diff --git a/lib/ansible/modules/cloud/azure/azure_rm_virtualmachine_extension.py b/lib/ansible/modules/cloud/azure/azure_rm_virtualmachine_extension.py
new file mode 100644
index 0000000000..c00f53d9af
--- /dev/null
+++ b/lib/ansible/modules/cloud/azure/azure_rm_virtualmachine_extension.py
@@ -0,0 +1,319 @@
+#!/usr/bin/python
+#
+# Copyright (c) 2017 Sertac Ozercan <seozerca@microsoft.com>
+#
+# GNU General Public License v3.0+ (see COPYING or https://www.gnu.org/licenses/gpl-3.0.txt)
+
+from __future__ import absolute_import, division, print_function
+__metaclass__ = type
+
+
+ANSIBLE_METADATA = {'metadata_version': '1.1',
+                    'status': ['preview'],
+                    'supported_by': 'community'}
+
+
+DOCUMENTATION = '''
+---
+module: azure_rm_virtualmachine_extension
+
+version_added: "2.4"
+
+short_description: Managed Azure Virtual Machine extension
+
+description:
+    - Create, update and delete Azure Virtual Machine Extension
+
+options:
+    resource_group:
+        description:
+            - Name of a resource group where the vm extension exists or will be created.
+        required: true
+    name:
+        description:
+            - Name of the vm extension
+        required: true
+    state:
+        description:
+            - Assert the state of the vm extension. Use 'present' to create or update a vm extension and
+              'absent' to delete a vm extension.
+        default: present
+        choices:
+            - absent
+            - present
+        required: false
+    location:
+        description:
+            - Valid azure location. Defaults to location of the resource group.
+        default: resource_group location
+        required: false
+    virtual_machine_name:
+        description:
+            - The name of the virtual machine where the extension should be create or updated.
+        required: false
+    publisher:
+        description:
+            - The name of the extension handler publisher.
+        required: false
+    virtual_machine_extension_type:
+        description:
+            - The type of the extension handler.
+        required: false
+    type_handler_version:
+        description:
+            - The type version of the extension handler.
+        required: false
+    settings:
+        description:
+            - Json formatted public settings for the extension.
+        required: false
+    protected_settings:
+        description:
+            - Json formatted protected settings for the extension.
+        required: false
+    auto_upgrade_minor_version:
+        description:
+            - Whether the extension handler should be automatically upgraded across minor versions.
+        required: false
+
+extends_documentation_fragment:
+    - azure
+
+author:
+    - "Sertac Ozercan (@sozercan)"
+    - "Julien Stroheker (@ju_stroh)"
+'''
+
+EXAMPLES = '''
+    - name: Create VM Extension
+      azure_rm_virtualmachine_extension:
+        name: myvmextension
+        location: eastus
+        resource_group: Testing
+        virtual_machine_name: myvm
+        publisher: Microsoft.Azure.Extensions
+        virtual_machine_extension_type: CustomScript
+        type_handler_version: 2.0
+        settings: '{"commandToExecute": "hostname"}'
+        auto_upgrade_minor_version: true
+
+    - name: Delete VM Extension
+      azure_rm_virtualmachine_extension:
+        name: myvmextension
+        location: eastus
+        resource_group: Testing
+        virtual_machine_name: myvm
+        state: absent
+'''
+
+RETURN = '''
+state:
+    description: Current state of the vm extension
+    returned: always
+    type: dict
+changed:
+    description: Whether or not the resource has changed
+    returned: always
+    type: bool
+'''
+
+from ansible.module_utils.azure_rm_common import AzureRMModuleBase
+
+try:
+    from msrestazure.azure_exceptions import CloudError
+    from azure.mgmt.compute.models import (
+        VirtualMachineExtension
+    )
+except ImportError:
+    # This is handled in azure_rm_common
+    pass
+
+
+def vmextension_to_dict(extension):
+    '''
+    Serializing the VM Extension from the API to Dict
+    :return: dict
+    '''
+    return dict(
+        id=extension.id,
+        name=extension.name,
+        location=extension.location,
+        publisher=extension.publisher,
+        virtual_machine_extension_type=extension.virtual_machine_extension_type,
+        type_handler_version=extension.type_handler_version,
+        auto_upgrade_minor_version=extension.auto_upgrade_minor_version,
+        settings=extension.settings,
+        protected_settings=extension.protected_settings,
+    )
+
+
+class AzureRMVMExtension(AzureRMModuleBase):
+    """Configuration class for an Azure RM VM Extension resource"""
+
+    def __init__(self):
+        self.module_arg_spec = dict(
+            resource_group=dict(
+                type='str',
+                required=True
+            ),
+            name=dict(
+                type='str',
+                required=True
