diff --git a/internal/services/apimanagement/api_management_diagnostic_resource.go b/internal/services/apimanagement/api_management_diagnostic_resource.go
index 02aa56bbe4ef..e71c85e88fd6 100644
--- a/internal/services/apimanagement/api_management_diagnostic_resource.go
+++ b/internal/services/apimanagement/api_management_diagnostic_resource.go
@@ -15,6 +15,7 @@ import (
 	"github.com/hashicorp/go-azure-sdk/resource-manager/apimanagement/2021-08-01/logger"
 	"github.com/hashicorp/terraform-provider-azurerm/helpers/tf"
 	"github.com/hashicorp/terraform-provider-azurerm/internal/clients"
+	"github.com/hashicorp/terraform-provider-azurerm/internal/features"
 	"github.com/hashicorp/terraform-provider-azurerm/internal/services/apimanagement/schemaz"
 	"github.com/hashicorp/terraform-provider-azurerm/internal/tf/pluginsdk"
 	"github.com/hashicorp/terraform-provider-azurerm/internal/tf/set"
@@ -114,7 +115,12 @@ func resourceApiManagementDiagnostic() *pluginsdk.Resource {
 			"operation_name_format": {
 				Type:     pluginsdk.TypeString,
 				Optional: true,
-				Default:  string(diagnostic.OperationNameFormatName),
+				Default: func() interface{} {
+					if !features.FourPointOh() {
+						return string(diagnostic.OperationNameFormatName)
+					}
+					return nil
+				}(),
 				ValidateFunc: validation.StringInSlice([]string{
 					string(diagnostic.OperationNameFormatName),
 					string(diagnostic.OperationNameFormatUrl),
@@ -147,11 +153,18 @@ func resourceApiManagementDiagnosticCreateUpdate(d *pluginsdk.ResourceData, meta
 
 	parameters := diagnostic.DiagnosticContract{
 		Properties: &diagnostic.DiagnosticContractProperties{
-			LoggerId:            d.Get("api_management_logger_id").(string),
-			OperationNameFormat: pointer.To(diagnostic.OperationNameFormat(d.Get("operation_name_format").(string))),
+			LoggerId: d.Get("api_management_logger_id").(string),
 		},
 	}
 
+	if d.Get("identifier") == "applicationinsights" {
+		if operationNameFormat, ok := d.GetOk("operation_name_format"); ok {
+			parameters.Properties.OperationNameFormat = pointer.To(diagnostic.OperationNameFormat(operationNameFormat.(string)))
+		} else if !features.FourPointOh() {
+			parameters.Properties.OperationNameFormat = pointer.To(diagnostic.OperationNameFormatName)
+		}
+	}
+
 	if samplingPercentage, ok := d.GetOk("sampling_percentage"); ok {
 		parameters.Properties.Sampling = &diagnostic.SamplingSettings{
 			SamplingType: pointer.To(diagnostic.SamplingTypeFixed),
@@ -259,7 +272,11 @@ func resourceApiManagementDiagnosticRead(d *pluginsdk.ResourceData, meta interfa
 				d.Set("backend_request", nil)
 				d.Set("backend_response", nil)
 			}
-			format := string(diagnostic.OperationNameFormatName)
+
+			format := ""
+			if !features.FourPointOh() {
+				format = string(diagnostic.OperationNameFormatName)
+			}
 			if props.OperationNameFormat != nil {
 				format = string(pointer.From(props.OperationNameFormat))
 			}