Managing Sensitive Data in Terraform Configurations

Terraform configurations frequently need to reference credentials, API keys, and connection strings that must never appear in plain text in version control or plan output. Terraform provides several mechanisms for handling this sensitive data. The sensitive variable attribute suppresses values from CLI output, environment variables inject secrets without hardcoding them in .tf files, and data sources can retrieve secrets at apply time from external stores like Azure Key Vault. Despite these protections, Terraform state files always contain the real values in plain text, making state file security a critical concern.

In this lab, you will define sensitive variables and observe how Terraform masks them in plan output, inject credentials through environment variables using the TF_VAR_ prefix, retrieve a pre-provisioned Key Vault secret using the azurerm_key_vault_secret data source, and inspect the Terraform state file to understand where sensitive values are still exposed.

Objectives

By completing this intermediate lab, you will be able to:

• Define Terraform variables with the sensitive attribute and verify masking in plan output
• Inject secret values into Terraform using environment variables
• Retrieve secrets from Azure Key Vault using Terraform data sources
• Identify sensitive value exposure in Terraform state files

Who is this lab for?

This lab is designed for:

• Cloud engineers who manage infrastructure secrets in Terraform workflows
• DevOps practitioners building secure CI/CD pipelines with Terraform
• Terraform Associate candidates preparing for exam objectives on sensitive data handling