diff --git a/cli/cros/cros_flash.py b/cli/cros/cros_flash.py
index f62f5b6..22f8703 100644
--- a/cli/cros/cros_flash.py
+++ b/cli/cros/cros_flash.py
@@ -153,7 +153,12 @@
     update.add_argument(
         '--send-payload-in-parallel', default=False, action='store_true',
         help=('To speed up transfer payload files for long haul, chop '
-              'payload in chunks and transfer them in parallel'))
+              'payload in chunks and transfer them in parallel.'))
+    update.add_argument(
+        '--no-copy-payloads-to-device', dest='copy_payloads_to_device',
+        action='store_false', default=True,
+        help=('Do not copy the update payloads to the device. For now this '
+              'only works for the stateful payload.'))
     usb = parser.add_argument_group('USB specific options')
     usb.add_argument(
         '--install', default=False, action='store_true',
@@ -202,7 +207,8 @@
           yes=self.options.yes,
           force=self.options.force,
           debug=self.options.debug,
-          send_payload_in_parallel=self.options.send_payload_in_parallel)
+          send_payload_in_parallel=self.options.send_payload_in_parallel,
+          copy_payloads_to_device=self.options.copy_payloads_to_device)
       logging.notice('cros flash completed successfully.')
     except dev_server_wrapper.ImagePathError:
       logging.error('To get the latest remote image, please run:\n'
diff --git a/cli/flash.py b/cli/flash.py
index 2a6071d..16c137c 100644
--- a/cli/flash.py
+++ b/cli/flash.py
@@ -363,7 +363,8 @@
                board=None, src_image_to_delta=None, wipe=True, debug=False,
                yes=False, force=False, ssh_private_key=None, ping=True,
                disable_verification=False, send_payload_in_parallel=False,
-               clear_tpm_owner=False, version=None):
+               clear_tpm_owner=False, version=None,
+               copy_payloads_to_device=True):
     """Initializes RemoteDeviceUpdater"""
     if not stateful_update and not rootfs_update:
       raise ValueError('No update operation to perform; either stateful or'
@@ -389,6 +390,7 @@
     self.force = force
     self.send_payload_in_parallel = send_payload_in_parallel
     self.version = version
+    self.copy_payloads_to_device = copy_payloads_to_device
 
   def Cleanup(self):
     """Cleans up the temporary directory."""
@@ -526,7 +528,8 @@
               yes=self.yes,
               send_payload_in_parallel=self.send_payload_in_parallel,
               resolve_app_id_mismatch=True,
-              transfer_class=auto_updater_transfer.LocalTransfer)
+              transfer_class=auto_updater_transfer.LocalTransfer,
+              copy_payloads_to_device=self.copy_payloads_to_device)
           chromeos_AU.RunUpdate()
 
         except Exception:
@@ -552,7 +555,7 @@
           reboot=True, wipe=True, ssh_private_key=None, ping=True,
           disable_rootfs_verification=False, clear_cache=False, yes=False,
           force=False, debug=False, send_payload_in_parallel=False,
-          clear_tpm_owner=False, version=None):
+          clear_tpm_owner=False, version=None, copy_payloads_to_device=True):
   """Flashes a device, USB drive, or file with an image.
 
   This provides functionality common to `cros flash` and `brillo flash`
@@ -584,6 +587,9 @@
     send_payload_in_parallel: Transfer payloads in chunks in parallel to speed
         up transmissions for long haul between endpoints.
     version: Default version.
+    copy_payloads_to_device: If True, update payloads are copied to the
+        Chromium OS device first. Otherwise, they are piped through SSH.
+        Currently, this only applies to the stateful payloads.
 
