diff --git a/python/ray/air/tests/test_new_dataset_config.py b/python/ray/air/tests/test_new_dataset_config.py
index b4c7ea091790..f475e2699e91 100644
--- a/python/ray/air/tests/test_new_dataset_config.py
+++ b/python/ray/air/tests/test_new_dataset_config.py
@@ -2,6 +2,7 @@
 
 import random
 import pytest
+from unittest.mock import MagicMock
 
 import ray
 from ray import train
@@ -168,6 +169,32 @@ def test_configure_execution_options_carryover_context(ray_start_4_cpus):
     assert ingest_options.verbose_progress is True
 
 
+@pytest.mark.parametrize("enable_locality", [True, False])
+def test_configure_locality(enable_locality):
+    options = DataConfig.default_ingest_options()
+    options.locality_with_output = enable_locality
+    data_config = DataConfig(execution_options=options)
+
+    mock_ds = MagicMock()
+    mock_ds.streaming_split = MagicMock()
+    mock_ds.copy = MagicMock(return_value=mock_ds)
+    world_size = 2
+    worker_handles = [MagicMock() for _ in range(world_size)]
+    worker_node_ids = ["node" + str(i) for i in range(world_size)]
+    data_config.configure(
+        datasets={"train": mock_ds},
+        world_size=world_size,
+        worker_handles=worker_handles,
+        worker_node_ids=worker_node_ids,
+    )
+    mock_ds.streaming_split.assert_called_once()
+    mock_ds.streaming_split.assert_called_with(
+        world_size,
+        equal=True,
+        locality_hints=worker_node_ids if enable_locality else None,
+    )
+
+
 class CustomConfig(DataConfig):
     def __init__(self):
         pass
diff --git a/python/ray/train/_internal/data_config.py b/python/ray/train/_internal/data_config.py
index fb85dce793ea..2c26195c8a8d 100644
--- a/python/ray/train/_internal/data_config.py
+++ b/python/ray/train/_internal/data_config.py
@@ -91,6 +91,9 @@ def configure(
         else:
             datasets_to_split = set(self._datasets_to_split)
 
+        locality_hints = (
+            worker_node_ids if self._execution_options.locality_with_output else None
+        )
         for name, ds in datasets.items():
             ds = ds.copy(ds)
             ds.context.execution_options = copy.deepcopy(self._execution_options)
@@ -107,7 +110,7 @@ def configure(
             if name in datasets_to_split:
                 for i, split in enumerate(
                     ds.streaming_split(
-                        world_size, equal=True, locality_hints=worker_node_ids
+                        world_size, equal=True, locality_hints=locality_hints
                     )
                 ):
                     output[i][name] = split