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Yes, it does work on my M1 MBP with Win11.
So far so good. Just performed a Windows Update on my M1 Macbook Pro with Parallels Desktop 17 for Mac. Windows 11 Pro, version 21H2 works fine...
So far so good. On a M1 MacBook Pro running Parallels 17 with Windows Insider program and Windows 10 build that just migrated to Windows 11 ARM...