diff --git a/builtin/providers/azurerm/resource_arm_availability_set.go b/builtin/providers/azurerm/resource_arm_availability_set.go
index 3e5f57d90..a51ff0446 100644
--- a/builtin/providers/azurerm/resource_arm_availability_set.go
+++ b/builtin/providers/azurerm/resource_arm_availability_set.go
@@ -4,6 +4,7 @@ import (
 	"fmt"
 	"log"
 	"net/http"
+	"strings"
 
 	"github.com/Azure/azure-sdk-for-go/arm/compute"
 	"github.com/hashicorp/terraform/helper/schema"
@@ -65,6 +66,13 @@ func resourceArmAvailabilitySet() *schema.Resource {
 				},
 			},
 
+			"managed": {
+				Type:     schema.TypeBool,
+				Optional: true,
+				Default:  false,
+				ForceNew: true,
+			},
+
 			"tags": tagsSchema(),
 		},
 	}
@@ -82,6 +90,7 @@ func resourceArmAvailabilitySetCreate(d *schema.ResourceData, meta interface{})
 	updateDomainCount := d.Get("platform_update_domain_count").(int)
 	faultDomainCount := d.Get("platform_fault_domain_count").(int)
 	tags := d.Get("tags").(map[string]interface{})
+	managed := d.Get("managed").(bool)
 
 	availSet := compute.AvailabilitySet{
 		Name:     &name,
@@ -93,6 +102,13 @@ func resourceArmAvailabilitySetCreate(d *schema.ResourceData, meta interface{})
 		Tags: expandTags(tags),
 	}
 
+	if managed == true {
+		n := "Aligned"
+		availSet.Sku = &compute.Sku{
+			Name: &n,
+		}
+	}
+
 	resp, err := availSetClient.CreateOrUpdate(resGroup, name, availSet)
 	if err != nil {
 		return err
@@ -129,6 +145,10 @@ func resourceArmAvailabilitySetRead(d *schema.ResourceData, meta interface{}) er
 	d.Set("name", resp.Name)
 	d.Set("location", resp.Location)
 
+	if resp.Sku != nil && resp.Sku.Name != nil {
+		d.Set("managed", strings.EqualFold(*resp.Sku.Name, "Aligned"))
+	}
+
 	flattenAndSetTags(d, resp.Tags)
 
 	return nil
diff --git a/builtin/providers/azurerm/resource_arm_availability_set_test.go b/builtin/providers/azurerm/resource_arm_availability_set_test.go
index 257357956..5e1b77912 100644
--- a/builtin/providers/azurerm/resource_arm_availability_set_test.go
+++ b/builtin/providers/azurerm/resource_arm_availability_set_test.go
@@ -122,6 +122,27 @@ func TestAccAzureRMAvailabilitySet_withDomainCounts(t *testing.T) {
 	})
 }
 
+func TestAccAzureRMAvailabilitySet_managed(t *testing.T) {
+	ri := acctest.RandInt()
+	config := fmt.Sprintf(testAccAzureRMVAvailabilitySet_managed, ri, ri)
+
+	resource.Test(t, resource.TestCase{
+		PreCheck:     func() { testAccPreCheck(t) },
+		Providers:    testAccProviders,
+		CheckDestroy: testCheckAzureRMAvailabilitySetDestroy,
+		Steps: []resource.TestStep{
+			resource.TestStep{
+				Config: config,
+				Check: resource.ComposeTestCheckFunc(
+					testCheckAzureRMAvailabilitySetExists("azurerm_availability_set.test"),
+					resource.TestCheckResourceAttr(
+						"azurerm_availability_set.test", "managed", "true"),
+				),
+			},
+		},
+	})
+}
+
 func testCheckAzureRMAvailabilitySetExists(name string) resource.TestCheckFunc {
 	return func(s *terraform.State) error {
 		// Ensure we have enough information in state to look up in API
@@ -224,8 +245,8 @@ resource "azurerm_availability_set" "test" {
     resource_group_name = "${azurerm_resource_group.test.name}"
 
     tags {
-	environment = "Production"
-	cost_center = "MSFT"
+       environment = "Production"
+       cost_center = "MSFT"
     }
 }
 `
@@ -241,7 +262,7 @@ resource "azurerm_availability_set" "test" {
     resource_group_name = "${azurerm_resource_group.test.name}"
 
     tags {
-	environment = "staging"
+       environment = "staging"
     }
 }
 `
@@ -259,3 +280,18 @@ resource "azurerm_availability_set" "test" {
     platform_fault_domain_count = 1
 }
 `
+
+var testAccAzureRMVAvailabilitySet_managed = `
+resource "azurerm_resource_group" "test" {
+    name = "acctestRG-%d"
+    location = "West US"
+}
+resource "azurerm_availability_set" "test" {
+    name = "acctestavset-%d"
+    location = "West US"
+    resource_group_name = "${azurerm_resource_group.test.name}"
+    platform_update_domain_count = 10
+    platform_fault_domain_count = 1
+    managed = true
+}
+`