diff --git a/azure/scope/identity.go b/azure/scope/identity.go
index 194cc2465b85..862581ba2520 100644
--- a/azure/scope/identity.go
+++ b/azure/scope/identity.go
@@ -33,6 +33,7 @@ import (
 
 	infrav1 "sigs.k8s.io/cluster-api-provider-azure/api/v1beta1"
 	"sigs.k8s.io/cluster-api-provider-azure/pkg/ot"
+	"sigs.k8s.io/cluster-api-provider-azure/util/filewatcher"
 	"sigs.k8s.io/cluster-api-provider-azure/util/tele"
 )
 
@@ -145,6 +146,13 @@ func (p *AzureCredentialsProvider) GetTokenCredential(ctx context.Context, resou
 		if err != nil {
 			return nil, errors.Wrap(err, "failed to parse certificate data")
 		}
+
+		// Watch the certificate for changes; if the certificate changes, the pod will be restarted
+		err = filewatcher.WatchFileForChanges(p.Identity.Spec.CertPath)
+		if err != nil {
+			return nil, errors.Wrap(err, "failed to watch certificate file")
+		}
+
 		cred, authErr = azidentity.NewClientCertificateCredential(p.GetTenantID(), p.Identity.Spec.ClientID, certs, key, &azidentity.ClientCertificateCredentialOptions{
 			ClientOptions: azcore.ClientOptions{
 				TracingProvider: tracingProvider,
diff --git a/util/filewatcher/filewatcher.go b/util/filewatcher/filewatcher.go
new file mode 100644
index 000000000000..9c4e8d144599
--- /dev/null
+++ b/util/filewatcher/filewatcher.go
@@ -0,0 +1,67 @@
+package filewatcher
+
+import (
+	"os"
+	"path/filepath"
+	"sync"
+
+	"github.com/fsnotify/fsnotify"
+	"k8s.io/klog/v2"
+)
+
+var watchCertificateFileOnce sync.Once
+
+// WatchFileForChanges watches the file, fileToWatch, for changes. If the file contents have changed, the pod this
+// function is running on will be restarted.
+func WatchFileForChanges(fileToWatch string) error {
+	var err error
+
+	// This starts only one occurrence of the file watcher, which watches the file, fileToWatch.
+	watchCertificateFileOnce.Do(func() {
+		klog.Infof("Starting the file change watcher on file, %s", fileToWatch)
+
+		// Update the file path to watch in case this is a symlink
+		fileToWatch, err = filepath.EvalSymlinks(fileToWatch)
+		if err != nil {
+			return
+		}
+		klog.Infof("Watching file, %s", fileToWatch)
+
+		// Start the file watcher to monitor file changes
+		go func() {
+			err = checkForFileChanges(fileToWatch)
+		}()
+	})
+	return err
+}
+
+// checkForFileChanges starts a new file watcher. If the file is changed, the pod running this function will exit.
+func checkForFileChanges(path string) error {
+	watcher, err := fsnotify.NewWatcher()
+	if err != nil {
+		return err
+	}
+
+	go func() {
+		for {
+			select {
+			case event, ok := <-watcher.Events:
+				if ok && (event.Has(fsnotify.Write) || event.Has(fsnotify.Chmod) || event.Has(fsnotify.Remove)) {
+					klog.Infof("file, %s, was modified, exiting...", event.Name)
+					os.Exit(0)
+				}
+			case err, ok := <-watcher.Errors:
+				if ok {
+					klog.Errorf("file watcher error: %v", err)
+				}
+			}
+		}
+	}()
+
+	err = watcher.Add(path)
+	if err != nil {
+		return err
+	}
+
+	return nil
+}