# Hyper-V Hosts as Old as the Guests: Upgrade the Cluster to Windows Server 2025 with the VMs Running, Rebuild on Azure Local, or Leave On-Premises > Can a Windows Server 2016 Hyper-V cluster reach 2025 with the VMs running? Rolling-upgrade hops, the DCs on the cluster, Azure Local, Azure and the prices. Canonical: https://o365hq.com/blog/hyper-v-hosts-as-old-as-the-guests-upgrade-the-cluster-to-windows-server-2025-or-leave-on-premises Provider: IT Partner LLC — US Microsoft partner since 2006. Book: https://o365hq.com/book Published: 2026-10-18 · IT Partner The guests reached end of support first; the hosts came as a surprise. A Windows Server 2016 Hyper-V cluster loses extended support on 12 January 2027. Three ways out: roll it to Windows Server 2025 with the VMs running, rebuild on Azure Local, or move the guests to Azure and retire the hosts. ## The three options, answered first A Windows Server 2016 Hyper-V cluster can reach Windows Server 2025 without shutting down the virtual machines, but not in one pass: Cluster OS Rolling Upgrade moves a cluster one version at a time, so 2016 goes to 2019, then 2022, then 2025, or a new 2025 cluster is built alongside and the VMs live-migrate across. Host age against the OEM's 2025 support list, SAN or Storage Spaces Direct, the licenses you hold and how many guests could leave the building decide between the three; the forcing date is 12 January 2027, when Windows Server 2016 leaves extended support. | | Rolling upgrade to 2025 | Rebuild on Azure Local | Guests to Azure | |---|---|---|---| | Hardware | Current nodes, if the OEM supports them on 2025 | Catalog nodes, usually new | None after the last wave | | Licensing | Datacenter or Standard per node, 16-core minimum; 2025 CALs | Per core per month, waived with Datacenter plus Software Assurance | Metered VMs; Azure Hybrid Benefit | | Storage | SAN CSV or S2D carry through | S2D on the new nodes | Managed disks, Azure Files | | Time | Three hops from 2016, or a new cluster; three weeks for one hop | Six weeks around hardware lead time | Two-week assessment, then six weeks in waves | | Wins when | Hosts under warranty, guests must stay local | Hosts past warranty, S2D wanted, several sites | Hosts due for retirement, guests tolerate WAN latency | | Cost shape | Our fee per node plus licenses bought once | Hardware plus a monthly host fee | No hardware; monthly consumption | ## Cluster OS Rolling Upgrade, and why 2016 is three hops away One node is drained, its VMs live-migrate to its neighbors, it is rebuilt, and it rejoins; the cluster runs in mixed-OS mode until the last node is done. Microsoft's page (19 March 2025) says you can upgrade only to the next newer version; to cross several, "such as from Windows Server 2016 to Windows Server 2025, run the upgrade sequentially" or migrate to a new cluster. Microsoft recommends finishing a pass within four weeks and calls the process reversible until Update-ClusterFunctionalLevel runs. Storage sets the pace. SAN Cluster Shared Volumes carry through mixed mode, gated by storage-vendor driver and firmware support for 2025. Storage Spaces Direct rolls more slowly, because each node enters storage maintenance mode and repair jobs must finish before the next node leaves; Microsoft's separate S2D procedure (27 June 2025) covers 2016 to 2019 only, and the storage pool is updated after the functional level. Live migration changes too: on Windows Server 2025 CredSSP-based live migration stops working because Credential Guard is on by default, so Kerberos constrained delegation is configured before the first 2025 node joins. VM configuration versions (8.0 on 2016, 9.0 on 2019, 10.0 on 2022, 12.0 on 2025) wait until every host and the functional level are done; the move to 12.0 needs the VM off and is one-way. What cannot be rolled: clusters using .vhdx files as shared storage, and nodes the OEM will not support on 2025. ## The domain controllers on the cluster The cluster depends on the domain controllers it hosts. Microsoft's support article on DCs in virtual hosting environments (12 February 2026) states that for the nodes, disks and other resources on a clustered host to