diff --git a/src/scvmm/HISTORY.rst b/src/scvmm/HISTORY.rst
index 9a304cc43a2..6559c19808b 100644
--- a/src/scvmm/HISTORY.rst
+++ b/src/scvmm/HISTORY.rst
@@ -2,6 +2,10 @@
 
 Release History
 ===============
+1.2.2
+++++++
+* `az scvmm vm delete`: Clear the retained HybridCompute machine's SCVMM kind before VM instance deletion, including with `--no-wait`.
+
 1.2.1
 ++++++
 * [HotFix] Fixed `az scvmm vm create-from-machines` command for VM Instance creation.
diff --git a/src/scvmm/azext_scvmm/custom.py b/src/scvmm/azext_scvmm/custom.py
index 6a6fa2eb7e2..cfc52a19af3 100644
--- a/src/scvmm/azext_scvmm/custom.py
+++ b/src/scvmm/azext_scvmm/custom.py
@@ -999,13 +999,24 @@ def delete_vm(
         machine_client.delete(resource_group_name, resource_name)
         return
 
+    if not delete_machine:
+        try:
+            machine = machine_client.get(resource_group_name, resource_name)
+        except ResourceNotFoundError:
+            machine = None
+
+        if machine is not None and machine.kind and machine.kind.lower() == MACHINE_KIND_SCVMM.lower():
+            _ = machine_client.update(
+                resource_group_name, resource_name, MachineUpdate(kind=''),
+            )
+
     try:
         # TODO (snaskar): Add deleteFromHost to SDK
         op = sdk_no_wait(
             no_wait, client.begin_delete, machine_id, force, delete_from_host,
         )
     except ResourceNotFoundError:
-        # Nothing to delete if the parent machine does not exist.
+        # Nothing to delete if the VM instance does not exist.
         return
 
     op.result()
diff --git a/src/scvmm/azext_scvmm/tests/latest/test_scvmm_scenario.py b/src/scvmm/azext_scvmm/tests/latest/test_scvmm_scenario.py
index 38466dd0a7c..ed4c05376fa 100644
--- a/src/scvmm/azext_scvmm/tests/latest/test_scvmm_scenario.py
+++ b/src/scvmm/azext_scvmm/tests/latest/test_scvmm_scenario.py
@@ -316,6 +316,11 @@ def test_scvmm(self):
         )
 
         self.cmd('az scvmm vm delete -g {resource_group} --name {vm_name} -y')
+        machine = self.cmd(
+            'az resource show -g {resource_group} -n {vm_name}'
+            ' --resource-type Microsoft.HybridCompute/machines --api-version 2023-04-25-preview'
+        ).get_output_in_json()
+        self.assertIn(machine.get('kind'), (None, ''))
         
         with self.assertRaisesRegex(SystemExit, "3"):
             self.cmd('az scvmm vm show -g {resource_group} --name {vm_name}')
@@ -333,6 +338,11 @@ def test_scvmm(self):
         ])
 
         self.cmd('az scvmm vm delete -g {resource_group} --name {vm_name} --delete-from-host -y')
+        machine = self.cmd(
+            'az resource show -g {resource_group} -n {vm_name}'
+            ' --resource-type Microsoft.HybridCompute/machines --api-version 2023-04-25-preview'
+        ).get_output_in_json()
+        self.assertIn(machine.get('kind'), (None, ''))
 
         self.cmd('az scvmm avset delete -g {resource_group} --name {avset_name} -y')
 
diff --git a/src/scvmm/setup.py b/src/scvmm/setup.py
index 2100980072f..162b6be4b46 100644
--- a/src/scvmm/setup.py
+++ b/src/scvmm/setup.py
@@ -16,7 +16,7 @@
 
     logger.warn("Wheel is not available, disabling bdist_wheel hook")
 
-VERSION = '1.2.1'
+VERSION = '1.2.2'
 
 # The full list of classifiers is available at
 # https://pypi.python.org/pypi?%3Aaction=list_classifiers