diff --git a/src/runtime/pkg/katautils/config.go b/src/runtime/pkg/katautils/config.go
index 67fc685dc..495404667 100644
--- a/src/runtime/pkg/katautils/config.go
+++ b/src/runtime/pkg/katautils/config.go
@@ -778,14 +778,9 @@ func newClhHypervisorConfig(h hypervisor) (vc.HypervisorConfig, error) {
 		return vc.HypervisorConfig{}, err
 	}
 
-	if initrd != "" {
+	if image == "" && initrd == "" {
 		return vc.HypervisorConfig{},
-			errors.New("having an initrd defined in the configuration file is not supported")
-	}
-
-	if image == "" {
-		return vc.HypervisorConfig{},
-			errors.New("image must be defined in the configuration file")
+			errors.New("image or initrd must be defined in the configuration file")
 	}
 
 	firmware, err := h.firmware()
diff --git a/src/runtime/virtcontainers/clh.go b/src/runtime/virtcontainers/clh.go
index a3cdf02f6..da6e73e3e 100644
--- a/src/runtime/virtcontainers/clh.go
+++ b/src/runtime/virtcontainers/clh.go
@@ -284,16 +284,26 @@ func (clh *cloudHypervisor) CreateVM(ctx context.Context, id string, networkNS N
 		return err
 	}
 
-	if imagePath == "" {
-		return errors.New("image path is empty")
+	initrdPath, err := clh.config.InitrdAssetPath()
+	if err != nil {
+		return err
 	}
 
-	pmem := chclient.NewPmemConfig(imagePath)
-	*pmem.DiscardWrites = true
-	if clh.vmconfig.Pmem != nil {
-		*clh.vmconfig.Pmem = append(*clh.vmconfig.Pmem, *pmem)
+	if imagePath != "" {
+		pmem := chclient.NewPmemConfig(imagePath)
+		*pmem.DiscardWrites = true
+
+		if clh.vmconfig.Pmem != nil {
+			*clh.vmconfig.Pmem = append(*clh.vmconfig.Pmem, *pmem)
+		} else {
+			clh.vmconfig.Pmem = &[]chclient.PmemConfig{*pmem}
+		}
+	} else if initrdPath != "" {
+		initrd := chclient.NewInitramfsConfig(initrdPath)
+
+		clh.vmconfig.SetInitramfs(*initrd)
 	} else {
-		clh.vmconfig.Pmem = &[]chclient.PmemConfig{*pmem}
+		return errors.New("no image or initrd specified")
 	}
 
 	// Use serial port as the guest console only in debug mode,
diff --git a/src/runtime/virtcontainers/clh_test.go b/src/runtime/virtcontainers/clh_test.go
index b0de2ae9b..f9452cbd3 100644
--- a/src/runtime/virtcontainers/clh_test.go
+++ b/src/runtime/virtcontainers/clh_test.go
@@ -229,11 +229,43 @@ func TestCloudHypervisorCleanupVM(t *testing.T) {
 	assert.True(os.IsNotExist(err), "persist.GetDriver() unexpected error")
 }
 
+func TestClhCreateVMWithInitrd(t *testing.T) {
+	assert := assert.New(t)
+
+	clhConfig, err := newClhConfig()
+	assert.NoError(err)
+	clhConfig.ImagePath = ""
+	clhConfig.InitrdPath = testClhInitrdPath
+
+	store, err := persist.GetDriver()
+	assert.NoError(err)
+
+	clhConfig.VMStorePath = store.RunVMStoragePath()
+	clhConfig.RunStorePath = store.RunStoragePath()
+
+	clh := &cloudHypervisor{
+		config: clhConfig,
+	}
+
+	sandbox := &Sandbox{
+		ctx: context.Background(),
+		id:  "testSandbox",
+		config: &SandboxConfig{
+			HypervisorConfig: clhConfig,
+		},
+	}
+
+	err = clh.CreateVM(context.Background(), sandbox.id, NetworkNamespace{}, &sandbox.config.HypervisorConfig)
+	assert.NoError(err)
+	assert.Exactly(clhConfig, clh.config)
+}
+
 func TestClhCreateVM(t *testing.T) {
 	assert := assert.New(t)
 
 	clhConfig, err := newClhConfig()
 	assert.NoError(err)
+	assert.NotEmpty(clhConfig.ImagePath)
 
 	store, err := persist.GetDriver()
 	assert.NoError(err)
diff --git a/src/runtime/virtcontainers/virtcontainers_test.go b/src/runtime/virtcontainers/virtcontainers_test.go
index 84f0387dd..cb03e2351 100644
--- a/src/runtime/virtcontainers/virtcontainers_test.go
+++ b/src/runtime/virtcontainers/virtcontainers_test.go
@@ -44,6 +44,7 @@ var testQemuImagePath = ""
 var testQemuPath = ""
 var testClhKernelPath = ""
 var testClhImagePath = ""
+var testClhInitrdPath = ""
 var testClhPath = ""
 var testAcrnKernelPath = ""
 var testAcrnImagePath = ""
@@ -157,6 +158,7 @@ func TestMain(m *testing.M) {
 	testVirtiofsdPath = filepath.Join(testDir, testBundle, testVirtiofsd)
 	testClhKernelPath = filepath.Join(testDir, testBundle, testKernel)
 	testClhImagePath = filepath.Join(testDir, testBundle, testImage)
+	testClhInitrdPath = filepath.Join(testDir, testBundle, testInitrd)
 	testClhPath = filepath.Join(testDir, testBundle, testHypervisor)
 
 	setupClh()