autostart, authentication requests must be serviced by a DC in the computer's domain; if the only DCs able to answer sit on a host that is restarting, authentication fails and the cluster must be recovered by hand. Its recommendation is at least two DCs in the domain on an independent hosting solution outside the cluster, physical or a virtual platform with no Active Directory dependency. So the sequence is fixed. A replacement DC is promoted off the cluster first, on a physical server or a standalone host, replication is confirmed and the FSMO roles are placed; then the cluster-resident 2016 DCs are demoted, and the host work starts with the nodes no longer authenticating against their own guests, which also removes the boot-order problem. Host-to-guest time synchronization is disabled on DC VMs (Microsoft, 7 March 2024), and any DC left on the cluster is its site's second DC, never the only one. [Replacing Windows Server 2016 domain controllers with Windows Server 2025](/blog/replacing-windows-server-2016-domain-controllers-with-windows-server-2025-order-of-operations) has the promote, demote and re-IP order. ## Licensing the hosts: Datacenter, Standard, CALs and hotpatch Microsoft's Windows Server 2025 licensing guidance requires at least 8 core licenses per processor and 16 per server. Standard grants two operating system environments per fully licensed server and can be stacked for each further pair of VMs; Datacenter grants unlimited OSEs. The 16-core packs are [Windows Server 2025 Standard](/software/windows-server-standard-core-2025) at $1,176 and [Windows Server 2025 Datacenter](/software/windows-server-data-center-core-2025) at $6,770 (Microsoft list price, October 2026 price list). Six Standard stacks on a 16-core host cost $7,056 against $6,770 for Datacenter, and in a failover cluster each node must be licensed for every VM that can land on it after a failover, so Datacenter wins past a couple of VMs per host; Storage Spaces Direct is a Datacenter feature on Microsoft's edition comparison. The [Windows Server calculator](/tools/windows-server-calculator) prices both. The CAL version must match or exceed the server version, so 2016-era CALs without Software Assurance mean a 2025 CAL for every user or device, $50 per user or $39 per device (Microsoft list price, October 2026 price list); [Licensing a domain-controller refresh](/blog/licensing-a-domain-controller-refresh-windows-server-2025-cores-and-the-cal-version-rule) covers the rule. Hotpatch is the reason to pick 2025 over 2022: an Arc-connected Windows Server 2025 host receives hotpatches at no additional charge from Microsoft since 19 May 2026 and needs Virtualization-Based Security with UEFI and Secure Boot; [Hotpatching Windows Server 2025 domain controllers](/blog/hotpatching-windows-server-2025-domain-controllers-azure-arc-vbs-and-what-is-charged) covers the enrollment. Arc add-ons, Azure Update Manager, Defender for Servers and Azure consumption are Microsoft's charges, billed to you. ## Azure Local as the rebuild path When the hosts fail the OEM's 2025 list, the rolling upgrade becomes a new-cluster build anyway, and the question is which cluster. Azure Local is Hyper-V and Storage Spaces Direct on catalog hardware, managed from the Azure portal through Arc. It beats the rolling upgrade when the hosts are past warranty and must be replaced regardless, when S2D is wanted and the SAN retires with the hosts, and when several sites or an Arc-managed estate make one portal worth more than a console per cluster. The licensing shape in two sentences. Hosts are billed per physical core per month through your Azure subscription, plus Windows Server for the guests through the subscription add-on or Datacenter keys you own. Datacenter cores with active Software Assurance exchange one for one against physical cores of Azure Local and waive both the host fee and the guest subscription (Microsoft's Azure Hybrid Benefit for Azure Local page, updated 25 June 2026). [Azure Local for small sites](/blog/azure-local-for-small-sites-what-it-is-what-it-costs-to-license-and-when-it-beats-azure-vms) has the hardware rules; [Azure Local Design and Deployment](/services/azure-local-design-deployment) runs