIG = (
+    "763104351884.dkr.ecr.us-west-2.amazonaws.com/"
+    "huggingface-pytorch-inference:2.0.0-transformers4.28.1-gpu-py310-cu118-ubuntu20.04-v1.0"
+)
 
 
 class TestTransformersBuilder(unittest.TestCase):
@@ -100,3 +104,43 @@ def test_build_deploy_for_transformers_local_container_and_remote_container(
 
         with self.assertRaises(ValueError) as _:
             model.deploy(mode=Mode.IN_PROCESS)
+
+    @patch(
+        "sagemaker.serve.builder.transformers_builder._get_nb_instance",
+        return_value="ml.g5.24xlarge",
+    )
+    @patch("sagemaker.serve.builder.transformers_builder._capture_telemetry", side_effect=None)
+    def test_image_uri(
+        self,
+        mock_get_nb_instance,
+        mock_telemetry,
+    ):
+        builder = ModelBuilder(
+            model=mock_model_id,
+            schema_builder=mock_schema_builder,
+            mode=Mode.LOCAL_CONTAINER,
+            image_uri=MOCK_IMAGE_CONFIG,
+        )
+
+        builder._prepare_for_mode = MagicMock()
+        builder._prepare_for_mode.side_effect = None
+
+        model = builder.build()
+        builder.serve_settings.telemetry_opt_out = True
+
+        builder.modes[str(Mode.LOCAL_CONTAINER)] = MagicMock()
+        predictor = model.deploy(model_data_download_timeout=1800)
+
+        assert builder.image_uri == MOCK_IMAGE_CONFIG
+        assert builder.env_vars["MODEL_LOADING_TIMEOUT"] == "1800"
+        assert isinstance(predictor, TransformersLocalModePredictor)
+
+        assert builder.nb_instance_type == "ml.g5.24xlarge"
+
+        builder._original_deploy = MagicMock()
+        builder._prepare_for_mode.return_value = (None, {})
+        predictor = model.deploy(mode=Mode.SAGEMAKER_ENDPOINT, role="mock_role_arn")
+        assert "HF_MODEL_ID" in model.env
+
+        with self.assertRaises(ValueError) as _:
+            model.deploy(mode=Mode.IN_PROCESS)