diff --git a/designate/cmd/status.py b/designate/cmd/status.py
index 1b32d51be..0f85fd073 100644
--- a/designate/cmd/status.py
+++ b/designate/cmd/status.py
@@ -12,6 +12,7 @@
 # License for the specific language governing permissions and limitations
 # under the License.
 
+from oslo_upgradecheck import common_checks
 from oslo_upgradecheck import upgradecheck
 from sqlalchemy import MetaData, Table, select, func
 
@@ -43,6 +44,9 @@ class Checks(upgradecheck.UpgradeCommands):
 
     _upgrade_checks = ((_('Duplicate service status'),
                         _duplicate_service_status),
+                       (_('Policy File JSON to YAML Migration'),
+                        (common_checks.check_policy_json,
+                         {'conf': designate.conf.CONF})),
                        )
 
 
diff --git a/designate/common/config.py b/designate/common/config.py
index 09797addd..8a3d7f210 100644
--- a/designate/common/config.py
+++ b/designate/common/config.py
@@ -13,6 +13,9 @@
 # under the License.
 
 from oslo_middleware import cors
+from oslo_policy import opts as policy_opts
+
+import designate.conf
 
 
 def set_defaults():
@@ -34,3 +37,8 @@ def set_defaults():
                        'PATCH',
                        'HEAD']
     )
+    # TODO(gmann): Remove setting the default value of config policy_file
+    # once oslo_policy change the default value to 'policy.yaml'.
+    # https://github.com/openstack/oslo.policy/blob/a626ad12fe5a3abd49d70e3e5b95589d279ab578/oslo_policy/opts.py#L49
+    DEFAULT_POLICY_FILE = 'policy.yaml'
+    policy_opts.set_defaults(designate.conf.CONF, DEFAULT_POLICY_FILE)
diff --git a/designate/policy.py b/designate/policy.py
index 32ace5b27..863f0ddcd 100644
--- a/designate/policy.py
+++ b/designate/policy.py
@@ -25,7 +25,11 @@ from designate.common import policies
 CONF = cfg.CONF
 
 # Add the default policy opts
-opts.set_defaults(CONF)
+# TODO(gmann): Remove setting the default value of config policy_file
+# once oslo_policy change the default value to 'policy.yaml'.
+# https://github.com/openstack/oslo.policy/blob/a626ad12fe5a3abd49d70e3e5b95589d279ab578/oslo_policy/opts.py#L49
+DEFAULT_POLICY_FILE = 'policy.yaml'
+opts.set_defaults(CONF, DEFAULT_POLICY_FILE)
 
 LOG = logging.getLogger(__name__)
 
diff --git a/designate/tests/unit/mdns/test_service.py b/designate/tests/unit/mdns/test_service.py
index f12eaab0d..3ec535903 100644
--- a/designate/tests/unit/mdns/test_service.py
+++ b/designate/tests/unit/mdns/test_service.py
@@ -38,7 +38,8 @@ class MdnsServiceTest(oslotest.base.BaseTestCase):
         self.stdlog = fixtures.StandardLogging()
         self.useFixture(self.stdlog)
 
-        self.useFixture(cfg_fixture.Config(CONF))
+        conf = self.useFixture(cfg_fixture.Config(CONF))
+        conf.conf([], project='designate')
 
         self.service = service.Service()
 
diff --git a/designate/tests/unit/producer/test_service.py b/designate/tests/unit/producer/test_service.py
index e9a25efd2..6bbd89ed7 100644
--- a/designate/tests/unit/producer/test_service.py
+++ b/designate/tests/unit/producer/test_service.py
@@ -35,7 +35,8 @@ CONF = cfg.CONF
 @mock.patch.object(service.rpcapi.CentralAPI, 'get_instance', mock.Mock())
 class ProducerTest(oslotest.base.BaseTestCase):
     def setUp(self):
-        self.useFixture(cfg_fixture.Config(CONF))
+        conf = self.useFixture(cfg_fixture.Config(CONF))
+        conf.conf([], project='designate')
 
         service.CONF = RoObject({
             'service:producer': RoObject({
diff --git a/designate/tests/unit/sink/test_notifications.py b/designate/tests/unit/sink/test_notifications.py
index 9a11f2e8b..b80b8a2fb 100644
--- a/designate/tests/unit/sink/test_notifications.py
+++ b/designate/tests/unit/sink/test_notifications.py
@@ -41,6 +41,7 @@ class TestSinkNotification(oslotest.base.BaseTestCase,
             'allowed_event_types', ['compute.instance.create.end'],
             'handler:fake'
         )
+        CONF([], project='designate')
 
         self.context = mock.Mock()
         self.service = service.Service()
diff --git a/designate/tests/unit/test_central/test_basic.py b/designate/tests/unit/test_central/test_basic.py
index a02dcce2d..b77119556 100644
--- a/designate/tests/unit/test_central/test_basic.py
+++ b/designate/tests/unit/test_central/test_basic.py
@@ -229,7 +229,7 @@ class CentralBasic(TestCase):
     def setUp(self):
         super(CentralBasic, self).setUp()
         self.CONF = self.useFixture(cfg_fixture.Config(cfg.CONF)).conf
-
+        self.CONF([], project='designate')
         mock_storage = mock.Mock(spec=designate.storage.base.Storage)
 