   Raises:
     FlashError: An unrecoverable error occured.
@@ -630,7 +636,8 @@
         ping=ping,
         disable_verification=disable_rootfs_verification,
         send_payload_in_parallel=send_payload_in_parallel,
-        version=version)
+        version=version,
+        copy_payloads_to_device=copy_payloads_to_device)
     updater.Run()
   elif device.scheme == commandline.DEVICE_SCHEME_USB:
     path = osutils.ExpandPath(device.path) if device.path else ''
diff --git a/lib/auto_updater.py b/lib/auto_updater.py
index 64a4476..0571294 100644
--- a/lib/auto_updater.py
+++ b/lib/auto_updater.py
@@ -148,7 +148,8 @@
                reboot=True, disable_verification=False,
                send_payload_in_parallel=False, payload_filename=None,
                staging_server=None, clear_tpm_owner=False,
-               resolve_app_id_mismatch=False, ignore_appid=False):
+               resolve_app_id_mismatch=False, ignore_appid=False,
+               copy_payloads_to_device=True):
     """Initialize a ChromiumOSUpdater for auto-update a chromium OS device.
 
     Args:
@@ -190,6 +191,9 @@
           App ID. This allows mismatching the source and target version boards.
           One specific use case is updating between <board> and
           <board>-kernelnext images which have different App IDs.
+      copy_payloads_to_device: If True, update payloads are copied to the
+          Chromium OS device first. Otherwise, they are piped through SSH.
+          Currently, this only applies to the stateful payloads.
     """
     super(ChromiumOSUpdater, self).__init__(device, payload_dir)
 
@@ -234,6 +238,7 @@
     self._clear_tpm_owner = clear_tpm_owner
     self._resolve_app_id_mismatch = resolve_app_id_mismatch
     self._ignore_appid = ignore_appid
+    self._copy_payloads_to_device = copy_payloads_to_device
 
   @property
   def is_au_endtoendtest(self):
@@ -525,18 +530,25 @@
   def UpdateStateful(self):
     """Update the stateful partition of the device."""
     try:
-      stateful_update_payload = os.path.join(
-          self.device.work_dir, auto_updater_transfer.STATEFUL_FILENAME)
+      if self._copy_payloads_to_device:
+        self._transfer_obj.TransferStatefulUpdate()
+        stateful_update_payload = os.path.join(
+            self.device.work_dir, auto_updater_transfer.STATEFUL_FILENAME)
+      else:
+        stateful_update_payload = os.path.join(
+            self.payload_dir, auto_updater_transfer.STATEFUL_FILENAME)
 
       updater = stateful_updater.StatefulUpdater(self.device)
       updater.Update(
           stateful_update_payload,
+          is_payload_on_device=self._copy_payloads_to_device,
           update_type=(stateful_updater.StatefulUpdater.UPDATE_TYPE_CLOBBER if
                        self._clobber_stateful else None))
 
-      # Delete the stateful update file on success so it doesn't occupy extra
-      # disk space. On failure it will get cleaned up.
-      self.device.DeletePath(stateful_update_payload)
+      if self._copy_payloads_to_device:
+        # Delete the stateful update file on success so it doesn't occupy extra
+        # disk space. On failure it will get cleaned up.
+        self.device.DeletePath(stateful_update_payload)
     except stateful_updater.Error as e:
       error_msg = 'Stateful update failed with error: %s' % str(e)
       logging.exception(error_msg)
@@ -571,15 +583,6 @@
     # remainder of the update process.
     self.device.DeletePath(self.device_payload_dir, recursive=True)
 
-  def RunUpdateStateful(self):
-    """Run all processes needed by updating stateful.
-
-    1. Copy files to remote device needed by stateful update.
-    2. Do stateful update.
-    """
-    self._transfer_obj.TransferStatefulUpdate()
-    self.UpdateStateful()
-
   def RebootAndVerify(self):
     """Reboot and verify the remote device.
 
