diff --git a/.changelog/38498.txt b/.changelog/38498.txt
new file mode 100644
index 00000000000..d0e17423771
--- /dev/null
+++ b/.changelog/38498.txt
@@ -0,0 +1,3 @@
+```release-note:enhancement
+resource/aws_cloudformation_stack_set_instance: Add `operation_preferences.concurrency_mode` argument
+```
diff --git a/internal/service/cloudformation/stack_set_instance.go b/internal/service/cloudformation/stack_set_instance.go
index de0f381e6e5..92f6023db84 100644
--- a/internal/service/cloudformation/stack_set_instance.go
+++ b/internal/service/cloudformation/stack_set_instance.go
@@ -145,6 +145,11 @@ func resourceStackSetInstance() *schema.Resource {
 							ValidateFunc:  validation.IntBetween(1, 100),
 							ConflictsWith: []string{"operation_preferences.0.max_concurrent_count"},
 						},
+						"concurrency_mode": {
+							Type:             schema.TypeString,
+							Optional:         true,
+							ValidateDiagFunc: enum.Validate[awstypes.ConcurrencyMode](),
+						},
 						"region_concurrency_type": {
 							Type:             schema.TypeString,
 							Optional:         true,
diff --git a/internal/service/cloudformation/stack_set_instance_test.go b/internal/service/cloudformation/stack_set_instance_test.go
index 255935248e4..b6ddc351901 100644
--- a/internal/service/cloudformation/stack_set_instance_test.go
+++ b/internal/service/cloudformation/stack_set_instance_test.go
@@ -38,7 +38,7 @@ func TestAccCloudFormationStackSetInstance_basic(t *testing.T) {
 		Steps: []resource.TestStep{
 			{
 				Config: testAccStackSetInstanceConfig_basic(rName),
-				Check: resource.ComposeTestCheckFunc(
+				Check: resource.ComposeAggregateTestCheckFunc(
 					testAccCheckStackSetInstanceExists(ctx, resourceName, &stackInstance1),
 					acctest.CheckResourceAttrAccountID(resourceName, names.AttrAccountID),
 					resource.TestCheckResourceAttr(resourceName, "call_as", "SELF"),
@@ -310,9 +310,45 @@ func TestAccCloudFormationStackSetInstance_operationPreferences(t *testing.T) {
 		Steps: []resource.TestStep{
 			{
 				Config: testAccStackSetInstanceConfig_operationPreferences(rName),
-				Check: resource.ComposeTestCheckFunc(
+				Check: resource.ComposeAggregateTestCheckFunc(
 					testAccCheckStackSetInstanceForOrganizationalUnitExists(ctx, resourceName, stackInstanceSummaries),
 					resource.TestCheckResourceAttr(resourceName, "operation_preferences.#", acctest.Ct1),
+					resource.TestCheckResourceAttr(resourceName, "operation_preferences.0.concurrency_mode", ""),
+					resource.TestCheckResourceAttr(resourceName, "operation_preferences.0.failure_tolerance_count", acctest.Ct1),
+					resource.TestCheckResourceAttr(resourceName, "operation_preferences.0.failure_tolerance_percentage", acctest.Ct0),
+					resource.TestCheckResourceAttr(resourceName, "operation_preferences.0.max_concurrent_count", acctest.Ct10),
+					resource.TestCheckResourceAttr(resourceName, "operation_preferences.0.max_concurrent_percentage", acctest.Ct0),
+					resource.TestCheckResourceAttr(resourceName, "operation_preferences.0.region_concurrency_type", ""),
+				),
+			},
+		},
+	})
+}
+
+func TestAccCloudFormationStackSetInstance_concurrencyMode(t *testing.T) {
+	ctx := acctest.Context(t)
+	var stackInstanceSummaries []awstypes.StackInstanceSummary
+	rName := sdkacctest.RandomWithPrefix(acctest.ResourcePrefix)
+	resourceName := "aws_cloudformation_stack_set_instance.test"
+
+	resource.ParallelTest(t, resource.TestCase{
+		PreCheck: func() {
+			acctest.PreCheck(ctx, t)
+			testAccPreCheckStackSet(ctx, t)
+			acctest.PreCheckOrganizationsEnabled(ctx, t)
+			acctest.PreCheckOrganizationManagementAccount(ctx, t)
+			acctest.PreCheckIAMServiceLinkedRole(ctx, t, "/aws-service-role/stacksets.cloudformation.amazonaws.com")
+		},
+		ErrorCheck:               acctest.ErrorCheck(t, names.CloudFormationServiceID),
+		ProtoV5ProviderFactories: acctest.ProtoV5ProviderFactories,
+		CheckDestroy:             testAccCheckStackSetInstanceForOrganizationalUnitDestroy(ctx),
+		Steps: []resource.TestStep{
+			{
+				Config: testAccStackSetInstanceConfig_concurrencyMode(rName),
+				Check: resource.ComposeAggregateTestCheckFunc(
+					testAccCheckStackSetInstanceForOrganizationalUnitExists(ctx, resourceName, stackInstanceSummaries),
+					resource.TestCheckResourceAttr(resourceName, "operation_preferences.#", acctest.Ct1),
+					resource.TestCheckResourceAttr(resourceName, "operation_preferences.0.concurrency_mode", "SOFT_FAILURE_TOLERANCE"),
 					resource.TestCheckResourceAttr(resourceName, "operation_preferences.0.failure_tolerance_count", acctest.Ct1),
 					resource.TestCheckResourceAttr(resourceName, "operation_preferences.0.failure_tolerance_percentage", acctest.Ct0),
 					resource.TestCheckResourceAttr(resourceName, "operation_preferences.0.max_concurrent_count", acctest.Ct10),
@@ -864,6 +900,26 @@ resource "aws_cloudformation_stack_set_instance" "test" {
 `)
 }
 
+func testAccStackSetInstanceConfig_concurrencyMode(rName string) string {
+	return acctest.ConfigCompose(testAccStackSetInstanceBaseConfig_ServiceManagedStackSet(rName), `
+resource "aws_cloudformation_stack_set_instance" "test" {
+  depends_on = [aws_iam_role_policy.Administration, aws_iam_role_policy.Execution]
+
+  operation_preferences {
+    failure_tolerance_count = 1
+    max_concurrent_count    = 10
+    concurrency_mode        = "SOFT_FAILURE_TOLERANCE"
+  }
+
+  deployment_targets {
+    organizational_unit_ids = [data.aws_organizations_organization.test.roots[0].id]
+  }
+
+  stack_set_name = aws_cloudformation_stack_set.test.name
+}
+`)
+}
+
 func testAccStackSetInstanceConfig_delegatedAdministrator(rName string) string {
 	return acctest.ConfigCompose(testAccStackSetConfig_delegatedAdministrator(rName), `
 data "aws_organizations_organization" "test" {}
diff --git a/internal/service/cloudformation/type.go b/internal/service/cloudformation/type.go
index 403f4c6f7ff..2276bdddd44 100644
--- a/internal/service/cloudformation/type.go
+++ b/internal/service/cloudformation/type.go
@@ -442,6 +442,9 @@ func expandOperationPreferences(tfMap map[string]interface{}) *awstypes.StackSet
 	if v, ok := tfMap["max_concurrent_percentage"].(int); ok {
 		apiObject.MaxConcurrentPercentage = aws.Int32(int32(v))
 	}
+	if v, ok := tfMap["concurrency_mode"].(string); ok && v != "" {
+		apiObject.ConcurrencyMode = awstypes.ConcurrencyMode(v)
+	}
 	if v, ok := tfMap["region_concurrency_type"].(string); ok && v != "" {
 		apiObject.RegionConcurrencyType = awstypes.RegionConcurrencyType(v)
 	}
diff --git a/website/docs/r/cloudformation_stack_set_instance.html.markdown b/website/docs/r/cloudformation_stack_set_instance.html.markdown
index e180b086d57..a2279f52a7d 100644
--- a/website/docs/r/cloudformation_stack_set_instance.html.markdown
+++ b/website/docs/r/cloudformation_stack_set_instance.html.markdown
@@ -111,6 +111,7 @@ The `operation_preferences` configuration block supports the following arguments
 * `failure_tolerance_percentage` - (Optional) Percentage of accounts, per Region, for which this stack operation can fail before AWS CloudFormation stops the operation in that Region.
 * `max_concurrent_count` - (Optional) Maximum number of accounts in which to perform this operation at one time.
 * `max_concurrent_percentage` - (Optional) Maximum percentage of accounts in which to perform this operation at one time.
+* `concurrency_mode` - (Optional) Specifies how the concurrency level behaves during the operation execution. Valid values are `STRICT_FAILURE_TOLERANCE` and `SOFT_FAILURE_TOLERANCE`.
 * `region_concurrency_type` - (Optional) Concurrency type of deploying StackSets operations in Regions, could be in parallel or one Region at a time. Valid values are `SEQUENTIAL` and `PARALLEL`.
 * `region_order` - (Optional) Order of the Regions in where you want to perform the stack operation.