+            ),
+            state=dict(
+                type='str',
+                required=False,
+                default='present',
+                choices=['present', 'absent']
+            ),
+            location=dict(
+                type='str',
+                required=False
+            ),
+            virtual_machine_name=dict(
+                type='str',
+                required=False
+            ),
+            publisher=dict(
+                type='str',
+                required=False
+            ),
+            virtual_machine_extension_type=dict(
+                type='str',
+                required=False
+            ),
+            type_handler_version=dict(
+                type='str',
+                required=False
+            ),
+            auto_upgrade_minor_version=dict(
+                type='bool',
+                required=False
+            ),
+            settings=dict(
+                type='dict',
+                required=False
+            ),
+            protected_settings=dict(
+                type='dict',
+                required=False
+            )
+        )
+
+        self.resource_group = None
+        self.name = None
+        self.location = None
+        self.publisher = None
+        self.virtual_machine_extension_type = None
+        self.type_handler_version = None
+        self.auto_upgrade_minor_version = None
+        self.settings = None
+        self.protected_settings = None
+        self.state = None
+
+        self.results = dict(changed=False, state=dict())
+
+        super(AzureRMVMExtension, self).__init__(derived_arg_spec=self.module_arg_spec,
+                                                 supports_check_mode=False,
+                                                 supports_tags=False)
+
+    def exec_module(self, **kwargs):
+        """Main module execution method"""
+
+        for key in list(self.module_arg_spec.keys()):
+            setattr(self, key, kwargs[key])
+
+        resource_group = None
+        response = None
+        to_be_updated = False
+
+        try:
+            resource_group = self.get_resource_group(self.resource_group)
+        except CloudError:
+            self.fail('resource group {} not found'.format(self.resource_group))
+        if not self.location:
+            self.location = resource_group.location
+
+        if self.state == 'present':
+            response = self.get_vmextension()
+            if not response:
+                to_be_updated = True
+            else:
+                if response['settings'] != self.settings:
+                    response['settings'] = self.settings
+                    to_be_updated = True
+
+                if response['protected_settings'] != self.protected_settings:
+                    response['protected_settings'] = self.protected_settings
+                    to_be_updated = True
+
+            if to_be_updated:
+                self.results['changed'] = True
+                self.results['state'] = self.create_or_update_vmextension()
+        elif self.state == 'absent':
+            self.delete_vmextension()
+            self.results['changed'] = True
+
+        return self.results
+
+    def create_or_update_vmextension(self):
+        '''
+        Method calling the Azure SDK to create or update the VM extension.
+        :return: void
+        '''
+        self.log("Creating VM extension {0}".format(self.name))
+        try:
+            params = VirtualMachineExtension(
+                location=self.location,
+                publisher=self.publisher,
+                virtual_machine_extension_type=self.virtual_machine_extension_type,
+                type_handler_version=self.type_handler_version,
+                auto_upgrade_minor_version=self.auto_upgrade_minor_version,
+                settings=self.settings,
+                protected_settings=self.protected_settings
+            )
+            poller = self.compute_client.virtual_machine_extensions.create_or_update(self.resource_group, self.virtual_machine_name, self.name, params)
+            response = self.get_poller_result(poller)
+            return vmextension_to_dict(response)
+
+        except CloudError as e:
+            self.log('Error attempting to create the VM extension.')
+            self.fail("Error creating the VM extension: {0}".format(str(e)))
+
+    def delete_vmextension(self):
+        '''
+        Method calling the Azure SDK to delete the VM Extension.
+        :return: void
+        '''
+        self.log("Deleting vmextension {0}".format(self.name))
+        try:
+            poller = self.compute_client.virtual_machine_extensions.delete(self.resource_group, self.virtual_machine_name, self.name)
+            self.get_poller_result(poller)
+        except CloudError as e:
+            self.log('Error attempting to delete the vmextension.')
+            self.fail("Error deleting the vmextension: {0}".format(str(e)))
+
+    def get_vmextension(self):
+        '''
+        Method calling the Azure SDK to get a VM Extension.
