diff --git a/Code/Editor/GameExporter.cpp b/Code/Editor/GameExporter.cpp
index 1fc980fdac..00dc3d8de1 100644
--- a/Code/Editor/GameExporter.cpp
+++ b/Code/Editor/GameExporter.cpp
@@ -318,7 +318,7 @@ void CGameExporter::ExportLevelInfo(const QString& path)
     root->setAttr("Name", levelName.toUtf8().data());
     auto terrain = AzFramework::Terrain::TerrainDataRequestBus::FindFirstHandler();
     const AZ::Aabb terrainAabb = terrain ? terrain->GetTerrainAabb() : AZ::Aabb::CreateFromPoint(AZ::Vector3::CreateZero());
-    const AZ::Vector2 terrainGridResolution = terrain ? terrain->GetTerrainGridResolution() : AZ::Vector2::CreateOne();
+    const AZ::Vector2 terrainGridResolution = terrain ? terrain->GetTerrainHeightQueryResolution() : AZ::Vector2::CreateOne();
     const int compiledHeightmapSize = static_cast<int>(terrainAabb.GetXExtent() / terrainGridResolution.GetX());
     root->setAttr("HeightmapSize", compiledHeightmapSize);
 
diff --git a/Code/Framework/AzFramework/AzFramework/Terrain/TerrainDataRequestBus.cpp b/Code/Framework/AzFramework/AzFramework/Terrain/TerrainDataRequestBus.cpp
index 947d3821ab..1fb29cfa30 100644
--- a/Code/Framework/AzFramework/AzFramework/Terrain/TerrainDataRequestBus.cpp
+++ b/Code/Framework/AzFramework/AzFramework/Terrain/TerrainDataRequestBus.cpp
@@ -51,7 +51,8 @@ namespace AzFramework
                     ->Event("GetNormal", &AzFramework::Terrain::TerrainDataRequestBus::Events::GetNormal)
                     ->Event("GetNormalFromFloats", &AzFramework::Terrain::TerrainDataRequestBus::Events::GetNormalFromFloats)
                     ->Event("GetTerrainAabb", &AzFramework::Terrain::TerrainDataRequestBus::Events::GetTerrainAabb)
-                    ->Event("GetTerrainGridResolution", &AzFramework::Terrain::TerrainDataRequestBus::Events::GetTerrainGridResolution)
+                    ->Event("GetTerrainHeightQueryResolution",
+                        &AzFramework::Terrain::TerrainDataRequestBus::Events::GetTerrainHeightQueryResolution)
                     ;
 
             }
diff --git a/Code/Framework/AzFramework/AzFramework/Terrain/TerrainDataRequestBus.h b/Code/Framework/AzFramework/AzFramework/Terrain/TerrainDataRequestBus.h
index 08e238434e..92eb28a110 100644
--- a/Code/Framework/AzFramework/AzFramework/Terrain/TerrainDataRequestBus.h
+++ b/Code/Framework/AzFramework/AzFramework/Terrain/TerrainDataRequestBus.h
@@ -59,8 +59,11 @@ namespace AzFramework
             static AZ::Vector3 GetDefaultTerrainNormal() { return AZ::Vector3::CreateAxisZ(); }
 
             // System-level queries to understand world size and resolution
-            virtual AZ::Vector2 GetTerrainGridResolution() const = 0;
+            virtual AZ::Vector2 GetTerrainHeightQueryResolution() const = 0;
+            virtual void SetTerrainHeightQueryResolution(AZ::Vector2 queryResolution) = 0;
+
             virtual AZ::Aabb GetTerrainAabb() const = 0;
+            virtual void SetTerrainAabb(const AZ::Aabb& worldBounds) = 0;
 
             //! Returns terrains height in meters at location x,y.
             //! @terrainExistsPtr: Can be nullptr. If != nullptr then, if there's no terrain at location x,y or location x,y is inside a terrain HOLE then *terrainExistsPtr will become false,
diff --git a/Gems/PhysX/Code/Tests/PhysXTestUtil.h b/Gems/PhysX/Code/Tests/PhysXTestUtil.h
index b1ba23600a..8e81b9cb89 100644
--- a/Gems/PhysX/Code/Tests/PhysXTestUtil.h
+++ b/Gems/PhysX/Code/Tests/PhysXTestUtil.h
@@ -93,9 +93,26 @@ namespace PhysX
 
         ////////////////////////////////////////////////////////////////////////
         // TerrainDataRequestBus interface dummy implementation
-        AZ::Vector2 GetTerrainGridResolution() const override { return {}; }
-        AZ::Aabb GetTerrainAabb() const override { return {}; }
-        float GetHeight(AZ::Vector3, Sampler, bool*) const override { return {}; }
+        AZ::Vector2 GetTerrainHeightQueryResolution() const override
+        {
+            return {};
+        }
+        void SetTerrainHeightQueryResolution([[maybe_unused]] AZ::Vector2 queryResolution) override
+        {
+        }
+
+        AZ::Aabb GetTerrainAabb() const override
+        {
+            return {};
+        }
+        void SetTerrainAabb([[maybe_unused]] const AZ::Aabb& worldBounds) override
+        {
+        }
+
+        float GetHeight(AZ::Vector3, Sampler, bool*) const override
+        {
+            return {};
+        }
         float GetHeightFromFloats(float, float, Sampler, bool*) const override { return {}; }
         AzFramework::SurfaceData::SurfaceTagWeight GetMaxSurfaceWeight(AZ::Vector3, Sampler, bool*) const override { return {}; }
         AzFramework::SurfaceData::SurfaceTagWeight GetMaxSurfaceWeightFromFloats(float, float, Sampler, bool*) const override { return {}; }
diff --git a/Gems/Terrain/Assets/Shaders/Terrain/TerrainCommon.azsli b/Gems/Terrain/Assets/Shaders/Terrain/TerrainCommon.azsli
index 6e489796d7..18b85bbd43 100644
--- a/Gems/Terrain/Assets/Shaders/Terrain/TerrainCommon.azsli
+++ b/Gems/Terrain/Assets/Shaders/Terrain/TerrainCommon.azsli
@@ -11,16 +11,16 @@ ShaderResourceGroup ObjectSrg : SRG_PerObject
 {
     Texture2D<float> m_heightmapImage;
     
-    Sampler LinearSampler
+    Sampler PointSampler
     {
-        MinFilter = Linear;
-        MagFilter = Linear;
-        MipFilter = Linear;
+        MinFilter = Point;
+        MagFilter = Point;
+        MipFilter = Point;
         AddressU = Clamp;
         AddressV = Clamp;
         AddressW = Clamp;
     };
-    
+
     row_major float3x4 m_modelToWorld;
 
     struct TerrainData
@@ -57,8 +57,8 @@ float4x4 GetObject_WorldMatrix()
 
 float GetHeight(float2 origUv)
 {
-    float2 uv = clamp(origUv, 0.0f, 1.0f);
-    return ObjectSrg::m_terrainData.m_heightScale * (ObjectSrg::m_heightmapImage.SampleLevel(ObjectSrg::LinearSampler, uv, 0).r - 0.5f);
+    float2 uv = clamp(origUv + (ObjectSrg::m_terrainData.m_uvStep * 0.5f), 0.0f, 1.0f);
+    return ObjectSrg::m_terrainData.m_heightScale * (ObjectSrg::m_heightmapImage.SampleLevel(ObjectSrg::PointSampler, uv, 0).r - 0.5f);
 }
 
