diff --git a/run.sh b/run.sh
index f17cc45..3a16ed8 100755
--- a/run.sh
+++ b/run.sh
@@ -199,12 +199,26 @@ vm_create() {
         log_warn "This is OK for live ISO testing but not for installation"
     fi
 
+    # Detect KVM acceleration; fall back to QEMU software emulation
+    local domain_type="qemu"
+    local cpu_mode="qemu64"
+    if [[ -e /dev/kvm ]]; then
+        domain_type="kvm"
+        cpu_mode="host-passthrough"
+        log_info "KVM acceleration enabled"
+    else
+        log_warn "KVM not available (/dev/kvm missing) - using QEMU software emulation"
+        log_warn "VM will be slower but functional for boot testing"
+    fi
+
     # Create VM XML from template
     local vm_xml="/tmp/${VM_NAME}.xml"
     sed -e "s|@VM_NAME@|${VM_NAME}|g" \
         -e "s|@VM_UUID@|${vm_uuid}|g" \
         -e "s|@VM_RAM@|${VM_RAM}|g" \
         -e "s|@VM_CPUS@|${VM_CPUS}|g" \
+        -e "s|@DOMAIN_TYPE@|${domain_type}|g" \
+        -e "s|@CPU_MODE@|${cpu_mode}|g" \
         -e "s|@SECURE_BOOT@|${secure_boot}|g" \
         -e "s|@UEFI_CODE@|${uefi_code}|g" \
         -e "s|@UEFI_VARS_TEMPLATE@|${uefi_vars}|g" \
diff --git a/tests/unit/secureboot_test.bats b/tests/unit/secureboot_test.bats
index 5573866..e592f9b 100644
--- a/tests/unit/secureboot_test.bats
+++ b/tests/unit/secureboot_test.bats
@@ -275,6 +275,34 @@
     grep -q "vm_setup_swtpm" /workspace/run.sh
 }
 
+# =============================================================================
+# VM KVM/QEMU Acceleration Fallback
+# =============================================================================
+
+@test "VM template has domain type placeholder" {
+    grep -q '@DOMAIN_TYPE@' /workspace/vm/template.xml
+}
+
+@test "VM template has CPU mode placeholder" {
+    grep -q '@CPU_MODE@' /workspace/vm/template.xml
+}
+
+@test "run.sh detects KVM availability via /dev/kvm" {
+    grep -q '/dev/kvm' /workspace/run.sh
+}
+
+@test "run.sh substitutes domain type in VM XML" {
+    grep -q '@DOMAIN_TYPE@' /workspace/run.sh
+}
+
+@test "run.sh substitutes CPU mode in VM XML" {
+    grep -q '@CPU_MODE@' /workspace/run.sh
+}
+
+@test "run.sh defaults to QEMU emulation when KVM unavailable" {
+    grep -q 'qemu64' /workspace/run.sh
+}
+
 # =============================================================================
 # Output Verification
 # =============================================================================
diff --git a/vm/template.xml b/vm/template.xml
index 5f49468..692dd02 100644
--- a/vm/template.xml
+++ b/vm/template.xml
@@ -1,4 +1,4 @@
-<domain type='kvm'>
+<domain type='@DOMAIN_TYPE@'>
   <name>@VM_NAME@</name>
   <uuid>@VM_UUID@</uuid>
   <memory unit='MiB'>@VM_RAM@</memory>
@@ -16,7 +16,7 @@
     <apic/>
     <smm state='on'/>
   </features>
-  <cpu mode='host-passthrough' check='none'/>
+  <cpu mode='@CPU_MODE@' check='none'/>
   <clock offset='utc'>
     <timer name='rtc' tickpolicy='catchup'/>
     <timer name='pit' tickpolicy='delay'/>