diff --git a/pkg/types/vsphere/validation/platform.go b/pkg/types/vsphere/validation/platform.go
index 6a8a57001b..e63e0615c1 100644
--- a/pkg/types/vsphere/validation/platform.go
+++ b/pkg/types/vsphere/validation/platform.go
@@ -214,7 +214,7 @@ func validateFailureDomains(p *vsphere.Platform, fldPath *field.Path, isLegacyUp
 			}
 			datacenterName := clusterPathParts[1]
 
-			if len(failureDomain.Topology.Datacenter) != 0 && datacenterName != failureDomain.Topology.Datacenter {
+			if len(failureDomain.Topology.Datacenter) != 0 && !strings.Contains(failureDomain.Topology.Datacenter, datacenterName) {
 				return append(allErrs, field.Invalid(topologyFld.Child("computeCluster"), computeCluster, fmt.Sprintf("compute cluster must be in datacenter %s", failureDomain.Topology.Datacenter)))
 			}
 			p.FailureDomains[index].Topology.ComputeCluster = filepath.Clean(p.FailureDomains[index].Topology.ComputeCluster)
@@ -229,7 +229,7 @@ func validateFailureDomains(p *vsphere.Platform, fldPath *field.Path, isLegacyUp
 			}
 			datacenterName := resourcePoolPathParts[1]
 			clusterName := resourcePoolPathParts[2]
-			if len(failureDomain.Topology.Datacenter) != 0 && datacenterName != failureDomain.Topology.Datacenter {
+			if len(failureDomain.Topology.Datacenter) != 0 && !strings.Contains(failureDomain.Topology.Datacenter, datacenterName) {
 				return append(allErrs, field.Invalid(topologyFld.Child("resourcePool"), resourcePool, fmt.Sprintf("resource pool must be in datacenter %s", failureDomain.Topology.Datacenter)))
 			}
 			if len(failureDomain.Topology.ComputeCluster) != 0 && !strings.Contains(failureDomain.Topology.ComputeCluster, clusterName) {
diff --git a/pkg/types/vsphere/validation/platform_test.go b/pkg/types/vsphere/validation/platform_test.go
index 238e9f6d09..95272893b2 100644
--- a/pkg/types/vsphere/validation/platform_test.go
+++ b/pkg/types/vsphere/validation/platform_test.go
@@ -2,7 +2,9 @@ package validation
 
 import (
 	"fmt"
+	"path"
 	"regexp"
+	"strings"
 	"testing"
 
 	"github.com/stretchr/testify/assert"
@@ -205,6 +207,30 @@ func TestValidatePlatform(t *testing.T) {
 				return p
 			}(),
 		},
+		{
+			name: "Datacenter as a child of a folder",
+			platform: func() *vsphere.Platform {
+				p := validPlatform()
+
+				for i, v := range p.VCenters {
+					for j, dc := range v.Datacenters {
+						p.VCenters[i].Datacenters[j] = path.Join("/dcfolder", dc)
+					}
+				}
+
+				for i, fd := range p.FailureDomains {
+					dcAsChild := path.Join("/dcfolder", fd.Topology.Datacenter)
+
+					p.FailureDomains[i].Topology.Datacenter = dcAsChild
+					p.FailureDomains[i].Topology.ResourcePool = strings.ReplaceAll(fd.Topology.ResourcePool, fd.Topology.Datacenter, dcAsChild)
+					p.FailureDomains[i].Topology.Folder = strings.ReplaceAll(fd.Topology.Folder, fd.Topology.Datacenter, dcAsChild)
+					p.FailureDomains[i].Topology.ComputeCluster = strings.ReplaceAll(fd.Topology.ComputeCluster, fd.Topology.Datacenter, dcAsChild)
+					p.FailureDomains[i].Topology.Datastore = strings.ReplaceAll(fd.Topology.Datastore, fd.Topology.Datacenter, dcAsChild)
+				}
+
+				return p
+			}(),
+		},
 		{
 			name: "Additional invalid tag IDs provided",
 			platform: func() *vsphere.Platform {