If you’ve tried building an ALB manually in the AWS Console, you already know the drill create a VPC, configure subnets, set up security groups, launch EC2 instances, create a target group, add listeners, and then double check everything because one small misconfiguration can break the whole setup. It works, but it’s time consuming and not something you want to repeat every time you need a fresh environment.

This is exactly where Terraform shines. Instead of clicking through multiple AWS console pages, you define your infrastructure in code and let Terraform handle the provisioning. Need to rebuild the lab? Just run terraform apply again and you’re good to go.

In this lab, we will:

• Provision an Application Load Balancer (ALB)

• Launch two EC2 instances

• Register them in a target group

• Test load balancing by refreshing the ALB DNS and observing the traffic alternate between instances

The diagram above highlights one of the powerful capabilities of an ALB routing traffic to different target groups using rules. This is commonly used for path-based routing (for example, /api vs /web) or host-based routing in multi-service architectures.

For this exercise, we’ll keep things simple and focus on a single target group with two EC2 instances. The ALB will distribute incoming requests across both instances, and we’ll validate the behavior by refreshing the DNS endpoint.

AWS ALB Terraform: Getting Started (Prerequisites)

Before we start writing Terraform code, make sure your environment is ready. Terraform needs a way to authenticate to AWS so it can provision resources on your behalf. This setup was tested using Tutorials Dojo PlayCloud, but the same steps apply to any AWS account.

Your IAM user must have permissions to create:

• VPC networking resources

• EC2 instances

• Application Load Balancers

Security Reminder: Never hardcode access keys inside Terraform files. This is a common cause of credential leaks. Always use secure credential management methods such as the AWS CLI configuration, environment variables, or IAM roles.

1.1 Create an IAM User for Terraform

To allow Terraform to interact with AWS programmatically, we’ll create a dedicated IAM user for CLI access. In real-world environments, you should apply the principle of least privilege and grant only the required permissions. For this lab, we’ll use Administrator Access to keep the focus on Terraform and ALB concepts.

Go to IAM → Users → Create user, enter a descriptive username (for example: terraform-alb-user)

Assign Administrator Access permissions, then click next and complete the user creation

Note: Administrator access is used here for learning purposes. In real-world scenarios, create a custom policy with only the required permissions.

Open the IAM user you created → Go to the Security credentials tab

Scroll to Access keys → Click Create access key

Select the use case: Command Line Interface (CLI), a best-practices warning will appear acknowledge it and proceed, then click Create access key

After creation, AWS will display:

• Access Key ID

• Secret Access Key

Note: The Secret Access Key is shown only once. If you lose it, you must delete the key and generate a new one.

Save Your Credentials Securely

You have two options:

• Option A (Recommended): Download the .csv file and store it in a secure, password-protected location

• Option B: Copy the values into a secure password manager

Click Done after saving the credentials.

1.2 Install AWS CLI for Terraform ALB AWS

Install the AWS Command Line Interface (CLI) and verify the installation: 

aws --version

AWS CLI installed successfully and verified using aws –version 

Enter the following:

• Access Key ID:
• Secret Access Key
• Default region: us-east-1
• Default output format: json

This step matters because Terraform uses your configured AWS credentials (commonly via AWS CLI) to authenticate and create resources.

1.3 Install Terraform for AWS ALB Terraform

With the AWS CLI configured, the next step is to install Terraform itself. Download Terraform from the official HashiCorp website and install it on your local machine. After installation, verify that it’s working by running:

terraform -version

If Terraform is installed correctly, the version number will appear in your terminal.

1.4 VS Code Setup for AWS ALB Terraform

For this lab, I used Visual Studio Code as my editor. I also installed the Terraform extension, which provides syntax highlighting, automatic formatting, basic validation

This makes writing and troubleshooting Terraform code much easier, especially when working with multiple resources like VPCs, subnets, security groups, EC2 instances, and load balancers.

1.5 How Terraform Authenticates to AWS

At this point, you might be wondering: How does Terraform actually connect to AWS?

Terraform uses the credentials configured in the AWS CLI. When you run

• terraform init

• terraform plan
• terraform apply

1.6 Project Structure for AWS ALB Terraform

Alright before we run terraform init and start provisioning resources, let’s set up the project folder properly. Keeping the structure clean matters a lot, especially once your Terraform config starts growing.

Create a project folder (for example: alb-aws-test) and place your Terraform files inside it. Keeping your files organized from the start helps when your configurations become larger

For this lab, I used a simple structure:

• main.tf → all Terraform resources (VPC, subnets, EC2, ALB, target group, listener, outputs)

• user_data/ → startup scripts for each EC2 instance (Red and Blue)

1.6.1 Create the Project Folder

Create a folder anywhere on your machine (Desktop/Documents is fine), then name it:

Inside that folder, create another folder named: