diff --git a/docs/docs/terraform/index.mdx b/docs/docs/terraform/index.mdx
index 18dce02cc73..6f69c2fffe2 100644
--- a/docs/docs/terraform/index.mdx
+++ b/docs/docs/terraform/index.mdx
@@ -8,7 +8,8 @@
 :::caution Terraform support is in alpha stage
 Pants is currently building support for developing and deploying Terraform. Simple use cases might be supported, but many options are missing.
 
-Please share feedback for what you need to use Pants with your Terraform modules and deployments by either [opening a GitHub issue](https://github.com/pantsbuild/pants/issues/new/choose) or [joining our Slack](/community/getting-help)!
+Terraform release progress is tracked in the [stability for release issue](https://github.com/pantsbuild/pants/issues/21119).
+Please share feedback for what you need to use Pants with your Terraform modules and deployments by commenting on that issue, [opening a new GitHub issue](https://github.com/pantsbuild/pants/issues/new/choose) or [joining our Slack](/community/getting-help)!
 :::
 
 ## Initial setup
diff --git a/docs/notes/2.23.x.md b/docs/notes/2.23.x.md
index 4b64c6ed481..a62bad38a9c 100644
--- a/docs/notes/2.23.x.md
+++ b/docs/notes/2.23.x.md
@@ -124,6 +124,8 @@ The `python_aws_lambda_function` and `python_aws_lambda_layer` targets now allow
 
 #### Terraform
 
+Terraform supports caching providers.
+
 The default version of terraform has been updated from 1.7.1 to 1.9.0.
 
 The `tfsec` linter now works on all supported platforms without extra config.
diff --git a/src/python/pants/backend/terraform/dependencies.py b/src/python/pants/backend/terraform/dependencies.py
index d1a2d4a74b8..c5e11a7f80e 100644
--- a/src/python/pants/backend/terraform/dependencies.py
+++ b/src/python/pants/backend/terraform/dependencies.py
@@ -2,6 +2,7 @@
 # Licensed under the Apache License, Version 2.0 (see LICENSE).
 from __future__ import annotations
 
+import os
 import os.path
 from dataclasses import dataclass
 from typing import Optional
@@ -88,12 +89,8 @@ async def get_terraform_providers(
         ),
     )
     if fetched_deps.exit_code != 0:
-        raise ProcessExecutionFailure(
-            fetched_deps.exit_code,
-            fetched_deps.stdout,
-            fetched_deps.stderr,
-            init_process_description,
-            keep_sandboxes=keep_sandboxes,
+        raise ProcessExecutionFailure.from_result(
+            fetched_deps, init_process_description, keep_sandboxes
         )
 
     return TerraformDependenciesResponse(fetched_deps.output_digest)
diff --git a/src/python/pants/backend/terraform/dependencies_test.py b/src/python/pants/backend/terraform/dependencies_test.py
index 8067e5902f2..63214064517 100644
--- a/src/python/pants/backend/terraform/dependencies_test.py
+++ b/src/python/pants/backend/terraform/dependencies_test.py
@@ -1,5 +1,7 @@
 # Copyright 2023 Pants project contributors (see CONTRIBUTORS.md).
 # Licensed under the Apache License, Version 2.0 (see LICENSE).
+from __future__ import annotations
+
 import dataclasses
 import json
 import textwrap
@@ -14,7 +16,7 @@
     standard_deployment,
     terraform_lockfile,
 )
-from pants.engine.fs import DigestContents, FileContent
+from pants.engine.fs import DigestContents, DigestEntries, FileContent, SymlinkEntry
 from pants.engine.internals.native_engine import Address
 from pants.testutil.rule_runner import RuleRunner
 
@@ -24,7 +26,7 @@
 
 def _do_init_terraform(
     rule_runner: RuleRunner, standard_deployment: StandardDeployment, initialise_backend: bool
-) -> DigestContents:
+) -> tuple[DigestContents, DigestEntries]:
     rule_runner.write_files(standard_deployment.files)
     target = rule_runner.get_target(standard_deployment.target)
     field_set = DeployTerraformFieldSet.create(target)
@@ -39,17 +41,30 @@ def _do_init_terraform(
         ],
     )
     initialised_files = rule_runner.request(DigestContents, [result.sources_and_deps])
+    initialised_entries = rule_runner.request(DigestEntries, [result.sources_and_deps])
     assert isinstance(initialised_files, DigestContents)
-    return initialised_files
+    return initialised_files, initialised_entries
 
 
 def find_file(files: DigestContents, pattern: str) -> Optional[FileContent]:
     return next((file for file in files if Path(file.path).match(pattern)), None)
 
