diff --git a/azurerm/internal/services/compute/managed_disk_resource.go b/azurerm/internal/services/compute/managed_disk_resource.go
index 7647280f18ccc..6cc30a17eff98 100644
--- a/azurerm/internal/services/compute/managed_disk_resource.go
+++ b/azurerm/internal/services/compute/managed_disk_resource.go
@@ -25,7 +25,7 @@ import (
 
 func resourceManagedDisk() *schema.Resource {
 	return &schema.Resource{
-		Create: resourceManagedDiskCreateUpdate,
+		Create: resourceManagedDiskCreate,
 		Read:   resourceManagedDiskRead,
 		Update: resourceManagedDiskUpdate,
 		Delete: resourceManagedDiskDelete,
@@ -163,15 +163,21 @@ func resourceManagedDisk() *schema.Resource {
 				ValidateFunc:     azure.ValidateResourceID,
 			},
 
+			"tier": {
+				Type:     schema.TypeString,
+				Optional: true,
+				Computed: true,
+			},
+
 			"tags": tags.Schema(),
 		},
 	}
 }
 
-func resourceManagedDiskCreateUpdate(d *schema.ResourceData, meta interface{}) error {
+func resourceManagedDiskCreate(d *schema.ResourceData, meta interface{}) error {
 	subscriptionId := meta.(*clients.Client).Account.SubscriptionId
 	client := meta.(*clients.Client).Compute.DisksClient
-	ctx, cancel := timeouts.ForCreateUpdate(meta.(*clients.Client).StopContext, d)
+	ctx, cancel := timeouts.ForCreate(meta.(*clients.Client).StopContext, d)
 	defer cancel()
 
 	log.Printf("[INFO] preparing arguments for Azure ARM Managed Disk creation.")
@@ -197,6 +203,7 @@ func resourceManagedDiskCreateUpdate(d *schema.ResourceData, meta interface{}) e
 	createOption := compute.DiskCreateOption(d.Get("create_option").(string))
 	storageAccountType := d.Get("storage_account_type").(string)
 	osType := d.Get("os_type").(string)
+
 	t := d.Get("tags").(map[string]interface{})
 	zones := azure.ExpandZones(d.Get("zones").([]interface{}))
 	skuName := compute.DiskStorageAccountTypes(storageAccountType)
@@ -295,6 +302,13 @@ func resourceManagedDiskCreateUpdate(d *schema.ResourceData, meta interface{}) e
 		}
 	}
 
+	if tier := d.Get("tier").(string); tier != "" {
+		if storageAccountType != string(compute.PremiumZRS) && storageAccountType != string(compute.PremiumLRS) {
+			return fmt.Errorf("`tier` can only be specified when `storage_account_type` is set to `Premium_LRS` or `Premium_ZRS`")
+		}
+		props.Tier = &tier
+	}
+
 	createDisk := compute.Disk{
 		Name:           &name,
 		Location:       &location,
@@ -353,6 +367,15 @@ func resourceManagedDiskUpdate(d *schema.ResourceData, meta interface{}) error {
 		DiskUpdateProperties: &compute.DiskUpdateProperties{},
 	}
 
+	if d.HasChange("tier") {
+		if storageAccountType != string(compute.PremiumZRS) && storageAccountType != string(compute.PremiumLRS) {
+			return fmt.Errorf("`tier` can only be specified when `storage_account_type` is set to `Premium_LRS` or `Premium_ZRS`")
+		}
+		shouldShutDown = true
+		tier := d.Get("tier").(string)
+		diskUpdate.Tier = &tier
+	}
+
 	if d.HasChange("tags") {
 		t := d.Get("tags").(map[string]interface{})
 		diskUpdate.Tags = tags.Expand(t)
@@ -600,6 +623,7 @@ func resourceManagedDiskRead(d *schema.ResourceData, meta interface{}) error {
 		d.Set("disk_iops_read_write", props.DiskIOPSReadWrite)
 		d.Set("disk_mbps_read_write", props.DiskMBpsReadWrite)
 		d.Set("os_type", props.OsType)
+		d.Set("tier", props.Tier)
 
 		if networkAccessPolicy := props.NetworkAccessPolicy; networkAccessPolicy != compute.AllowAll {
 			d.Set("network_access_policy", props.NetworkAccessPolicy)
diff --git a/azurerm/internal/services/compute/managed_disk_resource_test.go b/azurerm/internal/services/compute/managed_disk_resource_test.go
index 1aa4878b3dfda..dc0c206714f80 100644
--- a/azurerm/internal/services/compute/managed_disk_resource_test.go
+++ b/azurerm/internal/services/compute/managed_disk_resource_test.go
@@ -322,6 +322,30 @@ func TestAccManagedDisk_attachedStorageTypeUpdate(t *testing.T) {
 	})
 }
 
