diff --git a/doc/source/configuration/index.rst b/doc/source/configuration/index.rst
index cca3bc963..9f7135ab9 100644
--- a/doc/source/configuration/index.rst
+++ b/doc/source/configuration/index.rst
@@ -3,7 +3,7 @@ Configuration Guide
 ===================
 
 The static configuration for Placement lives in two main files: ``placement.conf`` and
-``policy.json``. These are described below.
+``policy.yaml``. These are described below.
 
 Configuration
 -------------
diff --git a/doc/source/configuration/policy.rst b/doc/source/configuration/policy.rst
index 08d250eb4..1b07e13ca 100644
--- a/doc/source/configuration/policy.rst
+++ b/doc/source/configuration/policy.rst
@@ -2,6 +2,14 @@
 Placement Policies
 ==================
 
+.. warning::
+
+   JSON formatted policy file is deprecated since Placement 5.0.0 (Wallaby).
+   The `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 Placement.
 For a sample configuration file, refer to
 :doc:`/configuration/sample-policy`.
diff --git a/doc/source/configuration/sample-policy.rst b/doc/source/configuration/sample-policy.rst
index 12e21c52a..e2e2bdc44 100644
--- a/doc/source/configuration/sample-policy.rst
+++ b/doc/source/configuration/sample-policy.rst
@@ -2,6 +2,14 @@
 Sample Placement Policy File
 ============================
 
+.. warning::
+
+   JSON formatted policy file is deprecated since Placement 5.0.0 (Wallaby).
+   The `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 a sample placement policy file for adaptation and use.
 
 The sample policy can also be viewed in :download:`file form
diff --git a/lower-constraints.txt b/lower-constraints.txt
index fb4397da5..5071c34f4 100644
--- a/lower-constraints.txt
+++ b/lower-constraints.txt
@@ -36,16 +36,16 @@ os-service-types==1.2.0
 os-traits==2.4.0
 oslo.concurrency==3.26.0
 oslo.config==6.7.0
-oslo.context==2.21.0
+oslo.context==2.22.0
 oslo.db==4.40.0
 oslo.i18n==3.20.0
 oslo.log==4.3.0
 oslo.middleware==3.31.0
-oslo.policy==1.35.0
+oslo.policy==3.6.0
 oslo.serialization==2.25.0
-oslo.upgradecheck==0.2.0
-oslo.utils==3.37.0
-oslotest==3.4.0
+oslo.upgradecheck==1.3.0
+oslo.utils==4.5.0
+oslotest==3.5.0
 osprofiler==1.4.0
 pbr==3.1.1
 pep8==1.5.7
@@ -64,7 +64,7 @@ python-keystoneclient==3.15.0
 python-mimeparse==1.6.0
 python-subunit==1.2.0
 pytz==2018.3
-PyYAML==3.13
+PyYAML==5.1
 repoze.lru==0.7
 requests==2.25.0
 requestsexceptions==1.4.0
diff --git a/placement/cmd/status.py b/placement/cmd/status.py
index e6d0d3f68..721d17dcb 100644
--- a/placement/cmd/status.py
+++ b/placement/cmd/status.py
@@ -14,6 +14,7 @@ import sqlalchemy as sa
 import sys
 
 from oslo_config import cfg
+from oslo_upgradecheck import common_checks
 from oslo_upgradecheck import upgradecheck
 
 from placement import conf
@@ -105,6 +106,8 @@ class Checks(upgradecheck.UpgradeCommands):
     _upgrade_checks = (
         ('Missing Root Provider IDs', _check_root_provider_ids),
         ('Incomplete Consumers', _check_incomplete_consumers),
+        ("Policy File JSON to YAML Migration",
+         (common_checks.check_policy_json, {'conf': cfg.CONF})),
     )
 
 
diff --git a/placement/conf/base.py b/placement/conf/base.py
index 86dd4cdc1..b1e671ffe 100644
--- a/placement/conf/base.py
+++ b/placement/conf/base.py
@@ -16,6 +16,7 @@
 #    under the License.
 
 from oslo_config import cfg
+from oslo_policy import opts as policy_opts
 
 base_options = [
     cfg.StrOpt(
@@ -24,6 +25,19 @@ base_options = [
 ]
 
