diff --git a/TODO.md b/TODO.md
index 4323a49d7..726a87b42 100644
--- a/TODO.md
+++ b/TODO.md
@@ -3,6 +3,4 @@ This is just to keep track of what we need to do in the short term.
   * Configuration schemas for providers and provisioners
   * Helper improvements around complex types perhaps
   * Providers/AWS: `aws_security_group` needs an update func
-  * Providers/AWS: `aws_eip` needs an update func (re-assocation, I think this
-      is possible in the AWS API). `aws_eip` also needs improved tests
   * Providers/AWS: `aws_rds` needs an update func (+goamz changes)
diff --git a/builtin/providers/aws/resource_aws_eip.go b/builtin/providers/aws/resource_aws_eip.go
index 2410aeee5..c32e41c17 100644
--- a/builtin/providers/aws/resource_aws_eip.go
+++ b/builtin/providers/aws/resource_aws_eip.go
@@ -51,6 +51,22 @@ func resource_aws_eip_create(
 
 	log.Printf("[INFO] EIP ID: %s (vpc: %v)", rs.ID, vpc)
 
+	return resource_aws_eip_update(rs, d, meta)
+}
+
+func resource_aws_eip_update(
+	s *terraform.ResourceState,
+	d *terraform.ResourceDiff,
+	meta interface{}) (*terraform.ResourceState, error) {
+	p := meta.(*ResourceProvider)
+	ec2conn := p.ec2conn
+
+	// Merge the diff into the state so that we have all the attributes
+	// properly.
+	rs := s.MergeDiff(d)
+
+	vpc := rs.Attributes["vpc"] == "true"
+
 	// If we have an instance to register, do it
 	instanceId := rs.Attributes["instance"]
 
@@ -60,6 +76,7 @@ func resource_aws_eip_create(
 			InstanceId: instanceId,
 			PublicIp:   rs.ID,
 		}
+
 		// more unique ID conditionals
 		if vpc {
 			assocOpts = ec2.AssociateAddress{
@@ -70,7 +87,6 @@ func resource_aws_eip_create(
 
 		log.Printf("[DEBUG] EIP associate configuration: %#v (vpc: %v)", assocOpts, vpc)
 		_, err := ec2conn.AssociateAddress(&assocOpts)
-
 		if err != nil {
 			return rs, fmt.Errorf("Failure associating instances: %s", err)
 		}
@@ -84,19 +100,6 @@ func resource_aws_eip_create(
 	return resource_aws_eip_update_state(rs, address)
 }
 
-func resource_aws_eip_update(
-	s *terraform.ResourceState,
-	d *terraform.ResourceDiff,
-	meta interface{}) (*terraform.ResourceState, error) {
-
-	rs := s.MergeDiff(d)
-	log.Printf("ResourceDiff: %s", d)
-	log.Printf("ResourceState: %s", s)
-	log.Printf("Merged: %s", rs)
-
-	return nil, fmt.Errorf("Did not update")
-}
-
 func resource_aws_eip_destroy(
 	s *terraform.ResourceState,
 	meta interface{}) error {
diff --git a/builtin/providers/aws/resource_aws_eip_test.go b/builtin/providers/aws/resource_aws_eip_test.go
index e42ff2047..6e6f1fd91 100644
--- a/builtin/providers/aws/resource_aws_eip_test.go
+++ b/builtin/providers/aws/resource_aws_eip_test.go
@@ -9,7 +9,7 @@ import (
 	"github.com/mitchellh/goamz/ec2"
 )
 
-func TestAccAWSEIP(t *testing.T) {
+func TestAccAWSEIP_normal(t *testing.T) {
 	var conf ec2.Address
 
 	resource.Test(t, resource.TestCase{
@@ -28,6 +28,33 @@ func TestAccAWSEIP(t *testing.T) {
 	})
 }
 
+func TestAccAWSEIP_instance(t *testing.T) {
+	var conf ec2.Address
+
+	resource.Test(t, resource.TestCase{
+		PreCheck:     func() { testAccPreCheck(t) },
+		Providers:    testAccProviders,
+		CheckDestroy: testAccCheckAWSEIPDestroy,
+		Steps: []resource.TestStep{
+			resource.TestStep{
+				Config: testAccAWSEIPInstanceConfig,
+				Check: resource.ComposeTestCheckFunc(
+					testAccCheckAWSEIPExists("aws_eip.bar", &conf),
+					testAccCheckAWSEIPAttributes(&conf),
+				),
+			},
+
+			resource.TestStep{
+				Config: testAccAWSEIPInstanceConfig2,
+				Check: resource.ComposeTestCheckFunc(
+					testAccCheckAWSEIPExists("aws_eip.bar", &conf),
+					testAccCheckAWSEIPAttributes(&conf),
+				),
+			},
+		},
+	})
+}
+
 func testAccCheckAWSEIPDestroy(s *terraform.State) error {
 	conn := testAccProvider.ec2conn
 
@@ -107,3 +134,27 @@ const testAccAWSEIPConfig = `
 resource "aws_eip" "bar" {
 }
 `
+
+const testAccAWSEIPInstanceConfig = `
+resource "aws_instance" "foo" {
+	# us-west-2
+	ami = "ami-4fccb37f"
+	instance_type = "m1.small"
+}
+
+resource "aws_eip" "bar" {
+	instance = "${aws_instance.foo.id}"
+}
+`
+
+const testAccAWSEIPInstanceConfig2 = `
+resource "aws_instance" "bar" {
+	# us-west-2
+	ami = "ami-4fccb37f"
+	instance_type = "m1.small"
+}
+
+resource "aws_eip" "bar" {
+	instance = "${aws_instance.bar.id}"
+}
+`
diff --git a/builtin/providers/aws/resources.go b/builtin/providers/aws/resources.go
index f03689b14..a2c81b479 100644
--- a/builtin/providers/aws/resources.go
+++ b/builtin/providers/aws/resources.go
@@ -45,6 +45,7 @@ func init() {
 				Destroy:         resource_aws_eip_destroy,
 				Diff:            resource_aws_eip_diff,
 				Refresh:         resource_aws_eip_refresh,
+				Update:          resource_aws_eip_update,
 			},
 
 			"aws_elb": resource.Resource{