diff --git a/aws/resource_aws_vpc.go b/aws/resource_aws_vpc.go
index 9fa19f1592d..e1687477d0a 100644
--- a/aws/resource_aws_vpc.go
+++ b/aws/resource_aws_vpc.go
@@ -10,6 +10,7 @@ import (
 	"github.com/aws/aws-sdk-go/service/ec2"
 	"github.com/hashicorp/terraform/helper/resource"
 	"github.com/hashicorp/terraform/helper/schema"
+	"github.com/hashicorp/terraform/helper/validation"
 )
 
 func resourceAwsVpc() *schema.Resource {
@@ -21,6 +22,7 @@ func resourceAwsVpc() *schema.Resource {
 		Importer: &schema.ResourceImporter{
 			State: resourceAwsVpcInstanceImport,
 		},
+		CustomizeDiff: resourceAwsVpcCustomizeDiff,
 
 		SchemaVersion: 1,
 		MigrateState:  resourceAwsVpcMigrateState,
@@ -34,10 +36,10 @@ func resourceAwsVpc() *schema.Resource {
 			},
 
 			"instance_tenancy": {
-				Type:     schema.TypeString,
-				Optional: true,
-				ForceNew: true,
-				Computed: true,
+				Type:         schema.TypeString,
+				Optional:     true,
+				Default:      ec2.TenancyDefault,
+				ValidateFunc: validation.StringInSlice([]string{ec2.TenancyDefault, ec2.TenancyDedicated}, false),
 			},
 
 			"enable_dns_hostnames": {
@@ -112,15 +114,11 @@ func resourceAwsVpc() *schema.Resource {
 
 func resourceAwsVpcCreate(d *schema.ResourceData, meta interface{}) error {
 	conn := meta.(*AWSClient).ec2conn
-	instance_tenancy := "default"
-	if v, ok := d.GetOk("instance_tenancy"); ok {
-		instance_tenancy = v.(string)
-	}
 
 	// Create the VPC
 	createOpts := &ec2.CreateVpcInput{
 		CidrBlock:                   aws.String(d.Get("cidr_block").(string)),
-		InstanceTenancy:             aws.String(instance_tenancy),
+		InstanceTenancy:             aws.String(d.Get("instance_tenancy").(string)),
 		AmazonProvidedIpv6CidrBlock: aws.Bool(d.Get("assign_generated_ipv6_cidr_block").(bool)),
 	}
 
@@ -452,6 +450,21 @@ func resourceAwsVpcUpdate(d *schema.ResourceData, meta interface{}) error {
 		d.SetPartial("assign_generated_ipv6_cidr_block")
 	}
 
+	if d.HasChange("instance_tenancy") && !d.IsNewResource() {
+		modifyOpts := &ec2.ModifyVpcTenancyInput{
+			VpcId:           aws.String(vpcid),
+			InstanceTenancy: aws.String(d.Get("instance_tenancy").(string)),
+		}
+		log.Printf(
+			"[INFO] Modifying instance_tenancy vpc attribute for %s: %#v",
+			d.Id(), modifyOpts)
+		if _, err := conn.ModifyVpcTenancy(modifyOpts); err != nil {
+			return err
+		}
+
+		d.SetPartial("instance_tenancy")
+	}
+
 	if err := setTags(conn, d); err != nil {
 		return err
 	} else {
@@ -492,6 +505,17 @@ func resourceAwsVpcDelete(d *schema.ResourceData, meta interface{}) error {
 	})
 }
 
