diff --git a/nova/tests/unit/test_utils.py b/nova/tests/unit/test_utils.py
index 03f565b7e49..639191fedf3 100644
--- a/nova/tests/unit/test_utils.py
+++ b/nova/tests/unit/test_utils.py
@@ -73,24 +73,25 @@ def test_parse_server_string(self):
         self.assertEqual(('', ''), result)
 
     def test_hostname_unicode_sanitization(self):
-        hostname = u"\u7684.test.example.com"
-        self.assertEqual("test.example.com",
-                         utils.sanitize_hostname(hostname))
+        hostname = u'\u7684myamazinghostname'
+        self.assertEqual(
+            'myamazinghostname', utils.sanitize_hostname(hostname))
 
     def test_hostname_sanitize_periods(self):
-        hostname = "....test.example.com..."
-        self.assertEqual("test.example.com",
-                         utils.sanitize_hostname(hostname))
+        hostname = '....test.example.com...'
+        self.assertEqual(
+            'test-example-com', utils.sanitize_hostname(hostname))
 
     def test_hostname_sanitize_dashes(self):
-        hostname = "----test.example.com---"
-        self.assertEqual("test.example.com",
-                         utils.sanitize_hostname(hostname))
+        hostname = '----my-amazing-hostname---'
+        self.assertEqual(
+            "my-amazing-hostname", utils.sanitize_hostname(hostname))
 
     def test_hostname_sanitize_characters(self):
         hostname = "(#@&$!(@*--#&91)(__=+--test-host.example!!.com-0+"
-        self.assertEqual("91----test-host.example.com-0",
-                         utils.sanitize_hostname(hostname))
+        self.assertEqual(
+            "91----test-host-example-com-0",
+            utils.sanitize_hostname(hostname))
 
     def test_hostname_translate(self):
         hostname = "<}\x1fh\x10e\x08l\x02l\x05o\x12!{>"
@@ -99,20 +100,20 @@ def test_hostname_translate(self):
     def test_hostname_has_default(self):
         hostname = u"\u7684hello"
         defaultname = "Server-1"
-        self.assertEqual("hello", utils.sanitize_hostname(hostname,
-                                                          defaultname))
+        self.assertEqual(
+            "hello", utils.sanitize_hostname(hostname, defaultname))
 
     def test_hostname_empty_has_default(self):
         hostname = u"\u7684"
         defaultname = "Server-1"
-        self.assertEqual(defaultname, utils.sanitize_hostname(hostname,
-                                                              defaultname))
+        self.assertEqual(
+            defaultname, utils.sanitize_hostname(hostname, defaultname))
 
     def test_hostname_empty_has_default_too_long(self):
         hostname = u"\u7684"
         defaultname = "a" * 64
-        self.assertEqual("a" * 63, utils.sanitize_hostname(hostname,
-                                                           defaultname))
+        self.assertEqual(
+            "a" * 63, utils.sanitize_hostname(hostname, defaultname))
 
     def test_hostname_empty_no_default(self):
         hostname = u"\u7684"
diff --git a/nova/utils.py b/nova/utils.py
index 0575b9a8f65..a4a1abaaa17 100644
--- a/nova/utils.py
+++ b/nova/utils.py
@@ -372,7 +372,7 @@ def truncate_hostname(name):
         hostname = hostname.encode('latin-1', 'ignore').decode('latin-1')
 
     hostname = truncate_hostname(hostname)
-    hostname = re.sub('[ _]', '-', hostname)
+    hostname = re.sub(r'[ _\.]', '-', hostname)
     hostname = re.sub(r'[^\w.-]+', '', hostname)
     hostname = hostname.lower()
     hostname = hostname.strip('.-')
diff --git a/releasenotes/notes/bug-1581977-310e5f218ccb1d16.yaml b/releasenotes/notes/bug-1581977-310e5f218ccb1d16.yaml
new file mode 100644
index 00000000000..8498b5c36e9
--- /dev/null
+++ b/releasenotes/notes/bug-1581977-310e5f218ccb1d16.yaml
@@ -0,0 +1,24 @@
+---
+fixes:
+  - |
+    Nova will now replace periods (``.``) with dashes (``-``) when santizing an
+    instance's display name for use as a hostname.
+
+    Nova publishes hostnames for instances via the metadata service and config
+    drives. This hostname is based on a sanitized version of the instance name
+    combined with the domain value specified in ``[api] dhcp_domain``. The
+    previous sanitization of the hostname included the replacement of whitespace
+    and underscores with dashes and the stripping of unicode characters along
+    with leading and trailing periods and dashes. It did not, however, include
+    the removal of periods in the name. Periods are not valid in the hostname
+    or, more specifically, in the host-specific or leaf label (the ``host`` in
+    ``host.example.com``) and their presence can cause conflicts when ``[api]
+    dhcp_domain`` is configured, leading to instances being mistakenly
+    configured with hostnames like ``host.example.com.example.com``. More
+    pressingly, their use can result in a failure to boot instances if DNS
+    integration is enabled in neutron, likely via designate, as the hostname is
+    identified as a FQDN (fully-qualified domain name) by neutron and reasonable
+    instance names like ``test-ubuntu20.04`` will be rejected as invalid FQDNs,
+    in this case because the name would yield a TLD (top-level domain) of ``04``
+    and TLDs cannot be entire numerical. To avoid these issues, periods are now
+    replaced with dashes.