diff --git a/docs/getting_started/spot-ocean.md b/docs/getting_started/spot-ocean.md
index 7caad1cbeb..767ea796f0 100644
--- a/docs/getting_started/spot-ocean.md
+++ b/docs/getting_started/spot-ocean.md
@@ -160,6 +160,8 @@ metadata:
 | `spotinst.io/ocean-instance-types` | Specify a list of instance types that should be used by the Ocean Launch Spec. | none |
 | `spotinst.io/autoscaler-disabled` | Specify whether the auto scaler should be disabled. | `false` |
 | `spotinst.io/autoscaler-default-node-labels` | Specify whether default node labels should be set for the auto scaler. | `false` |
+| `spotinst.io/autoscaler-auto-config` | Specify whether headroom resources should be automatically configured and optimized. | `true` |
+| `spotinst.io/autoscaler-auto-headroom-percentage` | Specify the auto headroom percentage (a number in the range [0, 200]) which controls the percentage of headroom. | none |
 | `spotinst.io/autoscaler-headroom-cpu-per-unit` | Specify the number of CPUs to allocate for headroom. CPUs are denoted in millicores, where 1000 millicores = 1 vCPU. | none |
 | `spotinst.io/autoscaler-headroom-gpu-per-unit` | Specify the number of GPUs to allocate for headroom. | none |
 | `spotinst.io/autoscaler-headroom-mem-per-unit` | Specify the amount of memory (MB) to allocate for headroom. | none |
diff --git a/pkg/model/spotinstmodel/instance_group.go b/pkg/model/spotinstmodel/instance_group.go
index f1d9789667..3a316ebdd9 100644
--- a/pkg/model/spotinstmodel/instance_group.go
+++ b/pkg/model/spotinstmodel/instance_group.go
@@ -92,6 +92,12 @@ const (
 	// the auto scaler.
 	InstanceGroupLabelAutoScalerDefaultNodeLabels = "spotinst.io/autoscaler-default-node-labels"
 
+	// InstanceGroupLabelAutoScalerAuto* are the metadata labels used on the
+	// instance group to specify whether headroom resources should be
+	// automatically configured and optimized.
+	InstanceGroupLabelAutoScalerAutoConfig             = "spotinst.io/autoscaler-auto-config"
+	InstanceGroupLabelAutoScalerAutoHeadroomPercentage = "spotinst.io/autoscaler-auto-headroom-percentage"
+
 	// InstanceGroupLabelAutoScalerHeadroom* are the metadata labels used on the
 	// instance group to specify the headroom configuration used by the auto scaler.
 	InstanceGroupLabelAutoScalerHeadroomCPUPerUnit = "spotinst.io/autoscaler-headroom-cpu-per-unit"
@@ -580,6 +586,8 @@ func (b *InstanceGroupModelBuilder) buildLaunchSpec(c *fi.ModelBuilderContext,
 	}
 	if autoScalerOpts != nil { // remove unsupported options
 		autoScalerOpts.Enabled = nil
+		autoScalerOpts.AutoConfig = nil
+		autoScalerOpts.AutoHeadroomPercentage = nil
 		autoScalerOpts.ClusterID = nil
 		autoScalerOpts.Cooldown = nil
 		autoScalerOpts.Down = nil
@@ -753,6 +761,7 @@ func (b *InstanceGroupModelBuilder) buildAutoScalerOpts(clusterID string, ig *ko
 
 	// Enable the auto scaler for Node instance groups.
 	opts.Enabled = fi.Bool(true)
+	opts.AutoConfig = fi.Bool(true)
 
 	// Parse instance group labels.
 	var defaultNodeLabels bool
@@ -785,6 +794,24 @@ func (b *InstanceGroupModelBuilder) buildAutoScalerOpts(clusterID string, ig *ko
 				opts.Cooldown = fi.Int(int(fi.Int64Value(v)))
 			}
 
+		case InstanceGroupLabelAutoScalerAutoConfig:
+			{
+				v, err := parseBool(v)
+				if err != nil {
+					return nil, err
+				}
+				opts.AutoConfig = v
+			}
+
+		case InstanceGroupLabelAutoScalerAutoHeadroomPercentage:
+			{
+				v, err := parseInt(v)
+				if err != nil {
+					return nil, err
+				}
+				opts.AutoHeadroomPercentage = fi.Int(int(fi.Int64Value(v)))
+			}
+
 		case InstanceGroupLabelAutoScalerHeadroomCPUPerUnit:
 			{
 				v, err := parseInt(v)
@@ -883,6 +910,12 @@ func (b *InstanceGroupModelBuilder) buildAutoScalerOpts(clusterID string, ig *ko
 		}
 	}
 
+	// Toggle automatic configuration off if headroom resources are explicitly defined.
+	if fi.BoolValue(opts.AutoConfig) && opts.Headroom != nil {
+		opts.AutoConfig = fi.Bool(false)
+		opts.AutoHeadroomPercentage = nil
+	}
+
 	// Configure Elastigroup defaults to avoid state drifts.
 	if !featureflag.SpotinstOcean.Enabled() {
 		if opts.Cooldown == nil {
diff --git a/upup/pkg/fi/cloudup/spotinsttasks/elastigroup.go b/upup/pkg/fi/cloudup/spotinsttasks/elastigroup.go
index 3fa65a9cc4..ba912a72ed 100644
--- a/upup/pkg/fi/cloudup/spotinsttasks/elastigroup.go
+++ b/upup/pkg/fi/cloudup/spotinsttasks/elastigroup.go
@@ -81,14 +81,16 @@ type RootVolumeOpts struct {
 }
 
