diff --git a/azurerm/resource_arm_virtual_machine_scale_set_test.go b/azurerm/resource_arm_virtual_machine_scale_set_test.go
index 3406a3406e0a..b631f3947d9f 100644
--- a/azurerm/resource_arm_virtual_machine_scale_set_test.go
+++ b/azurerm/resource_arm_virtual_machine_scale_set_test.go
@@ -662,6 +662,25 @@ func TestAccAzureRMVirtualMachineScaleSet_multipleNetworkProfiles(t *testing.T)
 	})
 }
 
+func TestAccAzureRMVirtualMachineScaleSet_AutoUpdates(t *testing.T) {
+	resourceName := "azurerm_virtual_machine_scale_set.test"
+	ri := acctest.RandInt()
+	config := testAccAzureRMVirtualMachineScaleSet_RollingAutoUpdates(ri, testLocation())
+	resource.Test(t, resource.TestCase{
+		PreCheck:     func() { testAccPreCheck(t) },
+		Providers:    testAccProviders,
+		CheckDestroy: testCheckAzureRMVirtualMachineScaleSetDestroy,
+		Steps: []resource.TestStep{
+			{
+				Config: config,
+				Check: resource.ComposeTestCheckFunc(
+					testCheckAzureRMVirtualMachineScaleSetExists(resourceName),
+				),
+			},
+		},
+	})
+}
+
 func testGetAzureRMVirtualMachineScaleSet(s *terraform.State, resourceName string) (result *compute.VirtualMachineScaleSet, err error) {
 	// Ensure we have enough information in state to look up in API
 	rs, ok := s.RootModule().Resources[resourceName]
@@ -3873,3 +3892,136 @@ resource "azurerm_virtual_machine_scale_set" "test" {
 }
 `, rInt, location)
 }
+
+func testAccAzureRMVirtualMachineScaleSet_RollingAutoUpdates(rInt int, location string) string {
+	return fmt.Sprintf(`
+resource "azurerm_resource_group" "test" {
+    name = "acctestrg-%[1]d"
+    location = "%[2]s"
+}
+
+resource "azurerm_virtual_network" "test" {
+    name = "acctvn-%[1]d"
+    address_space = ["10.0.0.0/8"]
+    location = "${azurerm_resource_group.test.location}"
+    resource_group_name = "${azurerm_resource_group.test.name}"
+}
+
+resource "azurerm_subnet" "test" {
+    name = "acctsub-%[1]d"
+    resource_group_name = "${azurerm_resource_group.test.name}"
+    virtual_network_name = "${azurerm_virtual_network.test.name}"
+    address_prefix = "10.0.0.0/16"
+}
+
+resource "azurerm_public_ip" "test" {
+  name                         = "PublicIPForLB"
+  location                     = "${azurerm_resource_group.test.location}"
+  resource_group_name          = "${azurerm_resource_group.test.name}"
+  public_ip_address_allocation = "Dynamic"
+  idle_timeout_in_minutes      = 4
+}
+
+resource "azurerm_lb" "test" {
+  name                = "acctestlb-%[1]d"
+  location            = "${azurerm_resource_group.test.location}"
+  resource_group_name = "${azurerm_resource_group.test.name}"
+
+  frontend_ip_configuration {
+    name                  = "PublicIPAddress"
+    public_ip_address_id = "${azurerm_public_ip.test.id}"
+  }
+}
+
+resource "azurerm_lb_rule" "test" {
+  resource_group_name            = "${azurerm_resource_group.test.name}"
+  loadbalancer_id                = "${azurerm_lb.test.id}"
+  name                           = "LBRule"
+  protocol                       = "Tcp"
+  frontend_port                  = 22
+  backend_port                   = 22
+  frontend_ip_configuration_name = "PublicIPAddress"
+  probe_id                       = "${azurerm_lb_probe.test.id}"
+  backend_address_pool_id = "${azurerm_lb_backend_address_pool.test.id}"
+}
+
+resource "azurerm_lb_probe" "test" {
+  resource_group_name = "${azurerm_resource_group.test.name}"
+  loadbalancer_id     = "${azurerm_lb.test.id}"
+  name                = "ssh-running-probe"
+  port                = 22
+  protocol            = "Tcp"
+}
+
+resource "azurerm_lb_backend_address_pool" "test" {
+  name                = "test"
+  resource_group_name = "${azurerm_resource_group.test.name}"
+  loadbalancer_id     = "${azurerm_lb.test.id}"
+}
+
+resource "azurerm_virtual_machine_scale_set" "test" {
