diff --git a/hw/ppc/spapr.c b/hw/ppc/spapr.c
index e25a35f4a5..d357350468 100644
--- a/hw/ppc/spapr.c
+++ b/hw/ppc/spapr.c
@@ -2092,6 +2092,7 @@ static const VMStateDescription vmstate_spapr = {
         &vmstate_spapr_cap_fwnmi,
         &vmstate_spapr_fwnmi,
         &vmstate_spapr_cap_rpt_invalidate,
+        &vmstate_spapr_cap_nested_papr,
         NULL
     }
 };
@@ -4685,6 +4686,7 @@ static void spapr_machine_class_init(ObjectClass *oc, void *data)
     smc->default_caps.caps[SPAPR_CAP_IBS] = SPAPR_CAP_WORKAROUND;
     smc->default_caps.caps[SPAPR_CAP_HPT_MAXPAGESIZE] = 16; /* 64kiB */
     smc->default_caps.caps[SPAPR_CAP_NESTED_KVM_HV] = SPAPR_CAP_OFF;
+    smc->default_caps.caps[SPAPR_CAP_NESTED_PAPR] = SPAPR_CAP_OFF;
     smc->default_caps.caps[SPAPR_CAP_LARGE_DECREMENTER] = SPAPR_CAP_ON;
     smc->default_caps.caps[SPAPR_CAP_CCF_ASSIST] = SPAPR_CAP_ON;
     smc->default_caps.caps[SPAPR_CAP_FWNMI] = SPAPR_CAP_ON;
diff --git a/hw/ppc/spapr_caps.c b/hw/ppc/spapr_caps.c
index a3a790b026..d3b9f107aa 100644
--- a/hw/ppc/spapr_caps.c
+++ b/hw/ppc/spapr_caps.c
@@ -491,6 +491,44 @@ static void cap_nested_kvm_hv_apply(SpaprMachineState *spapr,
     }
 }
 
+static void cap_nested_papr_apply(SpaprMachineState *spapr,
+                                    uint8_t val, Error **errp)
+{
+    ERRP_GUARD();
+    PowerPCCPU *cpu = POWERPC_CPU(first_cpu);
+    CPUPPCState *env = &cpu->env;
+
+    if (!val) {
+        /* capability disabled by default */
+        return;
+    }
+
+    if (tcg_enabled()) {
+        if (!(env->insns_flags2 & PPC2_ISA300)) {
+            error_setg(errp, "Nested-PAPR only supported on POWER9 and later");
+            error_append_hint(errp,
+                              "Try appending -machine cap-nested-papr=off\n");
+            return;
+        }
+        spapr->nested.api = NESTED_API_PAPR;
+    } else if (kvm_enabled()) {
+        /*
+         * this gets executed in L1 qemu when L2 is launched,
+         * needs kvm-hv support in L1 kernel.
+         */
+        if (!kvmppc_has_cap_nested_kvm_hv()) {
+            error_setg(errp,
+                       "KVM implementation does not support Nested-HV");
+            error_append_hint(errp,
+                              "Try appending -machine cap-nested-hv=off\n");
+        } else if (kvmppc_set_cap_nested_kvm_hv(val) < 0) {
+            error_setg(errp, "Error enabling cap-nested-hv with KVM");
+            error_append_hint(errp,
+                              "Try appending -machine cap-nested-hv=off\n");
+        }
+    }
+}
+
 static void cap_large_decr_apply(SpaprMachineState *spapr,
                                  uint8_t val, Error **errp)
 {
@@ -736,6 +774,15 @@ SpaprCapabilityInfo capability_table[SPAPR_CAP_NUM] = {
         .type = "bool",
         .apply = cap_nested_kvm_hv_apply,
     },
+    [SPAPR_CAP_NESTED_PAPR] = {
+        .name = "nested-papr",
+        .description = "Allow Nested PAPR (Phyp)",
+        .index = SPAPR_CAP_NESTED_PAPR,
+        .get = spapr_cap_get_bool,
+        .set = spapr_cap_set_bool,
+        .type = "bool",
+        .apply = cap_nested_papr_apply,
+    },
     [SPAPR_CAP_LARGE_DECREMENTER] = {
         .name = "large-decr",
         .description = "Allow Large Decrementer",
@@ -920,6 +967,7 @@ SPAPR_CAP_MIG_STATE(sbbc, SPAPR_CAP_SBBC);
 SPAPR_CAP_MIG_STATE(ibs, SPAPR_CAP_IBS);
 SPAPR_CAP_MIG_STATE(hpt_maxpagesize, SPAPR_CAP_HPT_MAXPAGESIZE);
 SPAPR_CAP_MIG_STATE(nested_kvm_hv, SPAPR_CAP_NESTED_KVM_HV);
+SPAPR_CAP_MIG_STATE(nested_papr, SPAPR_CAP_NESTED_PAPR);
 SPAPR_CAP_MIG_STATE(large_decr, SPAPR_CAP_LARGE_DECREMENTER);
 SPAPR_CAP_MIG_STATE(ccf_assist, SPAPR_CAP_CCF_ASSIST);
 SPAPR_CAP_MIG_STATE(fwnmi, SPAPR_CAP_FWNMI);
diff --git a/include/hw/ppc/spapr.h b/include/hw/ppc/spapr.h
index c8b42af430..8a6e9ce929 100644
--- a/include/hw/ppc/spapr.h
+++ b/include/hw/ppc/spapr.h
@@ -81,8 +81,10 @@ typedef enum {
 #define SPAPR_CAP_RPT_INVALIDATE        0x0B
 /* Support for AIL modes */
 #define SPAPR_CAP_AIL_MODE_3            0x0C
+/* Nested PAPR */
+#define SPAPR_CAP_NESTED_PAPR           0x0D
 /* Num Caps */
-#define SPAPR_CAP_NUM                   (SPAPR_CAP_AIL_MODE_3 + 1)
+#define SPAPR_CAP_NUM                   (SPAPR_CAP_NESTED_PAPR + 1)
 
 /*
  * Capability Values
@@ -1005,6 +1007,7 @@ extern const VMStateDescription vmstate_spapr_cap_sbbc;
 extern const VMStateDescription vmstate_spapr_cap_ibs;
 extern const VMStateDescription vmstate_spapr_cap_hpt_maxpagesize;
 extern const VMStateDescription vmstate_spapr_cap_nested_kvm_hv;
+extern const VMStateDescription vmstate_spapr_cap_nested_papr;
 extern const VMStateDescription vmstate_spapr_cap_large_decr;
 extern const VMStateDescription vmstate_spapr_cap_ccf_assist;
 extern const VMStateDescription vmstate_spapr_cap_fwnmi;
