diff --git a/specification/containerservice/resource-manager/Microsoft.ContainerService/stable/2021-07-01/examples/ManagedClustersCreate_Update.json b/specification/containerservice/resource-manager/Microsoft.ContainerService/stable/2021-07-01/examples/ManagedClustersCreate_Update.json
index 3506d51f4db0..69c71a5ad646 100644
--- a/specification/containerservice/resource-manager/Microsoft.ContainerService/stable/2021-07-01/examples/ManagedClustersCreate_Update.json
+++ b/specification/containerservice/resource-manager/Microsoft.ContainerService/stable/2021-07-01/examples/ManagedClustersCreate_Update.json
@@ -24,6 +24,7 @@
             "vmSize": "Standard_DS1_v2",
             "osType": "Linux",
             "type": "VirtualMachineScaleSets",
+            "scaleDownMode": "Deallocate",
             "availabilityZones": [
               "1",
               "2",
@@ -108,6 +109,7 @@
               "provisioningState": "Succeeded",
               "orchestratorVersion": "1.9.6",
               "type": "VirtualMachineScaleSets",
+              "scaleDownMode": "Deallocate",
               "availabilityZones": [
                 "1",
                 "2",
@@ -209,6 +211,7 @@
               "provisioningState": "Creating",
               "orchestratorVersion": "1.9.6",
               "type": "VirtualMachineScaleSets",
+              "scaleDownMode": "Deallocate",
               "availabilityZones": [
                 "1",
                 "2",
diff --git a/specification/containerservice/resource-manager/Microsoft.ContainerService/stable/2021-07-01/managedClusters.json b/specification/containerservice/resource-manager/Microsoft.ContainerService/stable/2021-07-01/managedClusters.json
index 45f11a2cd533..3272995fcc2a 100644
--- a/specification/containerservice/resource-manager/Microsoft.ContainerService/stable/2021-07-01/managedClusters.json
+++ b/specification/containerservice/resource-manager/Microsoft.ContainerService/stable/2021-07-01/managedClusters.json
@@ -2371,6 +2371,11 @@
           "type": "boolean",
           "description": "Whether to enable auto-scaler"
         },
+        "scaleDownMode": {
+          "$ref": "#/definitions/ScaleDownMode",
+          "title": "The scale down mode to use when scaling the Agent Pool.",
+          "description": "This also effects the cluster autoscaler behavior. If not specified, it defaults to Delete."
+        },
         "type": {
           "$ref": "#/definitions/AgentPoolType"
         },
@@ -4183,6 +4188,28 @@
       "title": "The max price (in US Dollars) you are willing to pay for spot instances. Possible values are any decimal value greater than zero or -1 which indicates default price to be up-to on-demand.",
       "description": "Possible values are any decimal value greater than zero or -1 which indicates the willingness to pay any on-demand price. For more details on spot pricing, see [spot VMs pricing](https://docs.microsoft.com/azure/virtual-machines/spot-vms#pricing)"
     },
+    "ScaleDownMode": {
+      "type": "string",
+      "enum": [
+        "Delete",
+        "Deallocate"
+      ],
+      "x-ms-enum": {
+        "name": "ScaleDownMode",
+        "modelAsString": true,
+        "values": [
+          {
+            "value": "Delete",
+            "description": "Create new instances during scale up and remove instances during scale down."
+          },
+          {
+            "value": "Deallocate",
+            "description": "Attempt to start deallocated instances (if they exist) during scale up and deallocate instances during scale down."
+          }
+        ]
+      },
+      "description": "Describes how VMs are added to or removed from Agent Pools. See [billing states](https://docs.microsoft.com/azure/virtual-machines/states-billing)."
+    },
     "ProximityPlacementGroupID": {
       "type": "string",
       "description": "The ID for Proximity Placement Group."