diff --git a/test/infrastructure/vcsim/controllers/vcsim_controller.go b/test/infrastructure/vcsim/controllers/vcsim_controller.go
index 34d80b95c6..af53e4bf5a 100644
--- a/test/infrastructure/vcsim/controllers/vcsim_controller.go
+++ b/test/infrastructure/vcsim/controllers/vcsim_controller.go
@@ -166,11 +166,28 @@ func (r *VCenterSimulatorReconciler) reconcileNormal(ctx context.Context, vCente
 			return errors.Wrapf(err, "failed to parse vcsim server url")
 		}
 
+		operations := []string{}
+
+		if !r.SupervisorMode {
+			// Add operations to create and attach tags for failure domains
+			datacenterName := vcsimhelpers.DatacenterName(0)
+			computeClusterName := vcsimhelpers.ClusterName(0, 0)
+			operations = append(operations,
+				"tags.category.create -d \"Kubernetes region\" -t Datacenter k8s-region",
+				"tags.category.create -d \"Kubernetes zone\" k8s-zone",
+				fmt.Sprintf("tags.create -c k8s-region %q", datacenterName),
+				fmt.Sprintf("tags.create -c k8s-zone %q", computeClusterName),
+				fmt.Sprintf("tags.attach -c k8s-region %[1]q /%[1]q", datacenterName),
+				fmt.Sprintf("tags.attach -c k8s-zone %[1]q /%[2]q/host/%[1]q", computeClusterName, datacenterName),
+			)
+		}
+
 		// Start the vcsim instance
 		vcsimInstance, err := vcsimhelpers.NewBuilder().
 			WithModel(model).
 			SkipModelCreate().
 			WithURL(vcsimURL).
+			WithOperations(operations...).
 			Build()
 
 		if err != nil {