 
+def find_link(entries: DigestEntries, pattern: str) -> Optional[SymlinkEntry]:
+    for entry in entries:
+        if not isinstance(entry, SymlinkEntry):
+            continue
+
+        if Path(entry.path).match(pattern):
+            # allow any prefix to account for absolute targets
+            return entry
+
+    return None
+
+
 def test_init_terraform(rule_runner: RuleRunner, standard_deployment: StandardDeployment) -> None:
     """Test for the happy path of initialising Terraform with a backend config."""
-    initialised_files = _do_init_terraform(
+    initialised_files, initialised_links = _do_init_terraform(
         rule_runner, standard_deployment, initialise_backend=True
     )
 
@@ -60,9 +75,9 @@ def test_init_terraform(rule_runner: RuleRunner, standard_deployment: StandardDe
     assert stub_tfstate["backend"]["config"]["path"] == str(standard_deployment.state_file)
 
     # Assert dependencies are initialised by checking for the dependency itself
-    assert find_file(
-        initialised_files,
-        ".terraform/providers/registry.terraform.io/hashicorp/null/*/*/terraform-provider-null*",
+    assert find_link(
+        initialised_links,
+        ".terraform/providers/registry.terraform.io/hashicorp/null/*/*",
     ), "Did not find expected provider"
 
     # Assert lockfile is included
@@ -80,7 +95,7 @@ def test_init_terraform_uses_lockfiles(
         files={**standard_deployment.files, **{"src/tf/.terraform.lock.hcl": terraform_lockfile}},
     )
 
-    initialised_files = _do_init_terraform(
+    initialised_files, initialised_entries = _do_init_terraform(
         rule_runner, deployment_with_lockfile, initialise_backend=True
     )
 
@@ -92,9 +107,9 @@ def test_init_terraform_uses_lockfiles(
     ), "version in lockfile has changed, we should not have regenerated the lockfile"
 
     # Assert dependencies are initialised to the older version
-    result_provider = find_file(
-        initialised_files,
-        ".terraform/providers/registry.terraform.io/hashicorp/null/*/*/terraform-provider-null*",
+    result_provider = find_link(
+        initialised_entries,
+        ".terraform/providers/registry.terraform.io/hashicorp/null/*/*",
     )
     assert result_provider, "Did not find any providers, did we initialise them successfully?"
     assert (
@@ -105,7 +120,7 @@ def test_init_terraform_uses_lockfiles(
 def test_init_terraform_without_backends(
     rule_runner: RuleRunner, standard_deployment: StandardDeployment
 ) -> None:
-    initialised_files = _do_init_terraform(
+    initialised_files, initialised_entries = _do_init_terraform(
         rule_runner, standard_deployment, initialise_backend=False
     )
 
@@ -115,9 +130,9 @@ def test_init_terraform_without_backends(
     ), "Terraform state file should not be present if the request was to not initialise the backend"
 
     # The dependencies should still be present
-    assert find_file(
-        initialised_files,
-        ".terraform/providers/registry.terraform.io/hashicorp/null/*/*/terraform-provider-null*",
+    assert find_link(
+        initialised_entries,
+        ".terraform/providers/registry.terraform.io/hashicorp/null/*/*",
     ), "Did not find expected provider"
 
 
@@ -157,7 +172,9 @@ def test_init_terraform_with_transitive_module(rule_runner: RuleRunner, tmpdir)
         Path(str(tmpdir.mkdir(".terraform").join("state.json"))),
         Address("src/tf/deployment", target_name="root"),
     )
-    initialised_files = _do_init_terraform(rule_runner, deployment, initialise_backend=True)
+    initialised_files, initialised_entries = _do_init_terraform(
+        rule_runner, deployment, initialise_backend=True
+    )
 
     assert initialised_files
     # Assert that init succeeded and created the modules mapping
@@ -175,7 +192,7 @@ def test_init_terraform_with_transitive_module(rule_runner: RuleRunner, tmpdir)
     )
 