 float4 GetTerrainProjectedPosition(ObjectSrg::TerrainData terrainData, float2 vertexPosition, float2 uv)
diff --git a/Gems/Terrain/Code/CMakeLists.txt b/Gems/Terrain/Code/CMakeLists.txt
index b4a35edbbf..0feacdaf71 100644
--- a/Gems/Terrain/Code/CMakeLists.txt
+++ b/Gems/Terrain/Code/CMakeLists.txt
@@ -83,15 +83,36 @@ endif()
 ################################################################################
 # See if globally, tests are supported
 if(PAL_TRAIT_BUILD_TESTS_SUPPORTED)
-    # We globally support tests, see if we support tests on this platform for Terrain.Static
-    if(PAL_TRAIT_TERRAIN_TEST_SUPPORTED)
-        # We support Terrain.Tests on this platform, add Terrain.Tests target which depends on Terrain.Static
+    ly_add_target(
+        NAME Terrain.Tests ${PAL_TRAIT_TEST_TARGET_TYPE}
+        NAMESPACE Gem
+        FILES_CMAKE
+            terrain_files.cmake
+            terrain_tests_files.cmake
+        INCLUDE_DIRECTORIES
+            PRIVATE
+                Tests
+                Source
+        BUILD_DEPENDENCIES
+            PRIVATE
+                AZ::AzTest
+                AZ::AzFramework
+                Gem::Terrain.Static
+    )
+
+    # Add Terrain.Tests to googletest
+    ly_add_googletest(
+        NAME Gem::Terrain.Tests
+    )
+
+    # If we are a host platform we want to add tools test like editor tests here
+    if(PAL_TRAIT_BUILD_HOST_TOOLS)
+        # We support Terrain.Editor.Tests on this platform, add Terrain.Editor.Tests target which depends on Terrain.Editor
         ly_add_target(
-            NAME Terrain.Tests ${PAL_TRAIT_TEST_TARGET_TYPE}
+            NAME Terrain.Editor.Tests ${PAL_TRAIT_TEST_TARGET_TYPE}
             NAMESPACE Gem
             FILES_CMAKE
-                terrain_files.cmake
-                terrain_tests_files.cmake
+                terrain_editor_tests_files.cmake
             INCLUDE_DIRECTORIES
                 PRIVATE
                     Tests
@@ -99,40 +120,12 @@ if(PAL_TRAIT_BUILD_TESTS_SUPPORTED)
             BUILD_DEPENDENCIES
                 PRIVATE
                     AZ::AzTest
-                    AZ::AzFramework
-                    Gem::Terrain.Static
+                    Gem::Terrain.Editor
         )
 
-        # Add Terrain.Tests to googletest
+        # Add Terrain.Editor.Tests to googletest
         ly_add_googletest(
-            NAME Gem::Terrain.Tests
+            NAME Gem::Terrain.Editor.Tests
         )
     endif()
-
-    # If we are a host platform we want to add tools test like editor tests here
-    if(PAL_TRAIT_BUILD_HOST_TOOLS)
-        # We are a host platform, see if Editor tests are supported on this platform
-        if(PAL_TRAIT_TERRAIN_EDITOR_TEST_SUPPORTED)
-            # We support Terrain.Editor.Tests on this platform, add Terrain.Editor.Tests target which depends on Terrain.Editor
-            ly_add_target(
-                NAME Terrain.Editor.Tests ${PAL_TRAIT_TEST_TARGET_TYPE}
-                NAMESPACE Gem
-                FILES_CMAKE
-                    terrain_editor_tests_files.cmake
-                INCLUDE_DIRECTORIES
-                    PRIVATE
-                        Tests
-                        Source
-                BUILD_DEPENDENCIES
-                    PRIVATE
-                        AZ::AzTest
-                        Gem::Terrain.Editor
-            )
-
-            # Add Terrain.Editor.Tests to googletest
-            ly_add_googletest(
-                NAME Gem::Terrain.Editor.Tests
-            )
-        endif()
-    endif()
 endif()
diff --git a/Gems/Terrain/Code/Source/Components/TerrainHeightGradientListComponent.cpp b/Gems/Terrain/Code/Source/Components/TerrainHeightGradientListComponent.cpp
index d64f660d90..4d0cb6576d 100644
--- a/Gems/Terrain/Code/Source/Components/TerrainHeightGradientListComponent.cpp
+++ b/Gems/Terrain/Code/Source/Components/TerrainHeightGradientListComponent.cpp
@@ -166,14 +166,20 @@ namespace Terrain
     }
 
     void TerrainHeightGradientListComponent::GetHeight(
-        const AZ::Vector3& inPosition, AZ::Vector3& outPosition, [[maybe_unused]] Sampler sampleFilter = Sampler::DEFAULT)
+        const AZ::Vector3& inPosition,
+        AZ::Vector3& outPosition,
+        [[maybe_unused]] AzFramework::Terrain::TerrainDataRequests::Sampler sampleFilter =
+            AzFramework::Terrain::TerrainDataRequests::Sampler::DEFAULT)
     {
         const float height = GetHeight(inPosition.GetX(), inPosition.GetY());
         outPosition.SetZ(height);
     }
 
     void TerrainHeightGradientListComponent::GetNormal(
-        const AZ::Vector3& inPosition, AZ::Vector3& outNormal, [[maybe_unused]] Sampler sampleFilter = Sampler::DEFAULT)
+        const AZ::Vector3& inPosition,
+        AZ::Vector3& outNormal,
+        [[maybe_unused]] AzFramework::Terrain::TerrainDataRequests::Sampler sampleFilter =
+            AzFramework::Terrain::TerrainDataRequests::Sampler::DEFAULT)
     {
         const float x = inPosition.GetX();
         const float y = inPosition.GetY();
@@ -206,7 +212,7 @@ namespace Terrain
         // Get the height range of the entire world
         m_cachedHeightQueryResolution = AZ::Vector2(1.0f);
         AzFramework::Terrain::TerrainDataRequestBus::BroadcastResult(
-            m_cachedHeightQueryResolution, &AzFramework::Terrain::TerrainDataRequestBus::Events::GetTerrainGridResolution);
+            m_cachedHeightQueryResolution, &AzFramework::Terrain::TerrainDataRequestBus::Events::GetTerrainHeightQueryResolution);
 
         AZ::Aabb worldBounds = AZ::Aabb::CreateNull();
         AzFramework::Terrain::TerrainDataRequestBus::BroadcastResult(
diff --git a/Gems/Terrain/Code/Source/Components/TerrainHeightGradientListComponent.h b/Gems/Terrain/Code/Source/Components/TerrainHeightGradientListComponent.h
index 7635680815..509f003afa 100644
--- a/Gems/Terrain/Code/Source/Components/TerrainHeightGradientListComponent.h
+++ b/Gems/Terrain/Code/Source/Components/TerrainHeightGradientListComponent.h
@@ -64,8 +64,14 @@ namespace Terrain
         TerrainHeightGradientListComponent() = default;
         ~TerrainHeightGradientListComponent() = default;
 
-        void GetHeight(const AZ::Vector3& inPosition, AZ::Vector3& outPosition, Sampler sampleFilter) override;
-        void GetNormal(const AZ::Vector3& inPosition, AZ::Vector3& outNormal, Sampler sampleFilter) override;
+        void GetHeight(
+            const AZ::Vector3& inPosition,
+            AZ::Vector3& outPosition,
+            AzFramework::Terrain::TerrainDataRequests::Sampler sampleFilter) override;
+        void GetNormal(
+            const AZ::Vector3& inPosition,
+            AZ::Vector3& outNormal,
+            AzFramework::Terrain::TerrainDataRequests::Sampler sampleFilter) override;
 
