diff --git a/pkg/clients/compute.go b/pkg/clients/compute.go
index 20891b443b..158fc8983a 100644
--- a/pkg/clients/compute.go
+++ b/pkg/clients/compute.go
@@ -25,6 +25,7 @@ import (
 	"github.com/gophercloud/gophercloud/openstack/compute/v2/extensions/availabilityzones"
 	"github.com/gophercloud/gophercloud/openstack/compute/v2/flavors"
 	"github.com/gophercloud/gophercloud/openstack/compute/v2/servers"
+	"github.com/gophercloud/gophercloud/openstack/utils"
 	"github.com/gophercloud/utils/openstack/clientconfig"
 	uflavors "github.com/gophercloud/utils/openstack/compute/v2/flavors"
 
@@ -32,16 +33,21 @@ import (
 )
 
 /*
-NovaMinimumMicroversion is the minimum Nova microversion supported by CAPO
-2.60 corresponds to OpenStack Queens
+NovaSupportedVersions is the list of Nova microversion supported by CAPO
+2.60 corresponds to OpenStack Queens and 2.53 to OpenStack Pike.
 
 For the canonical description of Nova microversions, see
 https://docs.openstack.org/nova/latest/reference/api-microversion-history.html
 
-CAPO uses server tags, which were added in microversion 2.52.
+CAPO uses server tags, which were first added in microversion 2.26 and then refined
+in 2.52 so it is possible to apply them when creating a server (which is what CAPO does).
 CAPO supports multiattach volume types, which were added in microversion 2.60.
 */
-const NovaMinimumMicroversion = "2.60"
+var NovaSupportedVersions = []*utils.Version{
+	{ID: "2.1", Priority: 10, Suffix: "/v2.1/"},   // Initial microversion release, same as specifying no version
+	{ID: "2.53", Priority: 20, Suffix: "/v2.53/"}, // Maximum in Pike
+	{ID: "2.60", Priority: 30, Suffix: "/v2.60/"}, // Maximum in Queens
+}
 
 // ServerExt is the base gophercloud Server with extensions used by InstanceStatus.
 type ServerExt struct {
@@ -65,14 +71,24 @@ type ComputeClient interface {
 type computeClient struct{ client *gophercloud.ServiceClient }
 
 // NewComputeClient returns a new compute client.
-func NewComputeClient(providerClient *gophercloud.ProviderClient, providerClientOpts *clientconfig.ClientOpts) (ComputeClient, error) {
+func NewComputeClient(providerClient *gophercloud.ProviderClient, providerClientOpts *clientconfig.ClientOpts,
+	recognizedVersions ...*utils.Version,
+) (ComputeClient, error) {
+	// If no recognized versions are supplied, we use the defaults.
+	if len(recognizedVersions) == 0 {
+		recognizedVersions = NovaSupportedVersions
+	}
+	chosen, _, err := utils.ChooseVersion(providerClient, recognizedVersions)
+	if err != nil {
+		return nil, fmt.Errorf("failed to negotiate compute client version: %v", err)
+	}
 	compute, err := openstack.NewComputeV2(providerClient, gophercloud.EndpointOpts{
 		Region: providerClientOpts.RegionName,
 	})
 	if err != nil {
 		return nil, fmt.Errorf("failed to create compute service client: %v", err)
 	}
-	compute.Microversion = NovaMinimumMicroversion
+	compute.Microversion = chosen.ID
 
 	return &computeClient{compute}, nil
 }
diff --git a/pkg/cloud/services/compute/instance.go b/pkg/cloud/services/compute/instance.go
index 57882f349a..647cfcd688 100644
--- a/pkg/cloud/services/compute/instance.go
+++ b/pkg/cloud/services/compute/instance.go
@@ -31,6 +31,7 @@ import (
 	"github.com/gophercloud/gophercloud/openstack/compute/v2/servers"
 	"github.com/gophercloud/gophercloud/openstack/imageservice/v2/images"
 	"github.com/gophercloud/gophercloud/openstack/networking/v2/ports"
+	"github.com/gophercloud/gophercloud/openstack/utils"
 	"k8s.io/apimachinery/pkg/runtime"
 	"sigs.k8s.io/cluster-api/util"
 
@@ -345,7 +346,19 @@ func (s *Service) createInstanceImpl(eventObject runtime.Object, openStackCluste
 
 	serverCreateOpts = applyServerGroupID(serverCreateOpts, instanceSpec.ServerGroupID)
 
-	server, err = s.getComputeClient().CreateServer(keypairs.CreateOptsExt{
+	// Filter supported versions based on features used
+	recognizedMicroversions := clients.NovaSupportedVersions
+	supportedMicroversions := []*utils.Version{}
+	if len(instanceSpec.Tags) > 0 {
+		for i := range recognizedMicroversions {
+			if recognizedMicroversions[i].ID == "2.1" {
+				continue
+			}
+			supportedMicroversions = append(supportedMicroversions, recognizedMicroversions[i])
+		}
+	}
+
+	server, err = s.getComputeClient(supportedMicroversions...).CreateServer(keypairs.CreateOptsExt{
 		CreateOptsBuilder: serverCreateOpts,
 		KeyName:           instanceSpec.SSHKeyName,
 	})
diff --git a/pkg/cloud/services/compute/service.go b/pkg/cloud/services/compute/service.go
index b819d33e31..b248371aab 100644
--- a/pkg/cloud/services/compute/service.go
+++ b/pkg/cloud/services/compute/service.go
@@ -19,6 +19,8 @@ package compute
 import (
 	"fmt"
 
