diff --git a/cluster-agent/internal/state/cpuPolicy.go b/cluster-agent/internal/state/cpuPolicy.go
new file mode 100644
index 00000000..bf270141
--- /dev/null
+++ b/cluster-agent/internal/state/cpuPolicy.go
@@ -0,0 +1,242 @@
+// SPDX-FileCopyrightText: (C) 2026 Intel Corporation
+// SPDX-License-Identifier: Apache-2.0
+
+package state
+
+import (
+	"fmt"
+	"regexp"
+	"strconv"
+	"strings"
+
+	"github.com/open-edge-platform/edge-node-agents/common/pkg/utils"
+)
+
+const bitSize = 32
+
+var reservedCPUsPattern = regexp.MustCompile(`--reserved-cpus[=\s]+["']?([^"'\s]+)["']?`)
+
+type CPU struct {
+	Sockets  uint32
+	Topology *CPUTopology
+}
+
+type CPUTopology struct {
+	Sockets []*Socket
+}
+
+type Socket struct {
+	SocketID   uint32
+	CoreGroups []*CoreGroup
+}
+
+type CoreGroup struct {
+	Type string
+	List []uint32
+}
+
+type cores struct {
+	CPU    string
+	Socket string
+	MaxMhz string
+}
+
+// ResolveReservedCPUPolicy processes the install command and resolves reserved CPU policy keywords.
+// If reserved-cpus is a literal value (e.g., "0-1", "16-31"), it passes through unchanged.
+// If it's a policy keyword (auto, auto:pcore, auto:ecore), it computes the actual CPU set
+// based on local system topology.
+func ResolveReservedCPUPolicy(installCmd string) (string, error) {
+	matches := reservedCPUsPattern.FindStringSubmatch(installCmd)
+	if len(matches) < 2 {
+		return installCmd, nil
+	}
+
+	reservedValue := matches[1]
+	if !isCPUPolicy(reservedValue) {
+		log.Debugf("reserved-cpus value %q is literal, passing through unchanged", reservedValue)
+		return installCmd, nil
+	}
+
+	cpu, err := getCPUList()
+	if err != nil {
+		return "", fmt.Errorf("failed to get CPU information: %w", err)
+	}
+	if cpu == nil || cpu.Topology == nil || len(cpu.Topology.Sockets) == 0 {
+		return "", fmt.Errorf("invalid or empty CPU topology detected")
+	}
+
+	var firstPCoreList, eCoreList []uint32
+	for _, socket := range cpu.Topology.Sockets {
+		for _, coreGroup := range socket.CoreGroups {
+			if coreGroup.Type == "P-Core" && len(firstPCoreList) == 0 {
+				firstPCoreList = coreGroup.List
+			} else if coreGroup.Type == "E-Core" {
+				eCoreList = append(eCoreList, coreGroup.List...)
+			}
+		}
+	}
+
+	var cpuSet string
+	switch reservedValue {
+	case "auto", "auto:pcore":
+		if len(firstPCoreList) == 0 {
+			return "", fmt.Errorf("no P-cores detected in CPU topology")
+		}
+		cpuSet = formatCPUSet(firstPCoreList)
+	case "auto:ecore":
+		if len(eCoreList) > 0 {
+			cpuSet = formatCPUSet(eCoreList)
+		} else if len(firstPCoreList) > 0 {
+			log.Info("No E-cores detected, falling back to P-core reservation for auto:ecore policy")
+			cpuSet = formatCPUSet(firstPCoreList)
+		} else {
+			return "", fmt.Errorf("no P-cores detected in CPU topology")
+		}
+	}
+
+	oldFlag := matches[0]
+	newFlag := fmt.Sprintf(`--reserved-cpus="%s"`, cpuSet)
+	modifiedCmd := strings.Replace(installCmd, oldFlag, newFlag, 1)
+
+	log.Infof("Resolved reserved CPU policy %q to %q", reservedValue, cpuSet)
+	return modifiedCmd, nil
+}
+
+// isCPUPolicy reports whether the given value is a recognized CPU policy keyword.
+func isCPUPolicy(value string) bool {
+	return value == "auto" || value == "auto:pcore" || value == "auto:ecore"
+}
+
+// formatCPUSet converts a list of CPU IDs to kernel-acceptable range format.
+// E.g., [0, 1, 2, 3] -> "0-3", [5] -> "5"
+func formatCPUSet(cpuList []uint32) string {
+	if len(cpuList) == 0 {
+		return ""
+	}
+	first, last := cpuList[0], cpuList[len(cpuList)-1]
+	if first == last {
+		return fmt.Sprintf("%d", first)
+	}
+	return fmt.Sprintf("%d-%d", first, last)
+}
+
+// getCPUList collects CPU information from `lscpu` and processes the result to generate structured CPU data
+// It returns with a CPU struct.