@@ -649,19 +652,20 @@
     """Update the device with image of specific version."""
     self._transfer_obj.CheckPayloads()
 
-    self._transfer_obj.TransferUpdateUtilsPackage()
-
-    restore_stateful = self.CheckRestoreStateful()
-    if restore_stateful:
-      self.RestoreStateful()
-
-    # Perform device updates.
+    restore_stateful = False
     if self._do_rootfs_update:
+      self._transfer_obj.TransferUpdateUtilsPackage()
+
+      restore_stateful = self.CheckRestoreStateful()
+      if restore_stateful:
+        self.RestoreStateful()
+
+      # Perform device updates.
       self.RunUpdateRootfs()
       logging.info('Rootfs update completed.')
 
     if self._do_stateful_update and not restore_stateful:
-      self.RunUpdateStateful()
+      self.UpdateStateful()
       logging.info('Stateful update completed.')
 
     if self._clear_tpm_owner:
@@ -897,7 +901,6 @@
     """Restore stateful partition for device."""
     logging.warning('Restoring the stateful partition.')
     self.PreSetupStatefulUpdate()
-    self._transfer_obj.TransferStatefulUpdate()
     self.ResetStatefulPartition()
     self.UpdateStateful()
     self.PostCheckStatefulUpdate()
diff --git a/lib/auto_updater_unittest.py b/lib/auto_updater_unittest.py
index 97790a5..be9fe64 100644
--- a/lib/auto_updater_unittest.py
+++ b/lib/auto_updater_unittest.py
@@ -34,7 +34,7 @@
 class ChromiumOSBaseUpdaterMock(partial_mock.PartialCmdMock):
   """Mock out all update and verify functions in ChromiumOSUpdater."""
   TARGET = 'chromite.lib.auto_updater.ChromiumOSUpdater'
-  ATTRS = ('RestoreStateful', 'UpdateStateful', 'UpdateRootfs',
+  ATTRS = ('RestoreStateful', 'UpdateRootfs',
            'SetupRootfsUpdate', 'RebootAndVerify')
 
   def __init__(self):
@@ -43,9 +43,6 @@
   def RestoreStateful(self, _inst, *_args, **_kwargs):
     """Mock out RestoreStateful."""
 
-  def UpdateStateful(self, _inst, *_args, **_kwargs):
-    """Mock out UpdateStateful."""
-
   def UpdateRootfs(self, _inst, *_args, **_kwargs):
     """Mock out UpdateRootfs."""
 
@@ -144,26 +141,6 @@
       self.assertFalse(
           self._transfer_mock.patched['TransferStatefulUpdate'].called)
 
-  def testTransferForStateful(self):
-    """Test Transfer functions' code path for stateful update.
-
-    When stateful update is enabled, update-utils and stateful update payload
-    are transferred. Rootfs update payload is not.
-    """
-    with remote_access.ChromiumOSDeviceHandler(
-        remote_access.TEST_IP) as device:
-      CrOS_AU = auto_updater.ChromiumOSUpdater(
-          device, None, self._payload_dir, do_rootfs_update=False,
-          transfer_class=auto_updater_transfer.LocalTransfer)
-      CrOS_AU.RunUpdate()
-      self.assertTrue(
-          self._transfer_mock.patched['CheckPayloads'].called)
-      self.assertTrue(
-          self._transfer_mock.patched['TransferUpdateUtilsPackage'].called)
-      self.assertFalse(
-          self._transfer_mock.patched['TransferRootfsUpdate'].called)
-      self.assertTrue(
-          self._transfer_mock.patched['TransferStatefulUpdate'].called)
 
 class ChromiumOSUpdatePreCheckTest(ChromiumOSUpdaterBaseTest):
   """Test precheck function."""
@@ -230,27 +207,47 @@
       CrOS_AU = auto_updater.ChromiumOSUpdater(
           device, None, self._payload_dir, do_stateful_update=False,
           transfer_class=auto_updater_transfer.LocalTransfer)
+      stateful_update_mock = self.PatchObject(auto_updater.ChromiumOSUpdater,
+                                              'UpdateStateful')
+
       CrOS_AU.RunUpdate()
       self.assertTrue(
           self._base_updater_mock.patched['SetupRootfsUpdate'].called)
       self.assertTrue(self._base_updater_mock.patched['UpdateRootfs'].called)
-      self.assertFalse(self._base_updater_mock.patched['UpdateStateful'].called)
+      stateful_update_mock.assert_not_called()
 
