How to Set Up a Local LLM Inference Server Using Ollama. Running a Large Language Model (LLM) on your own server is the ultimate way to keep your data private. It keeps your prompts on infrastructure you control and replaces unpredictable per-token API fees with a flat monthly cost. Ollama is one of the simplest tools to get this done: it bundles model downloads, GPU acceleration, and a local OpenAI-compatible HTTP API into a single setup. Here is what you need to know before deploying it in production. 1. Hardware and VRAM Sizing For full-speed AI inference, your model must fit entirely in your GPU memory (VRAM). If a model is too large and spills over into system RAM, Ollama will split the workload with the CPU, which drastically slows down generation speeds. For mid-size to large models, deploying on bare-metal gpu servers (like an NVIDIA A40 or A100) ensures you have the dedicated memory headroom required. 2. Verifying GPU Acceleration After installing your NVIDIA drivers ...