diff --git a/ci3/cache_download b/ci3/cache_download
index 7372433ae211..d3cca549febe 100755
--- a/ci3/cache_download
+++ b/ci3/cache_download
@@ -36,23 +36,55 @@ else
   endpoint="https://build-cache.aztec-labs.com"
 fi
 
-if [[ -n "${S3_BUILD_CACHE_AWS_PARAMS:-}" ]]; then
-  # Use AWS CLI with custom params (e.g., custom endpoint)
-  # NOTE: This is NOT currently used, but allows for using minio or other S3-compatible storage for tests.
-  s3_uri="s3://aztec-ci-artifacts/build-cache/$tar_file"
-  aws $S3_BUILD_CACHE_AWS_PARAMS s3 cp "$s3_uri" "-" | extract_tar
-elif [[ -n "${CACHE_SSH_HOST:-}" ]]; then
-  # Run S3 download on remote host via SSH jump and pipe back
-  if ! ssh "$CACHE_SSH_HOST" "curl -s -f \"$endpoint/$tar_file\"" | extract_tar; then
-    echo_stderr "SSH cache download of $tar_file via $CACHE_SSH_HOST failed."
-    exit 1
+# Downloads the artifact from remote to stdout.
+function download_from_remote {
+  if [[ -n "${S3_BUILD_CACHE_AWS_PARAMS:-}" ]]; then
+    # Use AWS CLI with custom params (e.g., custom endpoint)
+    # NOTE: This is NOT currently used, but allows for using minio or other S3-compatible storage for tests.
+    s3_uri="s3://aztec-ci-artifacts/build-cache/$tar_file"
+    aws $S3_BUILD_CACHE_AWS_PARAMS s3 cp "$s3_uri" "-" 2>/dev/null
+  elif [[ -n "${CACHE_SSH_HOST:-}" ]]; then
+    # Run remote download on remote host via SSH jump and pipe back
+    ssh "$CACHE_SSH_HOST" "curl -s -f \"$endpoint/$tar_file\""
+  else
+    # Default to download from remote via curl
+    curl -s -f "$endpoint/$tar_file"
   fi
-else
-  # Default to AWS S3 URL via curl
-  # Attempt to download and extract the cache file
-  if ! curl -s -f "$endpoint/$tar_file" | extract_tar; then
+}
+
+# Local cache: if CACHE_LOCAL_DIR is set, check local cache first,
+# and on miss, download from remote into local cache before extracting.
+# If the cache directory cannot be created, skip local caching and fall through.
+if [[ -n "${CACHE_LOCAL_DIR:-}" ]] && ! mkdir -p "$CACHE_LOCAL_DIR" 2>/dev/null; then
+  echo_stderr "Warning: Cannot create local cache dir $CACHE_LOCAL_DIR, skipping local cache."
+  CACHE_LOCAL_DIR=""
+fi
+
+if [[ -n "${CACHE_LOCAL_DIR:-}" ]]; then
+  local_cache_file="$CACHE_LOCAL_DIR/$tar_file"
+
+  if [[ -f "$local_cache_file" ]]; then
+    echo_stderr "Local cache hit for $tar_file."
+    extract_tar < "$local_cache_file"
+    echo_stderr "Cache extraction of $tar_file from local cache complete in ${SECONDS}s."
+    exit 0
+  fi
+
+  echo_stderr "Local cache miss for $tar_file, downloading from remote."
+  if ! download_from_remote > "$local_cache_file"; then
+    rm -f "$local_cache_file"
     echo_stderr "Cache download of $tar_file failed."
     exit 1
   fi
+
+  extract_tar < "$local_cache_file"
+  echo_stderr "Cache download and extraction of $tar_file complete in ${SECONDS}s."
+  exit 0
 fi
+
+if ! download_from_remote | extract_tar; then
+  echo_stderr "Cache download of $tar_file failed."