+  name = "acctvmss-%[1]d"
+  location = "${azurerm_resource_group.test.location}"
+  resource_group_name = "${azurerm_resource_group.test.name}"
+
+  upgrade_policy_mode = "Rolling"
+
+  automatic_os_upgrade = true
+  
+  rolling_upgrade_policy {
+    max_batch_instance_percent = 20
+    max_unhealthy_instance_percent = 20
+    max_unhealthy_upgraded_instance_percent = 20
+    pause_time_between_batches = "PT0S"
+  }
+
+  health_probe_id = "${azurerm_lb_probe.test.id}"
+
+  sku {
+    name = "Standard_A0"
+    tier = "Standard"
+    capacity = 1
+  }
+
+  os_profile {
+    computer_name_prefix = "testvm-%[1]d"
+    admin_username = "myadmin"
+    admin_password = "Passwword1234"
+  }
+
+  network_profile {
+    name = "TestNetworkProfile"
+    primary = true
+    
+    ip_configuration {
+      name                                   = "TestIPConfiguration"
+      subnet_id                              = "${azurerm_subnet.test.id}"
+      load_balancer_backend_address_pool_ids = ["${azurerm_lb_backend_address_pool.test.id}"]
+      primary = true
+    }
+  }
+
+  storage_profile_os_disk {
+    name              = ""
+    caching           = "ReadWrite"
+    create_option     = "FromImage"
+    managed_disk_type = "Standard_LRS"
+  }
+
+  storage_profile_data_disk {
+    lun 		          = 0
+    caching           = "ReadWrite"
+    create_option     = "Empty"
+    disk_size_gb      = 10
+    managed_disk_type = "Standard_LRS"
+  }
+
+  storage_profile_image_reference {
+    publisher = "Canonical"
+    offer     = "UbuntuServer"
+    sku       = "16.04-LTS"
+    version   = "latest"
+  }
+}
+`, rInt, location)
+}
diff --git a/examples/vmss-automatic-rolling-updates/README.md b/examples/vmss-automatic-rolling-updates/README.md
new file mode 100644
index 000000000000..84d335bc5de3
--- /dev/null
+++ b/examples/vmss-automatic-rolling-updates/README.md
@@ -0,0 +1,22 @@
+# Linux VM Scale Set with Automatic OS upgrades and Rolling Upgrade Policy
+
+This template deploys a Linux (Ubuntu) VM Scale Set. Once the VMSS is deployed, the user can deploy an application inside each of the VMs (either by directly logging into the VMs or via a [`remote-exec` provisioner](https://www.terraform.io/docs/provisioners/remote-exec.html)).
+
+Please review the official documentation first : [Azure virtual machine scale set automatic OS upgrades](https://docs.microsoft.com/en-us/azure/virtual-machine-scale-sets/virtual-machine-scale-sets-automatic-upgrade)
+
+## main.tf
+The `main.tf` file contains the actual resources that will be deployed. It also contains the Azure Resource Group definition and any defined variables.
+
+## outputs.tf
+This data is outputted when `terraform apply` is called, and can be queried using the `terraform output` command.
+
+You may leave the provider block in the `main.tf`, as it is in this template, or you can create a file called `provider.tf` and add it to your `.gitignore` file.
+
+Azure requires that an application is added to Azure Active Directory to generate the `client_id`, `client_secret`, and `tenant_id` needed by Terraform (`subscription_id` can be recovered from your Azure account details). Please go [here](https://www.terraform.io/docs/providers/azurerm/) for full instructions on how to create this to populate your `provider.tf` file.
+
+## terraform.tfvars
+If a `terraform.tfvars` or any `.auto.tfvars` files are present in the current directory, Terraform automatically loads them to populate variables. We don't recommend saving usernames and password to version control, but you can create a local secret variables file and use the `-var-file` flag or the `.auto.tfvars` extension to load it.
+
+## variables.tf
+The `variables.tf` file contains all of the input parameters that the user can specify when deploying this Terraform template.
