diff --git a/pkg/tfshim/sdk-v2/provider2.go b/pkg/tfshim/sdk-v2/provider2.go
index 860801e63..119b064cd 100644
--- a/pkg/tfshim/sdk-v2/provider2.go
+++ b/pkg/tfshim/sdk-v2/provider2.go
@@ -14,6 +14,7 @@ import (
 	testing "github.com/mitchellh/go-testing-interface"
 
 	shim "github.com/pulumi/pulumi-terraform-bridge/v3/pkg/tfshim"
+	"github.com/pulumi/pulumi/sdk/v3/go/common/util/contract"
 )
 
 type v2Resource2 struct {
@@ -115,12 +116,7 @@ func (d *v2InstanceDiff2) ProposedState(
 }
 
 func (*v2InstanceDiff2) IgnoreChanges(ignored map[string]bool) {
-	// TODO ignoreChanges is pretty complicated due to sequencing of calls; adopt tfbridge style
-	// handling of ignore changes instead of this? use CustomizeDiff to perform these changes?
-	// add some more hooks?
-	if len(ignored) > 0 {
-		panic(fmt.Sprintf("TODO: IgnoreChanges: %", ignored))
-	}
+	contract.Failf("IgnoreChanges is deprecated and should not be called anymore")
 }
 
 type v2Provider2 struct {
@@ -237,8 +233,9 @@ func (p *v2Provider2) Diff(
 	t string,
 	s shim.InstanceState,
 	c shim.ResourceConfig,
+	opts ...shim.DiffOption,
 ) (shim.InstanceDiff, error) {
-	return p.DiffWithContext(context.Background(), t, s, c)
+	return p.DiffWithContext(context.Background(), t, s, c, opts...)
 }
 
 func (p *v2Provider2) unpackInstanceState(t string, s shim.InstanceState) *v2InstanceState2 {
@@ -261,7 +258,9 @@ func (p *v2Provider2) DiffWithContext(
 	t string,
 	s shim.InstanceState,
 	c shim.ResourceConfig,
+	opts ...shim.DiffOption,
 ) (shim.InstanceDiff, error) {
+	options := shim.NewDiffOptions(opts...)
 	config := configFromShim(c)
 	state := p.unpackInstanceState(t, s)
 	res := p.tf.ResourcesMap[t]
@@ -280,7 +279,7 @@ func (p *v2Provider2) DiffWithContext(
 		return nil, err
 	}
 	st := state.stateValue
-	plan, err := p.server.PlanResourceChange(ctx, t, ty, cfg, st, proposed, state.meta, meta)
+	plan, err := p.server.PlanResourceChange(ctx, t, ty, cfg, st, proposed, state.meta, meta, options.IgnoreChanges)
 	if err != nil {
 		return nil, err
 	}
@@ -407,60 +406,42 @@ func (s *simpleProviderServer) PlanResourceChange(
 	config, priorState, proposedNewState cty.Value,
 	priorMeta map[string]interface{},
 	providerMeta *cty.Value,
+	ignores shim.IgnoreChanges,
 ) (*struct {
 	PlannedState cty.Value
 	PlannedMeta  map[string]interface{}
 	PlannedDiff  *terraform.InstanceDiff
 }, error) {
-	configVal, err := msgpack.Marshal(config, ty)
-	if err != nil {
-		return nil, err
-	}
-	priorStateVal, err := msgpack.Marshal(priorState, ty)
-	if err != nil {
-		return nil, err
-	}
-	proposedNewStateVal, err := msgpack.Marshal(proposedNewState, ty)
-	if err != nil {
-		return nil, err
-	}
-	priorPrivate, err := json.Marshal(priorMeta)
-	if err != nil {
-		return nil, err
-	}
-	req := &tfprotov5.PlanResourceChangeRequest{
-		TypeName:         typeName,
-		Config:           &tfprotov5.DynamicValue{MsgPack: configVal},
-		PriorState:       &tfprotov5.DynamicValue{MsgPack: priorStateVal},
-		ProposedNewState: &tfprotov5.DynamicValue{MsgPack: proposedNewStateVal},
-		PriorPrivate:     priorPrivate,
-	}
-	if providerMeta != nil {
-		providerMetaVal, err := msgpack.Marshal(*providerMeta, ty)
-		if err != nil {
-			return nil, err
+	req := &schema.SimplePlanResourceChangeLogicalRequest{
+		ResourceName:        typeName,
+		ConfigVal:           config,
+		PriorStateVal:       priorState,
+		ProposedNewStateVal: proposedNewState,
+		PriorPrivateState:   priorMeta,
+	}
+
+	if ignores != nil {
+		req.InstanceDiffTransform = func(d *terraform.InstanceDiff) *terraform.InstanceDiff {
+			dd := &v2InstanceDiff{d}
+			dd.processIgnoreChanges(ignores)
+			return dd.tf
 		}
-		req.ProviderMeta = &tfprotov5.DynamicValue{MsgPack: providerMetaVal}
 	}
-	resp, plannedDiff, err := s.gserver.PlanResourceChangeWithDiff(ctx, req)
-	newState, err := msgpack.Unmarshal(resp.PlannedState.MsgPack, ty)
-	if err != nil {
+
+	resp := s.gserver.PlanResourceChangeLogical(ctx, req)
+	if err := s.handle(resp.Diagnostics, nil); err != nil {
 		return nil, err
 	}
-	var plannedMeta map[string]interface{}
-	if resp.PlannedPrivate != nil {
-		if err := json.Unmarshal(resp.PlannedPrivate, &plannedMeta); err != nil {
-			return nil, err
-		}
-	}
+	// Ignore resp.UnsafeToUseLegacyTypeSystem - does not matter for Pulumi bridged providers.
+	// Ignore resp.RequiresReplace - expect replacement to be encoded in resp.InstanceDiff.
 	return &struct {
 		PlannedState cty.Value
 		PlannedMeta  map[string]interface{}
 		PlannedDiff  *terraform.InstanceDiff
 	}{
-		PlannedState: newState,
-		PlannedMeta:  plannedMeta,
-		PlannedDiff:  plannedDiff,
+		PlannedState: resp.PlannedState,
+		PlannedMeta:  resp.PlannedPrivate,
+		PlannedDiff:  resp.InstanceDiff,
 	}, nil
 }
 
@@ -580,12 +561,16 @@ func (p *providerWithPlanResourceChange) ApplyWithContext(
 }
 
 func (p *providerWithPlanResourceChange) DiffWithContext(
-	ctx context.Context, t string, s shim.InstanceState, c shim.ResourceConfig,
+	ctx context.Context,
+	t string,
+	s shim.InstanceState,
+	c shim.ResourceConfig,
+	opts ...shim.DiffOption,
 ) (shim.InstanceDiff, error) {
 	if p.usePlanResourceChange(t) {
-		return p.altProvider.DiffWithContext(ctx, t, s, c)
+		return p.altProvider.DiffWithContext(ctx, t, s, c, opts...)
 	}
-	return p.ProviderWithContext.DiffWithContext(ctx, t, s, c)
+	return p.ProviderWithContext.DiffWithContext(ctx, t, s, c, opts...)
 }
 
 func (p *providerWithPlanResourceChange) RefreshWithContext(