diff --git a/api/v1beta1/gcpmachine_types.go b/api/v1beta1/gcpmachine_types.go
index 7e27e7845..5a09c579a 100644
--- a/api/v1beta1/gcpmachine_types.go
+++ b/api/v1beta1/gcpmachine_types.go
@@ -329,8 +329,24 @@ type GCPMachineSpec struct {
 	// RootDiskEncryptionKey defines the KMS key to be used to encrypt the root disk.
 	// +optional
 	RootDiskEncryptionKey *CustomerEncryptionKey `json:"rootDiskEncryptionKey,omitempty"`
+
+	// InstanceTerminationAction specifies the termination action for the instance upon preemption.
+	//  GCP API defaults to "Unspecified", which defaults the action to "Stop".
+	// +kubebuilder:validation:Enum=Delete;Stop
+	// +optional
+	InstanceTerminationAction *InstanceTerminationAction `json:"instanceTerminationAction,omitempty"`
 }
 
+// InstanceTerminationAction is a type for specifying to Delete or Stop a VM upon preemption.
+type InstanceTerminationAction string
+
+const (
+	// InstanceTerminationActionDelete means to delete an instance upon preemption termination.
+	InstanceTerminationActionDelete InstanceTerminationAction = "Delete"
+	// InstanceTerminationActionStop means to stop an instance upon preemption termination.
+	InstanceTerminationActionStop InstanceTerminationAction = "Stop"
+)
+
 // MetadataItem defines a single piece of metadata associated with an instance.
 type MetadataItem struct {
 	// Key is the identifier for the metadata entry.
diff --git a/api/v1beta1/zz_generated.deepcopy.go b/api/v1beta1/zz_generated.deepcopy.go
index 78c0f8571..8e7e4e7ad 100644
--- a/api/v1beta1/zz_generated.deepcopy.go
+++ b/api/v1beta1/zz_generated.deepcopy.go
@@ -500,6 +500,11 @@ func (in *GCPMachineSpec) DeepCopyInto(out *GCPMachineSpec) {
 		*out = new(CustomerEncryptionKey)
 		(*in).DeepCopyInto(*out)
 	}
+	if in.InstanceTerminationAction != nil {
+		in, out := &in.InstanceTerminationAction, &out.InstanceTerminationAction
+		*out = new(InstanceTerminationAction)
+		**out = **in
+	}
 }
 
 // DeepCopy is an autogenerated deepcopy function, copying the receiver, creating a new GCPMachineSpec.
diff --git a/cloud/scope/machine.go b/cloud/scope/machine.go
index 96f745822..0a9d660c7 100644
--- a/cloud/scope/machine.go
+++ b/cloud/scope/machine.go
@@ -435,6 +435,16 @@ func (m *MachineScope) InstanceSpec(log logr.Logger) *compute.Instance {
 
 		instance.Scheduling.OnHostMaintenance = strings.ToUpper(string(*m.GCPMachine.Spec.OnHostMaintenance))
 	}
+	if m.GCPMachine.Spec.InstanceTerminationAction != nil {
+		switch *m.GCPMachine.Spec.InstanceTerminationAction {
+		case infrav1.InstanceTerminationActionDelete:
+			instance.Scheduling.InstanceTerminationAction = "DELETE"
+		case infrav1.InstanceTerminationActionStop:
+			instance.Scheduling.InstanceTerminationAction = "STOP"
+		default:
+			log.Error(errors.New("Invalid value"), "Unknown InstanceTerminationAction value", "Spec.InstanceTerminationAction", *m.GCPMachine.Spec.InstanceTerminationAction)
+		}
+	}
 	if m.GCPMachine.Spec.ConfidentialCompute != nil {
 		enabled := *m.GCPMachine.Spec.ConfidentialCompute == infrav1.ConfidentialComputePolicyEnabled
 		instance.ConfidentialInstanceConfig = &compute.ConfidentialInstanceConfig{
diff --git a/config/crd/bases/infrastructure.cluster.x-k8s.io_gcpmachines.yaml b/config/crd/bases/infrastructure.cluster.x-k8s.io_gcpmachines.yaml
index 24955802d..5461a3a8a 100644
--- a/config/crd/bases/infrastructure.cluster.x-k8s.io_gcpmachines.yaml
+++ b/config/crd/bases/infrastructure.cluster.x-k8s.io_gcpmachines.yaml
@@ -207,6 +207,14 @@ spec:
                 description: ImageFamily is the full reference to a valid image family
                   to be used for this machine.
                 type: string
+              instanceTerminationAction:
+                description: |-
+                  InstanceTerminationAction specifies the termination action for the instance upon preemption.
+                   GCP API defaults to "Unspecified", which defaults the action to "Stop".
+                enum:
+                - Delete
+                - Stop
+                type: string
               instanceType:
                 description: 'InstanceType is the type of instance to create. Example:
                   n1.standard-2'
diff --git a/config/crd/bases/infrastructure.cluster.x-k8s.io_gcpmachinetemplates.yaml b/config/crd/bases/infrastructure.cluster.x-k8s.io_gcpmachinetemplates.yaml
index 5cc470597..84c3de22c 100644
--- a/config/crd/bases/infrastructure.cluster.x-k8s.io_gcpmachinetemplates.yaml
+++ b/config/crd/bases/infrastructure.cluster.x-k8s.io_gcpmachinetemplates.yaml
@@ -222,6 +222,14 @@ spec:
                         description: ImageFamily is the full reference to a valid
                           image family to be used for this machine.
                         type: string
+                      instanceTerminationAction:
+                        description: |-
+                          InstanceTerminationAction specifies the termination action for the instance upon preemption.
+                           GCP API defaults to "Unspecified", which defaults the action to "Stop".
+                        enum:
+                        - Delete
+                        - Stop
+                        type: string
                       instanceType:
                         description: 'InstanceType is the type of instance to create.
                           Example: n1.standard-2'