+
diff --git a/examples/vmss-automatic-rolling-updates/main.tf b/examples/vmss-automatic-rolling-updates/main.tf
new file mode 100644
index 000000000000..ed6b18fe56e6
--- /dev/null
+++ b/examples/vmss-automatic-rolling-updates/main.tf
@@ -0,0 +1,143 @@
+resource "azurerm_resource_group" "rg" {
+  name     = "${var.resource_group_name}"
+  location = "${var.location}"
+}
+
+resource "azurerm_virtual_network" "vnet" {
+  name                = "${var.resource_group_name}vnet"
+  location            = "${azurerm_resource_group.rg.location}"
+  address_space       = ["10.0.0.0/16"]
+  resource_group_name = "${azurerm_resource_group.rg.name}"
+}
+
+resource "azurerm_subnet" "subnet" {
+  name                 = "subnet"
+  address_prefix       = "10.0.0.0/24"
+  resource_group_name  = "${azurerm_resource_group.rg.name}"
+  virtual_network_name = "${azurerm_virtual_network.vnet.name}"
+}
+
+resource "azurerm_public_ip" "pip" {
+  name                         = "${var.hostname}-pip"
+  location                     = "${azurerm_resource_group.rg.location}"
+  resource_group_name          = "${azurerm_resource_group.rg.name}"
+  public_ip_address_allocation = "Dynamic"
+  domain_name_label            = "${var.hostname}"
+}
+
+resource "azurerm_lb" "lb" {
+  name                = "LoadBalancer"
+  location            = "${azurerm_resource_group.rg.location}"
+  resource_group_name = "${azurerm_resource_group.rg.name}"
+  depends_on          = ["azurerm_public_ip.pip"]
+
+  frontend_ip_configuration {
+    name                 = "LBFrontEnd"
+    public_ip_address_id = "${azurerm_public_ip.pip.id}"
+  }
+}
+
+resource "azurerm_lb_backend_address_pool" "backlb" {
+  name                = "BackEndAddressPool"
+  resource_group_name = "${azurerm_resource_group.rg.name}"
+  loadbalancer_id     = "${azurerm_lb.lb.id}"
+}
+
+resource "azurerm_lb_probe" "prob" {
+  resource_group_name = "${azurerm_resource_group.test.name}"
+  loadbalancer_id     = "${azurerm_lb.lb.id}"
+  name                = "ssh-running-probe"
+  port                = 22
+  protocol            = "Tcp"
+}
+
+resource "azurerm_lb_rule" "lbr" {
+  resource_group_name            = "${azurerm_resource_group.rg.name}"
+  loadbalancer_id                = "${azurerm_lb.lb.id}"
+  name                           = "LBRule"
+  protocol                       = "Tcp"
+  frontend_port                  = 22
+  backend_port                   = 22
+  frontend_ip_configuration_name = "LBFrontEnd"
+  probe_id                       = "${azurerm_lb_probe.prob.id}"
+  backend_address_pool_id        = "${azurerm_lb_backend_address_pool.backlb.id}"
+}
+
+resource "azurerm_storage_account" "stor" {
+  name                     = "${var.resource_group_name}stor"
+  location                 = "${azurerm_resource_group.rg.location}"
+  resource_group_name      = "${azurerm_resource_group.rg.name}"
+  account_tier             = "${var.storage_account_tier}"
+  account_replication_type = "${var.storage_replication_type}"
+}
+
+resource "azurerm_storage_container" "vhds" {
+  name                  = "vhds"
+  resource_group_name   = "${azurerm_resource_group.rg.name}"
+  storage_account_name  = "${azurerm_storage_account.stor.name}"
+  container_access_type = "blob"
+}
+
+resource "azurerm_virtual_machine_scale_set" "scaleset" {
+  name                = "autoscalewad"
+  location            = "${azurerm_resource_group.rg.location}"
+  resource_group_name = "${azurerm_resource_group.rg.name}"
+  upgrade_policy_mode = "Manual"
+  overprovision       = true
+  depends_on          = ["azurerm_lb.lb", "azurerm_virtual_network.vnet"]
+
+  upgrade_policy_mode = "Rolling"
+
+  automatic_os_upgrade = true
+
+  rolling_upgrade_policy {
+    max_batch_instance_percent              = 20
+    max_unhealthy_instance_percent          = 20
+    max_unhealthy_upgraded_instance_percent = 20
+    pause_time_between_batches              = "PT0S"
+  }
+
+  health_probe_id = "${azurerm_lb_probe.prob.id}"
+
+  sku {
+    name     = "${var.vm_sku}"