from $9,500 over six weeks. ## Leaving on-premises: which guests fit Azure and what stays The host refresh is the moment to ask whether the hosts should exist at all. Guests that fit Azure: application servers whose users are already remote, the second domain controller, file servers that become Azure Files or SharePoint, and SQL Server after a licensing check. Guests that stay: anything that talks to shop-floor or lab equipment, applications whose vendor supports one hypervisor, a file server serving one office, and the print server until Universal Print replaces it. The decision test is a count. If more than half the VMs stay, the cluster is being upgraded or rebuilt anyway; if the hosts are past warranty and the stays would fit one small host or an Azure Local pair, retire the cluster. [Leaving VMware after the Broadcom changes](/blog/leaving-vmware-after-broadcom-hyper-v-azure-local-or-azure-for-a-small-cluster) walks the same three exits from the VMware side. [Azure Migrate Datacenter Discovery and Assessment](/services/azure-migration-discovery-assessment) is $1,950 per project over two weeks and prices all three paths; [Hyper-V to Azure Virtual Machine Migration](/services/hyper-v-to-azure-migration) starts from $4,950 over six weeks. ## Two plans in progress A medical practice of about 200 users is being acquired by a hospital group, with a possession date about four weeks out and an acquirer's checklist that requires central management of all servers. About a dozen servers, including the Hyper-V hosts, new domain controllers and the Entra Connect server, are rebuilt on Windows Server 2022 and connected to Azure Arc as each reaches a supported operating system. The hosts are not rolled: each is emptied of its VMs, rebuilt, connected and refilled inside after-hours maintenance windows. Windows Server 2022 left mainstream support on 13 October 2026 and stays in extended support, so the hosts take a single rolling pass to 2025 later; a one-year Windows Server subscription license covers servers that retire after the conversion. A hardware manufacturer with six sites on three continents, one forest and about ten Windows Server 2016 domain controllers has virtual DCs on clusters that need Active Directory at boot. Its plan keeps at least one DC per site off the cluster it authenticates and schedules each site's cluster work after that site's replacement DC is promoted and replicating. ## What it costs on our side [Hyper-V Failover Cluster Upgrade to Windows Server 2025](/services/hyper-v-cluster-upgrade-windows-server-2025) is $1,250 per server plus a $2,950 tenant fee over three weeks, for one cluster of 2 to 16 nodes with the VMs kept running; "server" means a cluster node. Week one is validation plus the hardware, firmware, driver and licensing check that picks the path; week two rolls the nodes or moves the VMs; week three raises the functional level, updates the storage pool and VM versions in planned windows and hands over the documentation. Multi-hop paths are quoted after validation. Hardware, licenses and guest operating systems are yours; 2016 guests go through the [Windows Server 2016 to 2025 Upgrade Service](/services/windows-server-2016-to-2025-upgrade) at $650 per server plus a $1,950 tenant fee over four weeks. [Azure Local Design and Deployment](/services/azure-local-design-deployment) is from $9,500 and [Hyper-V to Azure Virtual Machine Migration](/services/hyper-v-to-azure-migration) from $4,950, each over six weeks; every fee is quoted in writing before work starts. ## Frequently asked questions ### Can we upgrade Windows Server 2016 Hyper-V hosts without shutting down the VMs? Yes: rolling upgrade live-migrates the VMs off each node before it is rebuilt, and cross-cluster live migration moves running VMs to a new cluster; only the final configuration-version update to 12.0 needs a short planned shutdown. ### Is Cluster OS Rolling Upgrade from 2016 to 2025 supported directly? No. The procedure upgrades only to the next newer version: three passes from 2016, to 2019, 2022 and 2025, or a new 2025 cluster beside it with cross-cluster live migration. ### Should the host