How to Enable Nested Virtualization in Hyper-V: Complete Setup Guide

Nested virtualization is a powerful feature that allows you to run Hyper-V inside a virtual machine, enabling you to create complex virtualized environments without requiring multiple physical hosts. This capability is particularly valuable for testing scenarios, running emulators, or developing solutions that require multiple layers of virtualization.

What is Nested Virtualization?

Nested virtualization enables you to run a hypervisor inside a virtual machine, essentially creating a “VM within a VM” setup. This technology allows developers, IT professionals, and testers to emulate sophisticated environments on a single physical machine, making it easier to test complex scenarios and develop virtualization solutions.

Prerequisites for Nested Virtualization

Before enabling nested virtualization, ensure your system meets the following requirements:

Intel-based Systems

• Processor: Intel processor with VT-x and EPT technology
• Host OS: Windows Server 2016 or later, or Windows 10 or later
• VM Configuration: Version 8.0 or higher

AMD-based Systems

• Processor: AMD EPYC or Ryzen processor (or later)
• Host OS: Windows Server 2022 or later, or Windows 11 or later
• VM Configuration: Version 9.3 or higher

Additional Requirements

• The guest operating system can be any Windows-supported OS
• For Azure VMs, set Security Type to “Standard”
• Newer Windows versions can leverage additional CPU features for improved performance

Step-by-Step Guide to Enable Nested Virtualization

Step 1: Create Your Virtual Machine

First, create a virtual machine following the prerequisites mentioned above. Ensure you’re using the correct OS version and VM configuration version for your processor type.

Step 2: Enable Nested Virtualization

With the virtual machine in the OFF state, run the following PowerShell command on your physical Hyper-V host:

Set-VMProcessor -VMName <VMName> -ExposeVirtualizationExtensions $true

Replace <VMName> with the actual name of your virtual machine.

Step 3: Start the Virtual Machine

Once you’ve enabled nested virtualization, start your virtual machine.

Step 4: Install Hyper-V in the Guest VM

Install Hyper-V within the virtual machine just as you would on a physical server. This process is identical to a standard Hyper-V installation.

Important Note: For Windows Server 2019 and earlier as the first-level VM, limit the number of vCPUs to 225 or fewer to avoid performance issues.

Disabling Nested Virtualization

If you need to disable nested virtualization, stop the virtual machine and run this PowerShell command:

Set-VMProcessor -VMName <VMName> -ExposeVirtualizationExtensions $false

Networking Configuration Options

Nested virtualization requires special networking considerations. You have two primary options:

Option 1: MAC Address Spoofing

This method enables network packets to route through multiple virtual switches by allowing MAC address spoofing on the first-level (L1) virtual switch.

To enable MAC address spoofing:

Get-VMNetworkAdapter -VMName <VMName> | Set-VMNetworkAdapter -MacAddressSpoofing On

Option 2: Network Address Translation (NAT)

NAT networking is ideal when MAC address spoofing isn’t available, such as in public cloud environments.

Step 1: Create a virtual NAT switch in the host VM:

New-VMSwitch -Name VmNAT -SwitchType Internal
New-NetNat –Name LocalNAT –InternalIPInterfaceAddressPrefix "192.168.100.0/24"

Step 2: Assign an IP address to the network adapter:

Get-NetAdapter "vEthernet (VmNat)" | New-NetIPAddress -IPAddress 192.168.100.1 -AddressFamily IPv4 -PrefixLength 24

Step 3: Configure nested VMs with appropriate IP addresses and gateway settings:

Get-NetAdapter "vEthernet (VmNat)" | New-NetIPAddress -IPAddress 192.168.100.2 -DefaultGateway 192.168.100.1 -AddressFamily IPv4 -PrefixLength 24
Netsh interface ip add dnsserver "vEthernet (VmNat)" address=<DNS_SERVER_IP>

Best Practices and Tips

1. Performance Considerations: Nested virtualization introduces additional overhead. Ensure your physical host has sufficient resources (CPU, RAM, storage) to support multiple virtualization layers.
2. Testing Environment: This setup is perfect for creating isolated testing environments where you can experiment with different configurations without affecting production systems.
3. Development Scenarios: Developers can use nested virtualization to test applications across different virtualized environments or to develop virtualization management tools.
4. Resource Allocation: Be mindful of resource allocation at each virtualization level to maintain optimal performance.

Troubleshooting Common Issues

• VM Won’t Start: Ensure the VM is completely powered off before enabling nested virtualization
• Performance Issues: Check resource allocation and consider reducing the number of nested VMs
• Networking Problems: Verify that MAC address spoofing is enabled or NAT is properly configured
• Compatibility Issues: Confirm that your processor and OS versions meet the prerequisites

Conclusion

Nested virtualization in Hyper-V opens up numerous possibilities for testing, development, and learning. By following this guide, you can set up a robust nested virtualization environment that serves your specific needs. Whether you’re testing complex scenarios, developing virtualization solutions, or simply exploring advanced virtualization concepts, nested virtualization provides the flexibility and power you need.

Remember to monitor system performance and adjust resource allocation as needed to maintain optimal operation across all virtualization layers.