Choose OpenTofu if you want infrastructure as code under an open source licence, governed by the Linux Foundation, that works as a drop-in replacement for Terraform. Choose Terraform if you want the original tool and its commercial ecosystem, and your use fits its Business Source License, which allows internal use but not competing hosted offerings. For most teams the deciding factor is the licence, not the features.
I read Terraform's licence file and introduction, and OpenTofu's home page, FAQ and manifesto. OpenTofu exists because of a licence change, so that's where the comparison starts.
Terraform and OpenTofu side by side
| Terraform | OpenTofu | |
|---|---|---|
| Licence | Business Source License 1.1 for version 1.6.0 and later | Open source |
| Licensor or steward | International Business Machines Corporation (IBM) | The Linux Foundation |
| Origin | Open sourced in 2014 under MPL 2.0 | Fork of the last MPL-licensed Terraform |
| Ecosystem | Terraform Registry, HCP Terraform, Terraform Enterprise | OpenTofu Registry: 3,900+ providers, 23,600+ modules |
| State files | Native | Works with state up to Terraform 1.5.x |
| Free option (as of October 2026) | Free to use within the licence terms | Yes, open source |
What changed with Terraform's licence
OpenTofu's manifesto explains the background. Terraform was open sourced in 2014 under the Mozilla Public License 2.0, and after about nine years HashiCorp switched it to the Business Source License, which the OpenTofu group says isn't an open source licence. When HashiCorp didn't respond to the group's request to reverse it, they published a fork.
The current licence file in Terraform's repository is worth reading yourself. It names International Business Machines Corporation (IBM) as the licensor and covers Terraform version 1.6.0 or later. The additional use grant allows production use except offering Terraform to third parties on a hosted or embedded basis to compete with IBM's own versions, and it says using the software for internal purposes within an organisation isn't a competitive offering.
What OpenTofu offers
OpenTofu describes itself as a community-driven infrastructure as code tool under the Linux Foundation's stewardship and a drop-in replacement for Terraform that preserves your existing workflows and configurations. Its FAQ says it was created as an initiative of Gruntwork, Spacelift, Harness, Env0, Scalr and others, and that its aim is feature parity with Terraform.
Two compatibility details matter for anyone migrating. OpenTofu's FAQ says it works with existing state files up to those created with Terraform 1.5.x. And while it works with current Terraform providers, it uses a separate registry, searchable at search.opentofu.org, which its home page says holds more than 3,900 providers and 23,600 modules. The latest release is OpenTofu 1.13.0.
Who's affected by the licence
If you use Terraform to manage your own company's infrastructure, the licence file says that internal use isn't a competitive offering, so most companies using it for their own infrastructure fall outside that restriction. The teams that need to read it closely are vendors who host or embed infrastructure as code in a product that overlaps with IBM's paid versions. For them, OpenTofu was created to remove that uncertainty.
How to decide
- Do you want an open source licence with neutral governance? OpenTofu is under the Linux Foundation.
- Do you build a product or service that hosts or embeds infrastructure as code? Read Terraform's licence with a lawyer, or use OpenTofu.
- Are you on Terraform 1.5.x or earlier? OpenTofu says it works with those state files.
- Do you rely on HCP Terraform or Terraform Enterprise? Those are part of the Terraform ecosystem.
- Using common providers such as AWS or Cloudflare? OpenTofu works with current Terraform providers through its own registry.
For more on running infrastructure well, see my guide to cloud management suites, and this look at in-house vs outsourced development teams.
My advice on Terraform or OpenTofu
If you manage your own infrastructure and depend on HashiCorp's commercial services, staying on Terraform is reasonable, since internal use sits outside the licence's competitive restriction. If open source licensing matters to your company, or you build products in this space, OpenTofu gives you the same workflow under neutral governance. Test a migration on a non-production workspace first, and check your state file version before you switch.
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Frequently asked questions
Is Terraform still open source?
Terraform's licence file shows the Business Source License 1.1 for version 1.6.0 and later. OpenTofu's manifesto says the Business Source License isn't open source.
Who owns Terraform's licence now?
The licence file in Terraform's repository names International Business Machines Corporation (IBM) as the licensor.
Is OpenTofu a drop-in replacement for Terraform?
OpenTofu describes itself as a drop-in replacement for Terraform that preserves existing workflows and configurations.
Can OpenTofu use my Terraform state file?
OpenTofu's FAQ says it works with existing state files up to those created with Terraform version 1.5.x.
Does OpenTofu use the Terraform Registry?
No. OpenTofu works with current Terraform providers but uses its own registry, searchable at search.opentofu.org.