         //////////////////////////////////////////////////////////////////////////
         // AZ::Component interface implementation
diff --git a/Gems/Terrain/Code/Source/Components/TerrainLayerSpawnerComponent.cpp b/Gems/Terrain/Code/Source/Components/TerrainLayerSpawnerComponent.cpp
index e17dbd0e93..245c98ccac 100644
--- a/Gems/Terrain/Code/Source/Components/TerrainLayerSpawnerComponent.cpp
+++ b/Gems/Terrain/Code/Source/Components/TerrainLayerSpawnerComponent.cpp
@@ -104,7 +104,6 @@ namespace Terrain
     {
         AZ::TransformNotificationBus::Handler::BusConnect(GetEntityId());
         LmbrCentral::ShapeComponentNotificationsBus::Handler::BusConnect(GetEntityId());
-        TerrainAreaRequestBus::Handler::BusConnect(GetEntityId());
         TerrainSpawnerRequestBus::Handler::BusConnect(GetEntityId());
 
         TerrainSystemServiceRequestBus::Broadcast(&TerrainSystemServiceRequestBus::Events::RegisterArea, GetEntityId());
@@ -114,7 +113,6 @@ namespace Terrain
     {
         TerrainSystemServiceRequestBus::Broadcast(&TerrainSystemServiceRequestBus::Events::UnregisterArea, GetEntityId());
         TerrainSpawnerRequestBus::Handler::BusDisconnect();
-        TerrainAreaRequestBus::Handler::BusDisconnect();
         LmbrCentral::ShapeComponentNotificationsBus::Handler::BusDisconnect();
         AZ::TransformNotificationBus::Handler::BusDisconnect();
         
@@ -161,11 +159,6 @@ namespace Terrain
         return m_configuration.m_useGroundPlane;
     }
 
-    void TerrainLayerSpawnerComponent::RegisterArea()
-    {
-        TerrainSystemServiceRequestBus::Broadcast(&TerrainSystemServiceRequestBus::Events::RegisterArea, GetEntityId());
-    }
-
     void TerrainLayerSpawnerComponent::RefreshArea()
     {
         TerrainSystemServiceRequestBus::Broadcast(&TerrainSystemServiceRequestBus::Events::RefreshArea, GetEntityId());
diff --git a/Gems/Terrain/Code/Source/Components/TerrainLayerSpawnerComponent.h b/Gems/Terrain/Code/Source/Components/TerrainLayerSpawnerComponent.h
index 3f8e72e1b8..c7398bf93e 100644
--- a/Gems/Terrain/Code/Source/Components/TerrainLayerSpawnerComponent.h
+++ b/Gems/Terrain/Code/Source/Components/TerrainLayerSpawnerComponent.h
@@ -58,7 +58,6 @@ namespace Terrain
         : public AZ::Component
         , private AZ::TransformNotificationBus::Handler
         , private LmbrCentral::ShapeComponentNotificationsBus::Handler
-        , private Terrain::TerrainAreaRequestBus::Handler
         , private Terrain::TerrainSpawnerRequestBus::Handler
     {
     public:
@@ -81,6 +80,7 @@ namespace Terrain
         bool ReadInConfig(const AZ::ComponentConfig* baseConfig) override;
         bool WriteOutConfig(AZ::ComponentConfig* outBaseConfig) const override;
 
+    protected:
         //////////////////////////////////////////////////////////////////////////
         // AZ::TransformNotificationBus::Handler
         void OnTransformChanged(const AZ::Transform& local, const AZ::Transform& world) override;
@@ -92,8 +92,7 @@ namespace Terrain
         void GetPriority(AZ::u32& outLayer, AZ::u32& outPriority) override;
         bool GetUseGroundPlane() override;
         
-        void RegisterArea() override;
-        void RefreshArea() override;
+        void RefreshArea();
 
     private:
         TerrainLayerSpawnerConfig m_configuration;
diff --git a/Gems/Terrain/Code/Source/Components/TerrainWorldComponent.cpp b/Gems/Terrain/Code/Source/Components/TerrainWorldComponent.cpp
index 669a8f4b02..d8b7308ef7 100644
--- a/Gems/Terrain/Code/Source/Components/TerrainWorldComponent.cpp
+++ b/Gems/Terrain/Code/Source/Components/TerrainWorldComponent.cpp
@@ -13,6 +13,7 @@
 #include <AzCore/RTTI/BehaviorContext.h>
 #include <AzCore/Serialization/EditContext.h>
 #include <AzCore/Serialization/SerializeContext.h>
+#include <AzFramework/Terrain/TerrainDataRequestBus.h>
 
 namespace Terrain
 {
@@ -85,17 +86,16 @@ namespace Terrain
 
     void TerrainWorldComponent::Activate()
     {
-        TerrainSystemServiceRequestBus::Broadcast(
-            &TerrainSystemServiceRequestBus::Events::SetWorldBounds,
-            AZ::Aabb::CreateFromMinMax(m_configuration.m_worldMin, m_configuration.m_worldMax)
-        );
-        TerrainSystemServiceRequestBus::Broadcast(
-            &TerrainSystemServiceRequestBus::Events::SetHeightQueryResolution, m_configuration.m_heightQueryResolution);
-
         // Currently, the Terrain System Component owns the Terrain System instance because the Terrain World component gets recreated
         // every time an entity is added or removed to a level.  If this ever changes, the Terrain System ownership could move into
         // the level component.
         TerrainSystemServiceRequestBus::Broadcast(&TerrainSystemServiceRequestBus::Events::Activate);
+
+        AzFramework::Terrain::TerrainDataRequestBus::Broadcast(
+            &AzFramework::Terrain::TerrainDataRequestBus::Events::SetTerrainAabb,
+            AZ::Aabb::CreateFromMinMax(m_configuration.m_worldMin, m_configuration.m_worldMax));
+        AzFramework::Terrain::TerrainDataRequestBus::Broadcast(
+            &AzFramework::Terrain::TerrainDataRequestBus::Events::SetTerrainHeightQueryResolution, m_configuration.m_heightQueryResolution);
     }
 
     void TerrainWorldComponent::Deactivate()
diff --git a/Gems/Terrain/Code/Source/Components/TerrainWorldDebuggerComponent.cpp b/Gems/Terrain/Code/Source/Components/TerrainWorldDebuggerComponent.cpp
index d7504295c2..89ffa6364f 100644
--- a/Gems/Terrain/Code/Source/Components/TerrainWorldDebuggerComponent.cpp
+++ b/Gems/Terrain/Code/Source/Components/TerrainWorldDebuggerComponent.cpp
@@ -171,7 +171,7 @@ namespace Terrain
                 // Determine how far to draw in each direction in world space based on our MaxSectorsToDraw
                 AZ::Vector2 queryResolution = AZ::Vector2(1.0f);
                 AzFramework::Terrain::TerrainDataRequestBus::BroadcastResult(
-                    queryResolution, &AzFramework::Terrain::TerrainDataRequests::GetTerrainGridResolution);
+                    queryResolution, &AzFramework::Terrain::TerrainDataRequests::GetTerrainHeightQueryResolution);
                 AZ::Vector3 viewDistance(
                     queryResolution.GetX() * SectorSizeInGridPoints * sqrtf(MaxSectorsToDraw),
                     queryResolution.GetY() * SectorSizeInGridPoints * sqrtf(MaxSectorsToDraw),
@@ -214,7 +214,7 @@ namespace Terrain
 
         AZ::Vector2 queryResolution = AZ::Vector2(1.0f);
         AzFramework::Terrain::TerrainDataRequestBus::BroadcastResult(
-            queryResolution, &AzFramework::Terrain::TerrainDataRequests::GetTerrainGridResolution);
+            queryResolution, &AzFramework::Terrain::TerrainDataRequests::GetTerrainHeightQueryResolution);
 
