diff --git a/IM/VirtualMachine.py b/IM/VirtualMachine.py
index 708a1c040..967ab1113 100644
--- a/IM/VirtualMachine.py
+++ b/IM/VirtualMachine.py
@@ -564,8 +564,24 @@ def update_status(self, auth, force=False):
             self.state = new_state
             self.info.systems[0].setValue("state", new_state)
 
+            # Replace the #N# in dns_names
+            self.replace_dns_name(self.info.systems[0])
+
         return updated
 
+    def replace_dns_name(self, vm_system):
+        """Replace the #N# in dns_names."""
+        cont = 0
+        while vm_system.getValue('net_interface.%d.connection' % cont):
+            vm_dns_name = vm_system.getValue('net_interface.%d.dns_name' % cont)
+            # if dns_name is not set in iface 0 set the default one
+            if cont == 0 and vm_dns_name is None:
+                vm_dns_name = Config.DEFAULT_VM_NAME
+            if vm_dns_name and "#N#" in vm_dns_name:
+                vm_dns_name = vm_dns_name.replace("#N#", str(self.im_id))
+                vm_system.setValue('net_interface.%d.dns_name' % cont, vm_dns_name)
+            cont += 1
+
     @staticmethod
     def add_public_net(radl):
         """
diff --git a/test/unit/VirtualMachine.py b/test/unit/VirtualMachine.py
index feab96a42..b4f0a6402 100755
--- a/test/unit/VirtualMachine.py
+++ b/test/unit/VirtualMachine.py
@@ -159,6 +159,18 @@ def test_setIps(self):
         self.assertEqual(vm.info.systems[0].getValue('net_interface.0.ip'), "10.0.0.1")
         self.assertEqual(vm.info.systems[0].getValue('net_interface.2.ip'), "192.168.0.1")
 
+    def test_replace_dns_name(self):
+        radl_data = """
+            system test (
+            net_interface.0.connection = 'public' and
+            net_interface.0.dns_name = 'vnode-#N#'
+            )"""
+        radl = radl_parse.parse_radl(radl_data)
+        cloud_con = MagicMock()
+        vm = VirtualMachine(None, "1", None, radl, radl, cloud_con, 1)
+        vm.update_status(None)
+        self.assertEqual(vm.info.systems[0].getValue('net_interface.0.dns_name'), "vnode-1")
+
 
 if __name__ == '__main__':
     unittest.main()