diff --git a/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/InsufficientDatanodesException.java b/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/InsufficientDatanodesException.java
new file mode 100644
index 0000000000..a6a5a69a16
--- /dev/null
+++ b/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/InsufficientDatanodesException.java
@@ -0,0 +1,36 @@
+/**
+ * Licensed to the Apache Software Foundation (ASF) under one
+ * or more contributor license agreements.  See the NOTICE file
+ * distributed with this work for additional information
+ * regarding copyright ownership.  The ASF licenses this file
+ * to you under the Apache License, Version 2.0 (the
+ * "License"); you may not use this file except in compliance
+ * with the License.  You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+package org.apache.hadoop.hdds.scm.pipeline;
+
+import java.io.IOException;
+
+/**
+ * Exception thrown when there are not enough Datanodes to create a pipeline.
+ */
+public class InsufficientDatanodesException extends IOException {
+
+
+  public InsufficientDatanodesException() {
+    super();
+  }
+
+  public InsufficientDatanodesException(String message) {
+    super(message);
+  }
+}
diff --git a/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/RatisPipelineProvider.java b/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/RatisPipelineProvider.java
index 695220029a..6563e3fcaa 100644
--- a/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/RatisPipelineProvider.java
+++ b/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/RatisPipelineProvider.java
@@ -105,7 +105,7 @@ public Pipeline create(ReplicationFactor factor) throws IOException {
       String e = String
           .format("Cannot create pipeline of factor %d using %d nodes.",
               factor.getNumber(), dns.size());
-      throw new IOException(e);
+      throw new InsufficientDatanodesException(e);
     }
 
     Pipeline pipeline = Pipeline.newBuilder()
diff --git a/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/SCMPipelineManager.java b/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/SCMPipelineManager.java
index f274829df3..c72a52886c 100644
--- a/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/SCMPipelineManager.java
+++ b/hadoop-hdds/server-scm/src/main/java/org/apache/hadoop/hdds/scm/pipeline/SCMPipelineManager.java
@@ -152,6 +152,8 @@ public synchronized Pipeline createPipeline(
       nodeManager.addPipeline(pipeline);
       metrics.incNumPipelineCreated();
       return pipeline;
+    } catch (InsufficientDatanodesException idEx) {
+      throw idEx;
     } catch (IOException ex) {
       metrics.incNumPipelineCreationFailed();
       throw ex;
diff --git a/hadoop-ozone/integration-test/src/test/java/org/apache/hadoop/hdds/scm/pipeline/TestSCMPipelineManager.java b/hadoop-ozone/integration-test/src/test/java/org/apache/hadoop/hdds/scm/pipeline/TestSCMPipelineManager.java
index 990d73ab90..53e968bf23 100644
--- a/hadoop-ozone/integration-test/src/test/java/org/apache/hadoop/hdds/scm/pipeline/TestSCMPipelineManager.java
+++ b/hadoop-ozone/integration-test/src/test/java/org/apache/hadoop/hdds/scm/pipeline/TestSCMPipelineManager.java
@@ -18,6 +18,9 @@
 
 package org.apache.hadoop.hdds.scm.pipeline;
 
+import static org.apache.hadoop.test.MetricsAsserts.getLongCounter;
+import static org.apache.hadoop.test.MetricsAsserts.getMetrics;
+
 import org.apache.hadoop.conf.Configuration;
 import org.apache.hadoop.fs.FileUtil;
 import org.apache.hadoop.hdds.HddsConfigKeys;
@@ -30,6 +33,7 @@
 import org.apache.hadoop.hdds.scm.container.MockNodeManager;
 import org.apache.hadoop.hdds.scm.server.SCMDatanodeHeartbeatDispatcher.PipelineReportFromDatanode;
 import org.apache.hadoop.hdds.server.events.EventQueue;
+import org.apache.hadoop.metrics2.MetricsRecordBuilder;
 import org.apache.hadoop.test.GenericTestUtils;
 import org.junit.AfterClass;
 import org.junit.Assert;
@@ -208,4 +212,61 @@ public void testPipelineReport() throws IOException {
     // clean up
     pipelineManager.close();
   }
+
+  @Test
+  public void testPipelineCreationFailedMetric() throws Exception {
+    MockNodeManager nodeManagerMock = new MockNodeManager(true,
+        20);
+    SCMPipelineManager pipelineManager =
+        new SCMPipelineManager(conf, nodeManagerMock, new EventQueue());
+    PipelineProvider mockRatisProvider =
+        new MockRatisPipelineProvider(nodeManagerMock,
+            pipelineManager.getStateManager(), conf);
+    pipelineManager.setPipelineProvider(HddsProtos.ReplicationType.RATIS,
+        mockRatisProvider);
+
+    MetricsRecordBuilder metrics = getMetrics(
+        SCMPipelineMetrics.class.getSimpleName());
+    long numPipelineCreated = getLongCounter("NumPipelineCreated",
+        metrics);
+    Assert.assertTrue(numPipelineCreated == 0);
+
+    // 3 DNs are unhealthy.
+    // Create 5 pipelines (Use up 15 Datanodes)
+    for (int i = 0; i < 5; i++) {
+      Pipeline pipeline = pipelineManager
+          .createPipeline(HddsProtos.ReplicationType.RATIS,
+              HddsProtos.ReplicationFactor.THREE);
+      Assert.assertNotNull(pipeline);
+    }
+
+    metrics = getMetrics(
+        SCMPipelineMetrics.class.getSimpleName());
+    numPipelineCreated = getLongCounter("NumPipelineCreated", metrics);
+    Assert.assertTrue(numPipelineCreated == 5);
+
+    long numPipelineCreateFailed = getLongCounter(
+        "NumPipelineCreationFailed", metrics);
+    Assert.assertTrue(numPipelineCreateFailed == 0);
+
+    //This should fail...
+    try {
+      pipelineManager.createPipeline(HddsProtos.ReplicationType.RATIS,
+          HddsProtos.ReplicationFactor.THREE);
+      Assert.fail();
+    } catch (InsufficientDatanodesException idEx) {
+      Assert.assertEquals(
+          "Cannot create pipeline of factor 3 using 1 nodes.",
+          idEx.getMessage());
+    }
+
+    metrics = getMetrics(
+        SCMPipelineMetrics.class.getSimpleName());
+    numPipelineCreated = getLongCounter("NumPipelineCreated", metrics);
+    Assert.assertTrue(numPipelineCreated == 5);
+
+    numPipelineCreateFailed = getLongCounter(
+        "NumPipelineCreationFailed", metrics);
+    Assert.assertTrue(numPipelineCreateFailed == 0);
+  }
 }