+    tier     = "Standard"
+    capacity = "${var.instance_count}"
+  }
+
+  os_profile {
+    computer_name_prefix = "${var.vmss_name_prefix}"
+    admin_username       = "${var.admin_username}"
+    admin_password       = "${var.admin_password}"
+  }
+
+  os_profile_linux_config {
+    disable_password_authentication = false
+  }
+
+  network_profile {
+    name    = "${var.hostname}-nic"
+    primary = true
+
+    ip_configuration {
+      primary                                = true
+      name                                   = "${var.hostname}ipconfig"
+      subnet_id                              = "${azurerm_subnet.subnet.id}"
+      load_balancer_backend_address_pool_ids = ["${azurerm_lb_backend_address_pool.backlb.id}"]
+    }
+  }
+
+  storage_profile_os_disk {
+    name           = "${var.hostname}"
+    caching        = "ReadWrite"
+    create_option  = "FromImage"
+    vhd_containers = ["${azurerm_storage_account.stor.primary_blob_endpoint}${azurerm_storage_container.vhds.name}"]
+  }
+
+  storage_profile_image_reference {
+    publisher = "${var.image_publisher}"
+    offer     = "${var.image_offer}"
+    sku       = "${var.ubuntu_os_version}"
+    version   = "latest"
+  }
+}
diff --git a/examples/vmss-automatic-rolling-updates/outputs.tf b/examples/vmss-automatic-rolling-updates/outputs.tf
new file mode 100644
index 000000000000..668e48e29c18
--- /dev/null
+++ b/examples/vmss-automatic-rolling-updates/outputs.tf
@@ -0,0 +1,3 @@
+output "hostname" {
+  value = "${var.vmss_name_prefix}"
+}
diff --git a/examples/vmss-automatic-rolling-updates/variables.tf b/examples/vmss-automatic-rolling-updates/variables.tf
new file mode 100644
index 000000000000..c8fbdc9e6684
--- /dev/null
+++ b/examples/vmss-automatic-rolling-updates/variables.tf
@@ -0,0 +1,66 @@
+# variable "subscription_id" {}
+# variable "client_id" {}
+# variable "client_secret" {}
+# variable "tenant_id" {}
+
+variable "resource_group_name" {
+  description = "The name of the resource group in which to create the virtual network."
+  default     = "tfex-vmss-ubuntu"
+}
+
+variable "location" {
+  description = "The location/region where the virtual network is created. Changing this forces a new resource to be created."
+  default     = "southcentralus"
+}
+
+variable "storage_account_tier" {
+  description = "Defines the Tier of storage account to be created. Valid options are Standard and Premium."
+  default     = "Standard"
+}
+
+variable "storage_replication_type" {
+  description = "Defines the Replication Type to use for this storage account. Valid options include LRS, GRS etc."
+  default     = "LRS"
+}
+
+variable "hostname" {
+  description = "A string that determines the hostname/IP address of the origin server. This string could be a domain name, IPv4 address or IPv6 address."
+  default     = "tfex-vmss-ubuntu"
+}
+
+variable "vm_sku" {
+  description = "Size of VMs in the VM Scale Set."
+  default     = "Standard_A1"
+}
+
+variable "ubuntu_os_version" {
+  description = "The Ubuntu version for the VM. This will pick a fully patched image of this given Ubuntu version. Allowed values are: 15.10, 14.04.4-LTS."
+  default     = "16.04.0-LTS"
+}
+
+variable "image_publisher" {
+  description = "The name of the publisher of the image (az vm image list)"
+  default     = "Canonical"
+}
+
+variable "image_offer" {
+  description = "The name of the offer (az vm image list)"
+  default     = "UbuntuServer"
+}
+
+variable "vmss_name_prefix" {
+  description = "String used as a base for naming resources. Must be 1-9 characters in length for windows and 1-58 for linux images and globally unique across Azure. A hash is prepended to this string for some resources, and resource-specific information is appended."
+}
+
+variable "instance_count" {
+  description = "Number of VM instances (100 or less)."
+  default     = "5"
+}
+
+variable "admin_username" {
+  description = "Admin username on all VMs."
+}
+
+variable "admin_password" {
+  description = "Admin password on all VMs."
+}