diff --git a/tests/vm/Makefile.include b/tests/vm/Makefile.include
index 80f7f6bdee..a253aba457 100644
--- a/tests/vm/Makefile.include
+++ b/tests/vm/Makefile.include
@@ -41,6 +41,7 @@ endif
 	@echo "    J=[0..9]*            	 - Override the -jN parameter for make commands"
 	@echo "    DEBUG=1              	 - Enable verbose output on host and interactive debugging"
 	@echo "    V=1				 - Enable verbose ouput on host and guest commands"
+	@echo "    QEMU_LOCAL=1                 - Use QEMU binary local to this build."
 	@echo "    QEMU=/path/to/qemu		 - Change path to QEMU binary"
 	@echo "    QEMU_IMG=/path/to/qemu-img	 - Change path to qemu-img tool"
 
@@ -57,6 +58,7 @@ $(IMAGES_DIR)/%.img:	$(SRC_PATH)/tests/vm/% \
 		$(PYTHON) $< \
 		$(if $(V)$(DEBUG), --debug) \
 		$(if $(GENISOIMAGE),--genisoimage $(GENISOIMAGE)) \
+		$(if $(QEMU_LOCAL),--build-path $(BUILD_DIR)) \
 		--image "$@" \
 		--force \
 		--build-image $@, \
@@ -71,6 +73,7 @@ vm-build-%: $(IMAGES_DIR)/%.img
 		$(if $(DEBUG), --interactive) \
 		$(if $(J),--jobs $(J)) \
 		$(if $(V),--verbose) \
+		$(if $(QEMU_LOCAL),--build-path $(BUILD_DIR)) \
 		--image "$<" \
 		$(if $(BUILD_TARGET),--build-target $(BUILD_TARGET)) \
 		--snapshot \
@@ -92,6 +95,7 @@ vm-boot-ssh-%: $(IMAGES_DIR)/%.img
 		$(PYTHON) $(SRC_PATH)/tests/vm/$* \
 		$(if $(J),--jobs $(J)) \
 		$(if $(V)$(DEBUG), --debug) \
+		$(if $(QEMU_LOCAL),--build-path $(BUILD_DIR)) \
 		--image "$<" \
 		--interactive \
 		false, \
diff --git a/tests/vm/basevm.py b/tests/vm/basevm.py
index a2d4054d72..5a3ce42281 100644
--- a/tests/vm/basevm.py
+++ b/tests/vm/basevm.py
@@ -61,9 +61,11 @@ class BaseVM(object):
     # 4 is arbitrary, but greater than 2,
     # since we found we need to wait more than twice as long.
     tcg_ssh_timeout_multiplier = 4
-    def __init__(self, debug=False, vcpus=None, genisoimage=None):
+    def __init__(self, debug=False, vcpus=None, genisoimage=None,
+                 build_path=None):
         self._guest = None
         self._genisoimage = genisoimage
+        self._build_path = build_path
         self._tmpdir = os.path.realpath(tempfile.mkdtemp(prefix="vm-test-",
                                                          suffix=".tmp",
                                                          dir="."))
@@ -184,15 +186,15 @@ def boot(self, img, extra_args=[]):
             "-device", "virtio-blk,drive=drive0,bootindex=0"]
         args += self._data_args + extra_args
         logging.debug("QEMU args: %s", " ".join(args))
-        qemu_bin = os.environ.get("QEMU", "qemu-system-" + self.arch)
-        guest = QEMUMachine(binary=qemu_bin, args=args)
+        qemu_path = get_qemu_path(self.arch, self._build_path)
+        guest = QEMUMachine(binary=qemu_path, args=args)
         guest.set_machine('pc')
         guest.set_console()
         try:
             guest.launch()
         except:
             logging.error("Failed to launch QEMU, command line:")
-            logging.error(" ".join([qemu_bin] + args))
+            logging.error(" ".join([qemu_path] + args))
             logging.error("Log:")
             logging.error(guest.get_log())
             logging.error("QEMU version >= 2.10 is required")
@@ -391,6 +393,19 @@ def gen_cloud_init_iso(self):
 
         return os.path.join(cidir, "cloud-init.iso")
 
+def get_qemu_path(arch, build_path=None):
+    """Fetch the path to the qemu binary."""
+    # If QEMU environment variable set, it takes precedence
+    if "QEMU" in os.environ:
+        qemu_path = os.environ["QEMU"]
+    elif build_path:
+        qemu_path = os.path.join(build_path, arch + "-softmmu")
+        qemu_path = os.path.join(qemu_path, "qemu-system-" + arch)
+    else:
+        # Default is to use system path for qemu.
+        qemu_path = "qemu-system-" + arch
+    return qemu_path
+
 def parse_args(vmcls):
 
     def get_default_jobs():
@@ -421,6 +436,9 @@ def get_default_jobs():
                       help="build QEMU from source in guest")
     parser.add_option("--build-target",
                       help="QEMU build target", default="check")
+    parser.add_option("--build-path", default=None,
+                      help="Path of build directory, "\
+                           "for using build tree QEMU binary. ")
     parser.add_option("--interactive", "-I", action="store_true",
                       help="Interactively run command")
     parser.add_option("--snapshot", "-s", action="store_true",
@@ -439,7 +457,7 @@ def main(vmcls):
         logging.basicConfig(level=(logging.DEBUG if args.debug
                                    else logging.WARN))
         vm = vmcls(debug=args.debug, vcpus=args.jobs,
-                   genisoimage=args.genisoimage)
+                   genisoimage=args.genisoimage, build_path=args.build_path)
         if args.build_image:
             if os.path.exists(args.image) and not args.force:
                 sys.stderr.writelines(["Image file exists: %s\n" % args.image,