         // Calculate the world size of each sector.  Note that this size actually ends at the last point, not the last square.
         // So for example, the sector size for 3 points will go from (*--*--*) even though it will be used to draw (*--*--*--).
diff --git a/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystem.cpp b/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystem.cpp
index a271d624f5..674af376e4 100644
--- a/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystem.cpp
+++ b/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystem.cpp
@@ -9,6 +9,7 @@
 #include <TerrainSystem/TerrainSystem.h>
 #include <AzCore/std/parallel/shared_mutex.h>
 #include <SurfaceData/SurfaceDataTypes.h>
+#include <SurfaceData/SurfaceDataSystemRequestBus.h>
 #include <LmbrCentral/Shape/ShapeComponentBus.h>
 
 #include <Atom/RPI.Public/Scene.h>
@@ -53,7 +54,7 @@ TerrainSystem::TerrainSystem()
     m_currentSettings.m_worldBounds = AZ::Aabb::CreateNull();
 
     m_requestedSettings = m_currentSettings;
-    m_requestedSettings.m_worldBounds = AZ::Aabb::CreateFromMinMax(AZ::Vector3(0.0f, 0.0f, 0.0f), AZ::Vector3(4096.0f, 4096.0f, 2048.0f));
+    m_requestedSettings.m_worldBounds = AZ::Aabb::CreateFromMinMax(AZ::Vector3(-512.0f), AZ::Vector3(512.0f));
 }
 
 TerrainSystem::~TerrainSystem()
@@ -66,23 +67,76 @@ TerrainSystem::~TerrainSystem()
 
 void TerrainSystem::Activate()
 {
-    m_requestedSettings.m_systemActive = true;
+    AzFramework::Terrain::TerrainDataNotificationBus::Broadcast(
+        &AzFramework::Terrain::TerrainDataNotificationBus::Events::OnTerrainDataCreateBegin);
+
+    m_dirtyRegion = AZ::Aabb::CreateNull();
+    m_terrainHeightDirty = true;
     m_terrainSettingsDirty = true;
+    m_requestedSettings.m_systemActive = true;
+
+    {
+        AZStd::shared_lock<AZStd::shared_mutex> lock(m_areaMutex);
+        m_registeredAreas.clear();
+    }
+
+    AzFramework::Terrain::TerrainDataRequestBus::Handler::BusConnect();
+
+    // Register any terrain spawners that were already active before the terrain system activated.
+    auto enumerationCallback = [&]([[maybe_unused]] Terrain::TerrainSpawnerRequests* terrainSpawner) -> bool
+    {
+        AZ::EntityId areaId = *(Terrain::TerrainSpawnerRequestBus::GetCurrentBusId());
+        RegisterArea(areaId);
+
+        // Keep Enumerating
+        return true;
+    };
+    Terrain::TerrainSpawnerRequestBus::EnumerateHandlers(enumerationCallback);
+
+    AzFramework::Terrain::TerrainDataNotificationBus::Broadcast(
+        &AzFramework::Terrain::TerrainDataNotificationBus::Events::OnTerrainDataCreateEnd);
 }
 
 void TerrainSystem::Deactivate()
 {
-    m_requestedSettings.m_systemActive = false;
+    AzFramework::Terrain::TerrainDataNotificationBus::Broadcast(
+        &AzFramework::Terrain::TerrainDataNotificationBus::Events::OnTerrainDataDestroyBegin);
+
+    AzFramework::Terrain::TerrainDataRequestBus::Handler::BusDisconnect();
+
+    {
+        AZStd::shared_lock<AZStd::shared_mutex> lock(m_areaMutex);
+        m_registeredAreas.clear();
+    }
+
+    m_dirtyRegion = AZ::Aabb::CreateNull();
+    m_terrainHeightDirty = true;
     m_terrainSettingsDirty = true;
+    m_requestedSettings.m_systemActive = false;
+
+    if (auto rpi = AZ::RPI::RPISystemInterface::Get(); rpi)
+    {
+        if (auto defaultScene = rpi->GetDefaultScene(); defaultScene)
+        {
+            const AZ::RPI::Scene* scene = defaultScene.get();
+            if (auto terrainFeatureProcessor = scene->GetFeatureProcessor<TerrainFeatureProcessor>(); terrainFeatureProcessor)
+            {
+                terrainFeatureProcessor->RemoveTerrainData();
+            }
+        }
+    }
+
+    AzFramework::Terrain::TerrainDataNotificationBus::Broadcast(
+        &AzFramework::Terrain::TerrainDataNotificationBus::Events::OnTerrainDataDestroyEnd);
 }
 
-void TerrainSystem::SetWorldBounds(const AZ::Aabb& worldBounds)
+void TerrainSystem::SetTerrainAabb(const AZ::Aabb& worldBounds)
 {   
     m_requestedSettings.m_worldBounds = worldBounds;
     m_terrainSettingsDirty = true;
 }
 
-void TerrainSystem::SetHeightQueryResolution(AZ::Vector2 queryResolution)
+void TerrainSystem::SetTerrainHeightQueryResolution(AZ::Vector2 queryResolution)
 {
     m_requestedSettings.m_heightQueryResolution = queryResolution;
     m_terrainSettingsDirty = true;
@@ -93,13 +147,15 @@ AZ::Aabb TerrainSystem::GetTerrainAabb() const
     return m_currentSettings.m_worldBounds;
 }
 
-AZ::Vector2 TerrainSystem::GetTerrainGridResolution() const
+AZ::Vector2 TerrainSystem::GetTerrainHeightQueryResolution() const
 {
     return m_currentSettings.m_heightQueryResolution;
 }
 
-float TerrainSystem::GetHeightSynchronous(float x, float y) const
+float TerrainSystem::GetHeightSynchronous(float x, float y, Sampler sampler, bool* terrainExistsPtr) const
 {
+    bool terrainExists = false;
+
     AZ::Vector3 inPosition((float)x, (float)y, m_currentSettings.m_worldBounds.GetMin().GetZ());
     AZ::Vector3 outPosition((float)x, (float)y, m_currentSettings.m_worldBounds.GetMin().GetZ());
 
@@ -111,67 +167,77 @@ float TerrainSystem::GetHeightSynchronous(float x, float y) const
         if (areaBounds.Contains(inPosition))
         {
             Terrain::TerrainAreaHeightRequestBus::Event(
-                areaId, &Terrain::TerrainAreaHeightRequestBus::Events::GetHeight, inPosition, outPosition,
-                Terrain::TerrainAreaHeightRequestBus::Events::Sampler::DEFAULT);
+                areaId, &Terrain::TerrainAreaHeightRequestBus::Events::GetHeight, inPosition, outPosition, sampler);
+
+            terrainExists = true;
+
+            break;
         }
     }
 
-    return AZ::GetClamp(
-        outPosition.GetZ(), m_currentSettings.m_worldBounds.GetMin().GetZ(), m_currentSettings.m_worldBounds.GetMax().GetZ());
-}
-
-float TerrainSystem::GetHeight(AZ::Vector3 position, [[maybe_unused]] Sampler sampler, [[maybe_unused]] bool* terrainExistsPtr) const
-{
     if (terrainExistsPtr)
     {
-        *terrainExistsPtr = true;
+        *terrainExistsPtr = terrainExists;
     }
 
-    return GetHeightSynchronous(position.GetX(), position.GetY());
+    return AZ::GetClamp(
+        outPosition.GetZ(), m_currentSettings.m_worldBounds.GetMin().GetZ(), m_currentSettings.m_worldBounds.GetMax().GetZ());
 }
 
-float TerrainSystem::GetHeightFromFloats(
-    float x, float y, [[maybe_unused]] Sampler sampler, [[maybe_unused]] bool* terrainExistsPtr) const
+float TerrainSystem::GetHeight(AZ::Vector3 position, Sampler sampler, bool* terrainExistsPtr) const
 {
-    if (terrainExistsPtr)
-    {
-        *terrainExistsPtr = true;
-    }
-
-    return GetHeightSynchronous(x, y);
+    return GetHeightSynchronous(position.GetX(), position.GetY(), sampler, terrainExistsPtr);
 }
 
