diff --git a/engine/schema/src/com/cloud/vm/dao/VMInstanceDao.java b/engine/schema/src/com/cloud/vm/dao/VMInstanceDao.java
index 6ba7c365215..1e4c8b66c0e 100644
--- a/engine/schema/src/com/cloud/vm/dao/VMInstanceDao.java
+++ b/engine/schema/src/com/cloud/vm/dao/VMInstanceDao.java
@@ -136,4 +136,6 @@ public interface VMInstanceDao extends GenericDao<VMInstanceVO, Long>, StateDao<
     void resetHostPowerStateTracking(long hostId);
 
     HashMap<String, Long> countVgpuVMs(Long dcId, Long podId, Long clusterId);
+
+    VMInstanceVO findVMByHostNameInZone(String hostName, long zoneId);
 }
diff --git a/engine/schema/src/com/cloud/vm/dao/VMInstanceDaoImpl.java b/engine/schema/src/com/cloud/vm/dao/VMInstanceDaoImpl.java
index df023bfcf79..3eabbdb7499 100644
--- a/engine/schema/src/com/cloud/vm/dao/VMInstanceDaoImpl.java
+++ b/engine/schema/src/com/cloud/vm/dao/VMInstanceDaoImpl.java
@@ -85,6 +85,7 @@ public class VMInstanceDaoImpl extends GenericDaoBase<VMInstanceVO, Long> implem
     protected SearchBuilder<VMInstanceVO> HostUpSearch;
     protected SearchBuilder<VMInstanceVO> InstanceNameSearch;
     protected SearchBuilder<VMInstanceVO> HostNameSearch;
+    protected SearchBuilder<VMInstanceVO> HostNameAndZoneSearch;
     protected GenericSearchBuilder<VMInstanceVO, Long> FindIdsOfVirtualRoutersByAccount;
     protected GenericSearchBuilder<VMInstanceVO, Long> CountRunningByHost;
     protected GenericSearchBuilder<VMInstanceVO, Long> CountRunningByAccount;
@@ -218,6 +219,11 @@ public class VMInstanceDaoImpl extends GenericDaoBase<VMInstanceVO, Long> implem
         HostNameSearch.and("hostName", HostNameSearch.entity().getHostName(), Op.EQ);
         HostNameSearch.done();
 
+        HostNameAndZoneSearch = createSearchBuilder();
+        HostNameAndZoneSearch.and("hostName", HostNameAndZoneSearch.entity().getHostName(), Op.EQ);
+        HostNameAndZoneSearch.and("zone", HostNameAndZoneSearch.entity().getDataCenterId(), Op.EQ);
+        HostNameAndZoneSearch.done();
+
         FindIdsOfVirtualRoutersByAccount = createSearchBuilder(Long.class);
         FindIdsOfVirtualRoutersByAccount.selectFields(FindIdsOfVirtualRoutersByAccount.entity().getId());
         FindIdsOfVirtualRoutersByAccount.and("account", FindIdsOfVirtualRoutersByAccount.entity().getAccountId(), SearchCriteria.Op.EQ);
@@ -414,6 +420,14 @@ public class VMInstanceDaoImpl extends GenericDaoBase<VMInstanceVO, Long> implem
         return findOneBy(sc);
     }
 
+    @Override
+    public VMInstanceVO findVMByHostNameInZone(String hostName, long zoneId) {
+        SearchCriteria<VMInstanceVO> sc = HostNameAndZoneSearch.create();
+        sc.setParameters("hostName", hostName);
+        sc.setParameters("zone", zoneId);
+        return findOneBy(sc);
+    }
+
     @Override
     public void updateProxyId(long id, Long proxyId, Date time) {
         VMInstanceVO vo = createForUpdate();
diff --git a/server/src/com/cloud/vm/UserVmManagerImpl.java b/server/src/com/cloud/vm/UserVmManagerImpl.java
index 22f27691c07..c74c74efc7e 100755
--- a/server/src/com/cloud/vm/UserVmManagerImpl.java
+++ b/server/src/com/cloud/vm/UserVmManagerImpl.java
@@ -2919,6 +2919,12 @@ public class UserVmManagerImpl extends ManagerBase implements UserVmManager, Vir
                     hostName = generateHostName(uuidName);
                 }
             }
+            // If global config vm.instancename.flag is set to true, then CS will set guest VM's name as it appears on the hypervisor, to its hostname.
+            // In case of VMware since VM name must be unique within a DC, check if VM with the same hostname already exists in the zone.
+            VMInstanceVO vmByHostName = _vmInstanceDao.findVMByHostNameInZone(hostName, zone.getId());
+            if (vmByHostName != null && vmByHostName.getState() != VirtualMachine.State.Expunging) {
+                 throw new InvalidParameterValueException("There already exists a VM by the name: " + hostName + ".");
+            }
         } else {
             if (hostName == null) {
                 //Generate name using uuid and instance.name global config