diff --git a/heat/engine/resources/openstack/nova/server.py b/heat/engine/resources/openstack/nova/server.py
index 7fdd31e4d9..6cb782a4a2 100644
--- a/heat/engine/resources/openstack/nova/server.py
+++ b/heat/engine/resources/openstack/nova/server.py
@@ -548,11 +548,12 @@ class Server(server_base.BaseServer, sh.SchedulerHintsMixin,
         ),
         USER_DATA_UPDATE_POLICY: properties.Schema(
             properties.Schema.STRING,
-            _('Policy on how to apply a user_data update; either by '
-              'ignoring it or by replacing the entire server.'),
+            _('Policy on how to apply a user_data update; by '
+              'ignoring it, by replacing the entire server, '
+              'or rebuild the server.'),
             default='REPLACE',
             constraints=[
-                constraints.AllowedValues(['REPLACE', 'IGNORE']),
+                constraints.AllowedValues(['REPLACE', 'IGNORE', 'REBUILD']),
             ],
             support_status=support.SupportStatus(version='6.0.0'),
             update_allowed=True
@@ -1313,6 +1314,14 @@ class Server(server_base.BaseServer, sh.SchedulerHintsMixin,
                                                            'kwargs': kwargs})
         return prg
 
+    def _update_user_data_rebuild(self, after_props):
+        user_data = after_props[self.USER_DATA]
+        prg = progress.ServerUpdateProgress(
+            self.resource_id,
+            'rebuild',
+            handler_extra={'args': (user_data,)})
+        return prg
+
     def _update_networks(self, server, after_props):
         updaters = []
         new_networks = after_props[self.NETWORKS]
@@ -1404,6 +1413,12 @@ class Server(server_base.BaseServer, sh.SchedulerHintsMixin,
         if self.FLAVOR in prop_diff:
             updaters.extend(self._update_flavor(after_props))
 
+        if self.USER_DATA in prop_diff:
+            # We only care about rebuild here. The standard replace is
+            # dealt elsewere
+            if after_props[self.USER_DATA_UPDATE_POLICY] == 'REBUILD':
+                updaters.append(self._update_user_data_rebuild(after_props))
+
         if self.IMAGE in prop_diff:
             updaters.append(self._update_image(after_props))
         elif self.ADMIN_PASS in prop_diff:
diff --git a/heat/tests/openstack/nova/test_server.py b/heat/tests/openstack/nova/test_server.py
index 529a22d572..1ed657ff25 100644
--- a/heat/tests/openstack/nova/test_server.py
+++ b/heat/tests/openstack/nova/test_server.py
@@ -2362,6 +2362,26 @@ class ServersTest(common.HeatTestCase):
         scheduler.TaskRunner(server.update, update_template)()
         self.assertEqual((server.UPDATE, server.COMPLETE), server.state)
 
+    @mock.patch.object(servers.Server, 'prepare_for_replace')
+    @mock.patch.object(nova.NovaClientPlugin, 'client')
+    def test_server_update_server_userdata_rebuild(self, mock_create,
+                                                   mock_replace):
+        stack_name = 'update_udreplace'
+        (tmpl, stack) = self._setup_test_stack(stack_name)
+        self.patchobject(servers.Server, 'check_update_complete',
+                         return_value=True)
+
+        resource_defns = tmpl.resource_definitions(stack)
+        server = servers.Server('server_update_userdata_ignore',
+                                resource_defns['WebServer'], stack)
+
+        update_props = tmpl.t['Resources']['WebServer']['Properties'].copy()
+        update_props['user_data'] = 'changed'
+        update_props['user_data_update_policy'] = 'REBUILD'
+        update_template = server.t.freeze(properties=update_props)
+        updater = scheduler.TaskRunner(server.update, update_template)
+        self.assertRaises(resource.UpdateReplace, updater)
+
     @mock.patch.object(servers.Server, 'prepare_for_replace')
     def test_server_update_image_replace(self, mock_replace):
         stack_name = 'update_imgrep'
diff --git a/releasenotes/notes/add-rebuild-for-user_data_update_policy-b1a229f3f551ea4b.yaml b/releasenotes/notes/add-rebuild-for-user_data_update_policy-b1a229f3f551ea4b.yaml
new file mode 100644
index 0000000000..70aee66844
--- /dev/null
+++ b/releasenotes/notes/add-rebuild-for-user_data_update_policy-b1a229f3f551ea4b.yaml
@@ -0,0 +1,5 @@
+---
+features:
+  - |
+    Adding REBUILD option for user_data_update_policy so that
+    changes to user_data can be updated instead of a new create.