nested 2 host lab layout

VMware Home Lab Guide Part 2: Nested ESXi Hosts


This is Part 2 of a 3 part series of the most common built virtual home labs. Check here for Part 1 and the Complete Guide.


In part one of our Home Lab guide we discussed using a software hypervisor on top of an already existing operating system. In this part we will discuss a Type 1 Hypervisor running on a bare metal server. We will be again using nested ESXi hosts to form a ‘simulated’ environment using only one server. This is the setup I’m currently using. I believe it gives you the most bang for your buck. It allows you to save on hardware as well as power. But compared to the Multiple hosts solution in Part 3 of our guide you will be simulating some conditions virtually. For example, most networking will take place “inside” your servers ESXi virtual switches.

The setup and buildout is similar to a Type 2 Hypervisor with the difference of adding a third ESXi host. What? Yes! A third ESXi host. Think of it this way, in Part 1 of the guide we used VMware Workstation to ‘host’ our two ESXi hosts that would server our guest operating machines. The same is true with Nested ESXi Hosts except in lieu of Workstation we will be using a clean install of ESXi on top of a bare metal server. For example: physical sever with ESXi  > ESXi Virtual Machine> Windows Server 2008. Our server with ESXi will be given all of the system resources and then distributed to each of the nested virtual ESXi hosts running on top. Confused? Hopefully the below diagram under Setup helps explain. If you still have trouble wrapping your head around the concept please feel free to ask away in the comments.

The most important issue to be aware of this setup is the strict hardware requirements. You will need to do a fair amount of research into the parts (or server) you buy. Simple features like 64bit virtual machines or USB passthrough will not be possible without compatible hardware. For instance to run 64bit Guest OS a CPU with  EPT (Intel) or RVI (AMD) is required. Also, for USB passthrough a CPU with  Intel VT-d or AMD-VI. Some further tweaks to ESXi may also be necessary depending on hardware choices.


List of software and virtual machines that will be used to create our nested environment on a bare metal physical server.

System Requirements:

  • VMware ESXi 5.1 or 5.5 .iso with free license
  • Intel VT-D and AMD-VI capable 64 bit processor
  • 16 GB ram (min) 32 GB suggested
  • 500 gigabytes free disk space
  • VMware supported Network Interface Card (NIC) (recommended Intel)

Virtual Machines:

  • 2 x ESXi hosts running version 5.1 or 5.5
  • 1 x Windows Server 2003/2008/2012 for Domain Controller & DNS
  • 1 x Windows Server 2003/2008 for vCenter
  • 1 x FreeNAS Server for iSCSI or NAS storage
  • Various VM’s like CUCM or MS Exchange (optional)



  • Persistent
  • Easily upgradable
  • Closer to enterprise setup
  • Rebuild easily


  • Need compatible hardware (research a must_
  • Limited Resources
  • Fault Tolerance requires special considerations
  • Semi-Simulated