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We’re excited to introduce a new step in the Terraform on Azure experience: Open in VS Code, now available directly from Azure Copilot in the Azure Portal. This capability helps you move seamlessly from AI‑generated Terraform code to real Azure deployments – within a connected, guided workflow designed for enterprise scenarios.

Why This Matters

Infrastructure as Code with Terraform is powerful, but moving from generated configuration to a deployed environment typically involves multiple tools and handoffs. Teams need to understand Terraform state, work with remote backends, and integrate their code into version‑controlled CI/CD pipelines – often backed by Terraform Cloud or Azure‑native backends in enterprise environments.

Open in VS Code brings these steps together. It bridges the gap between AI‑assisted authoring in the Azure Portal and the real‑world workflows required to validate, manage state, and deploy infrastructure with confidence.

Continue Your Workflow in VS Code

With Azure Copilot, you can describe your infrastructure in natural language and generate Terraform configurations in seconds. For example:

“Create an Azure Container App using Terraform with a managed environment, Log Analytics enabled, and a system‑assigned managed identity to securely pull images from Azure Container Registry.”

Copilot generates the Terraform configuration for you. From there, you can select Open full view to enter a full‑screen Terraform editor, and then choose Open in VS Code to launch the configuration in an Azure‑hosted VS Code environment.

There’s no need to download files or set up a local development environment. VS Code for the web opens with Azure authentication already configured, along with commonly used extensions, so you can immediately focus on refining, validating, and preparing your infrastructure for deployment.

Built‑in Guidance for Real Deployments

Beyond editing, the VS Code experience includes built‑in, step‑by‑step guidance to help you deploy your Terraform configuration into your own Azure environment – whether you’re experimenting or preparing for production.

Because Terraform relies on state management, the workflow starts by helping you choose and configure a backend.

Backend Options

Option 1: Azure Storage Account as a remote backend

A natural fit for Azure‑native and enterprise environments. The experience guides you through creating or selecting a storage account and configuring Terraform to store state securely in Azure.

Option 2: HCP Terraform (Terraform Cloud) as a remote backend

Ideal for teams already using Terraform Cloud. The guided flow helps you authenticate, connect to an existing organization and workspace, and generate the required backend configuration directly into your Terraform files.

Option 3: Temporary workspace for quick validation

Designed for learning and experimentation. You can run terraform plan and terraform apply directly in the Azure workspace with temporary state, without committing to a long‑term backend – ideal for quick validation, but not intended for production use.

Each option includes an end‑to‑end walkthrough, so you can complete backend setup and run Terraform commands without leaving the VS Code environment or searching through external documentation.

Connecting Code, State, and Deployment

This experience connects three essential parts of the Terraform workflow:

• AI‑assisted code generation in Azure Portal Copilot


• Interactive editing and guided execution in VS Code for the web


• Flexible backend options for managing Terraform state

Together, these pieces make it easier to move from idea to infrastructure in a structured, supported way—whether you’re new to Terraform or managing production workloads with established CI/CD pipelines.

Available Now – and What’s Next

The Open in VS Code experience for Terraform is now public preview in Azure Portal Copilot.

We’re continuing to invest in this workflow, including clearer deployment guidance, future integration with GitHub Actions and other CI/CD pipelines, and deeper enhancements to the full‑screen Terraform editor experience.

If you haven’t tried it yet, generate a Terraform configuration with Azure Copilot and open it in VS Code to go from prompt to production end to end in one connected workflow.