diff --git a/pkg/providers/instance/suite_test.go b/pkg/providers/instance/suite_test.go
index 58b3ebdecf63..e999eb6fef08 100644
--- a/pkg/providers/instance/suite_test.go
+++ b/pkg/providers/instance/suite_test.go
@@ -23,6 +23,7 @@ import (
 	"sigs.k8s.io/karpenter/pkg/test/v1alpha1"
 
 	"github.com/aws/aws-sdk-go-v2/aws"
+	"github.com/aws/aws-sdk-go-v2/service/ec2"
 	ec2types "github.com/aws/aws-sdk-go-v2/service/ec2/types"
 	"github.com/awslabs/operatorpkg/object"
 	"github.com/samber/lo"
@@ -205,4 +206,38 @@ var _ = Describe("InstanceProvider", func() {
 		retrievedIDs := sets.New[string](lo.Map(instances, func(i *instance.Instance, _ int) string { return i.ID })...)
 		Expect(ids.Equal(retrievedIDs)).To(BeTrue())
 	})
+		It("should not consider subnet with no available IPs for instance creation", func() {
+		// Prepare the context, nodeClass, and nodeClaim as in the other tests
+		ExpectApplied(ctx, env.Client, nodeClaim, nodePool, nodeClass)
+		nodeClass = ExpectExists(ctx, env.Client, nodeClass)
+
+		// Update the EC2 API mock to include this subnet
+    	awsEnv.EC2API.DescribeSubnetsOutput.Set(&ec2.DescribeSubnetsOutput{
+    	    Subnets: []ec2types.Subnet{
+    	        {
+    	            SubnetId:                aws.String("test-subnet-1"),
+    	            AvailabilityZone:        aws.String("test-zone-1a"),
+    	            AvailableIpAddressCount: aws.Int32(0), // Exhausted
+    	            Tags:                    []ec2types.Tag{{Key: aws.String("Name"), Value: aws.String("test-subnet-1")}},
+    	        },
+    	        {
+    	            SubnetId:                aws.String("test-subnet-2"),
+    	            AvailabilityZone:        aws.String("test-zone-1b"),
+    	            AvailableIpAddressCount: aws.Int32(5), // Has IPs
+    	            Tags:                    []ec2types.Tag{{Key: aws.String("Name"), Value: aws.String("test-subnet-2")}},
+    	        },
+    	    },
+    	})
+
+    instanceTypes, err := cloudProvider.GetInstanceTypes(ctx, nodePool)
+    Expect(err).ToNot(HaveOccurred())
+
+    instanceTypes = lo.Filter(instanceTypes, func(i *corecloudprovider.InstanceType, _ int) bool { return i.Name == "m5.xlarge" })
+    instance, err := awsEnv.InstanceProvider.Create(ctx, nodeClass, nodeClaim, nil, instanceTypes)
+
+    // Assert that the instance is created using the subnet with available IPs
+    Expect(err).ToNot(HaveOccurred())
+    Expect(instance).ToNot(BeNil())
+    Expect(instance.SubnetID).To(Equal("test-subnet-2"))
+	})
 })
diff --git a/pkg/providers/subnet/subnet.go b/pkg/providers/subnet/subnet.go
index 959b8bc4ddc8..45c5e7848c2c 100644
--- a/pkg/providers/subnet/subnet.go
+++ b/pkg/providers/subnet/subnet.go
@@ -168,6 +168,13 @@ func (p *DefaultProvider) ZonalSubnetsForLaunch(ctx context.Context, nodeClass *
 		if trackedIPs, ok := p.inflightIPs[subnet.ID]; ok {
 			prevIPs = trackedIPs
 		}
+
+		// Check if the remaining IP count is insufficient to meet the predicted IP usage;
+		// if so, remove this subnet zone record from inflightIPs and continue to the next item in the loop。
+		if prevIPs-predictedIPsUsed < 0 {
+			delete(zonalSubnets, subnet.Zone)
+			continue
+		}
 		p.inflightIPs[subnet.ID] = prevIPs - predictedIPsUsed
 	}
 	return zonalSubnets, nil