         pool_list = objects.PoolList.from_list(
@@ -2196,6 +2196,7 @@ class CentralQuotaTest(unittest.TestCase):
     @patch('designate.central.service.storage')
     @patch('designate.central.service.quota')
     def test_zone_record_quota_allows_lowering_value(self, quota, storage):
+        cfg.CONF([], project='designate')
         service = Service()
         service.storage.count_records.return_value = 10
 
diff --git a/designate/tests/unit/workers/test_service.py b/designate/tests/unit/workers/test_service.py
index 9aa3adc47..73428f833 100644
--- a/designate/tests/unit/workers/test_service.py
+++ b/designate/tests/unit/workers/test_service.py
@@ -37,8 +37,8 @@ class TestService(oslotest.base.BaseTestCase):
         super(TestService, self).setUp()
         self.stdlog = fixtures.StandardLogging()
         self.useFixture(self.stdlog)
-        self.useFixture(cfg_fixture.Config(CONF))
-
+        conf = self.useFixture(cfg_fixture.Config(CONF))
+        conf.conf([], project='designate')
         self.context = mock.Mock()
         self.zone = mock.Mock()
         self.service = service.Service()
diff --git a/doc/source/admin/backends/msdns_agent.rst b/doc/source/admin/backends/msdns_agent.rst
index 5efafae00..a0bfdd7f5 100644
--- a/doc/source/admin/backends/msdns_agent.rst
+++ b/doc/source/admin/backends/msdns_agent.rst
@@ -89,7 +89,7 @@ Ensure that "policy_file" under the [default] section is set:
 
 .. code-block:: ini
 
-    policy_file = C:\\etc\\designate\\policy.json
+    policy_file = C:\\etc\\designate\\policy.yaml
 
 Start the designate agent using
 (Python 2.7 was installed in the default location C:\\Python27):
diff --git a/doc/source/admin/policy.rst b/doc/source/admin/policy.rst
index 43aafb67e..76a803308 100644
--- a/doc/source/admin/policy.rst
+++ b/doc/source/admin/policy.rst
@@ -2,6 +2,14 @@
 Policy Documentation
 ====================
 
+.. warning::
+
+   JSON formatted policy file is deprecated since Designate 12.0.0 (Wallaby).
+   This `oslopolicy-convert-json-to-yaml`__ tool will migrate your existing
+   JSON-formatted policy file to YAML in a backward-compatible way.
+
+.. __: https://docs.openstack.org/oslo.policy/latest/cli/oslopolicy-convert-json-to-yaml.html
+
 The following is an overview of all available policies in Designate. For a
 sample configuration file, refer to :doc:`samples/policy-yaml`.
 
diff --git a/doc/source/admin/quotas.rst b/doc/source/admin/quotas.rst
index 7062ae287..edf1f31ad 100644
--- a/doc/source/admin/quotas.rst
+++ b/doc/source/admin/quotas.rst
@@ -115,7 +115,7 @@ Per-Tenant via API
 These quotas can be edited via API on a per-tenant basis. An administrator
 can edit quotas for any tenant, but they must supply the
 ``X-Auth-All-Projects`` header, and have permission to use it, they'll also
-need the ``set-quotas`` permission in ``policy.json``. For example, an
+need the ``set-quotas`` permission in ``policy.yaml``. For example, an
 admin setting the zones quota for tenant X would look like:
 
