diff --git a/api/v1alpha1/kubevirtcluster_types.go b/api/v1alpha1/kubevirtcluster_types.go
index c13a714d..aaad865a 100644
--- a/api/v1alpha1/kubevirtcluster_types.go
+++ b/api/v1alpha1/kubevirtcluster_types.go
@@ -38,6 +38,7 @@ const ( //labels
 const ( // annotations
 	VmiDeletionGraceTime       = "capk.cluster.x-k8s.io/vmi-deletion-grace-time"
 	VmiDeletionGraceTimeEscape = "capk.cluster.x-k8s.io~1vmi-deletion-grace-time"
+	HostnameListAnnotation     = "capk.cluster.x-k8s.io/hostname-list"
 )
 
 // KubevirtClusterSpec defines the desired state of KubevirtCluster.
diff --git a/pkg/kubevirt/machine.go b/pkg/kubevirt/machine.go
index bb86c110..4554b2cc 100644
--- a/pkg/kubevirt/machine.go
+++ b/pkg/kubevirt/machine.go
@@ -181,7 +181,19 @@ func (m *Machine) Exists() bool {
 func (m *Machine) Create(ctx gocontext.Context) error {
 	m.machineContext.Logger.Info(fmt.Sprintf("Creating VM with role '%s'...", nodeRole(m.machineContext)))
 
-	virtualMachine := newVirtualMachineFromKubevirtMachine(m.machineContext, m.namespace)
+	// Get assigned hostname from MachineSet annotation if available
+	hostnameSelector := NewHostnameSelector(m.client)
+	assignedHostname, err := hostnameSelector.GetAssignedHostname(ctx, m.machineContext.KubevirtMachine, m.machineContext.Machine)
+	if err != nil {
+		m.machineContext.Logger.Error(err, "Failed to get assigned hostname, using original name")
+		assignedHostname = m.machineContext.KubevirtMachine.Name
+	}
+
+	if assignedHostname != m.machineContext.KubevirtMachine.Name {
+		m.machineContext.Logger.Info(fmt.Sprintf("Using assigned hostname '%s' instead of generated name '%s'", assignedHostname, m.machineContext.KubevirtMachine.Name))
+	}
+
+	virtualMachine := newVirtualMachineFromKubevirtMachine(m.machineContext, m.namespace, assignedHostname)
 
 	mutateFn := func() (err error) {
 		if virtualMachine.Labels == nil {
diff --git a/pkg/kubevirt/machine_test.go b/pkg/kubevirt/machine_test.go
index 18589700..f48f049d 100644
--- a/pkg/kubevirt/machine_test.go
+++ b/pkg/kubevirt/machine_test.go
@@ -605,7 +605,7 @@ var _ = Describe("util functions", func() {
 		machineContext.KubevirtMachine.Spec.VirtualMachineTemplate.Spec.DataVolumeTemplates = dataVolumeTemplates
 		machineContext.KubevirtMachine.Spec.VirtualMachineTemplate.Spec.Template.Spec.Volumes = volumes
 
-		newVM := newVirtualMachineFromKubevirtMachine(machineContext, "default")
+		newVM := newVirtualMachineFromKubevirtMachine(machineContext, "default", "")
 
 		Expect(newVM.Spec.DataVolumeTemplates[0].ObjectMeta.Name).To(Equal(kubevirtMachineName + "-dv1"))
 		Expect(newVM.Spec.Template.Spec.Volumes[0].VolumeSource.DataVolume.Name).To(Equal(kubevirtMachineName + "-dv1"))
@@ -771,7 +771,7 @@ var _ = Describe("util functions", func() {
 		machineContext.KubevirtMachine.Spec.VirtualMachineTemplate.Spec.DataVolumeTemplates = dataVolumeTemplates
 		machineContext.KubevirtMachine.Spec.VirtualMachineTemplate.Spec.Template.Spec.Volumes = volumes
 
-		newVM := newVirtualMachineFromKubevirtMachine(machineContext, "default")
+		newVM := newVirtualMachineFromKubevirtMachine(machineContext, "default", "")
 
 		Expect(newVM.Spec.DataVolumeTemplates[0].ObjectMeta.Name).To(Equal(kubevirtMachineName + "-dv1"))
 		Expect(newVM.Spec.Template.Spec.Volumes[0].VolumeSource.DataVolume.Name).To(Equal(kubevirtMachineName + "-dv1"))
diff --git a/pkg/kubevirt/utils.go b/pkg/kubevirt/utils.go
index afd14413..c7a63e8e 100644
--- a/pkg/kubevirt/utils.go
+++ b/pkg/kubevirt/utils.go
@@ -68,8 +68,8 @@ func prefixDataVolumeTemplates(vm *kubevirtv1.VirtualMachine, prefix string) *ku
 }
 
