diff --git a/functional/test_autoscaling.py b/functional/test_autoscaling.py
new file mode 100644
index 0000000..b2218a8
--- /dev/null
+++ b/functional/test_autoscaling.py
@@ -0,0 +1,491 @@
+#    Licensed under the Apache License, Version 2.0 (the "License"); you may
+#    not use this file except in compliance with the License. You may obtain
+#    a copy of the License at
+#
+#         http://www.apache.org/licenses/LICENSE-2.0
+#
+#    Unless required by applicable law or agreed to in writing, software
+#    distributed under the License is distributed on an "AS IS" BASIS, WITHOUT
+#    WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied. See the
+#    License for the specific language governing permissions and limitations
+#    under the License.
+
+import copy
+import json
+import logging
+
+from testtools import matchers
+
+from heat_integrationtests.common import test
+
+
+LOG = logging.getLogger(__name__)
+
+
+class AutoscalingGroupTest(test.HeatIntegrationTest):
+
+    template = '''
+{
+  "AWSTemplateFormatVersion" : "2010-09-09",
+  "Description" : "Template to create multiple instances.",
+  "Parameters" : {"size": {"Type": "String", "Default": "1"},
+                  "AZ": {"Type": "String", "Default": "nova"},
+                  "image": {"Type": "String"},
+                  "flavor": {"Type": "String"}},
+  "Resources": {
+    "JobServerGroup": {
+      "Type" : "AWS::AutoScaling::AutoScalingGroup",
+      "Properties" : {
+        "AvailabilityZones" : [{"Ref": "AZ"}],
+        "LaunchConfigurationName" : { "Ref" : "JobServerConfig" },
+        "MinSize" : {"Ref": "size"},
+        "MaxSize" : "20"
+      }
+    },
+
+    "JobServerConfig" : {
+      "Type" : "AWS::AutoScaling::LaunchConfiguration",
+      "Metadata": {"foo": "bar"},
+      "Properties": {
+        "ImageId"           : {"Ref": "image"},
+        "InstanceType"      : {"Ref": "flavor"},
+        "SecurityGroups"    : [ "sg-1" ],
+        "UserData"          : "jsconfig data"
+      }
+    }
+  },
+  "Outputs": {
+    "InstanceList": {"Value": {
+      "Fn::GetAtt": ["JobServerGroup", "InstanceList"]}},
+    "JobServerConfigRef": {"Value": {
+      "Ref": "JobServerConfig"}}
+  }
+}
+'''
+
+    instance_template = '''
+heat_template_version: 2013-05-23
+parameters:
+  ImageId: {type: string}
+  InstanceType: {type: string}
+  SecurityGroups: {type: comma_delimited_list}
+  UserData: {type: string}
+  Tags: {type: comma_delimited_list}
+
+resources:
+  random1:
+    type: OS::Heat::RandomString
+    properties:
+      salt: {get_param: ImageId}
+outputs:
+  PublicIp:
+    value: {get_attr: [random1, value]}
+'''
+
+    # This is designed to fail.
+    bad_instance_template = '''
+heat_template_version: 2013-05-23
+parameters:
+  ImageId: {type: string}
+  InstanceType: {type: string}
+  SecurityGroups: {type: comma_delimited_list}
+  UserData: {type: string}
+  Tags: {type: comma_delimited_list}
+
+resources:
+  random1:
+    type: OS::Heat::RandomString
+    depends_on: waiter
+  ready_poster:
+    type: AWS::CloudFormation::WaitConditionHandle
+  waiter:
+    type: AWS::CloudFormation::WaitCondition
+    properties:
+      Handle: {Ref: ready_poster}
+      Timeout: 1
+outputs:
+  PublicIp:
+    value: {get_attr: [random1, value]}
+'''
+
+    def setUp(self):
+        super(AutoscalingGroupTest, self).setUp()
+        self.client = self.orchestration_client
+        if not self.conf.image_ref:
+            raise self.skipException("No image configured to test")
+        if not self.conf.minimal_image_ref:
+            raise self.skipException("No minimal image configured to test")
+        if not self.conf.instance_type:
+            raise self.skipException("No flavor configured to test")
+
+    def assert_instance_count(self, stack, expected_count):
+        inst_list = self._stack_output(stack, 'InstanceList')
+        self.assertEqual(expected_count, len(inst_list.split(',')))
+
+    def _assert_instance_state(self, nested_identifier,
+                               num_complete, num_failed):
+        for res in self.client.resources.list(nested_identifier):
+            if 'COMPLETE' in res.resource_status:
+                num_complete = num_complete - 1
+            elif 'FAILED' in res.resource_status:
+                num_failed = num_failed - 1
+        self.assertEqual(0, num_failed)
+        self.assertEqual(0, num_complete)
+
+
+class AutoscalingGroupBasicTest(AutoscalingGroupTest):
+
+    def test_basic_create_works(self):
+        """Make sure the working case is good.