+func resourceAwsVpcCustomizeDiff(diff *schema.ResourceDiff, v interface{}) error {
+	if diff.HasChange("instance_tenancy") {
+		old, new := diff.GetChange("instance_tenancy")
+		if old.(string) != ec2.TenancyDedicated || new.(string) != ec2.TenancyDefault {
+			diff.ForceNew("instance_tenancy")
+		}
+	}
+
+	return nil
+}
+
 // VPCStateRefreshFunc returns a resource.StateRefreshFunc that is used to watch
 // a VPC.
 func VPCStateRefreshFunc(conn *ec2.EC2, id string) resource.StateRefreshFunc {
diff --git a/aws/resource_aws_vpc_test.go b/aws/resource_aws_vpc_test.go
index 457a542facf..1059b255975 100644
--- a/aws/resource_aws_vpc_test.go
+++ b/aws/resource_aws_vpc_test.go
@@ -89,6 +89,8 @@ func TestAccAWSVpc_basic(t *testing.T) {
 					testAccCheckVpcCidr(&vpc, "10.1.0.0/16"),
 					resource.TestCheckResourceAttr(
 						"aws_vpc.foo", "cidr_block", "10.1.0.0/16"),
+					resource.TestCheckResourceAttr(
+						"aws_vpc.foo", "instance_tenancy", "default"),
 					resource.TestCheckResourceAttrSet(
 						"aws_vpc.foo", "default_route_table_id"),
 					resource.TestCheckResourceAttr(
@@ -163,9 +165,48 @@ func TestAccAWSVpc_dedicatedTenancy(t *testing.T) {
 			{
 				Config: testAccVpcDedicatedConfig,
 				Check: resource.ComposeTestCheckFunc(
-					testAccCheckVpcExists("aws_vpc.bar", &vpc),
+					testAccCheckVpcExists("aws_vpc.foo", &vpc),
+					resource.TestCheckResourceAttr(
+						"aws_vpc.foo", "instance_tenancy", "dedicated"),
+				),
+			},
+		},
+	})
+}
+
+func TestAccAWSVpc_modifyTenancy(t *testing.T) {
+	var vpcDedicated ec2.Vpc
+	var vpcDefault ec2.Vpc
+
+	resource.Test(t, resource.TestCase{
+		PreCheck:     func() { testAccPreCheck(t) },
+		Providers:    testAccProviders,
+		CheckDestroy: testAccCheckVpcDestroy,
+		Steps: []resource.TestStep{
+			{
+				Config: testAccVpcDedicatedConfig,
+				Check: resource.ComposeTestCheckFunc(
+					testAccCheckVpcExists("aws_vpc.foo", &vpcDedicated),
+					resource.TestCheckResourceAttr(
+						"aws_vpc.foo", "instance_tenancy", "dedicated"),
+				),
+			},
+			{
+				Config: testAccVpcConfig,
+				Check: resource.ComposeTestCheckFunc(
+					testAccCheckVpcExists("aws_vpc.foo", &vpcDefault),
+					resource.TestCheckResourceAttr(
+						"aws_vpc.foo", "instance_tenancy", "default"),
+					testAccCheckVpcIdsEqual(&vpcDedicated, &vpcDefault),
+				),
+			},
+			{
+				Config: testAccVpcDedicatedConfig,
+				Check: resource.ComposeTestCheckFunc(
+					testAccCheckVpcExists("aws_vpc.foo", &vpcDedicated),
 					resource.TestCheckResourceAttr(
-						"aws_vpc.bar", "instance_tenancy", "dedicated"),
+						"aws_vpc.foo", "instance_tenancy", "dedicated"),
+					testAccCheckVpcIdsNotEqual(&vpcDedicated, &vpcDefault),
 				),
 			},
 		},
@@ -277,6 +318,26 @@ func testAccCheckVpcCidr(vpc *ec2.Vpc, expected string) resource.TestCheckFunc {
 	}
 }
 
+func testAccCheckVpcIdsEqual(vpc1, vpc2 *ec2.Vpc) resource.TestCheckFunc {
+	return func(s *terraform.State) error {
+		if *vpc1.VpcId != *vpc2.VpcId {
+			return fmt.Errorf("VPC IDs not equal")
+		}
+
+		return nil
+	}
+}
+
+func testAccCheckVpcIdsNotEqual(vpc1, vpc2 *ec2.Vpc) resource.TestCheckFunc {
+	return func(s *terraform.State) error {
+		if *vpc1.VpcId == *vpc2.VpcId {
+			return fmt.Errorf("VPC IDs are equal")
+		}
+
+		return nil
+	}
+}
+
 func testAccCheckVpcExists(n string, vpc *ec2.Vpc) resource.TestCheckFunc {
 	return func(s *terraform.State) error {
 		rs, ok := s.RootModule().Resources[n]
@@ -438,9 +499,9 @@ resource "aws_vpc" "foo" {
 }
 `
 const testAccVpcDedicatedConfig = `
-resource "aws_vpc" "bar" {
+resource "aws_vpc" "foo" {
 	instance_tenancy = "dedicated"
-	cidr_block = "10.2.0.0/16"
+	cidr_block = "10.1.0.0/16"
 	tags {
 		Name = "terraform-testacc-vpc-dedicated"
 	}