A Beginner’s Guide to Setting Up Terraform for AWS in VS Code (Step-by-Step)

If you’re starting your Infrastructure as Code (IaC) journey, this guide will help you set up Terraform with AWS in Visual Studio Code from scratch. By the end of this tutorial, you’ll create your first AWS resource and understand how everything works behind the scenes.

Why I Wrote This Guide

When I first started learning Terraform, I had one question that kept bothering me:

“I configured AWS in Command Prompt, so how does Terraform inside VS Code connect to my AWS account?”

It felt like magic.

After spending some time understanding how Terraform, AWS CLI, and VS Code work together, everything finally clicked.

If you have the same confusion, this guide is for you.

Let’s get started.

Step 1: Create an AWS Account

If you don’t already have one, create a free AWS account. After signing in, open the AWS Management Console.

Step 2: Create an IAM User

Instead of using your root account, create an IAM user.

**AWS Console

↓ IAM ↓ Users ↓ Create User**

Give the user a name.

For learning purposes, you can attach: AdministratorAccess

Note: In production, always use the principle of least privilege.

Create an Access Key for the user. AWS will provide:

AWS Access Key ID

AWS Secret Access Key

Keep them safe because you’ll need them in the next step.

Step 3: Install AWS CLI

Download and install AWS CLI.

Verify the installation:

aws — version

Example output: aws-cli/2.x.x

Step 4: Configure AWS CLI

Run: aws configure

You’ll be asked for:

AWS Access Key ID AWS Secret Access Key Default Region Output Format

->Example:

AWS Access Key ID: AKIA… AWS Secret Access Key: ** Default Region: ap-south-1 Output Format: json**

Congratulations!

Your AWS credentials are now stored on your computer.

Step 5: Where Are the Credentials Stored?

This is one of the most important things every beginner should know.

Running: aws configure does not save credentials inside Command Prompt. Instead, Windows creates these files: C:\Users\<YourName>.aws\

Inside you’ll find: credentials & config These files are used by many AWS tools, including Terraform.

Step 6: Install Terraform

Download Terraform from the HashiCorp website or install it using Winget.

Verify the installation:

terraform -version

Example:

Terraform v1.15.x

Step 7: Install Visual Studio Code

Install VS Code.

Recommended extensions:

• HashiCorp Terraform
• AWS Toolkit
• Error Lens

These extensions make writing Terraform much easier.

Step 8: Create a Terraform Project

Create a folder:

Terraform/

Inside it, create:

provider.tf
main.tf
variables.tf
outputs.tf

Step 9: Configure the AWS Provider

Open provider.tf

terraform {
  required_providers {
    aws = {
      source  = "hashicorp/aws"
      version = "~> 6.0"
    }
  }
}
provider "aws" {
  region = "ap-south-1"
}

This tells Terraform:

Use AWS

Use version 6.x

Deploy resources in Mumbai (ap-south-1)

Step 10: Create Your First AWS Resource

Open main.tf

resource "aws_s3_bucket" "demo_bucket" {
  bucket = "your-unique-bucket-name"

  tags = {
    Name = "Terraform Demo"
   }
}

Tip: S3 bucket names must be globally unique.

Step 11: Initialize Terraform

Inside VS Code Terminal:

terraform init

Terraform downloads the AWS Provider.

If successful, you’ll see:

Terraform has been successfully initialized!

Step 12: Validate the Configuration

terraform validate

Expected:

Success! The configuration is valid.

Step 13: Preview the Changes

terraform plan

Terraform will show:

1 resource to add

Nothing is created yet.

You’re only previewing the changes.

tep 14: Create the Bucket

Run:

terraform apply

Type:

yes

Terraform sends the request to AWS.

Within a few seconds, your S3 bucket is created.

tep 15: Verify It

Open:

AWS Console
↓
Amazon S3

You should see your bucket.

Or run:

aws s3 ls

tep 16: Delete the Bucket

When you’re finished learning:

terraform destroy

Type:

yes

Terraform deletes the bucket.