-bool TerrainSystem::GetIsHoleFromFloats(
-    [[maybe_unused]] float x, [[maybe_unused]] float y, [[maybe_unused]] Sampler sampleFilter) const
+float TerrainSystem::GetHeightFromFloats(float x, float y, Sampler sampler, bool* terrainExistsPtr) const
 {
-    return false;
+    return GetHeightSynchronous(x, y, sampler, terrainExistsPtr);
 }
 
-AZ::Vector3 TerrainSystem::GetNormalSynchronous([[maybe_unused]] float x, [[maybe_unused]] float y) const
+bool TerrainSystem::GetIsHoleFromFloats(float x, float y, Sampler sampler) const
 {
-    return AZ::Vector3::CreateAxisZ();
+    bool terrainExists = false;
+    GetHeightSynchronous(x, y, sampler, &terrainExists);
+    return !terrainExists;
 }
 
-AZ::Vector3 TerrainSystem::GetNormal(
-    AZ::Vector3 position, [[maybe_unused]] Sampler sampleFilter, [[maybe_unused]] bool* terrainExistsPtr) const
+AZ::Vector3 TerrainSystem::GetNormalSynchronous(float x, float y, Sampler sampler, bool* terrainExistsPtr) const
 {
+    bool terrainExists = false;
+
+    AZ::Vector3 inPosition((float)x, (float)y, m_currentSettings.m_worldBounds.GetMin().GetZ());
+    AZ::Vector3 outNormal = AZ::Vector3::CreateAxisZ();
+
+    AZStd::shared_lock<AZStd::shared_mutex> lock(m_areaMutex);
+
+    for (auto& [areaId, areaBounds] : m_registeredAreas)
+    {
+        inPosition.SetZ(areaBounds.GetMin().GetZ());
+        if (areaBounds.Contains(inPosition))
+        {
+            Terrain::TerrainAreaHeightRequestBus::Event(
+                areaId, &Terrain::TerrainAreaHeightRequestBus::Events::GetNormal, inPosition, outNormal, sampler);
+            terrainExists = true;
+            break;
+        }
+    }
+
     if (terrainExistsPtr)
     {
-        *terrainExistsPtr = true;
+        *terrainExistsPtr = terrainExists;
     }
 
-    return GetNormalSynchronous(position.GetX(), position.GetY());
+    return outNormal;
 }
 
-AZ::Vector3 TerrainSystem::GetNormalFromFloats(
-    float x, float y, [[maybe_unused]] Sampler sampleFilter, [[maybe_unused]] bool* terrainExistsPtr) const
+AZ::Vector3 TerrainSystem::GetNormal(AZ::Vector3 position, Sampler sampler, bool* terrainExistsPtr) const
 {
-    if (terrainExistsPtr)
-    {
-        *terrainExistsPtr = true;
-    }
+    return GetNormalSynchronous(position.GetX(), position.GetY(), sampler, terrainExistsPtr);
+}
 
-    return GetNormalSynchronous(x, y);
+AZ::Vector3 TerrainSystem::GetNormalFromFloats(float x, float y, Sampler sampler, bool* terrainExistsPtr) const
+{
+    return GetNormalSynchronous(x, y, sampler, terrainExistsPtr);
 }
 
 
@@ -298,35 +364,6 @@ void TerrainSystem::ProcessSurfacePointsFromRegion(const AZ::Aabb& inRegion, con
 }
 */
 
-void TerrainSystem::SystemActivate()
-{
-    {
-        AZStd::shared_lock<AZStd::shared_mutex> lock(m_areaMutex);
-        m_registeredAreas.clear();
-    }
-
-    AzFramework::Terrain::TerrainDataRequestBus::Handler::BusConnect();
-
-    TerrainAreaRequestBus::Broadcast(&TerrainAreaRequestBus::Events::RegisterArea);
-}
-
-void TerrainSystem::SystemDeactivate()
-{
-    AzFramework::Terrain::TerrainDataRequestBus::Handler::BusDisconnect();
-
-    {
-        AZStd::shared_lock<AZStd::shared_mutex> lock(m_areaMutex);
-        m_registeredAreas.clear();
-    }
-
-    const AZ::RPI::Scene* scene = AZ::RPI::RPISystemInterface::Get()->GetDefaultScene().get();
-    auto terrainFeatureProcessor = scene->GetFeatureProcessor<TerrainFeatureProcessor>();
-    if (terrainFeatureProcessor)
-    {
-        terrainFeatureProcessor->RemoveTerrainData();
-    }
-}
-
 void TerrainSystem::RegisterArea(AZ::EntityId areaId)
 {
     AZStd::unique_lock<AZStd::shared_mutex> lock(m_areaMutex);
@@ -383,6 +420,7 @@ void TerrainSystem::OnTick(float /*deltaTime*/, AZ::ScriptTimePoint /*time*/)
 
     if (m_terrainSettingsDirty)
     {
+        terrainSettingsChanged = true;
         m_terrainSettingsDirty = false;
 
         // This needs to happen before the "system active" check below, because activating the system will cause the various
@@ -393,24 +431,12 @@ void TerrainSystem::OnTick(float /*deltaTime*/, AZ::ScriptTimePoint /*time*/)
             m_dirtyRegion.AddAabb(m_requestedSettings.m_worldBounds);
             m_terrainHeightDirty = true;
             m_currentSettings.m_worldBounds = m_requestedSettings.m_worldBounds;
-            terrainSettingsChanged = true;
         }
 
         if (m_requestedSettings.m_heightQueryResolution != m_currentSettings.m_heightQueryResolution)
         {
             m_dirtyRegion = AZ::Aabb::CreateNull();
             m_terrainHeightDirty = true;
-            terrainSettingsChanged = true;
-        }
-
-        if (m_requestedSettings.m_systemActive != m_currentSettings.m_systemActive)
-        {
-            m_requestedSettings.m_systemActive ? SystemActivate() : SystemDeactivate();
-
-            // Null dirty region will be interpreted as updating everything
-            m_dirtyRegion = AZ::Aabb::CreateNull();
-            m_terrainHeightDirty = true;
-            terrainSettingsChanged = true;
         }
 
         m_currentSettings = m_requestedSettings;
@@ -420,6 +446,14 @@ void TerrainSystem::OnTick(float /*deltaTime*/, AZ::ScriptTimePoint /*time*/)
     {
         AZStd::shared_lock<AZStd::shared_mutex> lock(m_areaMutex);
 
+        // Block other threads from accessing the surface data bus while we are in GetValue (which may call into the SurfaceData bus).
+        // We lock our surface data mutex *before* checking / setting "isRequestInProgress" so that we prevent race conditions
+        // that create false detection of cyclic dependencies when multiple requests occur on different threads simultaneously.
+        // (One case where this was previously able to occur was in rapid updating of the Preview widget on the
+        // GradientSurfaceDataComponent in the Editor when moving the threshold sliders back and forth rapidly)
+        auto& surfaceDataContext = SurfaceData::SurfaceDataSystemRequestBus::GetOrCreateContext(false);
+        typename SurfaceData::SurfaceDataSystemRequestBus::Context::DispatchLockGuard scopeLock(surfaceDataContext.m_contextMutex);
+
         AZ::Transform transform = AZ::Transform::CreateTranslation(m_currentSettings.m_worldBounds.GetCenter());
 
         uint32_t width = aznumeric_cast<uint32_t>(
@@ -449,7 +483,8 @@ void TerrainSystem::OnTick(float /*deltaTime*/, AZ::ScriptTimePoint /*time*/)
                     }
 
