Older versions of virtualization software don’t support OS X Lion. Here are the versions of virtualization software that will run on Lion host OSes and those that will run inside virtual machines as guests.

Parallels Desktop 6 Build 12094 or later is required to run on a Lion host. Version 7.0 or later is required to run Lion in a virtual machine.

Parallels Server for Mac 4 Update 1 or later is required to run on a Lion host. At publishing time, the version number supporting Lion as a guest was not known.

VMware Fusion 3.1.3 and later is required to run on a Lion host. Version 4.0 or later is required to run Lion in a virtual machine. VMware Fusion 4 runs on Mac OS X 10.6.8 or later.

VirtualBox 4.0.10 or later is required to run on a Lion host. At publishing time, VirtualBox didn’t support Lion Server as a guest OS. There very likely will be a version that does support Lion guests, so check their website for updates.

Immediately after creating a new virtual machine, take a snapshot of the brand-new installation. In the event that you mess things up, this snapshot enables you to quickly revert to a clean, fresh install without having to reinstall the operating system. The Snapshot feature is usually available in the Virtual Machine menu of your virtualization software.