+	"github.com/gophercloud/gophercloud/openstack/utils"
+
 	"sigs.k8s.io/cluster-api-provider-openstack/pkg/clients"
 	"sigs.k8s.io/cluster-api-provider-openstack/pkg/cloud/services/networking"
 	"sigs.k8s.io/cluster-api-provider-openstack/pkg/scope"
@@ -39,9 +41,9 @@ func NewService(scope scope.Scope) (*Service, error) {
 	}, nil
 }
 
-func (s Service) getComputeClient() clients.ComputeClient {
+func (s Service) getComputeClient(recognizedVersions ...*utils.Version) clients.ComputeClient {
 	if s._computeClient == nil {
-		computeClient, err := s.scope.NewComputeClient()
+		computeClient, err := s.scope.NewComputeClient(recognizedVersions...)
 		if err != nil {
 			return clients.NewComputeErrorClient(err)
 		}
diff --git a/pkg/scope/mock.go b/pkg/scope/mock.go
index 3b8a25881e..6dbed17fe9 100644
--- a/pkg/scope/mock.go
+++ b/pkg/scope/mock.go
@@ -21,6 +21,7 @@ import (
 
 	"github.com/go-logr/logr"
 	"github.com/golang/mock/gomock"
+	"github.com/gophercloud/gophercloud/openstack/utils"
 	"sigs.k8s.io/controller-runtime/pkg/client"
 
 	infrav1 "sigs.k8s.io/cluster-api-provider-openstack/api/v1alpha7"
@@ -78,7 +79,7 @@ func (f *MockScopeFactory) NewClientScopeFromCluster(_ context.Context, _ client
 	return f, nil
 }
 
-func (f *MockScopeFactory) NewComputeClient() (clients.ComputeClient, error) {
+func (f *MockScopeFactory) NewComputeClient(_ ...*utils.Version) (clients.ComputeClient, error) {
 	return f.ComputeClient, nil
 }
 
diff --git a/pkg/scope/provider.go b/pkg/scope/provider.go
index e3204a9d8c..30e1ffe2d4 100644
--- a/pkg/scope/provider.go
+++ b/pkg/scope/provider.go
@@ -27,6 +27,7 @@ import (
 	"github.com/gophercloud/gophercloud"
 	"github.com/gophercloud/gophercloud/openstack"
 	"github.com/gophercloud/gophercloud/openstack/identity/v3/tokens"
+	"github.com/gophercloud/gophercloud/openstack/utils"
 	osclient "github.com/gophercloud/utils/client"
 	"github.com/gophercloud/utils/openstack/clientconfig"
 	corev1 "k8s.io/api/core/v1"
@@ -113,8 +114,8 @@ func (s *providerScope) ProjectID() string {
 	return s.projectID
 }
 
-func (s *providerScope) NewComputeClient() (clients.ComputeClient, error) {
-	return clients.NewComputeClient(s.providerClient, s.providerClientOpts)
+func (s *providerScope) NewComputeClient(recognizedVersions ...*utils.Version) (clients.ComputeClient, error) {
+	return clients.NewComputeClient(s.providerClient, s.providerClientOpts, recognizedVersions...)
 }
 
 func (s *providerScope) NewNetworkClient() (clients.NetworkClient, error) {
diff --git a/pkg/scope/scope.go b/pkg/scope/scope.go
index b3f6ca728c..cb9163b348 100644
--- a/pkg/scope/scope.go
+++ b/pkg/scope/scope.go
@@ -20,6 +20,7 @@ import (
 	"context"
 
 	"github.com/go-logr/logr"
+	"github.com/gophercloud/gophercloud/openstack/utils"
 	"sigs.k8s.io/controller-runtime/pkg/client"
 
 	infrav1 "sigs.k8s.io/cluster-api-provider-openstack/api/v1alpha7"
@@ -37,7 +38,7 @@ type Factory interface {
 
 // Scope contains arguments common to most operations.
 type Scope interface {
-	NewComputeClient() (clients.ComputeClient, error)
+	NewComputeClient(recognizedVersions ...*utils.Version) (clients.ComputeClient, error)
 	NewVolumeClient() (clients.VolumeClient, error)
 	NewImageClient() (clients.ImageClient, error)
 	NewNetworkClient() (clients.NetworkClient, error)
diff --git a/test/e2e/shared/openstack.go b/test/e2e/shared/openstack.go
index dca857d37e..34f1bbe969 100644
--- a/test/e2e/shared/openstack.go
+++ b/test/e2e/shared/openstack.go
@@ -44,6 +44,7 @@ import (
 	"github.com/gophercloud/gophercloud/openstack/networking/v2/networks"
 	"github.com/gophercloud/gophercloud/openstack/networking/v2/ports"
 	"github.com/gophercloud/gophercloud/openstack/networking/v2/subnets"
+	"github.com/gophercloud/gophercloud/openstack/utils"
 	"github.com/gophercloud/utils/openstack/clientconfig"
 	. "github.com/onsi/ginkgo/v2"
 	. "github.com/onsi/gomega"
@@ -230,12 +231,17 @@ func DumpOpenStackServers(e2eCtx *E2EContext, filter servers.ListOpts) ([]server
 		return nil, nil
 	}
 
+	chosen, _, err := utils.ChooseVersion(providerClient, clients.NovaSupportedVersions)
+	if err != nil {
+		return nil, fmt.Errorf("failed to negotiate compute client version: %v", err)
+	}
+
 	computeClient, err := openstack.NewComputeV2(providerClient, gophercloud.EndpointOpts{Region: clientOpts.RegionName})
 	if err != nil {
 		return nil, fmt.Errorf("error creating compute client: %v", err)
 	}
 
-	computeClient.Microversion = clients.NovaMinimumMicroversion
+	computeClient.Microversion = chosen.ID
 	allPages, err := servers.List(computeClient, filter).AllPages()
 	if err != nil {
 		return nil, fmt.Errorf("error listing servers: %v", err)