diff --git a/Lib/test/test_urllib2_localnet.py b/Lib/test/test_urllib2_localnet.py
index 0fda770..ec34375 100644
--- a/Lib/test/test_urllib2_localnet.py
+++ b/Lib/test/test_urllib2_localnet.py
@@ -5,7 +5,9 @@
 import BaseHTTPServer
 import unittest
 import hashlib
+
 from test import test_support
+
 mimetools = test_support.import_module('mimetools', deprecated=True)
 threading = test_support.import_module('threading')
 
@@ -346,6 +348,12 @@
     for transparent redirection have been written.
     """
 
+    def setUp(self):
+        proxy_handler = urllib2.ProxyHandler({})
+        opener = urllib2.build_opener(proxy_handler)
+        urllib2.install_opener(opener)
+        super(TestUrlopen, self).setUp()
+
     def start_server(self, responses):
         handler = GetRequestHandler(responses)
 
diff --git a/Misc/NEWS b/Misc/NEWS
index 58a6374..381b091 100644
--- a/Misc/NEWS
+++ b/Misc/NEWS
@@ -164,6 +164,9 @@
 Library
 -------
 
+- Issue #16702: test_urllib2_localnet tests now correctly ignores proxies for
+  localhost tests.
+
 - Issue #16713: Fix the parsing of tel url with params using urlparse module.
 
 - Issue #16443: Add docstrings to regular expression match objects.