diff --git a/images/virtualization-artifact/pkg/controller/vmip/internal/attached_handler.go b/images/virtualization-artifact/pkg/controller/vmip/internal/attached_handler.go
index 0bd413ddb1..4d67d7d9f6 100644
--- a/images/virtualization-artifact/pkg/controller/vmip/internal/attached_handler.go
+++ b/images/virtualization-artifact/pkg/controller/vmip/internal/attached_handler.go
@@ -125,6 +125,10 @@ func (h *AttachedHandler) getAttachedVirtualMachine(ctx context.Context, vmip *v
 	}
 
 	if attachedVM != nil {
+		// A VM that is being deleted is not considered attached so the VMIP can be released and, if managed, removed (e.g. during cascade deletion).
+		if !attachedVM.GetDeletionTimestamp().IsZero() && len(attachedVM.Status.VirtualMachinePods) == 0 {
+			return nil, nil
+		}
 		if network.HasMainNetworkStatus(attachedVM.Status.Networks) {
 			return attachedVM, nil
 		}
diff --git a/images/virtualization-artifact/pkg/controller/vmip/internal/watcher/vm_watcher.go b/images/virtualization-artifact/pkg/controller/vmip/internal/watcher/vm_watcher.go
index 49f9fb1231..ce3d7e9bf4 100644
--- a/images/virtualization-artifact/pkg/controller/vmip/internal/watcher/vm_watcher.go
+++ b/images/virtualization-artifact/pkg/controller/vmip/internal/watcher/vm_watcher.go
@@ -71,6 +71,10 @@ func (w VirtualMachineWatcher) Watch(mgr manager.Manager, ctr controller.Control
 						return true
 					}
 
+					if len(oldVM.Status.VirtualMachinePods) != len(newVM.Status.VirtualMachinePods) {
+						return true
+					}
+
 					return false
 				},
 			},