 
+def set_lib_defaults():
+    """Update default value for configuration options from other namespace.
+
+    Example, oslo lib config options. This is needed for
+    config generator tool to pick these default value changes.
+    https://docs.openstack.org/oslo.config/latest/cli/
+    generator.html#modifying-defaults-from-other-namespaces
+    """
+
+    # Update default value of oslo.policy policy_file config option.
+    policy_opts.set_defaults(cfg.CONF, 'policy.yaml')
+
+
 def register_opts(conf):
     conf.register_opts(base_options)
 
diff --git a/placement/policy.py b/placement/policy.py
index 03a5040ca..1710f29e2 100644
--- a/placement/policy.py
+++ b/placement/policy.py
@@ -48,7 +48,10 @@ def get_enforcer():
     # files from overrides on disk and defaults in code. We can just pass an
     # empty list and let oslo do the config lifting for us.
     cfg.CONF([], project='placement')
-    policy_opts.set_defaults(cfg.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
+    policy_opts.set_defaults(cfg.CONF, 'policy.yaml')
     return _get_enforcer(cfg.CONF)
 
 
diff --git a/releasenotes/notes/deprecate-json-formatted-policy-file-dbec7a29325316de.yaml b/releasenotes/notes/deprecate-json-formatted-policy-file-dbec7a29325316de.yaml
new file mode 100644
index 000000000..c9c530004
--- /dev/null
+++ b/releasenotes/notes/deprecate-json-formatted-policy-file-dbec7a29325316de.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 90c1a14ec..fdc4d409f 100644
--- a/requirements.txt
+++ b/requirements.txt
@@ -12,14 +12,14 @@ requests>=2.25.0 # Apache-2.0
 setuptools!=24.0.0,!=34.0.0,!=34.0.1,!=34.0.2,!=34.0.3,!=34.1.0,!=34.1.1,!=34.2.0,!=34.3.0,!=34.3.1,!=34.3.2,!=36.2.0,>=21.0.0 # PSF/ZPL
 oslo.concurrency>=3.26.0 # Apache-2.0
 oslo.config>=6.7.0 # Apache-2.0
-oslo.context>=2.21.0 # Apache-2.0
+oslo.context>=2.22.0 # Apache-2.0
 oslo.log>=4.3.0 # Apache-2.0
 oslo.serialization>=2.25.0 # Apache-2.0
-oslo.utils>=3.37.0 # Apache-2.0
+oslo.utils>=4.5.0 # Apache-2.0
 oslo.db>=4.40.0 # Apache-2.0
-oslo.policy>=1.35.0 # Apache-2.0
+oslo.policy>=3.6.0 # Apache-2.0
 oslo.middleware>=3.31.0 # Apache-2.0
-oslo.upgradecheck>=0.2.0 # Apache-2.0
+oslo.upgradecheck>=1.3.0 # Apache-2.0
 # NOTE(efried): Sync lower-constraints.txt for os-traits & os-resource-classes.
 os-resource-classes>=0.5.0 # Apache-2.0
 os-traits>=2.4.0 # Apache-2.0
diff --git a/setup.cfg b/setup.cfg
index 9477ab833..b3f6d7221 100644
--- a/setup.cfg
+++ b/setup.cfg
@@ -36,6 +36,9 @@ packages =
 oslo.config.opts =
     placement.conf = placement.conf.opts:list_opts
 
+oslo.config.opts.defaults =
+    nova.conf = placement.conf.base:set_lib_defaults
+
 oslo.policy.enforcer =
     placement = placement.policy:get_enforcer
 
diff --git a/test-requirements.txt b/test-requirements.txt
index 12c74efea..bbcc35fff 100644
--- a/test-requirements.txt
+++ b/test-requirements.txt
@@ -12,7 +12,7 @@ fixtures>=3.0.0 # Apache-2.0/BSD
 # don't use it here to keep the consistency with global requirements.
 psycopg2>=2.8 # LGPL/ZPL
 PyMySQL>=0.8.0 # MIT License
-oslotest>=3.4.0 # Apache-2.0
+oslotest>=3.5.0 # Apache-2.0
 stestr>=1.0.0 # Apache-2.0
 testtools>=2.2.0 # MIT
 bandit>=1.1.0 # Apache-2.0