diff --git a/cluster-autoscaler/cloudprovider/hetzner/hetzner_cloud_provider.go b/cluster-autoscaler/cloudprovider/hetzner/hetzner_cloud_provider.go
index 046a8b456e81..0a2b5a0e5112 100644
--- a/cluster-autoscaler/cloudprovider/hetzner/hetzner_cloud_provider.go
+++ b/cluster-autoscaler/cloudprovider/hetzner/hetzner_cloud_provider.go
@@ -17,6 +17,7 @@ limitations under the License.
 package hetzner
 
 import (
+	"context"
 	"fmt"
 	"regexp"
 	"strconv"
@@ -178,6 +179,31 @@ func (d *HetznerCloudProvider) Refresh() error {
 	return nil
 }
 
+// Check if any defined placement groups could potentially have more than the maximum allowed number of nodes
+func getLargePlacementGroups(nodeGroups map[string]*hetznerNodeGroup, threshold int) []int64 {
+	placementGroupTotals := make(map[int64]int)
+
+	// Calculate totals for each placement group
+	for _, nodeGroup := range nodeGroups {
+		if nodeGroup.placementGroup == nil || nodeGroup.placementGroup.ID == 0 {
+			continue
+		}
+
+		placementGroupID := nodeGroup.placementGroup.ID
+		placementGroupTotals[placementGroupID] += nodeGroup.maxSize
+	}
+
+	// Collect placement groups with total maxSize > threshold
+	var largePlacementGroupIDs []int64
+	for id, totalMaxSize := range placementGroupTotals {
+		if totalMaxSize > threshold {
+			largePlacementGroupIDs = append(largePlacementGroupIDs, id)
+		}
+	}
+
+	return largePlacementGroupIDs
+}
+
 // BuildHetzner builds the Hetzner cloud provider.
 func BuildHetzner(_ config.AutoscalingOptions, do cloudprovider.NodeGroupDiscoveryOptions, rl *cloudprovider.ResourceLimiter) cloudprovider.CloudProvider {
 	manager, err := newManager()
@@ -225,6 +251,57 @@ func BuildHetzner(_ config.AutoscalingOptions, do cloudprovider.NodeGroupDiscove
 			targetSize:         len(servers),
 			clusterUpdateMutex: &clusterUpdateLock,
 		}
+
+		// If a placement group was specified, check with the API to see if it exists
+		if manager.clusterConfig.IsUsingNewFormat {
+
+			placementGroupRef := manager.clusterConfig.NodeConfigs[spec.name].PlacementGroup
+
+			if placementGroupRef == "" {
+				continue
+			}
+
+			ctx, cancel := context.WithTimeout(context.Background(), 10*time.Second)
+			defer cancel()
+
+			placementGroup, _, err := manager.client.PlacementGroup.Get(ctx, placementGroupRef)
+
+			// Check if an error occurred
+			if err != nil {
+				if err == context.DeadlineExceeded {
+					klog.Fatalf("Timed out checking if placement group `%s` exists.", placementGroupRef)
+				} else {
+					klog.Fatalf("Failed to verify if placement group `%s` exists error: %v", placementGroupRef, err)
+				}
+			}
+
+			// If the placement group exists, add it to the node group config
+			if placementGroup != nil {
+				manager.nodeGroups[spec.name].placementGroup = placementGroup
+			} else {
+				klog.Fatalf("The requested placement group `%s` does not appear to exist.", placementGroupRef)
+			}
+		}
+	}
+
+	// Get placement groups with total maxSize over the maximum allowed
+	maxPlacementGroupSize := 10
+
+	largePlacementGroups := getLargePlacementGroups(manager.nodeGroups, maxPlacementGroupSize)
+
+	// Fail if we have placement groups over the max size
+	if len(largePlacementGroups) > 0 {
+
+		// Gather placement group names
+		var placementGroupIDs string
+		for i, placementGroupID := range largePlacementGroups {
+			if i > 0 {
+				placementGroupIDs += ", "
+			}
+			placementGroupIDs += strconv.FormatInt(placementGroupID, 10)
+		}
+
+		klog.Fatalf("The following placement groups have a potential size over the allowed maximum of %d: %s.", maxPlacementGroupSize, placementGroupIDs)
 	}
 
 	return provider
diff --git a/cluster-autoscaler/cloudprovider/hetzner/hetzner_manager.go b/cluster-autoscaler/cloudprovider/hetzner/hetzner_manager.go
index 6dd9488d9a3b..1308e5ce7c50 100644
--- a/cluster-autoscaler/cloudprovider/hetzner/hetzner_manager.go
+++ b/cluster-autoscaler/cloudprovider/hetzner/hetzner_manager.go
@@ -73,9 +73,10 @@ type ImageList struct {
 
 // NodeConfig holds the configuration for a single nodepool
 type NodeConfig struct {
-	CloudInit string
-	Taints    []apiv1.Taint
-	Labels    map[string]string
+	CloudInit      string
+	PlacementGroup string
+	Taints         []apiv1.Taint
+	Labels         map[string]string
 }
 
 // LegacyConfig holds the configuration in the legacy format
diff --git a/cluster-autoscaler/cloudprovider/hetzner/hetzner_node_group.go b/cluster-autoscaler/cloudprovider/hetzner/hetzner_node_group.go
index c0f7510a8b3d..7e5ee63549bb 100644
--- a/cluster-autoscaler/cloudprovider/hetzner/hetzner_node_group.go
+++ b/cluster-autoscaler/cloudprovider/hetzner/hetzner_node_group.go
@@ -48,6 +48,7 @@ type hetznerNodeGroup struct {
 	instanceType string
 
 	clusterUpdateMutex *sync.Mutex
+	placementGroup     *hcloud.PlacementGroup
 }
 
 type hetznerNodeGroupSpec struct {
@@ -485,6 +486,7 @@ func createServer(n *hetznerNodeGroup) error {
 			EnableIPv4: n.manager.publicIPv4,
 			EnableIPv6: n.manager.publicIPv6,
 		},
+		PlacementGroup: n.placementGroup,
 	}
 	if n.manager.sshKey != nil {
 		opts.SSHKeys = []*hcloud.SSHKey{n.manager.sshKey}