 // newVirtualMachineFromKubevirtMachine creates VirtualMachine instance.
-func newVirtualMachineFromKubevirtMachine(ctx *context.MachineContext, namespace string) *kubevirtv1.VirtualMachine {
-	vmiTemplate := buildVirtualMachineInstanceTemplate(ctx)
+func newVirtualMachineFromKubevirtMachine(ctx *context.MachineContext, namespace string, assignedHostname string) *kubevirtv1.VirtualMachine {
+	vmiTemplate := buildVirtualMachineInstanceTemplate(ctx, assignedHostname)
 
 	virtualMachine := &kubevirtv1.VirtualMachine{
 		Spec: *ctx.KubevirtMachine.Spec.VirtualMachineTemplate.Spec.DeepCopy(),
@@ -80,8 +80,14 @@ func newVirtualMachineFromKubevirtMachine(ctx *context.MachineContext, namespace
 	virtualMachine.APIVersion = "kubevirt.io/v1"
 	virtualMachine.Kind = "VirtualMachine"
 
+	// Use assigned hostname if provided, otherwise fall back to original KubevirtMachine name
+	vmName := assignedHostname
+	if vmName == "" {
+		vmName = ctx.KubevirtMachine.Name
+	}
+
 	virtualMachine.ObjectMeta = metav1.ObjectMeta{
-		Name:      ctx.KubevirtMachine.Name,
+		Name:      vmName,
 		Namespace: namespace,
 		Labels:    map[string]string{},
 	}
@@ -94,13 +100,13 @@ func newVirtualMachineFromKubevirtMachine(ctx *context.MachineContext, namespace
 		virtualMachine.ObjectMeta.Annotations = mapCopy(ctx.KubevirtMachine.Spec.VirtualMachineTemplate.ObjectMeta.Annotations)
 	}
 
-	virtualMachine.ObjectMeta.Labels["kubevirt.io/vm"] = ctx.KubevirtMachine.Name
-	virtualMachine.ObjectMeta.Labels["name"] = ctx.KubevirtMachine.Name
+	virtualMachine.ObjectMeta.Labels["kubevirt.io/vm"] = vmName
+	virtualMachine.ObjectMeta.Labels["name"] = vmName
 	virtualMachine.ObjectMeta.Labels["cluster.x-k8s.io/role"] = nodeRole(ctx)
 	virtualMachine.ObjectMeta.Labels["cluster.x-k8s.io/cluster-name"] = ctx.Cluster.Name
 
 	// make each datavolume unique by appending machine name as a prefix
-	virtualMachine = prefixDataVolumeTemplates(virtualMachine, ctx.KubevirtMachine.Name)
+	virtualMachine = prefixDataVolumeTemplates(virtualMachine, vmName)
 
 	return virtualMachine
 }
@@ -115,7 +121,7 @@ func mapCopy(src map[string]string) map[string]string {
 }
 
 // buildVirtualMachineInstanceTemplate creates VirtualMachineInstanceTemplateSpec.
-func buildVirtualMachineInstanceTemplate(ctx *context.MachineContext) *kubevirtv1.VirtualMachineInstanceTemplateSpec {
+func buildVirtualMachineInstanceTemplate(ctx *context.MachineContext, assignedHostname string) *kubevirtv1.VirtualMachineInstanceTemplateSpec {
 	template := &kubevirtv1.VirtualMachineInstanceTemplateSpec{
 		ObjectMeta: metav1.ObjectMeta{
 			Labels:      map[string]string{},
@@ -131,8 +137,14 @@ func buildVirtualMachineInstanceTemplate(ctx *context.MachineContext) *kubevirtv
 		template.ObjectMeta.Annotations = mapCopy(ctx.KubevirtMachine.Spec.VirtualMachineTemplate.Spec.Template.ObjectMeta.Annotations)
 	}
 
-	template.ObjectMeta.Labels["kubevirt.io/vm"] = ctx.KubevirtMachine.Name
-	template.ObjectMeta.Labels["name"] = ctx.KubevirtMachine.Name
+	// Use assigned hostname if provided, otherwise fall back to original KubevirtMachine name
+	vmName := assignedHostname
+	if vmName == "" {
+		vmName = ctx.KubevirtMachine.Name
+	}
+
+	template.ObjectMeta.Labels["kubevirt.io/vm"] = vmName
+	template.ObjectMeta.Labels["name"] = vmName
 	template.ObjectMeta.Labels["cluster.x-k8s.io/role"] = nodeRole(ctx)
 	template.ObjectMeta.Labels["cluster.x-k8s.io/cluster-name"] = ctx.Cluster.Name