+
+        Note this combines test_override_aws_ec2_instance into this test as
+        well, which is:
+        If AWS::EC2::Instance is overridden, AutoScalingGroup will
+        automatically use that overridden resource type.
+        """
+
+        files = {'provider.yaml': self.instance_template}
+        env = {'resource_registry': {'AWS::EC2::Instance': 'provider.yaml'},
+               'parameters': {'size': 4,
+                              'image': self.conf.image_ref,
+                              'flavor': self.conf.instance_type}}
+        stack_identifier = self.stack_create(template=self.template,
+                                             files=files, environment=env)
+        initial_resources = {
+            'JobServerConfig': 'AWS::AutoScaling::LaunchConfiguration',
+            'JobServerGroup': 'AWS::AutoScaling::AutoScalingGroup'}
+        self.assertEqual(initial_resources,
+                         self.list_resources(stack_identifier))
+
+        stack = self.client.stacks.get(stack_identifier)
+        self.assert_instance_count(stack, 4)
+
+    def test_size_updates_work(self):
+        files = {'provider.yaml': self.instance_template}
+        env = {'resource_registry': {'AWS::EC2::Instance': 'provider.yaml'},
+               'parameters': {'size': 2,
+                              'image': self.conf.image_ref,
+                              'flavor': self.conf.instance_type}}
+
+        stack_identifier = self.stack_create(template=self.template,
+                                             files=files,
+                                             environment=env)
+        stack = self.client.stacks.get(stack_identifier)
+        self.assert_instance_count(stack, 2)
+
+        # Increase min size to 5
+        env2 = {'resource_registry': {'AWS::EC2::Instance': 'provider.yaml'},
+                'parameters': {'size': 5,
+                               'image': self.conf.image_ref,
+                               'flavor': self.conf.instance_type}}
+        self.update_stack(stack_identifier, self.template,
+                          environment=env2, files=files)
+        self._wait_for_stack_status(stack_identifier, 'UPDATE_COMPLETE')
+        stack = self.client.stacks.get(stack_identifier)
+        self.assert_instance_count(stack, 5)
+
+    def test_update_group_replace(self):
+        """Make sure that during a group update the non updatable
+        properties cause a replacement.
+        """
+        files = {'provider.yaml': self.instance_template}
+        env = {'resource_registry':
+               {'AWS::EC2::Instance': 'provider.yaml'},
+               'parameters': {'size': '1',
+                              'image': self.conf.image_ref,
+                              'flavor': self.conf.instance_type}}
+
+        stack_identifier = self.stack_create(template=self.template,
+                                             files=files,
+                                             environment=env)
+        rsrc = self.client.resources.get(stack_identifier, 'JobServerGroup')
+        orig_asg_id = rsrc.physical_resource_id
+
+        env2 = {'resource_registry':
+                {'AWS::EC2::Instance': 'provider.yaml'},
+                'parameters': {'size': '1',
+                               'AZ': 'wibble',
+                               'image': self.conf.image_ref,
+                               'flavor': self.conf.instance_type}}
+        self.update_stack(stack_identifier, self.template,
+                          environment=env2, files=files)
+
+        # replacement will cause the resource physical_resource_id to change.
+        rsrc = self.client.resources.get(stack_identifier, 'JobServerGroup')
+        self.assertNotEqual(orig_asg_id, rsrc.physical_resource_id)
+
+    def test_create_instance_error_causes_group_error(self):
+        """If a resource in an instance group fails to be created, the instance
+        group itself will fail and the broken inner resource will remain.
+        """
+        stack_name = self._stack_rand_name()
+        files = {'provider.yaml': self.bad_instance_template}
+        env = {'resource_registry': {'AWS::EC2::Instance': 'provider.yaml'},
+               'parameters': {'size': 2,
+                              'image': self.conf.image_ref,
+                              'flavor': self.conf.instance_type}}
+
+        self.client.stacks.create(
+            stack_name=stack_name,
+            template=self.template,
+            files=files,
+            disable_rollback=True,
+            parameters={},
+            environment=env
+        )
+        self.addCleanup(self.client.stacks.delete, stack_name)
+        stack = self.client.stacks.get(stack_name)
+        stack_identifier = '%s/%s' % (stack_name, stack.id)
+        self._wait_for_stack_status(stack_identifier, 'CREATE_FAILED')
+        initial_resources = {
+            'JobServerConfig': 'AWS::AutoScaling::LaunchConfiguration',
+            'JobServerGroup': 'AWS::AutoScaling::AutoScalingGroup'}
+        self.assertEqual(initial_resources,
+                         self.list_resources(stack_identifier))
+
+        nested_ident = self.assert_resource_is_a_stack(stack_identifier,
+                                                       'JobServerGroup')
+        self._assert_instance_state(nested_ident, 0, 2)
+
+    def test_update_instance_error_causes_group_error(self):
+        """If a resource in an instance group fails to be created during an
+        update, the instance group itself will fail and the broken inner
+        resource will remain.
+        """
+        files = {'provider.yaml': self.instance_template}
+        env = {'resource_registry': {'AWS::EC2::Instance': 'provider.yaml'},
+               'parameters': {'size': 2,
+                              'image': self.conf.image_ref,
+                              'flavor': self.conf.instance_type}}
+
+        stack_identifier = self.stack_create(template=self.template,
+                                             files=files,
+                                             environment=env)
+        initial_resources = {
+            'JobServerConfig': 'AWS::AutoScaling::LaunchConfiguration',
+            'JobServerGroup': 'AWS::AutoScaling::AutoScalingGroup'}
+        self.assertEqual(initial_resources,
+                         self.list_resources(stack_identifier))
+
+        stack = self.client.stacks.get(stack_identifier)
+        self.assert_instance_count(stack, 2)
+        nested_ident = self.assert_resource_is_a_stack(stack_identifier,
+                                                       'JobServerGroup')
+        self._assert_instance_state(nested_ident, 2, 0)
+
+        env['parameters']['size'] = 3
+        files2 = {'provider.yaml': self.bad_instance_template}
+        self.client.stacks.update(
+            stack_id=stack_identifier,
+            template=self.template,
+            files=files2,
+            disable_rollback=True,
+            parameters={},
+            environment=env
+        )
+        self._wait_for_stack_status(stack_identifier, 'UPDATE_FAILED')
+
+        # assert that there are 3 bad instances
+        nested_ident = self.assert_resource_is_a_stack(stack_identifier,
+                                                       'JobServerGroup')
+        self._assert_instance_state(nested_ident, 0, 3)
+
+
+class AutoscalingGroupUpdatePolicyTest(AutoscalingGroupTest):
+
+    def ig_tmpl_with_updt_policy(self):
+        templ = json.loads(copy.deepcopy(self.template))
+        up = {"AutoScalingRollingUpdate": {
+            "MinInstancesInService": "1",
+            "MaxBatchSize": "2",
+            "PauseTime": "PT1S"}}
+        templ['Resources']['JobServerGroup']['UpdatePolicy'] = up
+        return templ
+
+    def update_instance_group(self, updt_template,
+                              num_updates_expected_on_updt,
+                              num_creates_expected_on_updt,
+                              num_deletes_expected_on_updt,
+                              update_replace):
+
+        # setup stack from the initial template
+        files = {'provider.yaml': self.instance_template}
+        size = 10
+        env = {'resource_registry': {'AWS::EC2::Instance': 'provider.yaml'},
+               'parameters': {'size': size,
+                              'image': self.conf.image_ref,
+                              'flavor': self.conf.instance_type}}
+        stack_name = self._stack_rand_name()
+        stack_identifier = self.stack_create(
+            stack_name=stack_name,
+            template=self.ig_tmpl_with_updt_policy(),
+            files=files,
+            environment=env)
+        stack = self.client.stacks.get(stack_identifier)
+        nested_ident = self.assert_resource_is_a_stack(stack_identifier,
+                                                       'JobServerGroup')
+
+        # test that physical resource name of launch configuration is used
+        conf_name = self._stack_output(stack, 'JobServerConfigRef')
+        conf_name_pattern = '%s-JobServerConfig-[a-zA-Z0-9]+$' % stack_name
+        self.assertThat(conf_name,
+                        matchers.MatchesRegex(conf_name_pattern))
+
+        # test the number of instances created
+        self.assert_instance_count(stack, size)
+        # saves info from initial list of instances for comparison later
+        init_instances = self.client.resources.list(nested_ident)
+        init_names = [inst.resource_name for inst in init_instances]
+
+        # test stack update
+        self.update_stack(stack_identifier, updt_template,
+                          environment=env, files=files)
+        self._wait_for_stack_status(stack_identifier, 'UPDATE_COMPLETE')
+        updt_stack = self.client.stacks.get(stack_identifier)
+
+        # test that the launch configuration is replaced
+        updt_conf_name = self._stack_output(updt_stack, 'JobServerConfigRef')
+        self.assertThat(updt_conf_name,
+                        matchers.MatchesRegex(conf_name_pattern))
+        self.assertNotEqual(conf_name, updt_conf_name)
+
+        # test that the group size are the same
+        updt_instances = self.client.resources.list(nested_ident)
+        updt_names = [inst.resource_name for inst in updt_instances]
+        self.assertEqual(len(init_names), len(updt_names))
+        for res in updt_instances:
+            self.assertEqual('UPDATE_COMPLETE', res.resource_status)
+
+        # test that the appropriate number of instance names are the same
+        matched_names = set(updt_names) & set(init_names)
+        self.assertEqual(num_updates_expected_on_updt, len(matched_names))
+
+        # test that the appropriate number of new instances are created
+        self.assertEqual(num_creates_expected_on_updt,
+                         len(set(updt_names) - set(init_names)))
+
+        # test that the appropriate number of instances are deleted
+        self.assertEqual(num_deletes_expected_on_updt,
+                         len(set(init_names) - set(updt_names)))
+
+        # test that the older instances are the ones being deleted
+        if num_deletes_expected_on_updt > 0:
+            deletes_expected = init_names[:num_deletes_expected_on_updt]
+            self.assertNotIn(deletes_expected, updt_names)
+
+    def test_instance_group_update_replace(self):
+        """
+        Test simple update replace with no conflict in batch size and
+        minimum instances in service.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        grp = updt_template['Resources']['JobServerGroup']
+        policy = grp['UpdatePolicy']['AutoScalingRollingUpdate']
+        policy['MinInstancesInService'] = '1'
+        policy['MaxBatchSize'] = '3'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['ImageId'] = self.conf.minimal_image_ref
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=10,
+                                   num_creates_expected_on_updt=0,
+                                   num_deletes_expected_on_updt=0,
+                                   update_replace=True)
+
+    def test_instance_group_update_replace_with_adjusted_capacity(self):
+        """
+        Test update replace with capacity adjustment due to conflict in
+        batch size and minimum instances in service.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        grp = updt_template['Resources']['JobServerGroup']
+        policy = grp['UpdatePolicy']['AutoScalingRollingUpdate']
+        policy['MinInstancesInService'] = '8'
+        policy['MaxBatchSize'] = '4'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['ImageId'] = self.conf.minimal_image_ref
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=8,
+                                   num_creates_expected_on_updt=2,
+                                   num_deletes_expected_on_updt=2,
+                                   update_replace=True)
+
+    def test_instance_group_update_replace_huge_batch_size(self):
+        """
+        Test update replace with a huge batch size.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        group = updt_template['Resources']['JobServerGroup']
+        policy = group['UpdatePolicy']['AutoScalingRollingUpdate']
+        policy['MinInstancesInService'] = '0'
+        policy['MaxBatchSize'] = '20'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['ImageId'] = self.conf.minimal_image_ref
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=10,
+                                   num_creates_expected_on_updt=0,
+                                   num_deletes_expected_on_updt=0,
+                                   update_replace=True)
+
+    def test_instance_group_update_replace_huge_min_in_service(self):
+        """
+        Test update replace with a huge number of minimum instances in service.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        group = updt_template['Resources']['JobServerGroup']
+        policy = group['UpdatePolicy']['AutoScalingRollingUpdate']
+        policy['MinInstancesInService'] = '20'
+        policy['MaxBatchSize'] = '1'
+        policy['PauseTime'] = 'PT0S'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['ImageId'] = self.conf.minimal_image_ref
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=9,
+                                   num_creates_expected_on_updt=1,
+                                   num_deletes_expected_on_updt=1,
+                                   update_replace=True)
+
+    def test_instance_group_update_no_replace(self):
+        """
+        Test simple update only and no replace (i.e. updated instance flavor
+        in Launch Configuration) with no conflict in batch size and
+        minimum instances in service.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        group = updt_template['Resources']['JobServerGroup']
+        policy = group['UpdatePolicy']['AutoScalingRollingUpdate']
+        policy['MinInstancesInService'] = '1'
+        policy['MaxBatchSize'] = '3'
+        policy['PauseTime'] = 'PT0S'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['InstanceType'] = 'm1.tiny'
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=10,
+                                   num_creates_expected_on_updt=0,
+                                   num_deletes_expected_on_updt=0,
+                                   update_replace=False)
+
+    def test_instance_group_update_no_replace_with_adjusted_capacity(self):
+        """
+        Test update only and no replace (i.e. updated instance flavor in
+        Launch Configuration) with capacity adjustment due to conflict in
+        batch size and minimum instances in service.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        group = updt_template['Resources']['JobServerGroup']
+        policy = group['UpdatePolicy']['AutoScalingRollingUpdate']
+        policy['MinInstancesInService'] = '8'
+        policy['MaxBatchSize'] = '4'
+        policy['PauseTime'] = 'PT0S'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['InstanceType'] = 'm1.tiny'
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=8,
+                                   num_creates_expected_on_updt=2,
+                                   num_deletes_expected_on_updt=2,
+                                   update_replace=False)
diff --git a/functional/test_instance_group.py b/functional/test_instance_group.py
index d4e85b9..c76e67a 100644
--- a/functional/test_instance_group.py
+++ b/functional/test_instance_group.py
@@ -10,8 +10,12 @@
 #    License for the specific language governing permissions and limitations
 #    under the License.
 
+import copy
+import json
 import logging
 
+from testtools import matchers
+
 from heat_integrationtests.common import test
 
 
@@ -51,7 +55,9 @@
   },
   "Outputs": {
     "InstanceList": {"Value": {
-      "Fn::GetAtt": ["JobServerGroup", "InstanceList"]}}
+      "Fn::GetAtt": ["JobServerGroup", "InstanceList"]}},
+    "JobServerConfigRef": {"Value": {
+      "Ref": "JobServerConfig"}}
   }
 }
 '''
@@ -68,7 +74,8 @@
 resources:
   random1:
     type: OS::Heat::RandomString
-
+    properties:
+      salt: {get_param: ImageId}
 outputs:
   PublicIp:
     value: {get_attr: [random1, value]}
@@ -105,6 +112,8 @@
         self.client = self.orchestration_client
         if not self.conf.image_ref:
             raise self.skipException("No image configured to test")
+        if not self.conf.minimal_image_ref:
+            raise self.skipException("No minimal image configured to test")
         if not self.conf.instance_type:
             raise self.skipException("No flavor configured to test")
 
@@ -112,17 +121,6 @@
         inst_list = self._stack_output(stack, 'InstanceList')
         self.assertEqual(expected_count, len(inst_list.split(',')))
 
-    def _get_nested_identifier(self, stack_identifier):
-        rsrc = self.client.resources.get(stack_identifier, 'JobServerGroup')
-        nested_link = [l for l in rsrc.links if l['rel'] == 'nested']
-        self.assertEqual(1, len(nested_link))
-        nested_href = nested_link[0]['href']
-        nested_id = nested_href.split('/')[-1]
-        nested_identifier = '/'.join(nested_href.split('/')[-2:])
-        physical_resource_id = rsrc.physical_resource_id
-        self.assertEqual(physical_resource_id, nested_id)
-        return nested_identifier
-
     def _assert_instance_state(self, nested_identifier,
                                num_complete, num_failed):
         for res in self.client.resources.list(nested_identifier):
@@ -133,6 +131,9 @@
         self.assertEqual(0, num_failed)
         self.assertEqual(0, num_complete)
 
+
+class InstanceGroupBasicTest(InstanceGroupTest):
+
     def test_basic_create_works(self):
         """Make sure the working case is good.
         Note this combines test_override_aws_ec2_instance into this test as
@@ -240,7 +241,8 @@
         self.assertEqual(initial_resources,
                          self.list_resources(stack_identifier))
 
-        nested_ident = self._get_nested_identifier(stack_identifier)
+        nested_ident = self.assert_resource_is_a_stack(stack_identifier,
+                                                       'JobServerGroup')
         self._assert_instance_state(nested_ident, 0, 2)
 
     def test_update_instance_error_causes_group_error(self):
@@ -265,7 +267,8 @@
 
         stack = self.client.stacks.get(stack_identifier)
         self.assert_instance_count(stack, 2)
-        nested_ident = self._get_nested_identifier(stack_identifier)
+        nested_ident = self.assert_resource_is_a_stack(stack_identifier,
+                                                       'JobServerGroup')
         self._assert_instance_state(nested_ident, 2, 0)
 
         env['parameters']['size'] = 3
@@ -281,5 +284,206 @@
         self._wait_for_stack_status(stack_identifier, 'UPDATE_FAILED')
 
         # assert that there are 3 bad instances
-        nested_ident = self._get_nested_identifier(stack_identifier)
+        nested_ident = self.assert_resource_is_a_stack(stack_identifier,
+                                                       'JobServerGroup')
         self._assert_instance_state(nested_ident, 0, 3)
+
+
+class InstanceGroupUpdatePolicyTest(InstanceGroupTest):
+
+    def ig_tmpl_with_updt_policy(self):
+        templ = json.loads(copy.deepcopy(self.template))
+        up = {"RollingUpdate": {
+            "MinInstancesInService": "1",
+            "MaxBatchSize": "2",
+            "PauseTime": "PT1S"}}
+        templ['Resources']['JobServerGroup']['UpdatePolicy'] = up
+        return templ
+
+    def update_instance_group(self, updt_template,
+                              num_updates_expected_on_updt,
+                              num_creates_expected_on_updt,
+                              num_deletes_expected_on_updt,
+                              update_replace):
+
+        # setup stack from the initial template
+        files = {'provider.yaml': self.instance_template}
+        size = 10
+        env = {'resource_registry': {'AWS::EC2::Instance': 'provider.yaml'},
+               'parameters': {'size': size,
+                              'image': self.conf.image_ref,
+                              'flavor': self.conf.instance_type}}
+        stack_name = self._stack_rand_name()
+        stack_identifier = self.stack_create(
+            stack_name=stack_name,
+            template=self.ig_tmpl_with_updt_policy(),
+            files=files,
+            environment=env)
+        stack = self.client.stacks.get(stack_identifier)
+        nested_ident = self.assert_resource_is_a_stack(stack_identifier,
+                                                       'JobServerGroup')
+
+        # test that physical resource name of launch configuration is used
+        conf_name = self._stack_output(stack, 'JobServerConfigRef')
+        conf_name_pattern = '%s-JobServerConfig-[a-zA-Z0-9]+$' % stack_name
+        self.assertThat(conf_name,
+                        matchers.MatchesRegex(conf_name_pattern))
+
+        # test the number of instances created
+        self.assert_instance_count(stack, size)
+        # saves info from initial list of instances for comparison later
+        init_instances = self.client.resources.list(nested_ident)
+        init_names = [inst.resource_name for inst in init_instances]
+
+        # test stack update
+        self.update_stack(stack_identifier, updt_template,
+                          environment=env, files=files)
+        self._wait_for_stack_status(stack_identifier, 'UPDATE_COMPLETE')
+        updt_stack = self.client.stacks.get(stack_identifier)
+
+        # test that the launch configuration is replaced
+        updt_conf_name = self._stack_output(updt_stack, 'JobServerConfigRef')
+        self.assertThat(updt_conf_name,
+                        matchers.MatchesRegex(conf_name_pattern))
+        self.assertNotEqual(conf_name, updt_conf_name)
+
+        # test that the group size are the same
+        updt_instances = self.client.resources.list(nested_ident)
+        updt_names = [inst.resource_name for inst in updt_instances]
+        self.assertEqual(len(init_names), len(updt_names))
+        for res in updt_instances:
+            self.assertEqual('UPDATE_COMPLETE', res.resource_status)
+
+        # test that the appropriate number of instance names are the same
+        matched_names = set(updt_names) & set(init_names)
+        self.assertEqual(num_updates_expected_on_updt, len(matched_names))
+
+        # test that the appropriate number of new instances are created
+        self.assertEqual(num_creates_expected_on_updt,
+                         len(set(updt_names) - set(init_names)))
+
+        # test that the appropriate number of instances are deleted
+        self.assertEqual(num_deletes_expected_on_updt,
+                         len(set(init_names) - set(updt_names)))
+
+        # test that the older instances are the ones being deleted
+        if num_deletes_expected_on_updt > 0:
+            deletes_expected = init_names[:num_deletes_expected_on_updt]
+            self.assertNotIn(deletes_expected, updt_names)
+
+    def test_instance_group_update_replace(self):
+        """
+        Test simple update replace with no conflict in batch size and
+        minimum instances in service.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        grp = updt_template['Resources']['JobServerGroup']
+        policy = grp['UpdatePolicy']['RollingUpdate']
+        policy['MinInstancesInService'] = '1'
+        policy['MaxBatchSize'] = '3'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['ImageId'] = self.conf.minimal_image_ref
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=10,
+                                   num_creates_expected_on_updt=0,
+                                   num_deletes_expected_on_updt=0,
+                                   update_replace=True)
+
+    def test_instance_group_update_replace_with_adjusted_capacity(self):
+        """
+        Test update replace with capacity adjustment due to conflict in
+        batch size and minimum instances in service.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        grp = updt_template['Resources']['JobServerGroup']
+        policy = grp['UpdatePolicy']['RollingUpdate']
+        policy['MinInstancesInService'] = '8'
+        policy['MaxBatchSize'] = '4'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['ImageId'] = self.conf.minimal_image_ref
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=8,
+                                   num_creates_expected_on_updt=2,
+                                   num_deletes_expected_on_updt=2,
+                                   update_replace=True)
+
+    def test_instance_group_update_replace_huge_batch_size(self):
+        """
+        Test update replace with a huge batch size.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        group = updt_template['Resources']['JobServerGroup']
+        policy = group['UpdatePolicy']['RollingUpdate']
+        policy['MinInstancesInService'] = '0'
+        policy['MaxBatchSize'] = '20'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['ImageId'] = self.conf.minimal_image_ref
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=10,
+                                   num_creates_expected_on_updt=0,
+                                   num_deletes_expected_on_updt=0,
+                                   update_replace=True)
+
+    def test_instance_group_update_replace_huge_min_in_service(self):
+        """
+        Test update replace with a huge number of minimum instances in service.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        group = updt_template['Resources']['JobServerGroup']
+        policy = group['UpdatePolicy']['RollingUpdate']
+        policy['MinInstancesInService'] = '20'
+        policy['MaxBatchSize'] = '1'
+        policy['PauseTime'] = 'PT0S'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['ImageId'] = self.conf.minimal_image_ref
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=9,
+                                   num_creates_expected_on_updt=1,
+                                   num_deletes_expected_on_updt=1,
+                                   update_replace=True)
+
+    def test_instance_group_update_no_replace(self):
+        """
+        Test simple update only and no replace (i.e. updated instance flavor
+        in Launch Configuration) with no conflict in batch size and
+        minimum instances in service.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        group = updt_template['Resources']['JobServerGroup']
+        policy = group['UpdatePolicy']['RollingUpdate']
+        policy['MinInstancesInService'] = '1'
+        policy['MaxBatchSize'] = '3'
+        policy['PauseTime'] = 'PT0S'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['InstanceType'] = 'm1.tiny'
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=10,
+                                   num_creates_expected_on_updt=0,
+                                   num_deletes_expected_on_updt=0,
+                                   update_replace=False)
+
+    def test_instance_group_update_no_replace_with_adjusted_capacity(self):
+        """
+        Test update only and no replace (i.e. updated instance flavor in
+        Launch Configuration) with capacity adjustment due to conflict in
+        batch size and minimum instances in service.
+        """
+        updt_template = self.ig_tmpl_with_updt_policy()
+        group = updt_template['Resources']['JobServerGroup']
+        policy = group['UpdatePolicy']['RollingUpdate']
+        policy['MinInstancesInService'] = '8'
+        policy['MaxBatchSize'] = '4'
+        policy['PauseTime'] = 'PT0S'
+        config = updt_template['Resources']['JobServerConfig']
+        config['Properties']['InstanceType'] = 'm1.tiny'
+
+        self.update_instance_group(updt_template,
+                                   num_updates_expected_on_updt=8,
+                                   num_creates_expected_on_updt=2,
+                                   num_deletes_expected_on_updt=2,
+                                   update_replace=False)