diff --git a/tests/vm/Makefile.include b/tests/vm/Makefile.include
index e22c391a2a..f6c3892bb2 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"
 ifeq ($(PYTHON_YAML),yes)
@@ -63,6 +64,7 @@ $(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 $@, \
@@ -77,6 +79,7 @@ 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 \
@@ -98,6 +101,7 @@ 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 7d23ae279b..75a7ac2bd3 100644
--- a/tests/vm/basevm.py
+++ b/tests/vm/basevm.py
@@ -91,6 +91,7 @@ class BaseVM(object):
     def __init__(self, args, config=None):
         self._guest = None
         self._genisoimage = args.genisoimage
+        self._build_path = args.build_path
         # Allow input config to override defaults.
         self._config = DEFAULT_CONFIG.copy()
         if config != None:
@@ -275,15 +276,15 @@ class BaseVM(object):
         args = self._args + boot_params.split(' ')
         args += self._data_args + extra_args + self._config['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(self._config['machine'])
         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")
@@ -482,6 +483,19 @@ class BaseVM(object):
                               stderr=self._stdout)
         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_config(config, args):
     """ Parse yaml config and populate our config structure.
         The yaml config allows the user to override the
@@ -556,6 +570,9 @@ def parse_args(vmcls):
     parser.add_option("--config", "-c", default=None,
                       help="Provide config yaml for configuration. "\
                            "See config_example.yaml for example.")
+    parser.add_option("--build-path", default=None,
+                      help="Path of build directory, "\
+                           "for using build tree QEMU binary. ")
     parser.disable_interspersed_args()
     return parser.parse_args()
 
