diff --git a/server/cros/update_engine/omaha_devserver.py b/server/cros/update_engine/omaha_devserver.py
index 0e6c9eb..cdc8f55 100644
--- a/server/cros/update_engine/omaha_devserver.py
+++ b/server/cros/update_engine/omaha_devserver.py
@@ -4,6 +4,7 @@
 
 import json
 import logging
+import os
 import socket
 import time
 import urllib2
@@ -46,30 +47,27 @@
     _DEVSERVER_TIMELIMIT_SECONDS = 12 * 60 * 60
 
 
-    def __init__(self, omaha_host, update_payload_staged_url, max_updates=1,
+    def __init__(self, omaha_host, payload_location, max_updates=1,
                  critical_update=True):
         """Starts a private devserver instance, operating at Omaha capacity.
 
         @param omaha_host: host address where the devserver is spawned.
-        @param update_payload_staged_url: URL to provision for update requests.
+        @param payload_location: partial path from static dir to payload.
         @param max_updates: int number of updates this devserver will handle.
                             This is passed to src/platform/dev/devserver.py.
         @param critical_update: Whether to set a deadline in responses.
         """
         self._devserver_dir = '/home/chromeos-test/chromiumos/src/platform/dev'
 
-        if not update_payload_staged_url:
-            raise error.TestError('Missing update payload url')
-
         self._critical_update = critical_update
         self._max_updates = max_updates
         self._omaha_host = omaha_host
         self._devserver_pid = 0
         self._devserver_port = 0  # Determined later from devserver portfile.
-        self._update_payload_staged_url = update_payload_staged_url
 
         self._devserver_ssh = hosts.SSHHost(self._omaha_host,
                                             user='chromeos-test')
+        self._payload_location = payload_location
 
         # Temporary files for various devserver outputs.
         self._devserver_logfile = None
@@ -196,9 +194,6 @@
             OmahaDevserverFailedToStart: If the time limit is reached and we
                                          cannot connect to the devserver.
         """
-        update_payload_url_base, update_payload_path = self._split_url(
-                self._update_payload_staged_url)
-
         # Allocate temporary files for various server outputs.
         self._devserver_logfile = self._create_tempfile_on_devserver('log')
         self._devserver_stdoutfile = self._create_tempfile_on_devserver(
@@ -215,16 +210,15 @@
                 'timeout', '-s', 'TERM', '-k', '30',
                 str(self._DEVSERVER_TIMELIMIT_SECONDS),
                 '%s/devserver.py' % self._devserver_dir,
-                '--payload=%s' % update_payload_path,
                 '--port=0',
                 '--pidfile=%s' % self._devserver_pidfile,
                 '--portfile=%s' % self._devserver_portfile,
                 '--logfile=%s' % self._devserver_logfile,
-                '--remote_payload',
-                '--urlbase=%s' % update_payload_url_base,
                 '--max_updates=%s' % self._max_updates,
                 '--host_log',
-                '--static_dir=%s' % self._devserver_static_dir
+                '--static_dir=%s' % self._devserver_static_dir,
+                '--payload=%s' % os.path.join(self._devserver_static_dir,
+                                              self._payload_location),
         ]
 
         if self._critical_update:
@@ -367,16 +361,6 @@
                     snippet(self._get_devserver_log()))
 
 
-    @staticmethod
-    def _split_url(url):
-        """Splits a URL into the URL base and path."""
-        split_url = urlparse.urlsplit(url)
-        url_base = urlparse.urlunsplit(
-                (split_url.scheme, split_url.netloc, '', '', ''))
-        url_path = split_url.path
-        return url_base, url_path.lstrip('/')
-
-
     def stop_devserver(self):
         """Kill remote process and wait for it to die, dump its output."""
         if not self._devserver_pid:
diff --git a/server/cros/update_engine/update_engine_test.py b/server/cros/update_engine/update_engine_test.py
index 7210bd0..d28966a 100644
--- a/server/cros/update_engine/update_engine_test.py
+++ b/server/cros/update_engine/update_engine_test.py
@@ -88,6 +88,7 @@
 
 
     def cleanup(self):
+        """Clean up update_engine autotests."""
         if self._omaha_devserver is not None:
             self._omaha_devserver.stop_devserver()
         if self._host:
@@ -396,6 +397,21 @@
         return payloads[0]
 
 
+    def _get_partial_path_from_url(self, url):
+        """
+        Strip partial path to payload from GS Url.
+
+        Example: gs://chromeos-image-archive/samus-release/R77-112.0.0/bla.bin
+        returns samus-release/R77-112.0.0/bla.bin.
+
+        @param url: The Google Storage url.
+
+        """
+        gs = dev_server._get_image_storage_server()
+        staged_path = url.partition(gs)
+        return staged_path[2]
+
+
     def _get_staged_file_info(self, staged_url, retries=5):
         """
         Gets the staged files info that includes SHA256 and size.
@@ -642,8 +658,8 @@
         ds_url, build = tools.get_devserver_build_from_package_url(
             self._job_repo_url)
 
-        # We always stage the payloads on the existing lab devservers.
-        self._autotest_devserver = dev_server.ImageServer(ds_url)
+        # The lab devserver assigned to this test.
+        lab_devserver = dev_server.ImageServer(ds_url)
 
         if public:
             # Get the google storage url of the payload. We will be copying
@@ -656,24 +672,35 @@
             return url
 
         if full_payload:
-            self._autotest_devserver.stage_artifacts(build, ['full_payload'])
             if not critical_update:
-                # We can use the same lab devserver to handle the update.
+                # Stage payloads on the lab devserver.
+                self._autotest_devserver = lab_devserver
+                self._autotest_devserver.stage_artifacts(build,
+                                                         ['full_payload'])
+                # Use the same lab devserver to also handle the update.
                 url = self._autotest_devserver.get_update_url(build)
                 logging.info('Full payload, non-critical update URL: %s', url)
                 return url
             else:
-                staged_url = self._autotest_devserver._get_image_url(build)
+                url_to_stage = self._get_payload_url(build, full_payload=True)
         else:
             # We need to stage delta ourselves due to crbug.com/793434.
-            delta_payload = self._get_payload_url(build, full_payload=False)
-            staged_url = self._stage_payload_by_uri(delta_payload)
+            url_to_stage = self._get_payload_url(build, full_payload=False)
 
-        # We need to start our own devserver for the rest of the cases.
+        # Get partial path to payload eg samus-release/R77-113.0,0/blah.bin
+        payload_location = self._get_partial_path_from_url(url_to_stage)
+
+        # We need to start our own devserver instance on the lab devserver
+        # for the rest of the test scenarios.
         self._omaha_devserver = omaha_devserver.OmahaDevserver(
-            self._autotest_devserver.hostname, staged_url,
-            max_updates=max_updates, critical_update=critical_update)
+            lab_devserver.hostname, payload_location, max_updates=max_updates,
+            critical_update=critical_update)
         self._omaha_devserver.start_devserver()
+
+        # Stage the payloads on our new devserver.
+        ds_url = 'http://%s' % self._omaha_devserver.get_netloc()
+        self._autotest_devserver = dev_server.ImageServer(ds_url)
+        self._stage_payload_by_uri(url_to_stage)
         url = self._omaha_devserver.get_update_url()
         logging.info('Update URL: %s', url)
         return url