refresh be the moment we leave on-premises? Count the guests that must stay for latency, equipment or vendor reasons: more than half, keep a cluster; hosts past warranty and the stays fit one small host or an Azure Local pair, retire it. ### What about the domain controllers running on the cluster? At least two DCs belong outside the cluster, because its resources need a DC to autostart: promote a replacement off the cluster, confirm replication, move the roles, demote the cluster-resident 2016 DCs, then start on the hosts. ### Standard or Datacenter for the hosts? Datacenter for almost any cluster: Standard covers two VMs per fully licensed node and every node must be licensed for the VMs that can fail over to it; at $1,176 against $6,770 per 16-core pack the crossing comes near twelve VMs on one host. ## Sources - Microsoft Learn, "Cluster OS Rolling Upgrade" (windows-server/failover-clustering/cluster-operating-system-rolling-upgrade), ms.date 19 March 2025, retrieved October 2026 - Microsoft Learn, "Upgrade virtual machine version in Hyper-V on Windows or Windows Server" (windows-server/virtualization/hyper-v/deploy/upgrade-virtual-machine-version-in-hyper-v-on-windows-or-windows-server), ms.date 30 June 2025, retrieved October 2026 - Microsoft Learn, "Set up hosts for live migration without Failover Clustering" (windows-server/virtualization/hyper-v/deploy/set-up-hosts-for-live-migration-without-failover-clustering), ms.date 14 August 2025, retrieved October 2026 - Microsoft Learn, "Upgrade a Storage Spaces Direct cluster" (windows-server/storage/storage-spaces/upgrade-storage-spaces-direct), ms.date 27 June 2025, retrieved October 2026 - Microsoft Learn, "Things to consider when you host Active Directory domain controllers in virtual hosting environments" (troubleshoot/windows-server/active-directory/ad-dc-in-virtual-hosting-environment), ms.date 12 February 2026, retrieved October 2026 - Microsoft Learn, "Virtualizing domain controllers with Hyper-V" (windows-server/identity/ad-ds/get-started/virtual-dc/virtualized-domain-controllers-hyper-v), ms.date 7 March 2024, retrieved October 2026 - Microsoft Learn, "Hotpatch for Windows Server" (windows-server/get-started/hotpatch), ms.date 14 July 2025, and "Enable hotpatch for Azure Arc-enabled servers" (windows-server/get-started/enable-hotpatch-azure-arc-enabled-servers), retrieved October 2026 - Microsoft, "Windows Server 2025 Licensing Guidance" (microsoft.com/licensing/guidance/Windows-Server-2025), retrieved October 2026 - Microsoft Learn, "Comparison of Windows Server editions" (windows-server/get-started/editions-comparison), retrieved October 2026 - Microsoft Learn, "Azure Hybrid Benefit for Azure Local" (azure/azure-local/concepts/azure-hybrid-benefit), retrieved October 2026 - IT Partner Microsoft deadlines page: Windows Server 2016 end of extended support, Windows Server 2022 end of mainstream support, Windows Server 2025 hotpatch charge removal - Microsoft list price, October 2026 price list (Commercial), as shown on our Windows Server 2025 Standard, Datacenter and CAL software pages ## Key takeaways - Cluster OS Rolling Upgrade keeps the VMs running but moves one version per pass: three passes from 2016, or a new 2025 cluster, before 12 January 2027. - Mixed-OS mode is a corridor: finish within four weeks; VM version 12.0 is one-way and comes last. - At least two DCs live outside the cluster, which needs a DC to autostart; replace the DCs before touching the hosts. - Datacenter wins for almost any cluster; the 16-core packs are $1,176 and $6,770 on the October 2026 price list, and CALs must be at version 2025. - Hosts past warranty move the decision to Azure Local, or to Azure for the guests that tolerate the WAN. --- **Start with the path decision, not the install media.** [Hyper-V Failover Cluster Upgrade to Windows Server 2025](/services/hyper-v-cluster-upgrade-windows-server-2025) ($1,250 per server plus a $2,950 tenant fee, three weeks) opens with the validation report that names your path, then upgrades the cluster with the VMs running. Price the node licenses first with the [Windows Server licensing calculator](/tools/windows-server-calculator).