                     AZ::Vector3 outPosition;
-                    const Terrain::TerrainAreaHeightRequests::Sampler sampleFilter = Terrain::TerrainAreaHeightRequests::Sampler::DEFAULT;
+                    const AzFramework::Terrain::TerrainDataRequestBus::Events::Sampler sampleFilter =
+                        AzFramework::Terrain::TerrainDataRequestBus::Events::Sampler::DEFAULT;
 
                     Terrain::TerrainAreaHeightRequestBus::Event(
                         areaId, &Terrain::TerrainAreaHeightRequestBus::Events::GetHeight, inPosition, outPosition, sampleFilter);
@@ -476,6 +511,14 @@ void TerrainSystem::OnTick(float /*deltaTime*/, AZ::ScriptTimePoint /*time*/)
 
     if (terrainSettingsChanged || m_terrainHeightDirty)
     {
+        // Block other threads from accessing the surface data bus while we are in GetValue (which may call into the SurfaceData bus).
+        // We lock our surface data mutex *before* checking / setting "isRequestInProgress" so that we prevent race conditions
+        // that create false detection of cyclic dependencies when multiple requests occur on different threads simultaneously.
+        // (One case where this was previously able to occur was in rapid updating of the Preview widget on the
+        // GradientSurfaceDataComponent in the Editor when moving the threshold sliders back and forth rapidly)
+        auto& surfaceDataContext = SurfaceData::SurfaceDataSystemRequestBus::GetOrCreateContext(false);
+        typename SurfaceData::SurfaceDataSystemRequestBus::Context::DispatchLockGuard scopeLock(surfaceDataContext.m_contextMutex);
+
         AzFramework::Terrain::TerrainDataNotifications::TerrainDataChangedMask changeMask =
             AzFramework::Terrain::TerrainDataNotifications::TerrainDataChangedMask::None;
 
diff --git a/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystem.h b/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystem.h
index a75685fb12..c52165da6b 100644
--- a/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystem.h
+++ b/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystem.h
@@ -42,10 +42,6 @@ namespace Terrain
 
         ///////////////////////////////////////////
         // TerrainSystemServiceRequestBus::Handler Impl
-
-        void SetWorldBounds(const AZ::Aabb& worldBounds) override;
-        void SetHeightQueryResolution(AZ::Vector2 queryResolution) override;
-
         void Activate() override;
         void Deactivate() override;
 
@@ -55,8 +51,12 @@ namespace Terrain
 
         ///////////////////////////////////////////
         // TerrainDataRequestBus::Handler Impl
-        AZ::Vector2 GetTerrainGridResolution() const override;
+        AZ::Vector2 GetTerrainHeightQueryResolution() const override;
+        void SetTerrainHeightQueryResolution(AZ::Vector2 queryResolution) override;
+
         AZ::Aabb GetTerrainAabb() const override;
+        void SetTerrainAabb(const AZ::Aabb& worldBounds) override;
+
 
         //! Returns terrains height in meters at location x,y.
         //! @terrainExistsPtr: Can be nullptr. If != nullptr then, if there's no terrain at location x,y or location x,y is inside a terrain
@@ -94,15 +94,12 @@ namespace Terrain
             float x, float y, Sampler sampleFilter = Sampler::BILINEAR, bool* terrainExistsPtr = nullptr) const override;
 
     private:
-        float GetHeightSynchronous(float x, float y) const;
-        AZ::Vector3 GetNormalSynchronous(float x, float y) const;
+        float GetHeightSynchronous(float x, float y, Sampler sampler, bool* terrainExistsPtr) const;
+        AZ::Vector3 GetNormalSynchronous(float x, float y, Sampler sampler, bool* terrainExistsPtr) const;
 
         // AZ::TickBus::Handler overrides ...
         void OnTick(float deltaTime, AZ::ScriptTimePoint time) override;
 
-        void SystemActivate();
-        void SystemDeactivate();
-
         struct TerrainSystemSettings
         {
             AZ::Aabb m_worldBounds;
diff --git a/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystemBus.h b/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystemBus.h
index cb41ba9957..1ba63a8f84 100644
--- a/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystemBus.h
+++ b/Gems/Terrain/Code/Source/TerrainSystem/TerrainSystemBus.h
@@ -16,6 +16,8 @@
 #include <AzCore/EBus/EBus.h>
 #include <AzCore/Component/ComponentBus.h>
 
+#include <AzFramework/Terrain/TerrainDataRequestBus.h>
+
 namespace Terrain
 {
     /**
@@ -39,9 +41,6 @@ namespace Terrain
         virtual void Activate() = 0;
         virtual void Deactivate() = 0;
 
-        virtual void SetWorldBounds(const AZ::Aabb& worldBounds) = 0;
-        virtual void SetHeightQueryResolution(AZ::Vector2 queryResolution) = 0;
-
         // register an area to override terrain
         virtual void RegisterArea(AZ::EntityId areaId) = 0;
         virtual void UnregisterArea(AZ::EntityId areaId) = 0;
@@ -50,27 +49,6 @@ namespace Terrain
 
     using TerrainSystemServiceRequestBus = AZ::EBus<TerrainSystemServiceRequests>;
 
-    /**
-    * A bus to signal the life times of terrain areas
-    * Note: all the API are meant to be queued events
-    */
-    class TerrainAreaRequests
-        : public AZ::ComponentBus
-    {
-    public:
-        ////////////////////////////////////////////////////////////////////////
-        // EBusTraits
-        using MutexType = AZStd::recursive_mutex;
-        ////////////////////////////////////////////////////////////////////////
-
-        virtual ~TerrainAreaRequests() = default;
-
-        virtual void RegisterArea() = 0;
-        virtual void RefreshArea() = 0;
-
-    };
-
-    using TerrainAreaRequestBus = AZ::EBus<TerrainAreaRequests>;
 
     /**
     * A bus to signal the life times of terrain areas
@@ -87,15 +65,6 @@ namespace Terrain
 
         virtual ~TerrainAreaHeightRequests() = default;
 
-        enum class Sampler
-        {
-            BILINEAR,   // Get the value at the requested location, using terrain sample grid to bilinear filter between sample grid points
-            CLAMP,      // Clamp the input point to the terrain sample grid, then get the exact value
-            EXACT,       // Directly get the value at the location, regardless of terrain sample grid density
-
-            DEFAULT = BILINEAR
-        };
-
         enum SurfacePointDataMask
         {
             POSITION = 0x01,
@@ -107,8 +76,16 @@ namespace Terrain
 
         // Synchronous single input location.  The Vector3 input position versions are defined to ignore the input Z value.
 
-        virtual void GetHeight(const AZ::Vector3& inPosition, AZ::Vector3& outPosition, Sampler sampleFilter = Sampler::DEFAULT) = 0;
-        virtual void GetNormal(const AZ::Vector3& inPosition, AZ::Vector3& outNormal, Sampler sampleFilter = Sampler::DEFAULT) = 0;
+        virtual void GetHeight(
+            const AZ::Vector3& inPosition,
+            AZ::Vector3& outPosition,
+            AzFramework::Terrain::TerrainDataRequests::Sampler sampleFilter =
+                AzFramework::Terrain::TerrainDataRequests::Sampler::DEFAULT) = 0;
+        virtual void GetNormal(
+            const AZ::Vector3& inPosition,
+            AZ::Vector3& outNormal,
+            AzFramework::Terrain::TerrainDataRequests::Sampler sampleFilter =
+                AzFramework::Terrain::TerrainDataRequests::Sampler::DEFAULT) = 0;
     };
 
     using TerrainAreaHeightRequestBus = AZ::EBus<TerrainAreaHeightRequests>;
diff --git a/Gems/Terrain/Code/Tests/LayerSpawnerTests.cpp b/Gems/Terrain/Code/Tests/LayerSpawnerTests.cpp
index 91d6a26f75..f0533322c8 100644
--- a/Gems/Terrain/Code/Tests/LayerSpawnerTests.cpp
+++ b/Gems/Terrain/Code/Tests/LayerSpawnerTests.cpp
@@ -17,6 +17,10 @@
 