 .. code-block:: http
diff --git a/doc/source/contributor/gmr.rst b/doc/source/contributor/gmr.rst
index 49185a942..9f95faab2 100644
--- a/doc/source/contributor/gmr.rst
+++ b/doc/source/contributor/gmr.rst
@@ -345,7 +345,7 @@ GMR Example
       policy_default_rule = default
       policy_dirs =
         policy.d
-      policy_file = /etc/designate/policy.json
+      policy_file = /etc/designate/policy.yaml
       pool-manager-topic = pool_manager
       publish_errors = False
       pybasedir = /opt/stack/designate
diff --git a/lower-constraints.txt b/lower-constraints.txt
index f8ea81fcc..90985cdbe 100644
--- a/lower-constraints.txt
+++ b/lower-constraints.txt
@@ -70,23 +70,23 @@ os-win==4.1.0
 osc-lib==1.10.0
 oslo.cache==1.29.0
 oslo.concurrency==4.2.0
-oslo.config==5.2.0
+oslo.config==6.8.0
 oslo.context==2.22.0
 oslo.db==8.3.0
 oslo.i18n==3.20.0
 oslo.log==4.3.0
 oslo.messaging==12.4.0
 oslo.middleware==3.31.0
-oslo.policy==2.1.0
+oslo.policy==3.6.0
 oslo.reports==1.18.0
 oslo.rootwrap==5.8.0
 oslo.serialization==2.25.0
 oslo.service==1.31.0
-oslo.upgradecheck==0.1.0
-oslo.utils==3.37.0
+oslo.upgradecheck==1.3.0
+oslo.utils==4.5.0
 oslo.versionedobjects==1.31.2
 oslotest==3.2.0
-packaging==17.1
+packaging==20.4
 paramiko==2.7.1
 Paste==2.0.2
 PasteDeploy==1.5.0
@@ -115,13 +115,13 @@ python-mimeparse==1.6.0
 python-neutronclient==6.7.0
 python-subunit==1.2.0
 pytz==2018.3
-PyYAML==3.13
+PyYAML==5.1
 repoze.lru==0.7
 requests-mock==1.2.0
-requests==2.14.2
+requests==2.23.0
 requestsexceptions==1.4.0
 restructuredtext-lint==1.1.3
-rfc3986==1.1.0
+rfc3986==1.2.0
 Routes==2.4.1
 simplejson==3.13.2
 six==1.11.0
diff --git a/releasenotes/notes/deprecate-json-formatted-policy-file-a6a464a8d35e02a5.yaml b/releasenotes/notes/deprecate-json-formatted-policy-file-a6a464a8d35e02a5.yaml
new file mode 100644
index 000000000..c9c530004
--- /dev/null
+++ b/releasenotes/notes/deprecate-json-formatted-policy-file-a6a464a8d35e02a5.yaml
@@ -0,0 +1,20 @@
+---
+upgrade:
+  - |
+    The default value of ``[oslo_policy] policy_file`` config option has
+    been changed from ``policy.json`` to ``policy.yaml``.
+    Operators who are utilizing customized or previously generated
+    static policy JSON files (which are not needed by default), should
+    generate new policy files or convert them in YAML format. Use the
+    `oslopolicy-convert-json-to-yaml
+    <https://docs.openstack.org/oslo.policy/latest/cli/oslopolicy-convert-json-to-yaml.html>`_
+    tool to convert a JSON to YAML formatted policy file in
+    backward compatible way.
+deprecations:
+  - |
+    Use of JSON policy files was deprecated by the ``oslo.policy`` library
+    during the Victoria development cycle. As a result, this deprecation is
+    being noted in the Wallaby cycle with an anticipated future removal of support
+    by ``oslo.policy``. As such operators will need to convert to YAML policy
+    files. Please see the upgrade notes for details on migration of any
+    custom policy files.
diff --git a/requirements.txt b/requirements.txt
index 176d983d8..26c39be30 100644
--- a/requirements.txt
+++ b/requirements.txt
@@ -10,7 +10,7 @@ jsonschema>=3.2.0 # MIT
 keystoneauth1>=3.4.0 # Apache-2.0
 keystonemiddleware>=4.17.0 # Apache-2.0
 netaddr>=0.7.18 # BSD
-oslo.config>=5.2.0 # Apache-2.0
+oslo.config>=6.8.0 # Apache-2.0
 oslo.concurrency>=4.2.0 # Apache-2.0
 oslo.messaging>=12.4.0 # Apache-2.0
 oslo.middleware>=3.31.0 # Apache-2.0
@@ -19,8 +19,8 @@ oslo.reports>=1.18.0 # Apache-2.0
 oslo.rootwrap>=5.8.0 # Apache-2.0
 oslo.serialization>=2.25.0 # Apache-2.0
 oslo.service>=1.31.0 # Apache-2.0
-oslo.upgradecheck>=0.1.0
-oslo.utils>=3.37.0 # Apache-2.0
+oslo.upgradecheck>=1.3.0
+oslo.utils>=4.5.0 # Apache-2.0
 oslo.versionedobjects>=1.31.2 # Apache-2.0
 Paste>=2.0.2 # MIT
 PasteDeploy>=1.5.0 # MIT
@@ -28,7 +28,7 @@ pbr>=3.1.1 # Apache-2.0
 pecan!=1.0.2,!=1.0.3,!=1.0.4,!=1.2,>=1.0.0 # BSD
 python-designateclient>=2.12.0 # Apache-2.0
 python-neutronclient>=6.7.0 # Apache-2.0
-requests>=2.14.2 # Apache-2.0
+requests>=2.23.0 # Apache-2.0
 tenacity>=6.0.0 # Apache-2.0
 six>=1.11.0 # MIT
 SQLAlchemy>=1.2.19 # MIT
@@ -40,7 +40,7 @@ dnspython>=1.16.0  # http://www.dnspython.org/LICENSE
 oslo.db>=8.3.0 # Apache-2.0
 oslo.i18n>=3.20.0 # Apache-2.0
 oslo.context>=2.22.0 # Apache-2.0
-oslo.policy>=2.1.0 # Apache-2.0
+oslo.policy>=3.6.0 # Apache-2.0
 Werkzeug>=0.9 # BSD License
 python-memcached>=1.56 # PSF
 tooz>=1.58.0 # Apache-2.0