diff --git a/classes/helper.php b/classes/helper.php
index 6d599b6..6b03293 100644
--- a/classes/helper.php
+++ b/classes/helper.php
@@ -144,6 +144,61 @@ public static function remove_item(int $itemid, string $itemtype, string $itemna
         }
     }
 
+    /**
+     * Rename item.
+     *
+     * @param int $itemid Item ID.
+     * @param string $itemtype Item type (tag, course, category).
+     * @param string $newname Item new name.
+     * @return void
+     */
+    public static function rename_item(int $itemid, string $itemtype, string $newname): void {
+        global $DB;
+
+        // Get cohort to figure out an old name.
+        $cohort = helper::get_cohort_by_item($itemid, $itemtype);
+
+        if ($cohort && $cohort->name != $newname) {
+            $oldname = $cohort->name;
+
+            // Update cohort with a new name.
+            $cohort->name = $newname;
+            unset($cohort->customfields);
+            cohort_update_cohort($cohort);
+
+            // Update rule with a new name.
+            $rule = rule::get_record(['cohortid' => $cohort->id]);
+            if ($rule) {
+                $rule->set('name', $newname);
+                $rule->save();
+            }
+
+            // Update custom profile field.
+            self::update_profile_field_item($itemtype, $oldname, $newname);
+
+            // Update users data. TODO: move to adhoc task.
+            $field = $DB->get_record('user_info_field', ['shortname' => $itemtype]);
+
+            if ($field) {
+                $fieldselect = $DB->sql_like('data', ':value', false, false);
+                $value = $DB->sql_like_escape($oldname);
+                $params['value'] = "%$value%";
+                $params['fieldid'] = $field->id;
+
+                $where = "$fieldselect AND fieldid = :fieldid";
+                $usersdata = $DB->get_records_select('user_info_data', $where, $params);
+
+                foreach ($usersdata as $userdata) {
+                    $data = explode(', ', $userdata->data);
+                    $key = array_search($oldname, $data);
+                    $data[$key] = $newname;
+                    $userdata->data = implode(', ', $data);
+                    $DB->update_record('user_info_data', $userdata);
+                }
+            }
+        }
+    }
+
     /**
      * Get cohort by provided item type and item id.
      *
@@ -295,6 +350,35 @@ public static function delete_profile_field_item(string $shortname, string $item
         }
     }
 
+    /**
+     * Delete a given item from profile field.
+     *
+     * @param string $shortname Field short name.
+     * @param string $oldname Old name of the item
+     * @param string $newname New name of the item.
+     *
+     * @return void
+     */
+    public static function update_profile_field_item(string $shortname, string $oldname, string $newname): void {
+        global $DB;
+
+        $field = $DB->get_record('user_info_field', ['shortname' => $shortname]);
+        if ($field) {
+            $fielddata = [];
+            if (!empty($field->param1)) {
+                $fielddata = explode("\n", $field->param1);
+            }
+
+            if (in_array($oldname, $fielddata)) {
+                $key = array_search($oldname, $fielddata);
+                $fielddata[$key] = $newname;
+                sort($fielddata);
+                $field->param1 = implode("\n", $fielddata);
+                $DB->update_record('user_info_field', $field);
+            }
+        }
+    }
+
     /**
      * Add cohort.
      *
diff --git a/classes/observer.php b/classes/observer.php
index 61c332f..b6a10e4 100644
--- a/classes/observer.php
+++ b/classes/observer.php
@@ -23,8 +23,8 @@
 use core\event\tag_added;
 use core\event\tag_removed;
 use core\event\tag_deleted;
+use core\event\tag_updated;
 use tool_dynamic_cohorts\rule;
-use tool_dynamic_cohorts\rule_manager;
 
 /**
  * Event observer class.
@@ -82,6 +82,17 @@ public static function tag_deleted(tag_deleted $event): void {
         helper::remove_item($tagid, helper::ITEM_TYPE_TAG, $tagname);
     }
 
+    /**
+     * Process tag_deleted event.
+     *
+     * @param tag_updated $event The event.
+     */
+    public static function tag_updated(tag_updated $event): void {
+        $tagid = $event->objectid;
+        $tagnewname = $event->other['rawname'];
+        helper::rename_item($tagid, helper::ITEM_TYPE_TAG, $tagnewname);
+    }
+
     /**
      * Process course_created event.
      *
diff --git a/db/events.php b/db/events.php
index 436ff20..9e6f3b7 100644
--- a/db/events.php
+++ b/db/events.php
@@ -37,6 +37,10 @@
         'eventname' => '\core\event\tag_deleted',
         'callback' => '\tool_enrolprofile\observer::tag_deleted',
     ],
+    [
+        'eventname' => '\core\event\tag_updated',
+        'callback' => '\tool_enrolprofile\observer::tag_updated',
+    ],
     [
         'eventname' => '\core\event\course_created',
         'callback' => '\tool_enrolprofile\observer::course_created',
diff --git a/tests/observer_test.php b/tests/observer_test.php
index a9cf281..d9011a7 100644
--- a/tests/observer_test.php
+++ b/tests/observer_test.php
@@ -20,6 +20,7 @@
 use core_customfield\field_controller;
 use core_tag_tag;
 use context_course;
+use core_user;
 