+  exit 1
+fi
+
 echo_stderr "Cache download and extraction of $tar_file complete in ${SECONDS}s."
diff --git a/ci3/cache_local.test.sh b/ci3/cache_local.test.sh
new file mode 100755
index 000000000000..ce919ffe6768
--- /dev/null
+++ b/ci3/cache_local.test.sh
@@ -0,0 +1,230 @@
+#!/usr/bin/env bash
+# Test script for local cache functionality in cache_download and cache_upload.
+set -euo pipefail
+
+script_dir="$(cd "$(dirname "${BASH_SOURCE[0]}")" && pwd)"
+test_root="/tmp/cache-local-test-$$"
+passed=0
+failed=0
+
+cleanup() {
+  rm -rf "$test_root"
+}
+trap cleanup EXIT
+
+log() { echo -e "\033[1m$1\033[0m"; }
+pass() { echo -e "  \033[32m✓ $1\033[0m"; ((++passed)); }
+fail() { echo -e "  \033[31m✗ $1\033[0m"; ((++failed)); }
+
+setup() {
+  log "Setting up test environment in $test_root"
+  mkdir -p "$test_root"/{local-cache,extract,source}
+
+  # Create some test content to tar up.
+  echo "hello world" > "$test_root/source/file1.txt"
+  echo "foo bar" > "$test_root/source/file2.txt"
+
+  # Create a test tar.gz from that content.
+  tar -czf "$test_root/test-artifact.tar.gz" -C "$test_root/source" .
+}
+
+test_download_without_local_cache() {
+  log "\nTest 1: cache_download without CACHE_LOCAL_DIR (baseline)"
+
+  # Without CACHE_LOCAL_DIR, and without S3 access, cache_download should fail.
+  # This just confirms that the env var being unset means no local cache logic runs.
+  unset CACHE_LOCAL_DIR 2>/dev/null || true
+  if NO_CACHE=1 "$script_dir/cache_download" "some-file.tar.gz" "$test_root/extract" 2>/dev/null; then
+    fail "Should have exited with error when NO_CACHE=1"
+  else
+    pass "cache_download respects NO_CACHE=1 without local cache"
+  fi
+}
+
+test_download_local_cache_hit() {
+  log "\nTest 2: cache_download with local cache hit"
+
+  export CACHE_LOCAL_DIR="$test_root/local-cache"
+  rm -rf "$test_root/extract"
+  mkdir -p "$test_root/extract"
+
+  # Place the artifact in the local cache.
+  cp "$test_root/test-artifact.tar.gz" "$CACHE_LOCAL_DIR/test-artifact.tar.gz"
+
+  # cache_download should find it in local cache and extract.
+  if "$script_dir/cache_download" "test-artifact.tar.gz" "$test_root/extract" 2>/dev/null; then
+    if [[ -f "$test_root/extract/file1.txt" ]] && [[ -f "$test_root/extract/file2.txt" ]]; then
+      pass "Local cache hit extracted files correctly"
+    else
+      fail "Local cache hit did not extract files"
+    fi
+  else
+    fail "cache_download failed on local cache hit"
+  fi
+
+  # Verify stderr mentions local cache hit.
+  local stderr_output
+  rm -rf "$test_root/extract"
+  mkdir -p "$test_root/extract"
+  stderr_output=$("$script_dir/cache_download" "test-artifact.tar.gz" "$test_root/extract" 2>&1 >/dev/null) || true
+  if echo "$stderr_output" | grep -q "Local cache hit"; then
+    pass "Reported local cache hit in stderr"
+  else
+    fail "Did not report local cache hit (got: $stderr_output)"
+  fi
+}
+
+test_download_local_cache_miss() {
+  log "\nTest 3: cache_download with local cache miss (no remote)"
+
+  export CACHE_LOCAL_DIR="$test_root/local-cache-empty"
+  mkdir -p "$CACHE_LOCAL_DIR"
+  rm -rf "$test_root/extract"
+  mkdir -p "$test_root/extract"
+
+  # With an empty local cache and no S3 access, download should fail.
