diff --git a/vmware_nsx/common/nsxv_constants.py b/vmware_nsx/common/nsxv_constants.py
index 59f329adfa..03e2c25076 100644
--- a/vmware_nsx/common/nsxv_constants.py
+++ b/vmware_nsx/common/nsxv_constants.py
@@ -55,3 +55,9 @@ CSR_REQUEST = ("<csr><subject>"
                "<attribute><key>C</key><value>US</value></attribute>"
                "</subject><algorithm>RSA</algorithm><keySize>2048</keySize>"
                "</csr>")
+
+# Reserved IPs that cannot overlap defined subnets
+RESERVED_IPS = ["169.254.128.0/17",
+                "169.254.1.0/24",
+                "169.254.2.0/28",
+                "169.254.64.192/26"]
diff --git a/vmware_nsx/plugins/nsx_v/plugin.py b/vmware_nsx/plugins/nsx_v/plugin.py
index 8f6ec5c9af..de12f0cb2c 100644
--- a/vmware_nsx/plugins/nsx_v/plugin.py
+++ b/vmware_nsx/plugins/nsx_v/plugin.py
@@ -1105,6 +1105,31 @@ class NsxVPluginV2(addr_pair_db.AllowedAddressPairsMixin,
                     self._update_dhcp_edge_service(context, network_id,
                                                    address_groups)
 
+    def _is_overlapping_reserved_subnets(self, subnet):
+        """Return True if the subnet overlaps with reserved subnets.
+
+        For the V plugin we have a limitation that we should not use
+        some reserved ranges like: 169.254.128.0/17 and 169.254.1.0/24
+        """
+        reserved_subnets = nsxv_constants.RESERVED_IPS
+
+        # translate the given subnet to a range object
+        data = subnet['subnet']
+
+        if data['cidr'] not in (attr.ATTR_NOT_SPECIFIED, None):
+            range = netaddr.IPNetwork(data['cidr'])
+
+            # Check each reserved subnet for intersection
+            for reserved_subnet in reserved_subnets:
+                # translate the reserved subnet to a range object
+                reserved_range = netaddr.IPNetwork(reserved_subnet)
+                # check if new subnet overlaps this reserved subnet
+                if (range.first <= reserved_range.last
+                    and reserved_range.first <= range.last):
+                    return True
+
+        return False
+
     def create_subnet(self, context, subnet):
         """Create subnet on nsx_v provider network.
 
@@ -1128,6 +1153,9 @@ class NsxVPluginV2(addr_pair_db.AllowedAddressPairsMixin,
                  and netaddr.IPNetwork(data['cidr']).version == 6)):
                 err_msg = _("No support for DHCP for IPv6")
                 raise n_exc.InvalidInput(error_message=err_msg)
+            if self._is_overlapping_reserved_subnets(subnet):
+                err_msg = _("The requested subnet contains reserved IP's")
+                raise n_exc.InvalidInput(error_message=err_msg)
 
         with locking.LockManager.get_lock(
                 'nsx-edge-pool', lock_file_prefix='edge-bind-'):
diff --git a/vmware_nsx/tests/unit/nsx_v/test_plugin.py b/vmware_nsx/tests/unit/nsx_v/test_plugin.py
index 9f04c9554b..733ba41c0c 100644
--- a/vmware_nsx/tests/unit/nsx_v/test_plugin.py
+++ b/vmware_nsx/tests/unit/nsx_v/test_plugin.py
@@ -1212,6 +1212,22 @@ class TestSubnetsV2(NsxVPluginV2TestCase,
     def test_create_subnet_only_ip_version_v6_old(self):
         self.skipTest('Currently not supported')
 
+    def test_create_subnet_reserved_network(self):
+        self.mock_create_dhcp_service.stop()
+        name = 'overlap-reserved-net'
+        providernet_args = {pnet.NETWORK_TYPE: 'flat',
+                            pnet.PHYSICAL_NETWORK: 'dvs-uuid'}
+        with testlib_api.ExpectedException(
+                webob.exc.HTTPClientError) as ctx_manager:
+            with self.network(name=name, do_delete=False,
+                          providernet_args=providernet_args,
+                          arg_list=(pnet.NETWORK_TYPE,
+                                    pnet.SEGMENTATION_ID,
+                                    pnet.PHYSICAL_NETWORK)) as net:
+                self._test_create_subnet(network=net,
+                                         cidr='169.254.128.128/25')
+                self.assertEqual(ctx_manager.exception.code, 400)
+
 
 class TestSubnetPoolsV2(NsxVPluginV2TestCase, test_plugin.TestSubnetsV2):
     def setUp(self,