diff --git a/changelogs/fragments/7535-terraform-fix-multiline-string-handling-in-complex-variables.yml b/changelogs/fragments/7535-terraform-fix-multiline-string-handling-in-complex-variables.yml
new file mode 100644
index 0000000000..b991522dd6
--- /dev/null
+++ b/changelogs/fragments/7535-terraform-fix-multiline-string-handling-in-complex-variables.yml
@@ -0,0 +1,2 @@
+bugfixes:
+  - "terraform - fix multiline string handling in complex variables (https://github.com/ansible-collections/community.general/pull/7535)."
diff --git a/plugins/modules/terraform.py b/plugins/modules/terraform.py
index 27870b5b7c..cb6755efb8 100644
--- a/plugins/modules/terraform.py
+++ b/plugins/modules/terraform.py
@@ -514,7 +514,7 @@ def main():
 
     def format_args(vars):
         if isinstance(vars, str):
-            return '"{string}"'.format(string=vars.replace('\\', '\\\\').replace('"', '\\"'))
+            return '"{string}"'.format(string=vars.replace('\\', '\\\\').replace('"', '\\"')).replace('\n', '\\n')
         elif isinstance(vars, bool):
             if vars:
                 return 'true'