diff --git a/include/rocm_smi/rocm_smi_utils.h b/include/rocm_smi/rocm_smi_utils.h
index 9d255d9c90..d0ea9337cd 100755
--- a/include/rocm_smi/rocm_smi_utils.h
+++ b/include/rocm_smi/rocm_smi_utils.h
@@ -277,6 +277,10 @@ class ScopedAcquire {
   DISALLOW_COPY_AND_ASSIGN(ScopedAcquire)
 };
 
+// The best effort way to decide whether it is in VM guest environment:
+// In VM environment, the /proc/cpuinfo set hypervisor flag by default
+bool is_vm_guest();
+
 }  // namespace smi
 }  // namespace amd
 
diff --git a/src/rocm_smi_utils.cc b/src/rocm_smi_utils.cc
index 680352055b..a47c07e550 100755
--- a/src/rocm_smi_utils.cc
+++ b/src/rocm_smi_utils.cc
@@ -329,6 +329,25 @@ rsmi_status_t ErrnoToRsmiStatus(int err) {
   }
 }
 
+bool is_vm_guest() {
+  // the cpuinfo will set hypervisor flag in VM guest
+  const std::string hypervisor = "hypervisor";
+  std::string line;
+
+  // default to false if cannot find the file
+  std::ifstream infile("/proc/cpuinfo");
+  if (infile.fail()) {
+    return false;
+  }
+
+  while (std::getline(infile, line)) {
+    if (line.find(hypervisor) != std::string::npos) {
+      return true;
+    }
+  }
+  return false;
+}
+
 std::string leftTrim(const std::string &s) {
   if (!s.empty()) {
     return std::regex_replace(s, std::regex("^\\s+"), "");
diff --git a/tests/rocm_smi_test/functional/power_cap_read_write.cc b/tests/rocm_smi_test/functional/power_cap_read_write.cc
index 5481996627..13219cd5a3 100755
--- a/tests/rocm_smi_test/functional/power_cap_read_write.cc
+++ b/tests/rocm_smi_test/functional/power_cap_read_write.cc
@@ -54,6 +54,7 @@
 #include "gtest/gtest.h"
 #include "rocm_smi/rocm_smi.h"
 #include "rocm_smi_test/functional/power_cap_read_write.h"
+#include "rocm_smi/rocm_smi_utils.h"
 #include "rocm_smi_test/test_common.h"
 
 
@@ -121,6 +122,11 @@ void TestPowerCapReadWrite::Run(void) {
       continue;
     }
 
+    if (amd::smi::is_vm_guest()) {
+      std::cout << "VM guest is not supported for power cap test. Skipping test for " << dv_ind << std::endl;
+      continue;
+    }
+
     new_cap = (max + min)/2;
 
     IF_VERB(STANDARD) {