diff --git a/pkgs/development/python-modules/localstack/default.nix b/pkgs/by-name/lo/localstack/package.nix
similarity index 70%
rename from pkgs/development/python-modules/localstack/default.nix
rename to pkgs/by-name/lo/localstack/package.nix
index a2f8e39b8531..9f166f2c91d5 100644
--- a/pkgs/development/python-modules/localstack/default.nix
+++ b/pkgs/by-name/lo/localstack/package.nix
@@ -1,46 +1,27 @@
 {
   lib,
-  buildPythonPackage,
+  python3,
   fetchFromGitHub,
-  apispec,
-  boto3,
-  build,
-  cachetools,
-  click,
-  cryptography,
-  localstack-client,
-  localstack-ext,
-  plux,
-  psutil,
-  python-dotenv,
-  pyyaml,
-  packaging,
-  requests,
-  rich,
-  semver,
-  setuptools,
-  setuptools-scm,
-  tailer,
 }:
 
-buildPythonPackage rec {
+python3.pkgs.buildPythonApplication rec {
   pname = "localstack";
-  version = "4.0.3";
+  version = "4.1.1";
   pyproject = true;
 
   src = fetchFromGitHub {
     owner = "localstack";
     repo = "localstack";
     tag = "v${version}";
-    hash = "sha256-BsmXhTJVvRKEubDQwehsrY2jRSfvDBSH5S35CNg8vrQ=";
+    hash = "sha256-hITo6BAsFNGFG5N0b2N9nydGCsG7ged8/3g0sWovNYw=";
   };
 
-  build-system = [
+  build-system = with python3.pkgs; [
     setuptools
     setuptools-scm
   ];
 
-  dependencies = [
+  propagatedBuildInputs = with python3.pkgs; [
     apispec
     boto3
     build
@@ -60,7 +41,9 @@ buildPythonPackage rec {
     tailer
   ];
 
-  pythonRelaxDeps = [ "dill" ];
+  pythonRelaxDeps = [
+    "dill"
+  ];
 
   pythonImportsCheck = [ "localstack" ];
 
@@ -76,6 +59,12 @@ buildPythonPackage rec {
     runHook postCheck
   '';
 
+  # Propagating dependencies leaks them through $PYTHONPATH which causes issues
+  # when used in nix-shell.
+  postFixup = ''
+    rm $out/nix-support/propagated-build-inputs
+  '';
+
   meta = with lib; {
     description = "Fully functional local Cloud stack";
     homepage = "https://github.com/localstack/localstack";
diff --git a/pkgs/development/python-modules/localstack-client/default.nix b/pkgs/development/python-modules/localstack-client/default.nix
index 638f4328abf4..e74b8daa7015 100644
--- a/pkgs/development/python-modules/localstack-client/default.nix
+++ b/pkgs/development/python-modules/localstack-client/default.nix
@@ -1,25 +1,23 @@
 {
   lib,
   buildPythonPackage,
-  fetchFromGitHub,
+  fetchPypi,
   boto3,
   pytestCheckHook,
 
-  # downstream dependencies
-  localstack,
+  # use for testing promoted localstack
+  pkgs,
 }:
 
 buildPythonPackage rec {
   pname = "localstack-client";
-  version = "1.39";
+  version = "2.7";
   format = "setuptools";
 
-  src = fetchFromGitHub {
-    owner = "localstack";
-    repo = "localstack-python-client";
-    # Request for proper tags: https://github.com/localstack/localstack-python-client/issues/38
-    rev = "f1e538ad23700e5b1afe98720404f4801475e470";
-    hash = "sha256-MBXTiTzCwkduJPPRN7OKaWy2q9J8xCX/GGu09tyac3A=";
+  src = fetchPypi {
+    pname = "localstack_client";
+    inherit version;
+    hash = "sha256-FJkxGZAaS8vvfDLYmbJPSliodaZ2VpPt8QZNZrimhAg=";
   };
 
   propagatedBuildInputs = [ boto3 ];
@@ -39,7 +37,7 @@ buildPythonPackage rec {
   __darwinAllowLocalNetworking = true;
 
   passthru.tests = {
-    inherit localstack;
+    inherit (pkgs) localstack;
   };
 
   meta = with lib; {
diff --git a/pkgs/development/python-modules/localstack-ext/default.nix b/pkgs/development/python-modules/localstack-ext/default.nix
index e7989ddfd1df..78baef323e19 100644
--- a/pkgs/development/python-modules/localstack-ext/default.nix
+++ b/pkgs/development/python-modules/localstack-ext/default.nix
@@ -15,19 +15,19 @@
   python-dateutil,
   tabulate,
 
