diff --git a/config/append_test.go b/config/append_test.go
index 8c81ed91d..17cca25b7 100644
--- a/config/append_test.go
+++ b/config/append_test.go
@@ -119,6 +119,7 @@ func TestAppend(t *testing.T) {
 			false,
 		},
 
+		// appending configs merges terraform blocks
 		{
 			&Config{
 				Terraform: &Terraform{
diff --git a/config/merge.go b/config/merge.go
index 2e7686594..db214be45 100644
--- a/config/merge.go
+++ b/config/merge.go
@@ -32,9 +32,13 @@ func Merge(c1, c2 *Config) (*Config, error) {
 		c.Atlas = c2.Atlas
 	}
 
-	// Merge the Terraform configuration, which is a complete overwrite.
-	c.Terraform = c1.Terraform
-	if c2.Terraform != nil {
+	// Merge the Terraform configuration
+	if c1.Terraform != nil {
+		c.Terraform = c1.Terraform
+		if c2.Terraform != nil {
+			c.Terraform.Merge(c2.Terraform)
+		}
+	} else {
 		c.Terraform = c2.Terraform
 	}
 
diff --git a/config/merge_test.go b/config/merge_test.go
index b1d27b6db..5cd87aca6 100644
--- a/config/merge_test.go
+++ b/config/merge_test.go
@@ -434,6 +434,31 @@ func TestMerge(t *testing.T) {
 			},
 			false,
 		},
+
+		// terraform blocks are merged, not overwritten
+		{
+			&Config{
+				Terraform: &Terraform{
+					RequiredVersion: "A",
+				},
+			},
+			&Config{
+				Terraform: &Terraform{
+					Backend: &Backend{
+						Type: "test",
+					},
+				},
+			},
+			&Config{
+				Terraform: &Terraform{
+					RequiredVersion: "A",
+					Backend: &Backend{
+						Type: "test",
+					},
+				},
+			},
+			false,
+		},
 	}
 
 	for i, tc := range cases {