+        :return: void
+        '''
+        self.log("Checking if the vm extension {0} is present".format(self.name))
+        found = False
+        try:
+            response = self.compute_client.virtual_machine_extensions.get(self.resource_group, self.virtual_machine_name, self.name)
+            found = True
+        except CloudError as e:
+            self.log('Did not find vm extension')
+        if found:
+            return vmextension_to_dict(response)
+        else:
+            return False
+
+
+def main():
+    """Main execution"""
+    AzureRMVMExtension()
+
+if __name__ == '__main__':
+    main()
diff --git a/test/integration/targets/azure_rm_virtualmachine_extension/aliases b/test/integration/targets/azure_rm_virtualmachine_extension/aliases
new file mode 100644
index 0000000000..d6ff84111c
--- /dev/null
+++ b/test/integration/targets/azure_rm_virtualmachine_extension/aliases
@@ -0,0 +1,3 @@
+cloud/azure
+posix/ci/cloud/azure
+destructive
diff --git a/test/integration/targets/azure_rm_virtualmachine_extension/meta/main.yml b/test/integration/targets/azure_rm_virtualmachine_extension/meta/main.yml
new file mode 100644
index 0000000000..95e1952f98
--- /dev/null
+++ b/test/integration/targets/azure_rm_virtualmachine_extension/meta/main.yml
@@ -0,0 +1,2 @@
+dependencies:
+  - setup_azure
diff --git a/test/integration/targets/azure_rm_virtualmachine_extension/tasks/main.yml b/test/integration/targets/azure_rm_virtualmachine_extension/tasks/main.yml
new file mode 100644
index 0000000000..639a940a36
--- /dev/null
+++ b/test/integration/targets/azure_rm_virtualmachine_extension/tasks/main.yml
@@ -0,0 +1,139 @@
+- name: Create Random Storage Account Name
+  set_fact:
+    storage_account: "{{ resource_group | hash('md5') | truncate(24, True, '') }}"
+
+- name: Create virtual network
+  azure_rm_virtualnetwork:
+    resource_group: "{{ resource_group }}"
+    name: testVnet
+    address_prefixes: "10.0.0.0/16"
+
+- name: Add subnet
+  azure_rm_subnet:
+    resource_group: "{{ resource_group }}"
+    name: testSubnet
+    address_prefix: "10.0.1.0/24"
+    virtual_network: testVnet
+
+- name: Create public IP address
+  azure_rm_publicipaddress:
+    resource_group: "{{ resource_group }}"
+    allocation_method: Dynamic
+    name: testPublicIP
+
+- name: Create Network Security Group that allows SSH
+  azure_rm_securitygroup:
+    resource_group: "{{ resource_group }}"
+    name: testNetworkSecurityGroup
+    rules:
+      - name: SSH
+        protocol: Tcp
+        destination_port_range: 22
+        access: Allow
+        priority: 1001
+        direction: Inbound
+
+- name: Create virtual network interface card
+  azure_rm_networkinterface:
+    resource_group: "{{ resource_group }}"
+    name: testNIC
+    virtual_network: testVnet
+    subnet: testSubnet
+    public_ip_name: testPublicIP
+    security_group_name: testNetworkSecurityGroup
+
+- name: create a storage account
+  azure_rm_storageaccount:
+    resource_group: "{{ resource_group }}"
+    name: "{{ storage_account }}"
+    type: Standard_LRS
+
+- name: Create VM
+  azure_rm_virtualmachine:
+    resource_group: "{{ resource_group }}"
+    name: testVM
+    vm_size: Standard_DS1_v2
+    admin_username: testuser
+    ssh_password_enabled: true
+    admin_password: "Password1234!"
+    network_interfaces: testNIC
+    storage_account_name: "{{ storage_account }}"
+    storage_container: osdisk
+    storage_blob: osdisk.vhd
+    os_disk_caching: ReadWrite
+    image:
+      offer: CoreOS
+      publisher: CoreOS
+      sku: Stable
+      version: latest
+
+- name: Create VM Extension
+  azure_rm_virtualmachine_extension:
+    resource_group: "{{ resource_group }}"
+    name: testVMExtension
+    virtual_machine_name: testVM
+    publisher: Microsoft.Azure.Extensions
+    virtual_machine_extension_type: CustomScript
+    type_handler_version: 2.0
+    auto_upgrade_minor_version: true
+    settings: {"commandToExecute": "hostname"}
+  register: results
+
+- name: Assert that VM Extension ran
+  assert:
+    that: results.changed
+
+- name: Delete VM Extension
+  azure_rm_virtualmachine_extension:
+    resource_group: "{{ resource_group }}"
+    name: testVMExtension
+    virtual_machine_name: testVM
+    state: absent
+    publisher: Microsoft.Azure.Extensions
+    virtual_machine_extension_type: CustomScript
+    type_handler_version: 2.0
+    auto_upgrade_minor_version: true
+    settings: {"commandToExecute": "hostname"}
+  register: results
+
+- name: Assert that VM Extension deleted
+  assert:
+    that: results.changed
+
+- name: Delete VM
+  azure_rm_virtualmachine:
+    resource_group: "{{ resource_group }}"
+    name: testVM
+    state: absent
+    remove_on_absent: ['all']
+    vm_size: Standard_DS1_v2
+    admin_username: testuser
+    network_interfaces: testNIC
+    storage_container: osdisk
+    storage_blob: osdisk.vhd
+    os_disk_caching: ReadWrite
+    image:
+      offer: CoreOS
+      publisher: CoreOS
+      sku: Stable
+      version: latest
+
+- name: Delete a storage account
+  azure_rm_storageaccount:
+    resource_group: "{{ resource_group }}"
+    name: "{{ storage_account }}"
+    type: Standard_LRS
+    state: absent
+
+- name: Delete Network Security Group that allows SSH
+  azure_rm_securitygroup:
+    resource_group: "{{ resource_group }}"
+    name: testNetworkSecurityGroup
+    state: absent
+
+- name: Delete virtual network
+  azure_rm_virtualnetwork:
+    resource_group: "{{ resource_group }}"
+    name: testVnet
+    state: absent
+    address_prefixes: "10.0.0.0/16"