diff --git a/ci-operator/config/openshift/windows-machine-config-operator/openshift-windows-machine-config-operator-master.yaml b/ci-operator/config/openshift/windows-machine-config-operator/openshift-windows-machine-config-operator-master.yaml
index 7421d3b779004..cfba498c4376f 100644
--- a/ci-operator/config/openshift/windows-machine-config-operator/openshift-windows-machine-config-operator-master.yaml
+++ b/ci-operator/config/openshift/windows-machine-config-operator/openshift-windows-machine-config-operator-master.yaml
@@ -89,6 +89,7 @@ tests:
       COMPUTE_NODE_REPLICAS: "1"
       CONTROL_PLANE_REPLICAS: "1"
     test:
+    - ref: windows-ote-setup
     - ref: windows-e2e-operator-test
     workflow: ipi-aws-ovn-hybrid
 - always_run: false
diff --git a/ci-operator/step-registry/windows/ote-setup/OWNERS b/ci-operator/step-registry/windows/ote-setup/OWNERS
new file mode 100644
index 0000000000000..9fe3dd4ab92f8
--- /dev/null
+++ b/ci-operator/step-registry/windows/ote-setup/OWNERS
@@ -0,0 +1,4 @@
+approvers:
+- winc-approvers
+reviewers:
+- winc-reviewers
diff --git a/ci-operator/step-registry/windows/ote-setup/windows-ote-setup-commands.sh b/ci-operator/step-registry/windows/ote-setup/windows-ote-setup-commands.sh
new file mode 100755
index 0000000000000..b130627b1387b
--- /dev/null
+++ b/ci-operator/step-registry/windows/ote-setup/windows-ote-setup-commands.sh
@@ -0,0 +1,53 @@
+#!/bin/bash
+
+set -o nounset
+set -o errexit
+set -o pipefail
+
+WMCO_NS="openshift-windows-machine-config-operator"
+
+# OPERATOR_IMAGE is the WMCO CI image built from Dockerfile.ci, which includes
+# wmco-tests-ext.gz at /usr/bin/wmco-tests-ext.gz
+if [[ -z "${OPERATOR_IMAGE:-}" ]]; then
+  echo "ERROR: OPERATOR_IMAGE is not set, cannot set up OTE"
+  exit 1
+fi
+
+echo "Setting up WMCO OTE non-payload binary registration..."
+echo "WMCO image: ${OPERATOR_IMAGE}"
+
+# Create the WMCO namespace if it does not yet exist.
+# WMCO may not be deployed at this point; we create the namespace so the
+# ImageStream can be set up before the operator is installed.
+oc create namespace "$WMCO_NS" --dry-run=client -o yaml | oc apply -f -
+
+# Create ImageStream in the WMCO namespace
+oc apply -n "$WMCO_NS" -f - <<EOF
+apiVersion: image.openshift.io/v1
+kind: ImageStream
+metadata:
+  name: wmco-ote
+  namespace: ${WMCO_NS}
+EOF
+
+# Import the WMCO CI image as an ImageStreamTag.
+# The CI image (Dockerfile.ci) contains /usr/bin/wmco-tests-ext.gz.
+oc import-image wmco-ote:latest \
+  -n "$WMCO_NS" \
+  --from="${OPERATOR_IMAGE}" \
+  --confirm
+
+# Annotate the ImageStreamTag so openshift-tests can discover the OTE binary
+oc annotate imagestreamtag wmco-ote:latest \
+  -n "$WMCO_NS" \
+  --overwrite \
+  "testextension.redhat.io/component=windows-machine-config-operator" \
+  "testextension.redhat.io/binary=/usr/bin/wmco-tests-ext.gz"
+
+# Create TestExtensionAdmission CR permitting the WMCO namespace.
+# Note: the TestExtensionAdmission CRD is installed by the
+# openshift-tests-extension-admission-crd-install step in the workflow.
+openshift-tests extension-admission create wmco \
+  --permit="${WMCO_NS}/wmco-ote"
+
+echo "OTE setup complete. WMCO test binary is now discoverable by openshift-tests."
diff --git a/ci-operator/step-registry/windows/ote-setup/windows-ote-setup-ref.metadata.json b/ci-operator/step-registry/windows/ote-setup/windows-ote-setup-ref.metadata.json
new file mode 100644
index 0000000000000..7885cc09f63b6
--- /dev/null
+++ b/ci-operator/step-registry/windows/ote-setup/windows-ote-setup-ref.metadata.json
@@ -0,0 +1,11 @@
+{
+	"path": "windows/ote-setup/windows-ote-setup-ref.yaml",
+	"owners": {
+		"approvers": [
+			"winc-approvers"
+		],
+		"reviewers": [
+			"winc-reviewers"
+		]
+	}
+}
\ No newline at end of file
diff --git a/ci-operator/step-registry/windows/ote-setup/windows-ote-setup-ref.yaml b/ci-operator/step-registry/windows/ote-setup/windows-ote-setup-ref.yaml
new file mode 100644
index 0000000000000..264faab39eafa
--- /dev/null
+++ b/ci-operator/step-registry/windows/ote-setup/windows-ote-setup-ref.yaml
@@ -0,0 +1,22 @@
+ref:
+  as: windows-ote-setup
+  from: tests
+  cli: latest
+  commands: windows-ote-setup-commands.sh
+  resources:
+    requests:
+      cpu: 100m
+      memory: 200Mi
+  dependencies:
+    - env: OPERATOR_IMAGE
+      name: windows-machine-config-operator-test
+  documentation: |-
+    Sets up OTE (non-payload extension binary) discovery for the Windows Machine
+    Config Operator. Creates an ImageStream pointing to the WMCO CI image (which
+    contains wmco-tests-ext.gz at /usr/bin/wmco-tests-ext.gz), annotates it with
+    testextension.redhat.io annotations for OTE discovery, installs the
+    TestExtensionAdmission CRD, and creates an admission CR permitting the WMCO
+    namespace.
+
+    This step must run after WMCO is deployed and before openshift-tests runs.
+    It implements the non-payload OTE binary mechanism from openshift/origin#30863.