Authenticate Terraform using Managed Identity for Azure services

Terraform enables the definition, preview, and deployment of cloud infrastructure. Using Terraform, you create configuration files using HCL syntax. The HCL syntax allows you to specify the cloud provider - such as Azure - and the elements that make up your cloud infrastructure. After you create your configuration files, you create an execution plan that allows you to preview your infrastructure changes before they're deployed. Once you verify the changes, you apply the execution plan to deploy the infrastructure.

Managed identities for Azure resources is used to authenticate to Azure Active Directory. HashiCorp recommends using either a Service Principal or managed identity if you're running Terraform in a non-interactive manner. There are two types of managed identities: system-assigned and user-assigned. In this article, you learn how to use system-assigned identities.

Define a system-assigned managed identity

To use a system-assigned managed identity, use the following steps:

1. Specify the identity block and set type to SystemAssigned.

   resource "azurerm_linux_virtual_machine" "example" {
     # ...
   
     identity {
       type = "SystemAssigned"
     }
   }
   

2. Grant the Contributor role to the identity.

   data "azurerm_subscription" "current" {}
   
   data "azurerm_role_definition" "contributor" {
     name = "Contributor"
   }
   
   resource "azurerm_role_assignment" "example" {
     scope              = data.azurerm_subscription.current.id
     role_definition_name = "Contributor"
     principal_id       = azurerm_linux_virtual_machine.example.identity[0].principal_id
   }
   

3. Configure with environment variables, specifying your Azure credentials.

   export ARM_USE_MSI=true
   export ARM_SUBSCRIPTION_ID=xxxxxxxx-xxxx-xxxx-xxxx-xxxxxxxxxxxx
   export ARM_TENANT_ID=xxxxxxxx-xxxx-xxxx-xxxx-xxxxxxxxxxxx
   

Example: Create a virtual machine with a managed identity

1. Create a directory in which to test the sample Terraform code and make it the current directory.

2. Create a file named providers.tf and insert the following code.

   terraform {
     required_version = ">=0.12"
   
     required_providers {
       azapi = {
         source  = "azure/azapi"
         version = "~>1.5"
       }
       azurerm = {
         source  = "hashicorp/azurerm"
         version = "~>2.0"
       }
       random = {
         source  = "hashicorp/random"
         version = "~>3.0"
       }
     }
   }
   
   provider "azurerm" {
     features {}
   }
   

3. Create a file named main.tf and insert the following code:

   resource "random_pet" "rg_name" {
     prefix = var.resource_group_name_prefix
   }
   
   resource "azurerm_resource_group" "rg" {
     location = var.resource_group_location
     name     = random_pet.rg_name.id
   }
   
   data "azurerm_subscription" "current" {}
   
   resource "azurerm_virtual_network" "example" {
     name                = "myVnet"
     address_space       = ["10.0.0.0/16"]
     location            = azurerm_resource_group.rg.location
     resource_group_name = azurerm_resource_group.rg.name
   }
   
   resource "azurerm_subnet" "example" {
     name                 = "mySubnet"
     resource_group_name  = azurerm_resource_group.rg.name
     virtual_network_name = azurerm_virtual_network.example.name
     address_prefixes     = ["10.0.2.0/24"]
   }
   
   resource "azurerm_network_interface" "example" {
     name                = "myNic"
     location            = azurerm_resource_group.rg.location
     resource_group_name = azurerm_resource_group.rg.name
   
     ip_configuration {
       name                          = "internal"
       subnet_id                     = azurerm_subnet.example.id
       private_ip_address_allocation = "Dynamic"
     }
   }
   
   resource "azurerm_linux_virtual_machine" "example" {
     name                = "myVm"
     resource_group_name = azurerm_resource_group.rg.name
     location            = azurerm_resource_group.rg.location
     size                = "Standard_F2"
     network_interface_ids = [
       azurerm_network_interface.example.id,
     ]
   
     computer_name  = "hostname"
     admin_username = var.username
   
     admin_ssh_key {
       username   = var.username
       public_key = azapi_resource_action.ssh_public_key_gen.output.publicKey
     }
   
     identity {
       type = "SystemAssigned"
     }
   
     os_disk {
       caching              = "ReadWrite"
       storage_account_type = "Standard_LRS"
     }
   
     source_image_reference {
       publisher = "Canonical"
       offer     = "0001-com-ubuntu-server-jammy"
       sku       = "22_04-lts"
       version   = "latest"
     }
   }
   
   data "azurerm_role_definition" "contributor" {
     name = "Contributor"
   }
   
   resource "azurerm_role_assignment" "example" {
     scope              = data.azurerm_subscription.current.id
     role_definition_name = "Contributor"
     principal_id       = azurerm_linux_virtual_machine.example.identity[0].principal_id
   }
   

4. Create a file named ssh.tf and insert the following code.

   resource "random_pet" "ssh_key_name" {
     prefix    = "ssh"
     separator = ""
   }
   
   resource "azapi_resource_action" "ssh_public_key_gen" {
     type        = "Microsoft.Compute/sshPublicKeys@2022-11-01"
     resource_id = azapi_resource.ssh_public_key.id
     action      = "generateKeyPair"
     method      = "POST"
   
     response_export_values = ["publicKey", "privateKey"]
   }
   
   resource "azapi_resource" "ssh_public_key" {
     type      = "Microsoft.Compute/sshPublicKeys@2022-11-01"
     name      = random_pet.ssh_key_name.id
     location  = azurerm_resource_group.rg.location
     parent_id = azurerm_resource_group.rg.id
   }
   
   output "key_data" {
     value = azapi_resource_action.ssh_public_key_gen.output.publicKey
   }
       ```
   
   

5. Create a file named variables.tf and insert the following code:

   variable "resource_group_location" {
     type        = string
     description = "Location of the resource group."
     default     = "eastus"
   }
   
   variable "resource_group_name_prefix" {
     type        = string
     description = "Prefix of the resource group name that's combined with a random ID so name is unique in your Azure subscription."
     default     = "rg"
   }
   
   variable "username" {
     type        = string
     description = "The username for the local account that will be created on the new VM."
     default     = "azureadmin"
   }
   

6. Create a file named outputs.tf and insert the following code:

   output "resource_group_name" {
     value = azurerm_resource_group.rg.name
   }
   
   output "azurerm_linux_virtual_machine_name" {
     value = azurerm_linux_virtual_machine.example.name
   }
   

Next steps

Your first Terraform project: Create an Azure resource group