diff --git a/pkg/azureutils/azure_disk_utils.go b/pkg/azureutils/azure_disk_utils.go
index c07ff481ba..1ac00abc37 100644
--- a/pkg/azureutils/azure_disk_utils.go
+++ b/pkg/azureutils/azure_disk_utils.go
@@ -649,6 +649,13 @@ func ParseDiskParameters(parameters map[string]string) (ManagedDiskParameters, e
 			}
 		}
 	}
+
+	if strings.EqualFold(diskParams.AccountType, string(azureconstants.PremiumV2LRS)) {
+		if diskParams.CachingMode != "" && !strings.EqualFold(string(diskParams.CachingMode), string(v1.AzureDataDiskCachingNone)) {
+			return diskParams, fmt.Errorf("cachingMode %s is not supported for %s", diskParams.CachingMode, azureconstants.PremiumV2LRS)
+		}
+	}
+
 	return diskParams, nil
 }
 
diff --git a/pkg/azureutils/azure_disk_utils_test.go b/pkg/azureutils/azure_disk_utils_test.go
index de22722dea..fc63b412d4 100644
--- a/pkg/azureutils/azure_disk_utils_test.go
+++ b/pkg/azureutils/azure_disk_utils_test.go
@@ -1420,6 +1420,56 @@ func TestParseDiskParameters(t *testing.T) {
 			},
 			expectedError: fmt.Errorf("parse invalidValue failed with error: strconv.Atoi: parsing \"invalidValue\": invalid syntax"),
 		},
+		{
+			name:        "disk parameters with PremiumV2_LRS",
+			inputParams: map[string]string{consts.SkuNameField: "PremiumV2_LRS"},
+			expectedOutput: ManagedDiskParameters{
+				AccountType:    "PremiumV2_LRS",
+				Incremental:    true,
+				Tags:           make(map[string]string),
+				VolumeContext:  map[string]string{consts.SkuNameField: "PremiumV2_LRS"},
+				DeviceSettings: make(map[string]string),
+			},
+			expectedError: nil,
+		},
+		{
+			name: "disk parameters with PremiumV2_LRS (valid cachingMode)",
+			inputParams: map[string]string{
+				consts.SkuNameField:     "PremiumV2_LRS",
+				consts.CachingModeField: "none",
+			},
+			expectedOutput: ManagedDiskParameters{
+				AccountType: "PremiumV2_LRS",
+				CachingMode: "none",
+				Incremental: true,
+				Tags:        make(map[string]string),
+				VolumeContext: map[string]string{
+					consts.SkuNameField:     "PremiumV2_LRS",
+					consts.CachingModeField: "none",
+				},
+				DeviceSettings: make(map[string]string),
+			},
+			expectedError: nil,
+		},
+		{
+			name: "disk parameters with PremiumV2_LRS (invalid cachingMode)",
+			inputParams: map[string]string{
+				consts.SkuNameField:     "PremiumV2_LRS",
+				consts.CachingModeField: "ReadOnly",
+			},
+			expectedOutput: ManagedDiskParameters{
+				AccountType: "PremiumV2_LRS",
+				CachingMode: "ReadOnly",
+				Incremental: true,
+				Tags:        make(map[string]string),
+				VolumeContext: map[string]string{
+					consts.SkuNameField:     "PremiumV2_LRS",
+					consts.CachingModeField: "ReadOnly",
+				},
+				DeviceSettings: make(map[string]string),
+			},
+			expectedError: fmt.Errorf("cachingMode ReadOnly is not supported for PremiumV2_LRS"),
+		},
 		{
 			name: "valid parameters input",
 			inputParams: map[string]string{