diff --git a/nsxt/data_source_nsxt_policy_vm_test.go b/nsxt/data_source_nsxt_policy_vm_test.go
index e8c8abb37..210a6c3cf 100644
--- a/nsxt/data_source_nsxt_policy_vm_test.go
+++ b/nsxt/data_source_nsxt_policy_vm_test.go
@@ -16,6 +16,7 @@ func TestAccDataSourceNsxtPolicyVM_basic(t *testing.T) {
 	resource.ParallelTest(t, resource.TestCase{
 		PreCheck: func() {
 			testAccPreCheck(t)
+			testAccOnlyLocalManager(t)
 			testAccEnvDefined(t, "NSXT_TEST_VM_ID")
 			testAccEnvDefined(t, "NSXT_TEST_VM_NAME")
 		},
diff --git a/nsxt/data_source_nsxt_policy_vms.go b/nsxt/data_source_nsxt_policy_vms.go
index 273a460f6..b71d46bfa 100644
--- a/nsxt/data_source_nsxt_policy_vms.go
+++ b/nsxt/data_source_nsxt_policy_vms.go
@@ -5,14 +5,28 @@ package nsxt
 
 import (
 	"fmt"
+	"strings"
 
 	"github.com/hashicorp/terraform-plugin-sdk/v2/helper/schema"
 	"github.com/hashicorp/terraform-plugin-sdk/v2/helper/validation"
+	"github.com/vmware/vsphere-automation-sdk-go/services/nsxt/model"
 )
 
 var valueTypeValues = []string{"bios_id", "external_id", "instance_id"}
 
+var stateMap = map[string]string{
+	"running":   model.VirtualMachine_POWER_STATE_VM_RUNNING,
+	"stopped":   model.VirtualMachine_POWER_STATE_VM_STOPPED,
+	"suspended": model.VirtualMachine_POWER_STATE_VM_SUSPENDED,
+	"unknown":   model.VirtualMachine_POWER_STATE_UNKNOWN,
+}
+
 func dataSourceNsxtPolicyVMs() *schema.Resource {
+	stateMapKeys := []string{}
+	for k := range stateMap {
+		stateMapKeys = append(stateMapKeys, k)
+	}
+
 	return &schema.Resource{
 		Read: dataSourceNsxtPolicyVMsRead,
 
@@ -25,6 +39,17 @@ func dataSourceNsxtPolicyVMs() *schema.Resource {
 				ValidateFunc: validation.StringInSlice(valueTypeValues, false),
 				Default:      "bios_id",
 			},
+			"state": {
+				Type:         schema.TypeString,
+				Description:  "Power state of the VM",
+				Optional:     true,
+				ValidateFunc: validation.StringInSlice(stateMapKeys, false),
+			},
+			"guest_os": {
+				Type:        schema.TypeString,
+				Description: "Operating system",
+				Optional:    true,
+			},
 			"items": {
 				Type:        schema.TypeMap,
 				Description: "Mapping of VM instance ID by display name",
@@ -41,6 +66,8 @@ func dataSourceNsxtPolicyVMsRead(d *schema.ResourceData, m interface{}) error {
 	connector := getPolicyConnector(m)
 
 	valueType := d.Get("value_type").(string)
+	state := d.Get("state").(string)
+	osPrefix := d.Get("guest_os").(string)
 	vmMap := make(map[string]interface{})
 
 	allVMs, err := listAllPolicyVirtualMachines(connector, m)
@@ -49,6 +76,20 @@ func dataSourceNsxtPolicyVMsRead(d *schema.ResourceData, m interface{}) error {
 	}
 
 	for _, vm := range allVMs {
+		if state != "" {
+			if vm.PowerState != nil && *vm.PowerState != stateMap[state] {
+				continue
+			}
+		}
+
+		if osPrefix != "" {
+			if vm.GuestInfo != nil && vm.GuestInfo.OsName != nil {
+				osName := strings.ToLower(*vm.GuestInfo.OsName)
+				if !strings.HasPrefix(osName, strings.ToLower(osPrefix)) {
+					continue
+				}
+			}
+		}
 		if vm.DisplayName == nil {
 			continue
 		}
diff --git a/nsxt/data_source_nsxt_policy_vms_test.go b/nsxt/data_source_nsxt_policy_vms_test.go
index 0275a3728..6b658c698 100644
--- a/nsxt/data_source_nsxt_policy_vms_test.go
+++ b/nsxt/data_source_nsxt_policy_vms_test.go
@@ -18,6 +18,7 @@ func TestAccDataSourceNsxtPolicyVMs_basic(t *testing.T) {
 	resource.ParallelTest(t, resource.TestCase{
 		PreCheck: func() {
 			testAccPreCheck(t)
+			testAccOnlyLocalManager(t)
 			testAccEnvDefined(t, "NSXT_TEST_VM_NAME")
 		},
 		Providers: testAccProviders,
@@ -47,6 +48,28 @@ func TestAccDataSourceNsxtPolicyVMs_basic(t *testing.T) {
 	})
 }
 
+func TestAccDataSourceNsxtPolicyVMs_filter(t *testing.T) {
+	testResourceName := "data.nsxt_policy_vms.test"
+	checkResourceName := "nsxt_policy_group.check"
+
+	resource.ParallelTest(t, resource.TestCase{
+		PreCheck: func() {
+			testAccPreCheck(t)
+			testAccOnlyLocalManager(t)
+		},
+		Providers: testAccProviders,
+		Steps: []resource.TestStep{
+			{
+				Config: testAccNsxtPolicyVMsTemplateFilter(),
+				Check: resource.ComposeTestCheckFunc(
+					resource.TestCheckResourceAttrSet(testResourceName, "id"),
+					resource.TestCheckResourceAttrSet(checkResourceName, "display_name"),
+				),
+			},
+		},
+	})
+}
+
 func testAccNsxtPolicyVMsTemplate(valueType string) string {
 	return fmt.Sprintf(`
 data "nsxt_policy_vms" "test" {
@@ -61,3 +84,15 @@ resource "nsxt_policy_group" "check" {
   display_name = data.nsxt_policy_vms.test.items["%s"]
 }`, valueType, getTestVMName(), getTestVMName())
 }
+
+func testAccNsxtPolicyVMsTemplateFilter() string {
+	return fmt.Sprintf(`
+data "nsxt_policy_vms" "test" {
+  state    = "running"
+  guest_os = "ubuntu"
+}
+
+resource "nsxt_policy_group" "check" {
+  display_name = length(data.nsxt_policy_vms.test.items)
+}`)
+}
diff --git a/website/docs/d/policy_vms.html.markdown b/website/docs/d/policy_vms.html.markdown
index e9ae96006..8c0c46a64 100644
--- a/website/docs/d/policy_vms.html.markdown
+++ b/website/docs/d/policy_vms.html.markdown
@@ -15,6 +15,8 @@ This data source is applicable to NSX Policy Manager and VMC.
 
 ```hcl
 data "nsxt_policy_vms" "all" {
+  state      = "running"
+  guest_os   = "ubuntu"
   value_type = "bios_id"
 }
 
@@ -31,6 +33,8 @@ resource "nsxt_policy_vm_tags" "test" {
 ## Argument Reference
 
 * `value_tupe` - (Optional) Type of VM ID the user is interested in. Possible values are `bios_id`, `external_id`, `instance_id`. Default is `bios_id`.
+* `state` - (Optional) Filter results by power state of the machine.
+* `guest_os` - (Optional) Filter results by operating system of the machine. The match is case insensitive and prefix-based.
 
 ## Attributes Reference