     # Assert that the provider dependency was initialised
-    assert find_file(
-        initialised_files,
-        ".terraform/providers/registry.terraform.io/hashicorp/null/*/*/terraform-provider-null*",
+    assert find_link(
+        initialised_entries,
+        ".terraform/providers/registry.terraform.io/hashicorp/null/*/*",
     ), "Did not find expected provider contained in module, did we successfully include it in the files passed to `init`?"
diff --git a/src/python/pants/backend/terraform/testutil.py b/src/python/pants/backend/terraform/testutil.py
index e735ebdd60f..c38391a989e 100644
--- a/src/python/pants/backend/terraform/testutil.py
+++ b/src/python/pants/backend/terraform/testutil.py
@@ -23,7 +23,8 @@
 from pants.core.register import rules as core_rules
 from pants.core.util_rules import source_files
 from pants.engine import process
-from pants.engine.internals.native_engine import Address
+from pants.engine.fs import DigestEntries
+from pants.engine.internals.native_engine import Address, Digest
 from pants.engine.rules import QueryRule
 from pants.testutil.rule_runner import RuleRunner
 
@@ -50,6 +51,7 @@ def rule_runner_with_auto_approve() -> RuleRunner:
             *process.rules(),
             QueryRule(DeployProcess, (DeployTerraformFieldSet,)),
             QueryRule(TerraformInitResponse, (TerraformInitRequest,)),
+            QueryRule(DigestEntries, (Digest,)),
         ],
         preserve_tmpdirs=True,
     )
diff --git a/src/python/pants/backend/terraform/tool.py b/src/python/pants/backend/terraform/tool.py
index 228896353d9..399da6c6d30 100644
--- a/src/python/pants/backend/terraform/tool.py
+++ b/src/python/pants/backend/terraform/tool.py
@@ -1,7 +1,22 @@
 # Copyright 2021 Pants project contributors (see CONTRIBUTORS.md).
 # Licensed under the Apache License, Version 2.0 (see LICENSE).
+"""# Terraform
+
+## Caching: Pants uses the [provider cache](https://developer.hashicorp.com/terraform/cli/config/config-file#provider-plugin-cache) for caching providers.
+These are the things that need to be downloaded, so this provides the most speedup.
+We use the providers cache instead of identifying and caching the providers individually for a few reasons:
+1. This leverages Terraform's existing caching mechanism
+2. This is much simpler
+3. This incurs almost no overhead, since it is done as part of `terraform init`. We don't need to run more analysers or separately download providers
+
+We didn't use `terraform providers lock` for a few reasons:
+1. `terraform providers lock` isn't designed for this usecase, it's designed to create mirrors of providers. It does more work (to set up manifests) and would require us to set more config settings
+2. `terraform providers lock` doesn't use itself as a cache. So every time we would want to refresh the cache, we need to download _everything_ again. Even if nothing has changed.
+"""
+
 from __future__ import annotations
 
+import os
 import shlex
 from dataclasses import dataclass
 from pathlib import Path
@@ -13,6 +28,7 @@
     ExternalToolRequest,
     TemplatedExternalTool,
 )
+from pants.core.util_rules.system_binaries import BinaryShims, BinaryShimsRequest, GetentBinary
 from pants.engine.env_vars import EnvironmentVars, EnvironmentVarsRequest
 from pants.engine.fs import EMPTY_DIGEST, Digest
 from pants.engine.internals.selectors import Get
@@ -374,6 +390,14 @@ def default_known_versions(cls):
         advanced=True,
     )
 
+    @property
+    def plugin_cache_dir(self) -> str:
+        return "__terraform_filesystem_mirror"
+
+    @property
+    def append_only_caches(self) -> dict[str, str]:
+        return {"terraform_plugins": self.plugin_cache_dir}
+
 
 @dataclass(frozen=True)
 class TerraformProcess:
@@ -389,7 +413,10 @@ class TerraformProcess:
 