+func TestAccManagedDisk_attachedTierUpdate(t *testing.T) {
+	data := acceptance.BuildTestData(t, "azurerm_managed_disk", "test")
+	r := ManagedDiskResource{}
+
+	data.ResourceTest(t, r, []resource.TestStep{
+		{
+			Config: r.tierUpdateWhileAttached(data, "P10"),
+			Check: resource.ComposeTestCheckFunc(
+				check.That(data.ResourceName).ExistsInAzure(r),
+				check.That(data.ResourceName).Key("tier").HasValue("P10"),
+			),
+		},
+		data.ImportStep(),
+		{
+			Config: r.tierUpdateWhileAttached(data, "P20"),
+			Check: resource.ComposeTestCheckFunc(
+				check.That(data.ResourceName).ExistsInAzure(r),
+				check.That(data.ResourceName).Key("tier").HasValue("P20"),
+			),
+		},
+		data.ImportStep(),
+	})
+}
+
 func TestAccAzureRMManagedDisk_networkPolicy(t *testing.T) {
 	data := acceptance.BuildTestData(t, "azurerm_managed_disk", "test")
 	r := ManagedDiskResource{}
@@ -1023,6 +1047,33 @@ resource "azurerm_virtual_machine_data_disk_attachment" "test" {
 `, r.templateAttached(data), data.RandomInteger, diskSize)
 }
 
+func (r ManagedDiskResource) tierUpdateWhileAttached(data acceptance.TestData, tier string) string {
+	return fmt.Sprintf(`
+provider "azurerm" {
+  features {}
+}
+
+%s
+
+resource "azurerm_managed_disk" "test" {
+  name                 = "%d-disk1"
+  location             = azurerm_resource_group.test.location
+  resource_group_name  = azurerm_resource_group.test.name
+  storage_account_type = "Premium_LRS"
+  create_option        = "Empty"
+  disk_size_gb         = 10
+  tier                 = "%s"
+}
+
+resource "azurerm_virtual_machine_data_disk_attachment" "test" {
+  managed_disk_id    = azurerm_managed_disk.test.id
+  virtual_machine_id = azurerm_linux_virtual_machine.test.id
+  lun                = "0"
+  caching            = "None"
+}
+`, r.templateAttached(data), data.RandomInteger, tier)
+}
+
 func (r ManagedDiskResource) storageTypeUpdateWhilstAttached(data acceptance.TestData, storageAccountType string) string {
 	return fmt.Sprintf(`
 provider "azurerm" {
diff --git a/website/docs/r/managed_disk.html.markdown b/website/docs/r/managed_disk.html.markdown
index 2b8c0ec8e677b..c2ba45e09f504 100644
--- a/website/docs/r/managed_disk.html.markdown
+++ b/website/docs/r/managed_disk.html.markdown
@@ -117,6 +117,11 @@ The following arguments are supported:
 
 * `storage_account_id` - (Optional) The ID of the Storage Account where the `source_uri` is located. Required when `create_option` is set to `Import`.  Changing this forces a new resource to be created.
 
+* `tier` - (Optional) The disk performance tier to use. Possible values are documented [here](https://docs.microsoft.com/en-us/azure/virtual-machines/disks-change-performance). This feature is currently supported only for premium SSDs.
+
+~> **NOTE:** Changing this value is disruptive if the disk is attached to a Virtual Machine. The VM will be shut down and de-allocated as required by Azure to action the change. Terraform will attempt to start the machine again after the update if it was in a `running` state when the apply was started.
+
+
 * `tags` - (Optional) A mapping of tags to assign to the resource.
 
 * `zones` - (Optional) A collection containing the availability zone to allocate the Managed Disk in.