diff --git a/cloud/services/compute/subnets/reconcile.go b/cloud/services/compute/subnets/reconcile.go
index 403c49fb7..2a186d6aa 100644
--- a/cloud/services/compute/subnets/reconcile.go
+++ b/cloud/services/compute/subnets/reconcile.go
@@ -43,7 +43,7 @@ func (s *Service) Delete(ctx context.Context) error {
 	logger := log.FromContext(ctx)
 	for _, subnetSpec := range s.scope.SubnetSpecs() {
 		logger.V(2).Info("Deleting a subnet", "name", subnetSpec.Name)
-		subnetKey := meta.RegionalKey(subnetSpec.Name, s.scope.Region())
+		subnetKey := meta.RegionalKey(subnetSpec.Name, s.getSubnetRegion(subnetSpec))
 		err := s.subnets.Delete(ctx, subnetKey)
 		if err != nil && !gcperrors.IsNotFound(err) {
 			logger.Error(err, "Error deleting subnet", "name", subnetSpec.Name)
@@ -60,7 +60,7 @@ func (s *Service) createOrGetSubnets(ctx context.Context) ([]*compute.Subnetwork
 	subnets := []*compute.Subnetwork{}
 	for _, subnetSpec := range s.scope.SubnetSpecs() {
 		logger.V(2).Info("Looking for subnet", "name", subnetSpec.Name)
-		subnetKey := meta.RegionalKey(subnetSpec.Name, s.scope.Region())
+		subnetKey := meta.RegionalKey(subnetSpec.Name, s.getSubnetRegion(subnetSpec))
 		subnet, err := s.subnets.Get(ctx, subnetKey)
 		if err != nil {
 			if !gcperrors.IsNotFound(err) {
@@ -86,3 +86,11 @@ func (s *Service) createOrGetSubnets(ctx context.Context) ([]*compute.Subnetwork
 
 	return subnets, nil
 }
+
+// getSubnetRegion returns subnet region if user provided it, otherwise returns default scope region.
+func (s *Service) getSubnetRegion(subnetSpec *compute.Subnetwork) string {
+	if subnetSpec.Region != "" {
+		return subnetSpec.Region
+	}
+	return s.scope.Region()
+}
diff --git a/cloud/services/container/clusters/reconcile.go b/cloud/services/container/clusters/reconcile.go
index 4317e058b..5f307e64c 100644
--- a/cloud/services/container/clusters/reconcile.go
+++ b/cloud/services/container/clusters/reconcile.go
@@ -248,10 +248,10 @@ func (s *Service) createCluster(ctx context.Context, log *logr.Logger) error {
 	}
 
 	isRegional := shared.IsRegional(s.scope.Region())
-
 	cluster := &containerpb.Cluster{
-		Name:    s.scope.ClusterName(),
-		Network: *s.scope.GCPManagedCluster.Spec.Network.Name,
+		Name:       s.scope.ClusterName(),
+		Network:    *s.scope.GCPManagedCluster.Spec.Network.Name,
+		Subnetwork: s.getSubnetNameInClusterRegion(),
 		Autopilot: &containerpb.Autopilot{
 			Enabled: s.scope.GCPManagedControlPlane.Spec.EnableAutopilot,
 		},
@@ -281,6 +281,16 @@ func (s *Service) createCluster(ctx context.Context, log *logr.Logger) error {
 	return nil
 }
 
+// getSubnetNameInClusterRegion returns the subnet which is in the same region as cluster. If not found it returns empty string.
+func (s *Service) getSubnetNameInClusterRegion() string {
+	for _, subnet := range s.scope.GCPManagedCluster.Spec.Network.Subnets {
+		if subnet.Region == s.scope.Region() {
+			return subnet.Name
+		}
+	}
+	return ""
+}
+
 func (s *Service) updateCluster(ctx context.Context, updateClusterRequest *containerpb.UpdateClusterRequest, log *logr.Logger) error {
 	_, err := s.scope.ManagedControlPlaneClient().UpdateCluster(ctx, updateClusterRequest)
 	if err != nil {
diff --git a/exp/api/v1beta1/gcpmanagedcluster_webhook.go b/exp/api/v1beta1/gcpmanagedcluster_webhook.go
index 4b2c33844..09191bd69 100644
--- a/exp/api/v1beta1/gcpmanagedcluster_webhook.go
+++ b/exp/api/v1beta1/gcpmanagedcluster_webhook.go
@@ -20,6 +20,7 @@ import (
 	"github.com/google/go-cmp/cmp"
 	apierrors "k8s.io/apimachinery/pkg/api/errors"
 	"k8s.io/apimachinery/pkg/runtime"
+	kerrors "k8s.io/apimachinery/pkg/util/errors"
 	"k8s.io/apimachinery/pkg/util/validation/field"
 	ctrl "sigs.k8s.io/controller-runtime"
 	logf "sigs.k8s.io/controller-runtime/pkg/log"
@@ -52,7 +53,7 @@ var _ webhook.Validator = &GCPManagedCluster{}
 func (r *GCPManagedCluster) ValidateCreate() error {
 	gcpmanagedclusterlog.Info("validate create", "name", r.Name)
 
-	return nil
+	return r.validate()
 }
 
 // ValidateUpdate implements webhook.Validator so a webhook will be registered for the type.
@@ -95,3 +96,36 @@ func (r *GCPManagedCluster) ValidateDelete() error {
 
 	return nil
 }
+
+func (r *GCPManagedCluster) validate() error {
+	validators := []func() error{
+		r.validateCustomSubnet,
+	}
+
+	var errs []error
+	for _, validator := range validators {
+		if err := validator(); err != nil {
+			errs = append(errs, err)
+		}
+	}
+
+	return kerrors.NewAggregate(errs)
+}
+
+func (r *GCPManagedCluster) validateCustomSubnet() error {
+	gcpmanagedclusterlog.Info("validate custom subnet", "name", r.Name)
+	if r.Spec.Network.AutoCreateSubnetworks == nil || *r.Spec.Network.AutoCreateSubnetworks {
+		return nil
+	}
+	var isSubnetExistInClusterRegion = false
+	for _, subnet := range r.Spec.Network.Subnets {
+		if subnet.Region == r.Spec.Region {
+			isSubnetExistInClusterRegion = true
+		}
+	}
+
+	if !isSubnetExistInClusterRegion {
+		return field.Required(field.NewPath("spec", "network", "subnet"), "at least one given subnets region should be same as spec.network.region when spec.network.autoCreateSubnetworks is false")
+	}
+	return nil
+}