diff --git a/plugins/hypervisors/xenserver/src/main/java/com/cloud/hypervisor/XenServerGuru.java b/plugins/hypervisors/xenserver/src/main/java/com/cloud/hypervisor/XenServerGuru.java
index 2ef942cd53a3..eb2aca03434b 100644
--- a/plugins/hypervisors/xenserver/src/main/java/com/cloud/hypervisor/XenServerGuru.java
+++ b/plugins/hypervisors/xenserver/src/main/java/com/cloud/hypervisor/XenServerGuru.java
@@ -97,9 +97,7 @@ public VirtualMachineTO implement(VirtualMachineProfile vm) {
         UserVmVO userVmVO = userVmDao.findById(vm.getId());
         if (userVmVO != null) {
             HostVO host = hostDao.findById(userVmVO.getHostId());
-            if (host != null) {
-                to.setVcpuMaxLimit(MaxNumberOfVCPUSPerVM.valueIn(host.getClusterId()));
-            }
+            setMaxVCPUs(host, vm, to);
         }
 
         to.setBootloader(bt);
@@ -126,6 +124,23 @@ public VirtualMachineTO implement(VirtualMachineProfile vm) {
         return to;
     }
 
+    private void setMaxVCPUs(HostVO host, VirtualMachineProfile vm, VirtualMachineTO to) {
+        if (host != null) {
+            if (host.getCpus() < MaxNumberOfVCPUSPerVM.valueIn(host.getClusterId())) {
+                String message = String.valueOf(new StringBuilder()
+                        .append("Ignoring global max vCPUs limit (from global setting xen.vm.vcpu.max) on vm ")
+                        .append(vm.getUuid()).append(" and setting VM max vCPU to host pCPU max: ")
+                        .append(host.getCpus())
+                        .append(". Requested number of virtual CPUs exceeds number of host physical CPUs"));
+                logger.info(message);
+                to.setVcpuMaxLimit(host.getCpus());
+            } else {
+                logger.info("Setting vm: " + vm.getUuid() + " max vCPU limit (from global setting xen.vm.vcpu.max) to: " + MaxNumberOfVCPUSPerVM.valueIn(host.getClusterId()));
+                to.setVcpuMaxLimit(MaxNumberOfVCPUSPerVM.valueIn(host.getClusterId()));
+            }
+        }
+    }
+
     @Override
     public boolean trackVmHostChange() {
         return true;
diff --git a/test/integration/smoke/test_scale_vm.py b/test/integration/smoke/test_scale_vm.py
index ddd6bcfbc71e..04052d2ec886 100644
--- a/test/integration/smoke/test_scale_vm.py
+++ b/test/integration/smoke/test_scale_vm.py
@@ -23,7 +23,8 @@
 from marvin.lib.utils import cleanup_resources
 from marvin.lib.base import (Account,
                              VirtualMachine,
-                             ServiceOffering)
+                             ServiceOffering,
+                             Configurations)
 from marvin.lib.common import (get_zone,
                                get_template,
                                get_domain)
@@ -81,6 +82,12 @@ def setUpClass(cls):
             cls.services["service_offerings"]["big"]
         )
 
+        Configurations.update(
+            cls.apiclient,
+            name="enable.dynamic.scale.vm",
+            value="true"
+        )
+
         # create a virtual machine
         cls.virtual_machine = VirtualMachine.create(
             cls.apiclient,
@@ -101,6 +108,13 @@ def tearDownClass(cls):
             TestScaleVm,
             cls).getClsTestClient().getApiClient()
         cleanup_resources(cls.apiclient, cls._cleanup)
+
+        Configurations.update(
+            cls.apiclient,
+            name="enable.dynamic.scale.vm",
+            value="false"
+        )
+
         return
 
     def setUp(self):