 @rule
 async def setup_terraform_process(
-    request: TerraformProcess, terraform: TerraformTool, platform: Platform
+    request: TerraformProcess,
+    terraform: TerraformTool,
+    getent_binary: GetentBinary,
+    platform: Platform,
 ) -> Process:
     downloaded_terraform = await Get(
         DownloadedExternalTool,
@@ -398,7 +425,30 @@ async def setup_terraform_process(
     )
     env = await Get(EnvironmentVars, EnvironmentVarsRequest(terraform.extra_env_vars))
 
-    immutable_input_digests = {"__terraform": downloaded_terraform.digest}
+    extra_bins = await Get(
+        BinaryShims,
+        BinaryShimsRequest,
+        BinaryShimsRequest.for_paths(getent_binary, rationale="download terraform providers"),
+    )
+
+    path = []
+    user_path = env.get("PATH")
+    if user_path:
+        path.append(user_path)
+    path.append(extra_bins.path_component)
+
+    env = EnvironmentVars(
+        {
+            **env,
+            "PATH": ":".join(path),
+            "TF_PLUGIN_CACHE_DIR": (os.path.join("{chroot}", terraform.plugin_cache_dir)),
+        }
+    )
+
+    immutable_input_digests = {
+        "__terraform": downloaded_terraform.digest,
+        **extra_bins.immutable_input_digests,
+    }
 
     def prepend_paths(paths: Tuple[str, ...]) -> Tuple[str, ...]:
         return tuple((Path(request.chdir) / path).as_posix() for path in paths)
@@ -409,6 +459,7 @@ def prepend_paths(paths: Tuple[str, ...]) -> Tuple[str, ...]:
         immutable_input_digests=immutable_input_digests,
         output_files=prepend_paths(request.output_files),
         output_directories=prepend_paths(request.output_directories),
+        append_only_caches=terraform.append_only_caches,
         env=env,
         description=request.description,
         level=LogLevel.DEBUG,
diff --git a/src/python/pants/core/util_rules/system_binaries.py b/src/python/pants/core/util_rules/system_binaries.py
index 6e0a928ab93..f59c13e8326 100644
--- a/src/python/pants/core/util_rules/system_binaries.py
+++ b/src/python/pants/core/util_rules/system_binaries.py
@@ -414,6 +414,10 @@ class FindBinary(BinaryPath):
     pass
 
 
+class GetentBinary(BinaryPath):
+    pass
+
+
 class GpgBinary(BinaryPath):
     pass
 
@@ -907,6 +911,16 @@ async def find_git(system_binaries: SystemBinariesSubsystem.EnvironmentAware) ->
     return GitBinary(first_path.path, first_path.fingerprint)
 
 
+@rule(desc="Finding the `getent` binary", level=LogLevel.DEBUG)
+async def find_getent(system_binaries: SystemBinariesSubsystem.EnvironmentAware) -> GetentBinary:
+    request = BinaryPathRequest(
+        binary_name="getent", search_path=system_binaries.system_binary_paths
+    )
+    paths = await Get(BinaryPaths, BinaryPathRequest, request)
+    first_path = paths.first_path_or_raise(request, rationale="getent file")
+    return GetentBinary(first_path.path, first_path.fingerprint)
+
+
 @rule(desc="Finding the `gpg` binary", level=LogLevel.DEBUG)
 async def find_gpg(system_binaries: SystemBinariesSubsystem.EnvironmentAware) -> GpgBinary:
     request = BinaryPathRequest(binary_name="gpg", search_path=system_binaries.system_binary_paths)
diff --git a/src/python/pants/engine/process.py b/src/python/pants/engine/process.py
index abd4dd820ec..855e1e38d68 100644
--- a/src/python/pants/engine/process.py
+++ b/src/python/pants/engine/process.py
@@ -287,6 +287,18 @@ def try_decode(content: bytes) -> str:
             )
         super().__init__("\n".join(err_strings))
 
+    @classmethod
+    def from_result(
+        cls, result: FallibleProcessResult, description: str, keep_sandboxes: KeepSandboxes
+    ) -> ProcessExecutionFailure:
+        return cls(
+            result.exit_code,
+            result.stdout,
+            result.stderr,
+            description,
+            keep_sandboxes=keep_sandboxes,
+        )
+
 
 @rule
 def get_multi_platform_request_description(req: Process) -> ProductDescription: