diff --git a/app/client/cypress/scripts/cypress-local-setup.js b/app/client/cypress/scripts/cypress-local-setup.js
index 72c6a47370..e8424e0834 100644
--- a/app/client/cypress/scripts/cypress-local-setup.js
+++ b/app/client/cypress/scripts/cypress-local-setup.js
@@ -1,13 +1,12 @@
-const { execSync } = require("child_process");
+const { exec, execSync } = require("child_process");
 const { existsSync, readFileSync, writeFileSync } = require("fs");
 const path = require("path");
 const prompt = require("prompt-sync")();
 
-// Function to check if a Docker container is running
 function isContainerRunning(containerName) {
   try {
     const output = execSync(
-      `docker ps --format '{{.Names}}' | grep -w "${containerName}"`,
+      `docker ps --filter "name=^/${containerName}$" --format '{{.Names}}'`,
     );
     return output.length > 0;
   } catch (error) {
@@ -15,6 +14,98 @@ function isContainerRunning(containerName) {
   }
 }
 
+// Helper function to execute commands and return a Promise
+async function execCommand(command, options) {
+  return new Promise((resolve, reject) => {
+    exec(command, options, (error, stdout, stderr) => {
+      if (error) {
+        reject(error);
+      } else {
+        resolve({ stdout, stderr });
+      }
+    });
+  });
+}
+
+function checkDockerCompose() {
+  try {
+    execSync("docker-compose --version", { stdio: "ignore" });
+    return true;
+  } catch (error) {
+    console.error(
+      "ERROR: docker-compose is not installed. Please install Docker Compose.",
+    );
+    process.exit(1);
+  }
+}
+
+async function runLocalServer() {
+  try {
+    let user_input = prompt(
+      `Do you wish to continue without setting up the local server with docker? (yes/no): `,
+    );
+    user_input = (user_input || "").trim().toLowerCase();
+
+    if (user_input === "yes" || user_input === "y") {
+      console.log(
+        "INFO",
+        "Continuing without setting up local backend docker based server.",
+      );
+    } else {
+      // Adjust the path to point to the correct directory
+      const dockerDir = path.join(__dirname, "../../../../deploy/docker");
+
+      if (!existsSync(dockerDir)) {
+        console.error(`ERROR: Directory ${dockerDir} does not exist.`);
+        process.exit(1); // Exit if the directory is missing
+      }
+
+      await checkDockerCompose(); // Ensure Docker Compose is available
+
+      console.log("INFO: Starting local server using Docker Compose...");
+      execSync(`cd ${dockerDir} && pwd && docker-compose up -d`, {
+        stdio: "inherit",
+      });
+
+      // Wait for the services to be fully up and running
+      let servicesRunning = false;
+      const maxRetries = 30;
+      const retryInterval = 7000; // 7 seconds
+
+      for (let attempt = 1; attempt <= maxRetries; attempt++) {
+        try {
+          const { stdout } = await execCommand("docker-compose ps", {
+            cwd: dockerDir,
+          });
+          if (stdout.includes("Up")) {
+            servicesRunning = true;
+            break;
+          }
+        } catch (error) {
+          console.error("ERROR: Error checking service status:", error.message);
+          process.exit(1); // Exit if checking service status fails
+        }
+        console.log(
+          `INFO: Waiting for services to be fully up and running... (attempt ${attempt}/${maxRetries})`,
+        );
+        await new Promise((resolve) => setTimeout(resolve, retryInterval));
+      }
+      if (servicesRunning) {
+        console.log("INFO: Local server is up and running.");
+        return true;
+      } else {
+        console.error(
+          "ERROR: Services did not become available within the expected time.",
+        );
+        process.exit(1); // Exit if services are not up
+      }
+    }
+  } catch (error) {
+    console.error("ERROR: Error starting local server:", error.message);
+    process.exit(1); // Exit if starting local server fails
+  }
+}
+
 function ensureTEDIsRunning() {
   // Check if TED is running. If not, then ask user if they wish to pull and run the TED container
   const isTedRunning = isContainerRunning("ted");
@@ -147,7 +238,7 @@ async function setupCypress() {
   // Get the baseUrl from cypress.config.ts file
   let repoRoot = path.join(__dirname, "..", "..");
   let baseUrl = getBaseUrl(repoRoot);
-
+  await runLocalServer();
   await checkIfAppsmithIsRunning(baseUrl);
 
   // Install Cypress using yarn install on the app/client repository