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..e8cea266af76 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
@@ -98,7 +98,19 @@ public VirtualMachineTO implement(VirtualMachineProfile vm) {
         if (userVmVO != null) {
             HostVO host = hostDao.findById(userVmVO.getHostId());
             if (host != null) {
-                to.setVcpuMaxLimit(MaxNumberOfVCPUSPerVM.valueIn(host.getClusterId()));
+                // Max cpu cannot be more than host capability
+                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()));
+                }
             }
         }