diff --git a/contract-tests/Gemfile b/contract-tests/Gemfile
index 2cf6ac62..af66f0bc 100644
--- a/contract-tests/Gemfile
+++ b/contract-tests/Gemfile
@@ -8,6 +8,9 @@ gem "puma", "~> 8.0"
 gem "rackup", "~> 2.2"
 gem 'sinatra', '>= 4.1'
 
+# The file-based override source uses the listen gem for its watching change detection mode.
+gem 'listen', '~> 3.3'
+
 gem 'rubocop', '~> 1.37', group: 'development'
 gem 'rubocop-performance', '~> 1.15', group: 'development'
 
diff --git a/contract-tests/client_entity.rb b/contract-tests/client_entity.rb
index 5df1f56a..8fe1ce60 100644
--- a/contract-tests/client_entity.rb
+++ b/contract-tests/client_entity.rb
@@ -56,7 +56,12 @@ def initialize(log, config)
         opts[:payload_filter_key] = data_system_config[:payloadFilter]
       end
 
+      # Flag overrides are an option of the FDv2 data system configuration.
+      data_system.overrides(build_override_source(config[:overrides])) if config[:overrides]
+
       opts[:data_system_config] = data_system.build
+    elsif config[:overrides]
+      raise ArgumentError, "flag overrides require the data system to be configured"
     elsif config[:streaming]
       streaming = config[:streaming]
       opts[:stream_uri] = streaming[:baseUri] unless streaming[:baseUri].nil?
@@ -365,6 +370,23 @@ def close
     builder
   end
 
+  #
+  # Builds the file-based override source from the `overrides` block of the contract test
+  # configuration.
+  #
+  # @param overrides_config [Hash] the overrides configuration
+  # @return [Object] a builder for LaunchDarkly::DataSystem::ConfigBuilder#overrides
+  #
+  private def build_override_source(overrides_config)
+    options = { paths: overrides_config[:filePaths] }
+    if overrides_config[:duplicateKeysHandling]
+      options[:duplicate_keys_handling] = overrides_config[:duplicateKeysHandling].to_sym
+    end
+    options[:change_detection] = overrides_config[:changeDetection].to_sym if overrides_config[:changeDetection]
+    set_optional_time_prop(overrides_config, :pollIntervalMs, options, :poll_interval)
+    LaunchDarkly::Integrations::FileData.override_source(options)
+  end
+
   #
   # Builds a persistent data store from the contract test configuration.
   #
diff --git a/contract-tests/service.rb b/contract-tests/service.rb
index 779ed37d..246220a6 100644
--- a/contract-tests/service.rb
+++ b/contract-tests/service.rb
@@ -17,7 +17,7 @@
 }
 
 set :bind, '0.0.0.0'
-set :port, 9000
+set :port, (ENV['PORT'] || 9000).to_i
 set :logging, false
 
 clients = {}
@@ -55,6 +55,7 @@
       'flag-change-listeners',
       'flag-value-change-listeners',
       'fdv1-fallback',
+      'flag-overrides',
     ],
   }.to_json
 end