diff --git a/README.md b/README.md
index 597c4b5..24d56b4 100644
--- a/README.md
+++ b/README.md
@@ -289,6 +289,7 @@ Check your CloudFormation console once more and validate that your stack as well
 
 Argument | Environment variable | Default value | Description
 ---------|----------------------|---------------|------------
+capability | AWS_CAPABILITIES | | Enable specified capabilities for all stacks managed by the operator instance. Current parameter can be used multiple times. For example: `--capability CAPABILITY_NAMED_IAM --capability CAPABILITY_IAM`. Or with a line break when specifying as an environment variable: `AWS_CAPABILITIES=CAPABILITY_IAM$'\n'CAPABILITY_NAMED_IAM`
 debug | DEBUG | | Enable debug logging.
 dry-run | DRY_RUN | | If true, don't actually do anything.
 tag ... | AWS_TAGS | | Default tags which should be applied for all stacks. The format is `--tag=foo=bar --tag=wambo=baz` on the command line or with a line break when specifying as an env var. (e.g. in zsh: `AWS_TAGS="foo=bar"$'\n'"wambo=baz"`)
diff --git a/cmd/cloudformation-operator/main.go b/cmd/cloudformation-operator/main.go
index 6f783c3..00ada3b 100644
--- a/cmd/cloudformation-operator/main.go
+++ b/cmd/cloudformation-operator/main.go
@@ -18,17 +18,19 @@ import (
 )
 
 var (
-	namespace string
-	region    string
-	tags      = new(map[string]string)
-	dryRun    bool
-	debug     bool
-	version   = "0.3.0+git"
+	namespace    string
+	region       string
+	tags         = new(map[string]string)
+	capabilities = []string{}
+	dryRun       bool
+	debug        bool
+	version      = "0.4.0+git"
 )
 
 func init() {
 	kingpin.Flag("namespace", "The Kubernetes namespace to watch").Default("default").Envar("WATCH_NAMESPACE").StringVar(&namespace)
 	kingpin.Flag("region", "The AWS region to use").Envar("AWS_REGION").StringVar(&region)
+	kingpin.Flag("capability", "The AWS CloudFormation capability to enable").Envar("AWS_CAPABILITIES").StringsVar(&capabilities)
 	kingpin.Flag("dry-run", "If true, don't actually do anything.").Envar("DRY_RUN").BoolVar(&dryRun)
 	kingpin.Flag("debug", "Enable debug logging.").Envar("DEBUG").BoolVar(&debug)
 
@@ -61,6 +63,6 @@ func main() {
 	})
 
 	sdk.Watch("cloudformation.linki.space/v1alpha1", "Stack", namespace, 0)
-	sdk.Handle(stub.NewHandler(client, *tags, dryRun))
+	sdk.Handle(stub.NewHandler(client, capabilities, *tags, dryRun))
 	sdk.Run(context.TODO())
 }
diff --git a/pkg/stub/handler.go b/pkg/stub/handler.go
index 7b94c03..b064f47 100644
--- a/pkg/stub/handler.go
+++ b/pkg/stub/handler.go
@@ -29,13 +29,14 @@ var (
 )
 
 type Handler struct {
-	client     cloudformationiface.CloudFormationAPI
-	defautTags map[string]string
-	dryRun     bool
+	client       cloudformationiface.CloudFormationAPI
+	capabilities []string
+	defautTags   map[string]string
+	dryRun       bool
 }
 
-func NewHandler(client cloudformationiface.CloudFormationAPI, defautTags map[string]string, dryRun bool) handler.Handler {
-	return &Handler{client: client, defautTags: defautTags, dryRun: dryRun}
+func NewHandler(client cloudformationiface.CloudFormationAPI, capabilities []string, defautTags map[string]string, dryRun bool) handler.Handler {
+	return &Handler{client: client, capabilities: capabilities, defautTags: defautTags, dryRun: dryRun}
 }
 
 func (h *Handler) Handle(ctx types.Context, event types.Event) error {
@@ -83,6 +84,7 @@ func (h *Handler) createStack(stack *v1alpha1.Stack) error {
 	}
 
 	input := &cloudformation.CreateStackInput{
+		Capabilities: aws.StringSlice(h.capabilities),
 		StackName:    aws.String(stack.Name),
 		TemplateBody: aws.String(stack.Spec.Template),
 		Parameters:   stackParameters(stack),
@@ -109,6 +111,7 @@ func (h *Handler) updateStack(stack *v1alpha1.Stack) error {
 	}
 
 	input := &cloudformation.UpdateStackInput{
+		Capabilities: aws.StringSlice(h.capabilities),
 		StackName:    aws.String(stack.Name),
 		TemplateBody: aws.String(stack.Spec.Template),
 		Parameters:   stackParameters(stack),