 #include <TerrainMocks.h>
 
+using ::testing::NiceMock;
+using ::testing::AtLeast;
+using ::testing::_;
+
 class LayerSpawnerComponentTest
     : public ::testing::Test
 {
@@ -26,7 +30,7 @@ protected:
     AZStd::unique_ptr<AZ::Entity> m_entity;
     Terrain::TerrainLayerSpawnerComponent* m_layerSpawnerComponent;
     UnitTest::MockBoxShapeComponent* m_shapeComponent;
-    AZStd::unique_ptr<UnitTest::MockTerrainSystem> m_terrainSystem;
+    AZStd::unique_ptr<NiceMock<UnitTest::MockTerrainSystemService>> m_terrainSystem;
 
     void SetUp() override
     {
@@ -40,10 +44,8 @@ protected:
 
     void TearDown() override
     {
-        if (m_terrainSystem)
-        {
-            m_terrainSystem->Deactivate();
-        }
+        m_entity.reset();
+        m_terrainSystem.reset();
         m_app.Destroy();
     }
 
@@ -72,16 +74,9 @@ protected:
         ASSERT_TRUE(m_shapeComponent);
     }
 
-    void ResetEntity()
-    {
-        m_entity->Deactivate();
-        m_entity->Reset();
-    }
-
     void CreateMockTerrainSystem()
     {
-        m_terrainSystem = AZStd::make_unique<UnitTest::MockTerrainSystem>();
-        m_terrainSystem->Activate();
+        m_terrainSystem = AZStd::make_unique<NiceMock<UnitTest::MockTerrainSystemService>>();
     }
 };
 
@@ -93,7 +88,7 @@ TEST_F(LayerSpawnerComponentTest, ActivatEntityActivateSuccess)
     m_entity->Activate();
     EXPECT_EQ(m_entity->GetState(), AZ::Entity::State::Active);
      
-    ResetEntity();
+    m_entity->Deactivate();
 }
 
 TEST_F(LayerSpawnerComponentTest, LayerSpawnerDefaultValuesCorrect)
@@ -115,7 +110,7 @@ TEST_F(LayerSpawnerComponentTest, LayerSpawnerDefaultValuesCorrect)
 
     EXPECT_TRUE(useGroundPlane);
 
-    ResetEntity();
+    m_entity->Deactivate();
 }
 
 TEST_F(LayerSpawnerComponentTest, LayerSpawnerConfigValuesCorrect)
@@ -147,7 +142,7 @@ TEST_F(LayerSpawnerComponentTest, LayerSpawnerConfigValuesCorrect)
 
     EXPECT_FALSE(useGroundPlane);
 
-    ResetEntity();
+    m_entity->Deactivate();
 }
 
 TEST_F(LayerSpawnerComponentTest, LayerSpawnerRegisterAreaUpdatesTerrainSystem)
@@ -156,14 +151,14 @@ TEST_F(LayerSpawnerComponentTest, LayerSpawnerRegisterAreaUpdatesTerrainSystem)
 
     CreateMockTerrainSystem();
 
+    // The Activate call should register the area.
+    EXPECT_CALL(*m_terrainSystem, RegisterArea(_)).Times(1);
+
     AddLayerSpawnerAndShapeComponentToEntity();
 
     m_entity->Activate();
 
-    // The Activate call should have registered the area.
-    EXPECT_EQ(1, m_terrainSystem->m_registerAreaCalledCount);
-
-    ResetEntity();
+    m_entity->Deactivate();
 }
 
 TEST_F(LayerSpawnerComponentTest, LayerSpawnerUnregisterAreaUpdatesTerrainSystem)
@@ -172,16 +167,14 @@ TEST_F(LayerSpawnerComponentTest, LayerSpawnerUnregisterAreaUpdatesTerrainSystem
 
     CreateMockTerrainSystem();
 
+    // The Deactivate call should unregister the area.
+    EXPECT_CALL(*m_terrainSystem, UnregisterArea(_)).Times(1);
+
     AddLayerSpawnerAndShapeComponentToEntity();
 
     m_entity->Activate();
 
-    m_layerSpawnerComponent->Deactivate();
-
-    // The Deactivate call should have unregistered the area.
-    EXPECT_EQ(1, m_terrainSystem->m_unregisterAreaCalledCount);
-
-    ResetEntity();
+    m_entity->Deactivate();
 }
 
 TEST_F(LayerSpawnerComponentTest, LayerSpawnerTransformChangedUpdatesTerrainSystem)
@@ -190,6 +183,9 @@ TEST_F(LayerSpawnerComponentTest, LayerSpawnerTransformChangedUpdatesTerrainSyst
 
     CreateMockTerrainSystem();
 
+    // The TransformChanged call should refresh the area.
+    EXPECT_CALL(*m_terrainSystem, RefreshArea(_)).Times(1);
+
     AddLayerSpawnerAndShapeComponentToEntity();
 
     m_entity->Activate();
@@ -197,9 +193,7 @@ TEST_F(LayerSpawnerComponentTest, LayerSpawnerTransformChangedUpdatesTerrainSyst
     AZ::TransformNotificationBus::Event(
         m_entity->GetId(), &AZ::TransformNotificationBus::Events::OnTransformChanged, AZ::Transform(), AZ::Transform());
 
-    EXPECT_EQ(1, m_terrainSystem->m_refreshAreaCalledCount);
-
-    ResetEntity();
+    m_entity->Deactivate();
 }
 
 TEST_F(LayerSpawnerComponentTest, LayerSpawnerShapeChangedUpdatesTerrainSystem)
@@ -208,6 +202,9 @@ TEST_F(LayerSpawnerComponentTest, LayerSpawnerShapeChangedUpdatesTerrainSystem)
 
     CreateMockTerrainSystem();
 
+    // The ShapeChanged call should refresh the area.
+    EXPECT_CALL(*m_terrainSystem, RefreshArea(_)).Times(1);
+
     AddLayerSpawnerAndShapeComponentToEntity();
 
     m_entity->Activate();
@@ -216,7 +213,5 @@ TEST_F(LayerSpawnerComponentTest, LayerSpawnerShapeChangedUpdatesTerrainSystem)
         m_entity->GetId(), &LmbrCentral::ShapeComponentNotificationsBus::Events::OnShapeChanged,
         LmbrCentral::ShapeComponentNotifications::ShapeChangeReasons::ShapeChanged);
 
-    EXPECT_EQ(1, m_terrainSystem->m_refreshAreaCalledCount);
-
-    ResetEntity();
+    m_entity->Deactivate();
 }
diff --git a/Gems/Terrain/Code/Tests/TerrainMocks.h b/Gems/Terrain/Code/Tests/TerrainMocks.h
index 674104e26b..03a2eccf1d 100644
--- a/Gems/Terrain/Code/Tests/TerrainMocks.h
+++ b/Gems/Terrain/Code/Tests/TerrainMocks.h
@@ -7,7 +7,10 @@
  */
 #pragma once
 
+#include <gmock/gmock.h>
+
 #include <AzCore/Component/ComponentApplication.h>
+#include <AzFramework/Terrain/TerrainDataRequestBus.h>
 #include <LmbrCentral/Shape/ShapeComponentBus.h>
 
 namespace UnitTest
@@ -62,44 +65,45 @@ namespace UnitTest
         }
     };
 
