diff --git a/cluster-autoscaler/cloudprovider/azure/azure_template.go b/cluster-autoscaler/cloudprovider/azure/azure_template.go
index fdee130eabac..39afb09af222 100644
--- a/cluster-autoscaler/cloudprovider/azure/azure_template.go
+++ b/cluster-autoscaler/cloudprovider/azure/azure_template.go
@@ -30,7 +30,6 @@ import (
 	metav1 "k8s.io/apimachinery/pkg/apis/meta/v1"
 	"k8s.io/autoscaler/cluster-autoscaler/cloudprovider"
 	"k8s.io/autoscaler/cluster-autoscaler/utils/gpu"
-	cloudvolume "k8s.io/cloud-provider/volume"
 	"k8s.io/klog/v2"
 )
 
@@ -152,9 +151,14 @@ func buildGenericLabels(template compute.VirtualMachineScaleSet, nodeName string
 		for k, v := range *template.Zones {
 			failureDomains[k] = strings.ToLower(*template.Location) + "-" + v
 		}
-
-		result[apiv1.LabelTopologyZone] = strings.Join(failureDomains[:], cloudvolume.LabelMultiZoneDelimiter)
-		result[azureDiskTopologyKey] = strings.Join(failureDomains[:], cloudvolume.LabelMultiZoneDelimiter)
+		//Picks random zones for Multi-zone nodepool when scaling from zero.
+		//This random zone will not be the same as the zone of the VMSS that is being created, the purpose of creating
+		//the node template with random zone is to initiate scaling from zero on the multi-zone nodepool.
+		//Note that the if the customer is to have some pod affinity picking exact zone, this logic won't work.
+		//For now, discourage the customers from using podAffinity to pick the availability zones.
+		randomZone := failureDomains[rand.Intn(len(failureDomains))]
+		result[apiv1.LabelTopologyZone] = randomZone
+		result[azureDiskTopologyKey] = randomZone
 	} else {
 		result[apiv1.LabelTopologyZone] = "0"
 		result[azureDiskTopologyKey] = ""
diff --git a/cluster-autoscaler/cloudprovider/azure/azure_template_test.go b/cluster-autoscaler/cloudprovider/azure/azure_template_test.go
index 9ca887fc6cc7..d8eaeb1d8fe0 100644
--- a/cluster-autoscaler/cloudprovider/azure/azure_template_test.go
+++ b/cluster-autoscaler/cloudprovider/azure/azure_template_test.go
@@ -20,8 +20,11 @@ import (
 	"fmt"
 	"testing"
 
+	"github.com/Azure/azure-sdk-for-go/services/compute/mgmt/2022-08-01/compute"
+	"github.com/Azure/go-autorest/autorest"
 	"github.com/Azure/go-autorest/autorest/to"
 	"github.com/stretchr/testify/assert"
+
 	apiv1 "k8s.io/api/core/v1"
 	"k8s.io/apimachinery/pkg/api/resource"
 )
@@ -127,3 +130,50 @@ func makeTaintSet(taints []apiv1.Taint) map[apiv1.Taint]bool {
 	}
 	return set
 }
+
+func TestTopologyFromScaleSet(t *testing.T) {
+	testNodeName := "test-node"
+	testSkuName := "test-sku"
+	testVmss := compute.VirtualMachineScaleSet{
+		Response: autorest.Response{},
+		Sku:      &compute.Sku{Name: &testSkuName},
+		Plan:     nil,
+		VirtualMachineScaleSetProperties: &compute.VirtualMachineScaleSetProperties{
+			VirtualMachineProfile: &compute.VirtualMachineScaleSetVMProfile{OsProfile: nil}},
+		Zones:    &[]string{"1", "2", "3"},
+		Location: to.StringPtr("westus"),
+	}
+	expectedZoneValues := []string{"westus-1", "westus-2", "westus-3"}
+	labels := buildGenericLabels(testVmss, testNodeName)
+	topologyZone, ok := labels[apiv1.LabelTopologyZone]
+	assert.True(t, ok)
+	azureDiskTopology, ok := labels[azureDiskTopologyKey]
+	assert.True(t, ok)
+
+	assert.Contains(t, expectedZoneValues, topologyZone)
+	assert.Contains(t, expectedZoneValues, azureDiskTopology)
+}
+
+func TestEmptyTopologyFromScaleSet(t *testing.T) {
+	testNodeName := "test-node"
+	testSkuName := "test-sku"
+	testVmss := compute.VirtualMachineScaleSet{
+		Response: autorest.Response{},
+		Sku:      &compute.Sku{Name: &testSkuName},
+		Plan:     nil,
+		VirtualMachineScaleSetProperties: &compute.VirtualMachineScaleSetProperties{
+			VirtualMachineProfile: &compute.VirtualMachineScaleSetVMProfile{OsProfile: nil}},
+		Location: to.StringPtr("westus"),
+	}
+	expectedTopologyZone := "0"
+	expectedAzureDiskTopology := ""
+	labels := buildGenericLabels(testVmss, testNodeName)
+
+	topologyZone, ok := labels[apiv1.LabelTopologyZone]
+	assert.True(t, ok)
+	assert.Equal(t, expectedTopologyZone, topologyZone)
+
+	azureDiskTopology, ok := labels[azureDiskTopologyKey]
+	assert.True(t, ok)
+	assert.Equal(t, expectedAzureDiskTopology, azureDiskTopology)
+}