-  # Sensitive downstream dependencies
-  localstack,
+  # use for testing promoted localstack
+  pkgs,
 }:
 
 buildPythonPackage rec {
   pname = "localstack-ext";
-  version = "4.0.3";
+  version = "4.1.1";
   pyproject = true;
 
   src = fetchPypi {
     pname = "localstack_ext";
     inherit version;
-    hash = "sha256-vivEdEk32wJln8jfhrAtygO5CEvtsdXI7sxrj0dqIdA=";
+    hash = "sha256-Fgblk8eL5JnF4yLeH73yGuOeH9anSu1o9H1UxcjTyco=";
   };
 
   build-system = [
@@ -60,7 +60,7 @@ buildPythonPackage rec {
   doCheck = false;
 
   passthru.tests = {
-    inherit localstack;
+    inherit (pkgs) localstack;
   };
 
   meta = {
diff --git a/pkgs/development/python-modules/plux/default.nix b/pkgs/development/python-modules/plux/default.nix
index 3c726b7d3b36..7f63915d1aee 100644
--- a/pkgs/development/python-modules/plux/default.nix
+++ b/pkgs/development/python-modules/plux/default.nix
@@ -10,7 +10,7 @@
 
 buildPythonPackage rec {
   pname = "plux";
-  version = "1.11.0";
+  version = "1.12.0";
   pyproject = true;
 
   # Tests are not available from PyPi
@@ -18,7 +18,7 @@ buildPythonPackage rec {
     owner = "localstack";
     repo = "plux";
     tag = "v${version}";
-    hash = "sha256-M4N3Ccuw95OcLsWQVtITv4QShBJKliTh5QIoqji8x9o=";
+    hash = "sha256-2Sxn/LuiwTzByAAz7VlNLsxEiPIyJWXr86/76Anx+EU=";
   };
 
   build-system = [
diff --git a/pkgs/top-level/all-packages.nix b/pkgs/top-level/all-packages.nix
index 74a62d7fcf3e..6dc6c75d07c9 100644
--- a/pkgs/top-level/all-packages.nix
+++ b/pkgs/top-level/all-packages.nix
@@ -4131,8 +4131,6 @@ with pkgs;
 
   liquidctl = with python3Packages; toPythonApplication liquidctl;
 
-  localstack = with python3Packages; toPythonApplication localstack;
-
   xz = callPackage ../tools/compression/xz { };
 
   lzwolf = callPackage ../games/lzwolf { SDL2_mixer = SDL2_mixer_2_0; };
diff --git a/pkgs/top-level/python-aliases.nix b/pkgs/top-level/python-aliases.nix
index 5c9dc87970b7..76a01d39612f 100644
--- a/pkgs/top-level/python-aliases.nix
+++ b/pkgs/top-level/python-aliases.nix
@@ -355,6 +355,7 @@ mapAliases ({
   livestreamer = throw "'livestreamer' has been removed, as it unmaintained. A currently maintained fork is 'streamlink'."; # added 2023-11-14
   livestreamer-curses = throw "'livestreamer-curses' has been removed as it, and livestreamer itself are unmaintained."; # added 2023-11-14
   lmcloud = pylamarzocco; # added 2024-11-26
+  localstack = throw "localstack was promoted to a top-level attribute"; # added 2025-02-21
   logilab_astng = throw "logilab-astng has not been released since 2013 and is unmaintained"; # added 2022-11-29
   logilab_common = logilab-common; # added 2022-11-21
   loo-py = loopy; # added 2022-05-03
diff --git a/pkgs/top-level/python-packages.nix b/pkgs/top-level/python-packages.nix
index de00c9d97ee5..750947ea0c8e 100644
--- a/pkgs/top-level/python-packages.nix
+++ b/pkgs/top-level/python-packages.nix
@@ -7832,8 +7832,6 @@ self: super: with self; {
 
   localimport = callPackage ../development/python-modules/localimport { };
 
-  localstack = callPackage ../development/python-modules/localstack { };
-
   localstack-client = callPackage ../development/python-modules/localstack-client { };
 
   localstack-ext = callPackage ../development/python-modules/localstack-ext { };