-    class MockTerrainSystem : private Terrain::TerrainSystemServiceRequestBus::Handler
+    class MockTerrainSystemService : private Terrain::TerrainSystemServiceRequestBus::Handler
     {
     public:
-        void Activate() override
+        MockTerrainSystemService()
         {
             Terrain::TerrainSystemServiceRequestBus::Handler::BusConnect();
         }
 
-        void Deactivate() override
+        ~MockTerrainSystemService()
         {
             Terrain::TerrainSystemServiceRequestBus::Handler::BusDisconnect();
         }
 
-        void SetWorldBounds([[maybe_unused]] const AZ::Aabb& worldBounds) override
-        {
-        }
-
-        void SetHeightQueryResolution([[maybe_unused]] AZ::Vector2 queryResolution) override
-        {
-        }
+        MOCK_METHOD0(Activate, void());
+        MOCK_METHOD0(Deactivate, void());
 
-        void RegisterArea([[maybe_unused]] AZ::EntityId areaId) override
-        {
-            m_registerAreaCalledCount++;
-        }
+        MOCK_METHOD1(RegisterArea, void(AZ::EntityId areaId));
+        MOCK_METHOD1(UnregisterArea, void(AZ::EntityId areaId));
+        MOCK_METHOD1(RefreshArea, void(AZ::EntityId areaId));
+    };
 
-        void UnregisterArea([[maybe_unused]] AZ::EntityId areaId) override
+    class MockTerrainDataNotificationListener : public AzFramework::Terrain::TerrainDataNotificationBus::Handler
+    {
+    public:
+        MockTerrainDataNotificationListener()
         {
-            m_unregisterAreaCalledCount++;
+            AzFramework::Terrain::TerrainDataNotificationBus::Handler::BusConnect();
         }
 
-        void RefreshArea([[maybe_unused]] AZ::EntityId areaId) override
+        ~MockTerrainDataNotificationListener()
         {
-            m_refreshAreaCalledCount++;
+            AzFramework::Terrain::TerrainDataNotificationBus::Handler::BusDisconnect();
         }
 
-        int m_registerAreaCalledCount = 0;
-        int m_refreshAreaCalledCount = 0;
-        int m_unregisterAreaCalledCount = 0;
+        MOCK_METHOD0(OnTerrainDataCreateBegin, void());
+        MOCK_METHOD0(OnTerrainDataCreateEnd, void());
+        MOCK_METHOD0(OnTerrainDataDestroyBegin, void());
+        MOCK_METHOD0(OnTerrainDataDestroyEnd, void());
+        MOCK_METHOD2(OnTerrainDataChanged, void(const AZ::Aabb& dirtyRegion, TerrainDataChangedMask dataChangedMask));
     };
+
 }
diff --git a/Gems/Terrain/Code/Tests/TerrainSystemTest.cpp b/Gems/Terrain/Code/Tests/TerrainSystemTest.cpp
new file mode 100644
index 0000000000..3e557c66a6
--- /dev/null
+++ b/Gems/Terrain/Code/Tests/TerrainSystemTest.cpp
@@ -0,0 +1,92 @@
+/*
+ * Copyright (c) Contributors to the Open 3D Engine Project.
+ * For complete copyright and license terms please see the LICENSE at the root of this distribution.
+ *
+ * SPDX-License-Identifier: Apache-2.0 OR MIT
+ *
+ */
+
+#include <AzCore/Component/ComponentApplication.h>
+#include <AzCore/Memory/MemoryComponent.h>
+
+#include <TerrainSystem/TerrainSystem.h>
+
+#include <AzTest/AzTest.h>
+#include <TerrainMocks.h>
+
+using ::testing::AtLeast;
+using ::testing::NiceMock;
+
+class TerrainSystemTest : public ::testing::Test
+{
+protected:
+    AZ::ComponentApplication m_app;
+
+    AZStd::unique_ptr<AZ::Entity> m_entity;
+    AZStd::unique_ptr<Terrain::TerrainSystem> m_terrainSystem;
+
+    void SetUp() override
+    {
+        AZ::ComponentApplication::Descriptor appDesc;
+        appDesc.m_memoryBlocksByteSize = 20 * 1024 * 1024;
+        appDesc.m_recordingMode = AZ::Debug::AllocationRecords::RECORD_NO_RECORDS;
+        appDesc.m_stackRecordLevels = 20;
+
+        m_app.Create(appDesc);
+    }
+
+    void TearDown() override
+    {
+        m_terrainSystem.reset();
+        m_app.Destroy();
+    }
+
+    void CreateEntity()
+    {
+        m_entity = AZStd::make_unique<AZ::Entity>();
+        m_entity->Init();
+
+        ASSERT_TRUE(m_entity);
+    }
+
+    void ResetEntity()
+    {
+        m_entity->Deactivate();
+        m_entity->Reset();
+    }
+};
+
+TEST_F(TerrainSystemTest, TrivialCreateDestroy)
+{
+    m_terrainSystem = AZStd::make_unique<Terrain::TerrainSystem>();
+}
+
+TEST_F(TerrainSystemTest, TrivialActivateDeactivate)
+{
+    m_terrainSystem = AZStd::make_unique<Terrain::TerrainSystem>();
+    m_terrainSystem->Activate();
+    m_terrainSystem->Deactivate();
+}
+
+TEST_F(TerrainSystemTest, CreateEventsCalledOnActivation)
+{
+    NiceMock<UnitTest::MockTerrainDataNotificationListener> mockTerrainListener;
+    EXPECT_CALL(mockTerrainListener, OnTerrainDataCreateBegin()).Times(AtLeast(1));
+    EXPECT_CALL(mockTerrainListener, OnTerrainDataCreateEnd()).Times(AtLeast(1));
+
+    m_terrainSystem = AZStd::make_unique<Terrain::TerrainSystem>();
+    m_terrainSystem->Activate();
+}
+
+TEST_F(TerrainSystemTest, DestroyEventsCalledOnDeactivation)
+{
+    NiceMock<UnitTest::MockTerrainDataNotificationListener> mockTerrainListener;
+    EXPECT_CALL(mockTerrainListener, OnTerrainDataDestroyBegin()).Times(AtLeast(1));
+    EXPECT_CALL(mockTerrainListener, OnTerrainDataDestroyEnd()).Times(AtLeast(1));
+
+    m_terrainSystem = AZStd::make_unique<Terrain::TerrainSystem>();
+    m_terrainSystem->Activate();
+    m_terrainSystem->Deactivate();
+}
+
+
diff --git a/Gems/Terrain/Code/Tests/TerrainTest.cpp b/Gems/Terrain/Code/Tests/TerrainTest.cpp
index 9b47c91a31..40217ff9bc 100644
--- a/Gems/Terrain/Code/Tests/TerrainTest.cpp
+++ b/Gems/Terrain/Code/Tests/TerrainTest.cpp
@@ -8,24 +8,4 @@
 
 #include <AzTest/AzTest.h>
 
-class TerrainTest
-    : public ::testing::Test
-{
-protected:
-    void SetUp() override
-    {
-
-    }
-
-    void TearDown() override
-    {
-
-    }
-};
-
-TEST_F(TerrainTest, SanityTest)
-{
-    ASSERT_TRUE(true);
-}
-
 AZ_UNIT_TEST_HOOK(DEFAULT_UNIT_TEST_ENV);
diff --git a/Gems/Terrain/Code/terrain_tests_files.cmake b/Gems/Terrain/Code/terrain_tests_files.cmake
index b44f143f3b..6d1cf97fd9 100644
--- a/Gems/Terrain/Code/terrain_tests_files.cmake
+++ b/Gems/Terrain/Code/terrain_tests_files.cmake
@@ -9,5 +9,6 @@
 set(FILES
     Tests/TerrainMocks.h
     Tests/TerrainTest.cpp
+    Tests/TerrainSystemTest.cpp
     Tests/LayerSpawnerTests.cpp
 )