diff --git a/nova/tests/fakeguestfs.py b/nova/tests/fakeguestfs.py
index c8424282d51c..7a3b33039c25 100644
--- a/nova/tests/fakeguestfs.py
+++ b/nova/tests/fakeguestfs.py
@@ -27,6 +27,7 @@ class GuestFS(object):
         self.files = {}
         self.auginit = False
         self.root_mounted = False
+        self.backend_settings = None
 
     def launch(self):
         self.running = True
@@ -36,6 +37,9 @@ class GuestFS(object):
         self.mounts = []
         self.drives = []
 
+    def set_backend_settings(self, settings):
+        self.backend_settings = settings
+
     def close(self):
         self.closed = True
 
diff --git a/nova/tests/virt/test_virt_disk_vfs_guestfs.py b/nova/tests/virt/test_virt_disk_vfs_guestfs.py
index 353319b9887d..692576cdc0cb 100644
--- a/nova/tests/virt/test_virt_disk_vfs_guestfs.py
+++ b/nova/tests/virt/test_virt_disk_vfs_guestfs.py
@@ -27,12 +27,23 @@ class VirtDiskVFSGuestFSTest(test.NoDBTestCase):
         sys.modules['guestfs'] = fakeguestfs
         vfsimpl.guestfs = fakeguestfs
 
-    def test_appliance_setup_inspect(self):
+    def _do_test_appliance_setup_inspect(self, forcetcg):
+        if forcetcg:
+            vfsimpl.force_tcg()
+        else:
+            vfsimpl.force_tcg(False)
+
         vfs = vfsimpl.VFSGuestFS(imgfile="/dummy.qcow2",
                                  imgfmt="qcow2",
                                  partition=-1)
         vfs.setup()
 
+        if forcetcg:
+            self.assertEqual(vfs.handle.backend_settings, "force_tcg")
+            vfsimpl.force_tcg(False)
+        else:
+            self.assertIsNone(vfs.handle.backend_settings)
+
         self.assertEqual(vfs.handle.running, True)
         self.assertEqual(len(vfs.handle.mounts), 3)
         self.assertEqual(vfs.handle.mounts[0][1],
@@ -52,6 +63,12 @@ class VirtDiskVFSGuestFSTest(test.NoDBTestCase):
         self.assertEqual(handle.closed, True)
         self.assertEqual(len(handle.mounts), 0)
 
+    def test_appliance_setup_inspect_auto(self):
+        self._do_test_appliance_setup_inspect(False)
+
+    def test_appliance_setup_inspect_tcg(self):
+        self._do_test_appliance_setup_inspect(True)
+
     def test_appliance_setup_inspect_no_root_raises(self):
         vfs = vfsimpl.VFSGuestFS(imgfile="/dummy.qcow2",
                                  imgfmt="qcow2",
@@ -59,6 +76,8 @@ class VirtDiskVFSGuestFSTest(test.NoDBTestCase):
         # call setup to init the handle so we can stub it
         vfs.setup()
 
+        self.assertIsNone(vfs.handle.backend_settings)
+
         def fake_inspect_os():
             return []
 
@@ -72,6 +91,8 @@ class VirtDiskVFSGuestFSTest(test.NoDBTestCase):
         # call setup to init the handle so we can stub it
         vfs.setup()
 
+        self.assertIsNone(vfs.handle.backend_settings)
+
         def fake_inspect_os():
             return ['fake1', 'fake2']
 
@@ -84,6 +105,7 @@ class VirtDiskVFSGuestFSTest(test.NoDBTestCase):
                                  partition=None)
         vfs.setup()
 
+        self.assertIsNone(vfs.handle.backend_settings)
         self.assertEqual(vfs.handle.running, True)
         self.assertEqual(len(vfs.handle.mounts), 1)
         self.assertEqual(vfs.handle.mounts[0][1], "/dev/sda")
@@ -103,6 +125,7 @@ class VirtDiskVFSGuestFSTest(test.NoDBTestCase):
                                  partition=2)
         vfs.setup()
 
+        self.assertIsNone(vfs.handle.backend_settings)
         self.assertEqual(vfs.handle.running, True)
         self.assertEqual(len(vfs.handle.mounts), 1)
         self.assertEqual(vfs.handle.mounts[0][1], "/dev/sda2")
diff --git a/nova/virt/disk/vfs/guestfs.py b/nova/virt/disk/vfs/guestfs.py
index a65f649ab3f7..fabfde5ba415 100644
--- a/nova/virt/disk/vfs/guestfs.py
+++ b/nova/virt/disk/vfs/guestfs.py
@@ -15,7 +15,7 @@
 from eventlet import tpool
 
 from nova import exception
-from nova.i18n import _
+from nova.i18n import _, _LI
 from nova.openstack.common import importutils
 from nova.openstack.common import log as logging
 from nova.virt.disk.vfs import api as vfs
@@ -24,6 +24,18 @@ from nova.virt.disk.vfs import api as vfs
 LOG = logging.getLogger(__name__)
 
 guestfs = None
+forceTCG = False
+
+
+def force_tcg(force=True):
+    """Prevent libguestfs trying to use KVM acceleration
+
+    It is a good idea to call this if it is known that
+    KVM is not desired, even if technically available.
+    """
+
+    global forceTCG
+    forceTCG = force
 
 
 class VFSGuestFS(vfs.VFS):
@@ -116,6 +128,16 @@ class VFSGuestFS(vfs.VFS):
             else:
                 raise
 
+        try:
+            if forceTCG:
+                self.handle.set_backend_settings("force_tcg")
+        except AttributeError as ex:
+            # set_backend_settings method doesn't exist in older
+            # libguestfs versions, so nothing we can do but ignore
+            LOG.info(_LI("Unable to force TCG mode, libguestfs too old?"),
+                     ex)
+            pass
+
         try:
             self.handle.add_drive_opts(self.imgfile, format=self.imgfmt)
             self.handle.launch()
diff --git a/nova/virt/libvirt/driver.py b/nova/virt/libvirt/driver.py
index 7759b940fbfd..16c4e695cdf3 100644
--- a/nova/virt/libvirt/driver.py
+++ b/nova/virt/libvirt/driver.py
@@ -81,6 +81,7 @@ from nova import version
 from nova.virt import block_device as driver_block_device
 from nova.virt import configdrive
 from nova.virt.disk import api as disk
+from nova.virt.disk.vfs import guestfs
 from nova.virt import driver
 from nova.virt import event as virtevent
 from nova.virt import firewall
@@ -631,6 +632,12 @@ class LibvirtDriver(driver.ComputeDriver):
         libvirt.virEventRegisterDefaultImpl()
         self._do_quality_warnings()
 
+        # Stop libguestfs using KVM unless we're also configured
+        # to use this. This solves problem where people need to
+        # stop Nova use of KVM because nested-virt is broken
+        if CONF.libvirt.virt_type != "kvm":
+            guestfs.force_tcg()
+
         if not self._has_min_version(MIN_LIBVIRT_VERSION):
             major = MIN_LIBVIRT_VERSION[0]
             minor = MIN_LIBVIRT_VERSION[1]