-  def testRunStateful(self):
-    """Test the update functions are called correctly.
-
-    Only UpdateStateful is called for stateful update.
-    """
+  def testUpdateStatefulCopyStateful(self):
+    """Tests stateful update when stateful payload is copied to device."""
     with remote_access.ChromiumOSDeviceHandler(
         remote_access.TEST_IP) as device:
       CrOS_AU = auto_updater.ChromiumOSUpdater(
           device, None, self._payload_dir, do_rootfs_update=False,
           transfer_class=auto_updater_transfer.LocalTransfer)
+      update_mock = self.PatchObject(stateful_updater.StatefulUpdater, 'Update')
+
       CrOS_AU.RunUpdate()
-      self.assertFalse(
-          self._base_updater_mock.patched['SetupRootfsUpdate'].called)
-      self.assertFalse(self._base_updater_mock.patched['UpdateRootfs'].called)
-      self.assertTrue(self._base_updater_mock.patched['UpdateStateful'].called)
+      update_mock.assert_called_with(
+          auto_updater_transfer.STATEFUL_FILENAME, is_payload_on_device=True,
+          update_type=None)
+      self.assertTrue(
+          self._transfer_mock.patched['TransferStatefulUpdate'].called)
+
+  def testUpdateStatefulNoCopyStateful(self):
+    """Tests stateful update when stateful payload is not copied to device."""
+    with remote_access.ChromiumOSDeviceHandler(
+        remote_access.TEST_IP) as device:
+      CrOS_AU = auto_updater.ChromiumOSUpdater(
+          device, None, self._payload_dir, do_rootfs_update=False,
+          transfer_class=auto_updater_transfer.LocalTransfer,
+          copy_payloads_to_device=False)
+      update_mock = self.PatchObject(stateful_updater.StatefulUpdater, 'Update')
+
+      CrOS_AU.RunUpdate()
+      update_mock.assert_called_with(
+          os.path.join(self._payload_dir,
+                       auto_updater_transfer.STATEFUL_FILENAME),
+          is_payload_on_device=False,
+          update_type=None)
 
   def testMismatchedAppId(self):
     """Tests if App ID is set to empty when there's a mismatch."""
diff --git a/lib/stateful_updater.py b/lib/stateful_updater.py
index 0429ffb..732ae0e 100644
--- a/lib/stateful_updater.py
+++ b/lib/stateful_updater.py
@@ -51,22 +51,29 @@
     self._update_type_file = os.path.join(self._stateful_dir,
                                           self._UPDATE_TYPE_FILE)
 
-  def Update(self, payload_path_on_device, update_type=None):
+  def Update(self, payload_path, is_payload_on_device=True, update_type=None):
     """Updates the stateful partition given the update file.
 
     Args:
-      payload_path_on_device: The path to the stateful update (stateful.tgz)
-        on the DUT.
+      payload_path: The path to the stateful update (stateful.tgz).
+      is_payload_on_device: True if the payload is on the device. False if it
+        is on the workstation.
       update_type: The type of the stateful update to be marked. Accepted
         values: 'standard' (default) and 'clobber'.
     """
-    if not self._device.IfPathExists(payload_path_on_device):
-      raise Error('Missing the file: %s' % payload_path_on_device)
-
     try:
       cmd = ['tar', '--ignore-command-error', '--overwrite',
-             '--directory', self._stateful_dir, '-xzf', payload_path_on_device]
-      self._device.run(cmd)
+             '--directory', self._stateful_dir, '-xzf']
+      if is_payload_on_device:
+        if not self._device.IfPathExists(payload_path):
+          raise Error('Missing the file: %s' % payload_path)
+
+        cmd += [payload_path]
+        self._device.run(cmd)
+      else:
+        with open(payload_path, 'rb') as f:
+          cmd += ['-']
+          self._device.run(cmd, input=f)
     except cros_build_lib.RunCommandError as e:
       raise Error('Failed to untar the stateful update with error %s' % e)