Deploy Azure VM from Custom Image using Terraform

🗂 Project Structure
This Terraform project consists of the following files:
azure-vm-from-image-demo/
├── main.tf # Core infrastructure resources
├── variables.tf # Input variables
├── terraform.tfvars # Variable values (e.g., image ID, subnet ID)
├── outputs.tf # Useful outputs (e.g., VM ID, IP)

🔧 Terraform Configuration Explained

1. Resource Group + Network Interface In main.tf, we start by creating a resource group and a network interface that connects to an existing subnet:

resource "azurerm_resource_group" "rg" {
name = var.resource_group_name
location = var.location
}

resource "azurerm_network_interface" "nic" {
name = "vm-from-image-nic"
location = azurerm_resource_group.rg.location
resource_group_name = azurerm_resource_group.rg.name

ip_configuration {
name = "internal"
subnet_id = var.subnet_id
private_ip_address_allocation = "Dynamic"
}
}

💡 Explanation: This NIC connects the VM to the specified subnet. You’ll need to pass in an existing subnet ID (from a previous project or manual setup).

1. Virtual Machine from Custom Image

resource "azurerm_linux_virtual_machine" "vm" {
name = var.vm_name
resource_group_name = azurerm_resource_group.rg.name
location = azurerm_resource_group.rg.location
size = "Standard_B1s"
admin_username = var.admin_username
admin_password = var.admin_password
network_interface_ids = [azurerm_network_interface.nic.id]
disable_password_authentication = false

source_image_id = var.custom_image_id

os_disk {
caching = "ReadWrite"
storage_account_type = "Standard_LRS"
}
}
💡 Explanation: Instead of using a marketplace image, we’re referencing an existing custom image by its full resource ID (e.g., /subscriptions/.../images/demo-vm-image).

1. Variables + tfvars To keep the project reusable and configurable, we use the following variables in variables.tf and set actual values in terraform.tfvars: variable "custom_image_id" { description = "The resource ID of the custom managed image" type = string }

variable "subnet_id" {
description = "Subnet ID for VM NIC"
type = string
}
And in terraform.tfvars:

custom_image_id = "/subscriptions/xxxxx/resourceGroups/xxx/providers/Microsoft.Compute/images/demo-vm-image"
subnet_id = "/subscriptions/xxxxx/resourceGroups/xxx/providers/Microsoft.Network/virtualNetworks/demo-vnet/subnets/demo-subnet"
🛠 You can get these IDs from previous deployments or from the Azure Portal.

1. Outputs We output useful values like VM ID and private IP address: output "vm_id" { value = azurerm_linux_virtual_machine.vm.id }

output "private_ip" {
value = azurerm_network_interface.nic.private_ip_address
}

🚀 Deployment Steps
To deploy this project, follow these steps:

az login
terraform init
terraform plan
terraform apply

✅ Summary
This post showed how to:

Deploy a VM from a custom managed image in Azure

Use Terraform to automate the setup

Connect the VM to an existing subnet

Maintain modular, reusable code using variables and outputs