+// This reuses the same logic as hardware-discovery-agent/internal/cpu/cpu.go
+func getCPUList() (*CPU, error) {
+	dataBytes, err := utils.ReadFromCommand(nil, "lscpu")
+	if err != nil {
+		return &CPU{}, fmt.Errorf("failed to read data from command; error: %w", err)
+	}
+
+	lscpu := strings.Split(string(dataBytes), "\n")
+	var cpu CPU
+	var maxMhz string
+	for _, attribute := range lscpu {
+		attr := strings.TrimSpace(attribute)
+		if strings.HasPrefix(attr, "Socket(s)") {
+			socketStr := strings.TrimSpace(strings.TrimPrefix(attr, "Socket(s):"))
+			sockets, err := strconv.ParseUint(socketStr, 10, bitSize)
+			if err != nil {
+				continue
+			}
+			cpu.Sockets = uint32(sockets)
+		}
+		if strings.HasPrefix(attr, "CPU max MHz:") {
+			maxMhz = strings.TrimSpace(strings.TrimPrefix(attr, "CPU max MHz:"))
+		}
+	}
+
+	// If the number of sockets has been retrieved using the `lscpu` command
+	// above, we can determine how many P-Cores and E-Cores are enabled on the Edge Node.
+	if cpu.Sockets != 0 {
+		coreInfo := []*cores{}
+		coreDetails, err := utils.ReadFromCommand(nil, "lscpu", "--extended=CPU,SOCKET,MAXMHZ")
+		if err != nil {
+			return &cpu, fmt.Errorf("failed to read data from command; error: %w", err)
+		}
+		parseCoreDetails := strings.SplitAfter(string(coreDetails), "\n")
+
+		for _, coreData := range parseCoreDetails {
+			if strings.Contains(coreData, "CPU") || coreData == "" {
+				continue
+			}
+			var core cores
+			coreValues := strings.Fields(coreData)
+			core.CPU = coreValues[0]
+			core.Socket = coreValues[1]
+			coreMaxMhz := strings.Split(coreValues[2], "\n")
+			core.MaxMhz = coreMaxMhz[0]
+			coreInfo = append(coreInfo, &core)
+		}
+
+		cpuTopology := inferEPCores(cpu.Sockets, coreInfo, maxMhz)
+		cpu.Topology = cpuTopology
+	}
+
+	return &cpu, nil
+}
+
+// inferEPCores classifies cores as P-Core or E-Core based on frequency heuristic.
+func inferEPCores(sockets uint32, coreInfo []*cores, coreMaxFreq string) *CPUTopology {
+	socketInfo := []*Socket{}
+	for socketID := uint32(0); socketID < sockets; socketID++ {
+		// Determine a target max frequency for E Core detection based on the max frequency from lscpu.
+		maxCoreFreq, err := strconv.ParseUint(strings.TrimSuffix(coreMaxFreq, ".0000"), 10, 64)
+		if err != nil {
+			// If max frequency cannot be retrieved from lscpu, default to 0 so that all cores are considered P Cores.
+			maxCoreFreq = 0
+		}
+		eCoreTargetFreq := (3 * maxCoreFreq) / 4
+		socketDetails := getCoreGroupsPerSocket(socketID, coreInfo, eCoreTargetFreq)
+		socketInfo = append(socketInfo, socketDetails)
+	}
+	return &CPUTopology{Sockets: socketInfo}
+}
+
+// getCoreGroupsPerSocket groups cores by type (P-Core vs E-Core) for a single socket
+func getCoreGroupsPerSocket(socketID uint32, coreInfo []*cores, coreMaxFreq uint64) *Socket {
+	pCoreList := make([]uint32, 0)
+	eCoreList := make([]uint32, 0)
+
+	for _, core := range coreInfo {
+		socket, err := strconv.ParseUint(core.Socket, 10, bitSize)
+		if err != nil {
+			socket = 0
+		}
+		if socket == uint64(socketID) {
+			cpu, err := strconv.ParseUint(core.CPU, 10, bitSize)
+			if err != nil {
+				continue
+			}
+			if core.MaxMhz == "-" {
+				// If max frequency is not found, default to P Core for cpu ID and continue
+				pCoreList = append(pCoreList, uint32(cpu))
+				continue
+			}
+			coreFreq, err := strconv.ParseUint(strings.TrimSuffix(core.MaxMhz, ".0000"), 10, 64)
+			if err != nil {
+				continue
+			}
+			if coreFreq <= coreMaxFreq {
+				eCoreList = append(eCoreList, uint32(cpu))
+			} else {
+				pCoreList = append(pCoreList, uint32(cpu))
+			}
+		}
+	}
+
+	coreGroups := []*CoreGroup{}
+	coreGroups = append(coreGroups, &CoreGroup{
+		Type: "P-Core",
+		List: pCoreList,
+	})
+	if len(eCoreList) > 0 {
+		coreGroups = append(coreGroups, &CoreGroup{
+			Type: "E-Core",
+			List: eCoreList,
+		})
+	}
+
+	return &Socket{SocketID: socketID, CoreGroups: coreGroups}
+}
diff --git a/cluster-agent/internal/state/installInProgress.go b/cluster-agent/internal/state/installInProgress.go
index 3997d84a..fa33eabd 100644
--- a/cluster-agent/internal/state/installInProgress.go
+++ b/cluster-agent/internal/state/installInProgress.go
@@ -13,7 +13,13 @@ type InstallInProgress struct {
 func (s *InstallInProgress) Register() error {
 	log.Info("Start kubernetes engine installation script")
 
-	err := s.execute(s.sm.ctx, s.sm.installCmd)
+	resolvedCmd, err := ResolveReservedCPUPolicy(s.sm.installCmd)
+	if err != nil {
+		log.Warnf("Failed to resolve reserved CPU policy, proceeding with original command: %v", err)
+		resolvedCmd = s.sm.installCmd
+	}
+
+	err = s.execute(s.sm.ctx, resolvedCmd)
 	if err != nil {
 		s.sm.set(s.sm.inactive)
 		return err