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Additional Steps for Installing Istio on an RKE2 Cluster 3
/rancher/v2.5/en/istio/v2.5/configuration-reference/rke2
/rancher/v2.x/en/istio/v2.5/configuration-reference/rke2/

Through the Cluster Explorer, when installing or upgrading Istio through Apps & Marketplace,

  1. Click Components.

  2. Check the box next to Enabled CNI.

  3. Add a custom overlay file specifying cniBinDir and cniConfDir. For more information on these options, refer to the Istio documentation. An example is below:

    apiVersion: install.istio.io/v1alpha1
    kind: IstioOperator
    spec:
      components:
        cni:
          enabled: true
      values:
        cni:
          image: rancher/istio-install-cni:1.7.3
          excludeNamespaces:
            - istio-system
            - kube-system
          logLevel: info
          cniBinDir: /opt/cni/bin
          cniConfDir: /etc/cni/net.d
    
  4. After installing Istio, you'll notice the cni-node pods in the istio-system namespace in a CrashLoopBackoff error. Manually edit the istio-cni-node daemonset to include the following on the install-cni container:

    securityContext:
        privileged: true
    

Result: Now you should be able to utilize Istio as desired, including sidecar injection and monitoring via Kiali.