diff --git a/pilot/pkg/networking/core/v1alpha3/cluster.go b/pilot/pkg/networking/core/v1alpha3/cluster.go
index b7373238d88b..0b9df4e18661 100644
--- a/pilot/pkg/networking/core/v1alpha3/cluster.go
+++ b/pilot/pkg/networking/core/v1alpha3/cluster.go
@@ -787,6 +787,14 @@ func applyOutlierDetection(cluster *apiv2.Cluster, outlier *networking.OutlierDe
 }
 
 func applyLoadBalancer(cluster *apiv2.Cluster, lb *networking.LoadBalancerSettings) {
+	if cluster.OutlierDetection != nil {
+		// Locality weighted load balancing
+		cluster.CommonLbConfig = &apiv2.Cluster_CommonLbConfig{
+			LocalityConfigSpecifier: &apiv2.Cluster_CommonLbConfig_LocalityWeightedLbConfig_{
+				LocalityWeightedLbConfig: &apiv2.Cluster_CommonLbConfig_LocalityWeightedLbConfig{},
+			},
+		}
+	}
 	if lb == nil {
 		return
 	}
@@ -815,15 +823,6 @@ func applyLoadBalancer(cluster *apiv2.Cluster, lb *networking.LoadBalancerSettin
 			},
 		}
 	}
-
-	if cluster.OutlierDetection != nil {
-		// Locality weighted load balancing
-		cluster.CommonLbConfig = &apiv2.Cluster_CommonLbConfig{
-			LocalityConfigSpecifier: &apiv2.Cluster_CommonLbConfig_LocalityWeightedLbConfig_{
-				LocalityWeightedLbConfig: &apiv2.Cluster_CommonLbConfig_LocalityWeightedLbConfig{},
-			},
-		}
-	}
 }
 
 func applyLocalityLBSetting(
diff --git a/pilot/pkg/networking/core/v1alpha3/cluster_test.go b/pilot/pkg/networking/core/v1alpha3/cluster_test.go
index 4eb9555a2c71..479cb4505df3 100644
--- a/pilot/pkg/networking/core/v1alpha3/cluster_test.go
+++ b/pilot/pkg/networking/core/v1alpha3/cluster_test.go
@@ -513,3 +513,22 @@ func TestConditionallyConvertToIstioMtls(t *testing.T) {
 		})
 	}
 }
+
+func TestLocalityLB(t *testing.T) {
+	g := NewGomegaWithT(t)
+
+	clusters, err := buildTestClusters("*.example.org", model.SidecarProxy, testMesh,
+		&networking.DestinationRule{
+			Host: "*.example.org",
+			TrafficPolicy: &networking.TrafficPolicy{
+				OutlierDetection: &networking.OutlierDetection{
+					ConsecutiveErrors: 5,
+				},
+			},
+		})
+	g.Expect(err).NotTo(HaveOccurred())
+
+	if clusters[0].CommonLbConfig == nil {
+		t.Errorf("CommonLbConfig should be set for cluster %+v", clusters[0])
+	}
+}