How to enable nested virtualization in Azure

We have already mentioned new Azure VM series Dv3 and Ev3 which enable running VMs inside Azure VMs or just nested virtualization. Today we are going to get it configured and to run our first nested VM in Azure.

But before we start, let’s review some Dv3 and Ev3 facts:

  • they introduce Hyper-Threading Technology running on the Intel® Broadwell E5-2673 v4 2.3GHz processor and Intel® Haswell 2.4 GHz E5-2673 v3
  • they made shift from physical core to virtual CPUs (thanks to HT technology) to support larger VM sizes
  • they are the first Azure VMs running on Windows Server 2016 hosts
  • Dv3 VMs are up to 64 vCPUs and 256 GB RAM
  • Ev3 VMs are up to 64 vCPUs and 432 Gb RAM
  • they are currently available only for certain regions (West Europe, US East, US West 2, Asia Pacific Southeast)
  • they already come with ExposeVirtualizationExtensions enabled. we don’t need to enable CPU extensions as we have to do for on-premises WS2016 hosts

To get started with “nesting” you need to create one or more Dv3/Ev3 VMs in Azure within compatible region. For quick demo purposes, I created D2S_V3  VM with Windows Server 2016 DC , standard managed disk with no data disks attached.

TIP: actually you can , for instance, create 2 or more VMs , add data disks and configure storage spaces between them to achieve higher IO performance.

Then you need to install Hyper-V role and restart VM to apply changes

Install-WindowsFeature Hyper-V -IncludeManagementTools -Restart

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Verify that Hyper-V role is installed and add internal switch. New adapter “vEthernet (switchname)” will be created under network connections list (ncpa.cpl)

Define a new IP address for this adapter (I’m using subnet).  This network will be used as a NAT gateway for new VMs in order to allow internet access from nested VMs.

#Check Hyper-V role state
Get-WindowsFeature Hyper-V|ft InstallState, PostConfigurationNeeded

#Add new internal switch
New-VMSwitch -SwitchName "NSW01" -SwitchType Internal

# IP Configuration for vNIC
New-NetIPAddress -InterfaceAlias "vEthernet (NSW01)" -IPAddress -PrefixLength 24

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Configure NAT rule to provide “access” to our nested VMs

New-NetNat -Name Nat_VM -InternalIPInterfaceAddressPrefix


Now our nested VMs can assign IP addresses from subnet  (manual assignment). If you want to have dynamic IP assignment – create add. VM and configure DHCP.

When network configuration is done, add you first nested VM, run and check it’s status:

New-VM -Name Nested01 -MemoryStartupBytes 2GB -SwitchName NSW01 -Generation 2 -NewVHDSizeBytes 70GB -NewVHDPath C:\VMs\Nested01\OS.VHDX

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Using my Azure File share I installed WS2016 Essentials inside of Nested01 VM and configured IP address from subnet above. As you can see, after IP configuration my nested VM can access Internet via created NAT gateway previously (see ping output).

New-NetIPAddress -InterfaceAlias “Ethernet” -IPAddress -DefaultGateway -PrefixLength 24

Set-DnsClientServerAddress -InterfaceAlias Ethernet -ServerAddresses

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Final result (yeap, Simpsons again and again)

Homer – my Hyper-V host (Azure Dv3 VM)

Bart – nested VM (WS2016 Essentials)

nested virtualization azure 5

Cool? Go ahead and test Azure Stack using it’s deployment kit . I’ll cover it in my next posts. Keep in touch and happy Azure VMs nesting!

How to capture Linux VM in Azure

Images are used in Azure to provide a new virtual machine with an operating system. An image might also have one or more data disks. Images are available from several sources:

  • Azure offers images in the Marketplace. There are recent versions of Windows Server and distributions of the Linux operating system. Some images also contain applications, such as SQL Server. MSDN Benefit and MSDN Pay-as-You-Go subscribers have access to additional images.
  • The open source community offers images through VM Depot.
  • You also can store and use your own VM or OS images in Azure, by either capturing an existing Azure virtual machine for use as an image or uploading an image

There is a little difference between VM image (newer type) and OS image. VM image can include disk with generalized OS (sysprep in the Windows Server’s world) and data disks attached to the VM. OS image includes only OS disk.

I’ll show you how to make a new VM image from Linux VM created in Azure Resource Manager. You can use this image to create VMs across any resource group within your subscription (thanks to azure managed disks).

Before we start download and install the latest Python

Launch CMD , verify Python’s version and install Azure CLI 2.0

python --version
pip install --user azure-cli


Open SSH to your VM (use azure public ip, root creds) and start VM’s deprovision (read WARNINGS!)

sudo waagent -deprovision+user -force


Now VM is ready for generalizing

Switch back to CMD and change directory to C:\Users\yourusername\AppData\Roaming\Python\Python35\Scripts
Login to the Azure Account using Azure CLI (use received code to authenticate)

az login


Select subscription in which source VM is running

#To list all subscriptions and get IDs
az account list

#To select target subcription
az account set --subscription subid


Stop and deallocate the source VM

az vm deallocate --resource-group "groupname" --name "vmname"


Time to generalize VM and create VM image

az vm generalize --resource-group "groupname" --name "vmname"
az image create --resource-group "groupname" --name "ImageName" --source "SourceVMName"

Get image list from CLI (copy Image ID):


Azure side (Images):


Now we are ready to create VM or bunch of VMs from this image

az vm create --resource-group "groupname" --name "VMname" --image "imageid" --admin-username username --authentication-type password --admin-password "cleartexthere"


Note: VM Size , Storage type will be selected automatically by Azure. You need to manually define them if it’s required (see examples below)

Simple script that creates bunch of VMs with naming test-VM-0x , predefined VM size and storage type

for /L %%n in (1,1,9) do (
az vm create --resource-group "groupname" --name test-VM-%%n --storage-sku "StorageTypeHere (example: Standard_LRS)" --size "VMsize (example: Basic_A4)" --image "image id here" --admin-username adminname --authentication-type password --admin-password "password here"