 type AutoScalerOpts struct {
-	Enabled        *bool
-	ClusterID      *string
-	Cooldown       *int
-	Labels         map[string]string
-	Taints         []*corev1.Taint
-	Headroom       *AutoScalerHeadroomOpts
-	Down           *AutoScalerDownOpts
-	ResourceLimits *AutoScalerResourceLimitsOpts
+	Enabled                *bool
+	AutoConfig             *bool
+	AutoHeadroomPercentage *int
+	ClusterID              *string
+	Cooldown               *int
+	Labels                 map[string]string
+	Taints                 []*corev1.Taint
+	Headroom               *AutoScalerHeadroomOpts
+	Down                   *AutoScalerDownOpts
+	ResourceLimits         *AutoScalerResourceLimitsOpts
 }
 
 type AutoScalerHeadroomOpts struct {
@@ -1399,13 +1401,14 @@ type terraformElastigroupIntegration struct {
 }
 
 type terraformAutoScaler struct {
-	Enabled        *bool                              `json:"autoscale_is_enabled,omitempty" cty:"autoscale_is_enabled"`
-	AutoConfig     *bool                              `json:"autoscale_is_auto_config,omitempty" cty:"autoscale_is_auto_config"`
-	Cooldown       *int                               `json:"autoscale_cooldown,omitempty" cty:"autoscale_cooldown"`
-	Headroom       *terraformAutoScalerHeadroom       `json:"autoscale_headroom,omitempty" cty:"autoscale_headroom"`
-	Down           *terraformAutoScalerDown           `json:"autoscale_down,omitempty" cty:"autoscale_down"`
-	ResourceLimits *terraformAutoScalerResourceLimits `json:"resource_limits,omitempty" cty:"resource_limits"`
-	Labels         []*terraformKV                     `json:"autoscale_labels,omitempty" cty:"autoscale_labels"`
+	Enabled                *bool                              `json:"autoscale_is_enabled,omitempty" cty:"autoscale_is_enabled"`
+	AutoConfig             *bool                              `json:"autoscale_is_auto_config,omitempty" cty:"autoscale_is_auto_config"`
+	AutoHeadroomPercentage *int                               `json:"auto_headroom_percentage,omitempty" cty:"auto_headroom_percentage"`
+	Cooldown               *int                               `json:"autoscale_cooldown,omitempty" cty:"autoscale_cooldown"`
+	Headroom               *terraformAutoScalerHeadroom       `json:"autoscale_headroom,omitempty" cty:"autoscale_headroom"`
+	Down                   *terraformAutoScalerDown           `json:"autoscale_down,omitempty" cty:"autoscale_down"`
+	ResourceLimits         *terraformAutoScalerResourceLimits `json:"resource_limits,omitempty" cty:"resource_limits"`
+	Labels                 []*terraformKV                     `json:"autoscale_labels,omitempty" cty:"autoscale_labels"`
 }
 
 type terraformAutoScalerHeadroom struct {
diff --git a/upup/pkg/fi/cloudup/spotinsttasks/ocean.go b/upup/pkg/fi/cloudup/spotinsttasks/ocean.go
index 1d0ef536a3..b2f4479b55 100644
--- a/upup/pkg/fi/cloudup/spotinsttasks/ocean.go
+++ b/upup/pkg/fi/cloudup/spotinsttasks/ocean.go
@@ -293,6 +293,8 @@ func (o *Ocean) Find(c *fi.Context) (*Ocean, error) {
 			actual.AutoScalerOpts = new(AutoScalerOpts)
 			actual.AutoScalerOpts.ClusterID = ocean.ControllerClusterID
 			actual.AutoScalerOpts.Enabled = ocean.AutoScaler.IsEnabled
+			actual.AutoScalerOpts.AutoConfig = ocean.AutoScaler.IsAutoConfig
+			actual.AutoScalerOpts.AutoHeadroomPercentage = ocean.AutoScaler.AutoHeadroomPercentage
 			actual.AutoScalerOpts.Cooldown = ocean.AutoScaler.Cooldown
 
 			// Headroom.
@@ -521,7 +523,8 @@ func (_ *Ocean) create(cloud awsup.AWSCloud, a, e, changes *Ocean) error {
 			if opts.Enabled != nil {
 				autoScaler := new(aws.AutoScaler)
 				autoScaler.IsEnabled = opts.Enabled
-				autoScaler.IsAutoConfig = fi.Bool(true)
+				autoScaler.IsAutoConfig = opts.AutoConfig
+				autoScaler.AutoHeadroomPercentage = opts.AutoHeadroomPercentage
 				autoScaler.Cooldown = opts.Cooldown
 
 				// Headroom.
@@ -951,6 +954,8 @@ func (_ *Ocean) update(cloud awsup.AWSCloud, a, e, changes *Ocean) error {
 			if opts.Enabled != nil {
 				autoScaler := new(aws.AutoScaler)
 				autoScaler.IsEnabled = e.AutoScalerOpts.Enabled
+				autoScaler.IsAutoConfig = e.AutoScalerOpts.AutoConfig
+				autoScaler.AutoHeadroomPercentage = e.AutoScalerOpts.AutoHeadroomPercentage
 				autoScaler.Cooldown = e.AutoScalerOpts.Cooldown
 
 				// Headroom.
@@ -1182,9 +1187,10 @@ func (_ *Ocean) RenderTerraform(t *terraform.TerraformTarget, a, e, changes *Oce
 
 			if opts.Enabled != nil {
 				tf.AutoScaler = &terraformAutoScaler{
-					Enabled:    opts.Enabled,
-					AutoConfig: fi.Bool(true),
-					Cooldown:   opts.Cooldown,
+					Enabled:                opts.Enabled,
+					AutoConfig:             opts.AutoConfig,
+					AutoHeadroomPercentage: opts.AutoHeadroomPercentage,
+					Cooldown:               opts.Cooldown,
 				}
 
 				// Headroom.