diff --git a/.circleci/config.yml b/.circleci/config.yml
index 331c375ea1..d6b2baeee8 100644
--- a/.circleci/config.yml
+++ b/.circleci/config.yml
@@ -16,7 +16,7 @@ jobs:
         # that flag starts the download asynchronously so we'd have a race
         # condition.
         # renovate: datasource=github-releases depName=hashicorp/terraform versioning=hashicorp
-        TERRAFORM_VERSION: 1.3.6
+        TERRAFORM_VERSION: 1.5.4
     steps:
     - checkout
     - run: make build-service
diff --git a/Dockerfile b/Dockerfile
index 98fc394776..1e23fd8c7a 100644
--- a/Dockerfile
+++ b/Dockerfile
@@ -21,7 +21,7 @@ ARG TARGETPLATFORM
 
 # install terraform binaries
 # renovate: datasource=github-releases depName=hashicorp/terraform versioning=hashicorp
-ENV DEFAULT_TERRAFORM_VERSION=1.3.6
+ENV DEFAULT_TERRAFORM_VERSION=1.5.4
 
 # In the official Atlantis image we only have the latest of each Terraform version.
 SHELL ["/bin/bash", "-o", "pipefail", "-c"]
diff --git a/testdrive/utils.go b/testdrive/utils.go
index 921f129b9b..1b3edfedc6 100644
--- a/testdrive/utils.go
+++ b/testdrive/utils.go
@@ -34,7 +34,7 @@ import (
 )
 
 const hashicorpReleasesURL = "https://releases.hashicorp.com"
-const terraformVersion = "1.3.6" // renovate: datasource=github-releases depName=hashicorp/terraform versioning=hashicorp
+const terraformVersion = "1.5.4" // renovate: datasource=github-releases depName=hashicorp/terraform versioning=hashicorp
 const ngrokDownloadURL = "https://bin.equinox.io/c/4VmDzA7iaHb"
 const ngrokAPIURL = "localhost:41414" // We hope this isn't used.
 const atlantisPort = 4141
diff --git a/testing/Dockerfile b/testing/Dockerfile
index 7bcb47bca8..a97c14b278 100644
--- a/testing/Dockerfile
+++ b/testing/Dockerfile
@@ -6,7 +6,7 @@ RUN apt-get update && apt-get --no-install-recommends -y install unzip \
 
 # Install Terraform
 # renovate: datasource=github-releases depName=hashicorp/terraform versioning=hashicorp
-ENV TERRAFORM_VERSION=1.3.6
+ENV TERRAFORM_VERSION=1.5.4
 RUN case $(uname -m) in x86_64|amd64) ARCH="amd64" ;; aarch64|arm64|armv7l) ARCH="arm64" ;; esac && \
     wget -nv -O terraform.zip https://releases.hashicorp.com/terraform/${TERRAFORM_VERSION}/terraform_${TERRAFORM_VERSION}_linux_${ARCH}.zip && \
     mkdir -p /usr/local/bin/tf/versions/${TERRAFORM_VERSION} && \