 /**
  * Unit tests for observer class.
@@ -174,6 +175,134 @@ public function test_tag_added(): void {
         $this->assertNotEmpty($enrol);
     }
 
+    /**
+     * Check logic when updating a tag.
+     */
+    public function test_tag_updated(): void {
+        global $DB;
+
+        $course = $this->getDataGenerator()->create_course();
+        $profilefield = 'profile_field_' . helper::ITEM_TYPE_TAG;
+        $tagname = 'A tag';
+
+        core_tag_tag::set_item_tags('core', 'course', $course->id, context_course::instance($course->id), [
+            $tagname,
+            'Not tag',
+            'Another tag',
+        ]);
+
+        $tag = $DB->get_record('tag', ['rawname' => $tagname]);
+        $this->assertNotEmpty($tag);
+
+        $cohort = $DB->get_record('cohort', ['name' => $tagname]);
+        $this->assertNotEmpty($cohort);
+
+        $cohort = cohort_get_cohort($cohort->id, context_course::instance($course->id), true);
+        foreach ($cohort->customfields as $customfield) {
+            if ($customfield->get_field()->get('shortname') == helper::COHORT_FIELD_ID) {
+                $this->assertSame($tag->id, $customfield->export_value());
+            }
+            if ($customfield->get_field()->get('shortname') == helper::COHORT_FIELD_TYPE) {
+                $this->assertSame(helper::ITEM_TYPE_TAG, $customfield->export_value());
+            }
+        }
+
+        $profilefielddata = $DB->get_field('user_info_field', 'param1', ['id' => $this->tagprofilefield->id]);
+        $this->assertNotEmpty($profilefielddata);
+        $this->assertTrue(in_array($tagname, explode("\n", $profilefielddata)));
+
+        $rule = $DB->get_record('tool_dynamic_cohorts', ['name' => $tagname]);
+        $this->assertNotEmpty($rule);
+        $this->assertEquals($cohort->id, $rule->cohortid);
+
+        $user1 = $this->getDataGenerator()->create_user();
+        profile_save_data((object)[
+            'id' => $user1->id,
+            $profilefield => [
+                'Not tag',
+                $tagname,
+                'Another tag',
+            ]
+        ]);
+
+        $user2 = $this->getDataGenerator()->create_user();
+        profile_save_data((object)[
+            'id' => $user2->id,
+            $profilefield => [
+                $tagname,
+                'Another tag',
+            ]
+        ]);
+
+        profile_load_data($user1);
+        $this->assertSame([
+                'Not tag',
+                $tagname,
+                'Another tag',
+            ], $user1->$profilefield
+        );
+        profile_load_data($user2);
+        $this->assertSame([
+                $tagname,
+                'Another tag',
+            ], $user2->$profilefield
+        );
+
+        // Update name of the tag.
+        $newtagname = 'A new tag name';
+        core_tag_tag::get($tag->id, '*')->update(array('rawname' => $newtagname));
+
+        $tag = $DB->get_record('tag', ['rawname' => $tagname]);
+        $this->assertEmpty($tag);
+
+        $tag = $DB->get_record('tag', ['rawname' => $newtagname]);
+        $this->assertNotEmpty($tag);
+
+        $cohort = $DB->get_record('cohort', ['name' => $tagname]);
+        $this->assertEmpty($cohort);
+
+        $cohort = $DB->get_record('cohort', ['name' => $newtagname]);
+        $this->assertNotEmpty($cohort);
+
+        $cohort = cohort_get_cohort($cohort->id, context_course::instance($course->id), true);
+        foreach ($cohort->customfields as $customfield) {
+            if ($customfield->get_field()->get('shortname') == helper::COHORT_FIELD_ID) {
+                $this->assertSame($tag->id, $customfield->export_value());
+            }
+            if ($customfield->get_field()->get('shortname') == helper::COHORT_FIELD_TYPE) {
+                $this->assertSame(helper::ITEM_TYPE_TAG, $customfield->export_value());
+            }
+        }
+
+        $profilefielddata = $DB->get_field('user_info_field', 'param1', ['id' => $this->tagprofilefield->id]);
+        $this->assertNotEmpty($profilefielddata);
+        $this->assertFalse(in_array($tagname, explode("\n", $profilefielddata)));
+        $this->assertTrue(in_array($newtagname, explode("\n", $profilefielddata)));
+
+        $rule = $DB->get_record('tool_dynamic_cohorts', ['name' => $tagname]);
+        $this->assertEmpty($rule);
+
+        $rule = $DB->get_record('tool_dynamic_cohorts', ['name' => $newtagname]);
+        $this->assertNotEmpty($rule);
+        $this->assertEquals($cohort->id, $rule->cohortid);
+
+        profile_load_data($user1);
+        $this->assertSame([
+                'Not tag',
+                $newtagname,
+                'Another tag',
+            ], $user1->$profilefield
+        );
+        profile_load_data($user2);
+        $this->assertSame([
+                $newtagname,
+                'Another tag',
+            ], $user2->$profilefield
+        );
+
+    }
+
+
     /**
      * Check logic when removing a tag.
      */