diff --git a/functional/test_replace_deprecated.py b/functional/test_replace_deprecated.py
new file mode 100644
index 0000000..5e7fdc6
--- /dev/null
+++ b/functional/test_replace_deprecated.py
@@ -0,0 +1,92 @@
+#    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 yaml
+
+from heat_integrationtests.functional import functional_base
+
+
+class ReplaceDeprecatedResourceTest(functional_base.FunctionalTestsBase):
+    template = '''
+heat_template_version: "2013-05-23"
+parameters:
+  flavor:
+    type: string
+  image:
+    type: string
+  network:
+    type: string
+
+resources:
+  config:
+    type: OS::Heat::SoftwareConfig
+    properties:
+      config: xxxx
+
+  server:
+    type: OS::Nova::Server
+    properties:
+      image: {get_param: image}
+      flavor: {get_param: flavor}
+      networks: [{network: {get_param: network} }]
+      user_data_format: SOFTWARE_CONFIG
+  dep:
+    type: OS::Heat::SoftwareDeployments
+    properties:
+        config: {get_resource: config}
+        servers: {'0': {get_resource: server}}
+        signal_transport: NO_SIGNAL
+outputs:
+  server:
+    value: {get_resource: server}
+'''
+
+    deployment_group_snippet = '''
+type: OS::Heat::SoftwareDeploymentGroup
+properties:
+  config: {get_resource: config}
+  servers: {'0': {get_resource: server}}
+  signal_transport: NO_SIGNAL
+'''
+    enable_cleanup = True
+
+    def test_replace_software_deployments(self):
+        parms = {'flavor': self.conf.minimal_instance_type,
+                 'network': self.conf.fixed_network_name,
+                 'image': self.conf.minimal_image_ref
+                 }
+        deployments_template = yaml.safe_load(self.template)
+        stack_identifier = self.stack_create(
+            parameters=parms,
+            template=deployments_template,
+            enable_cleanup=self.enable_cleanup)
+        expected_resources = {'config': 'OS::Heat::SoftwareConfig',
+                              'dep': 'OS::Heat::SoftwareDeployments',
+                              'server': 'OS::Nova::Server'}
+        resource = self.client.resources.get(stack_identifier, 'server')
+        self.assertEqual(expected_resources,
+                         self.list_resources(stack_identifier))
+        initial_phy_id = resource.physical_resource_id
+        resources = deployments_template['resources']
+        resources['dep'] = yaml.safe_load(self.deployment_group_snippet)
+        self.update_stack(
+            stack_identifier,
+            deployments_template,
+            parameters=parms)
+        resource = self.client.resources.get(stack_identifier, 'server')
+        self.assertEqual(initial_phy_id,
+                         resource.physical_resource_id)
+        expected_new_resources = {'config': 'OS::Heat::SoftwareConfig',
+                                  'dep': 'OS::Heat::SoftwareDeploymentGroup',
+                                  'server': 'OS::Nova::Server'}
+        self.assertEqual(expected_new_resources,
+                         self.list_resources(stack_identifier))