+  local stderr_output
+  stderr_output=$("$script_dir/cache_download" "nonexistent.tar.gz" "$test_root/extract" 2>&1 >/dev/null) || true
+  if echo "$stderr_output" | grep -q "Local cache miss"; then
+    pass "Reported local cache miss in stderr"
+  else
+    fail "Did not report local cache miss (got: $stderr_output)"
+  fi
+}
+
+test_upload_saves_to_local_cache() {
+  log "\nTest 4: cache_upload saves to local cache"
+
+  export CACHE_LOCAL_DIR="$test_root/local-cache-upload"
+  mkdir -p "$CACHE_LOCAL_DIR"
+
+  # cache_upload requires CI=1 or S3_FORCE_UPLOAD, and AWS credentials.
+  # We set S3_FORCE_UPLOAD but expect S3 upload to fail (no credentials) - that's OK,
+  # we just want to verify the local cache copy happens.
+  local stderr_output
+  stderr_output=$(S3_FORCE_UPLOAD=1 "$script_dir/cache_upload" "test-upload.tar.gz" "$test_root/source/file1.txt" "$test_root/source/file2.txt" 2>&1 >/dev/null) || true
+
+  if [[ -f "$CACHE_LOCAL_DIR/test-upload.tar.gz" ]]; then
+    pass "cache_upload saved artifact to local cache"
+  else
+    fail "cache_upload did not save artifact to local cache"
+  fi
+
+  if echo "$stderr_output" | grep -q "Saved test-upload.tar.gz to local cache"; then
+    pass "Reported saving to local cache in stderr"
+  else
+    fail "Did not report saving to local cache (got: $stderr_output)"
+  fi
+}
+
+test_upload_without_local_cache() {
+  log "\nTest 5: cache_upload without CACHE_LOCAL_DIR"
+
+  unset CACHE_LOCAL_DIR 2>/dev/null || true
+
+  # Without CACHE_LOCAL_DIR, upload should not create any local cache files.
+  local stderr_output
+  stderr_output=$(S3_FORCE_UPLOAD=1 "$script_dir/cache_upload" "test-no-local.tar.gz" "$test_root/source/file1.txt" 2>&1 >/dev/null) || true
+
+  if echo "$stderr_output" | grep -q "local cache"; then
+    fail "Should not mention local cache when CACHE_LOCAL_DIR is unset"
+  else
+    pass "No local cache activity when CACHE_LOCAL_DIR is unset"
+  fi
+}
+
+test_roundtrip() {
+  log "\nTest 6: Upload then download roundtrip via local cache"
+
+  export CACHE_LOCAL_DIR="$test_root/local-cache-roundtrip"
+  mkdir -p "$CACHE_LOCAL_DIR"
+
+  # Upload: creates the tar and saves to local cache.
+  S3_FORCE_UPLOAD=1 "$script_dir/cache_upload" "roundtrip.tar.gz" "$test_root/source/file1.txt" "$test_root/source/file2.txt" 2>/dev/null || true
+
+  # Download: should find it in local cache and extract.
+  rm -rf "$test_root/extract"
+  mkdir -p "$test_root/extract"
+  if "$script_dir/cache_download" "roundtrip.tar.gz" "$test_root/extract" 2>/dev/null; then
+    if [[ -f "$test_root/extract/$test_root/source/file1.txt" ]] || [[ -f "$test_root/extract/file1.txt" ]]; then
+      pass "Roundtrip: upload then download via local cache works"
+    else
+      # The tar preserves full paths, so check with the full path structure.
+      if tar -tzf "$CACHE_LOCAL_DIR/roundtrip.tar.gz" | grep -q "file1.txt"; then
+        pass "Roundtrip: artifact in local cache contains expected files"
+      else
+        fail "Roundtrip: extracted files not found"
+      fi
+    fi
+  else
+    fail "Roundtrip: cache_download failed"
+  fi
+}
+
+test_disabled_cache_skips_local() {
+  log "\nTest 7: disabled-cache key skips local cache"
+
+  export CACHE_LOCAL_DIR="$test_root/local-cache"
+
+  local stderr_output
+  stderr_output=$("$script_dir/cache_download" "disabled-cache-foo.tar.gz" "$test_root/extract" 2>&1 >/dev/null) || true
+  if echo "$stderr_output" | grep -q "uncommitted changes"; then
+    pass "disabled-cache still triggers early exit before local cache"
+  else
+    fail "disabled-cache did not trigger early exit (got: $stderr_output)"
+  fi
+}
+
+test_inaccessible_cache_dir_falls_through() {
+  log "\nTest 8: Inaccessible CACHE_LOCAL_DIR falls through gracefully"
+
+  # Use a path we definitely can't create (root-owned directory).
+  export CACHE_LOCAL_DIR="/proc/fake-cache-dir"
+
+  local stderr_output
+  stderr_output=$("$script_dir/cache_download" "test-artifact.tar.gz" "$test_root/extract" 2>&1 >/dev/null) || true
+  if echo "$stderr_output" | grep -q "Cannot create local cache dir"; then
+    pass "Download warns about inaccessible cache dir"
+  else
+    fail "Download did not warn about inaccessible dir (got: $stderr_output)"
+  fi
+  # Should NOT see "Local cache hit" or "Local cache miss" since it fell through.
+  if echo "$stderr_output" | grep -q "Local cache"; then
+    fail "Download should not attempt local cache when dir is inaccessible"
+  else
+    pass "Download skipped local cache logic when dir is inaccessible"
+  fi
+
+  # Test upload too.
+  stderr_output=$(S3_FORCE_UPLOAD=1 "$script_dir/cache_upload" "test-upload-fallthrough.tar.gz" "$test_root/source/file1.txt" 2>&1 >/dev/null) || true
+  if echo "$stderr_output" | grep -q "Cannot create local cache dir"; then
+    pass "Upload warns about inaccessible cache dir"
+  else
+    fail "Upload did not warn about inaccessible dir (got: $stderr_output)"
+  fi
+}
+
+main() {
+  log "=== Local Cache Test Suite ===\n"
+
+  setup
+
+  test_download_without_local_cache
+  test_download_local_cache_hit
+  test_download_local_cache_miss
+  test_upload_saves_to_local_cache
+  test_upload_without_local_cache
+  test_roundtrip
+  test_disabled_cache_skips_local
+  test_inaccessible_cache_dir_falls_through
+
+  log "\n=== Results ==="
+  echo -e "\033[32mPassed: $passed\033[0m"
+  echo -e "\033[31mFailed: $failed\033[0m"
+
+  if [[ $failed -gt 0 ]]; then
+    exit 1
+  fi
+}
+
+main "$@"
diff --git a/ci3/cache_upload b/ci3/cache_upload
index 805731f388ec..fa4eb32f46bd 100755
--- a/ci3/cache_upload
+++ b/ci3/cache_upload
@@ -42,6 +42,16 @@ else
   tar -czf $out_tar "$@"
 fi
 
+# Save to local cache if enabled.
+if [[ -n "${CACHE_LOCAL_DIR:-}" ]]; then
+  if mkdir -p "$CACHE_LOCAL_DIR" 2>/dev/null; then
+    cp "$out_tar" "$CACHE_LOCAL_DIR/$name"
+    echo_stderr "Saved $name to local cache."
+  else
+    echo_stderr "Warning: Cannot create local cache dir $CACHE_LOCAL_DIR, skipping local cache."
+  fi
+fi
+
 # Pipe tar directly to AWS S3 cp
 if aws ${S3_BUILD_CACHE_AWS_PARAMS:-} s3 cp $out_tar "s3://aztec-ci-artifacts/build-cache/$name" &>/dev/null; then
   echo_stderr "Cache upload of $name complete in ${SECONDS}s."