diff --git a/AutomatedTesting/Gem/PythonTests/largeworlds/gradient_signal/EditorScripts/ImageGradient_ModifiesSurfaces.py b/AutomatedTesting/Gem/PythonTests/largeworlds/gradient_signal/EditorScripts/ImageGradient_ModifiesSurfaces.py
new file mode 100644
index 0000000000..23c144a3e2
--- /dev/null
+++ b/AutomatedTesting/Gem/PythonTests/largeworlds/gradient_signal/EditorScripts/ImageGradient_ModifiesSurfaces.py
@@ -0,0 +1,114 @@
+"""
+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
+"""
+
+
+class Tests:
+    image_gradient_entity_created = (
+        "Image Gradient entity created",
+        "Failed to create Image Gradient entity",
+    )
+    image_gradient_assigned = (
+        "Successfully assigned image gradient asset",
+        "Failed to assign image gradient asset"
+    )
+    instance_validation = (
+        "Found the expected number of instances",
+        "Found an unexpected number of instances"
+    )
+
+
+def ImageGradient_ModifiesSurfaces():
+    """
+    Summary:
+    This test verifies that an Image Gradient + Gradient Surface Tag Emitter properly modifies surfaces.
+
+    Expected Behavior:
+    Vegetation is used to verify expected surface modification.
+
+    Test Steps:
+    1) Open a level
+    2) Create an entity with Image Gradient, Gradient Transform Modifier, Shape Reference, and Gradient Surface Tag
+    Emitter components with an Image asset assigned.
+    3) Create a Vegetation Layer Spawner setup to plant on the generated surface.
+    4) Update all surface tag references
+    5) Validate expected instances planted on the modified surface.
+
+    :return: None
+    """
+
+    import os
+
+    import azlmbr.bus as bus
+    import azlmbr.entity as EntityId
+    import azlmbr.editor as editor
+    import azlmbr.math as math
+    import azlmbr.surface_data as surface_data
+
+    import editor_python_test_tools.hydra_editor_utils as hydra
+    from editor_python_test_tools.asset_utils import Asset
+    from editor_python_test_tools.editor_entity_utils import EditorEntity
+    from largeworlds.large_worlds_utils import editor_dynveg_test_helper as dynveg
+    from editor_python_test_tools.utils import Report
+    from editor_python_test_tools.utils import TestHelper as helper
+
+    # 1) Open an existing simple level
+    hydra.open_base_level()
+
+    # 2) Create an entity with required Image Gradient + Surface Tag Emitter components and assign image asset
+    components_to_add = ["Image Gradient", "Gradient Transform Modifier", "Shape Reference",
+                         "Gradient Surface Tag Emitter"]
+    entity_position = math.Vector3(0.0, 0.0, 0.0)
+    new_entity_id = editor.ToolsApplicationRequestBus(
+        bus.Broadcast, "CreateNewEntityAtPosition", entity_position, EntityId.EntityId()
+    )
+    Report.critical_result(Tests.image_gradient_entity_created, new_entity_id.IsValid())
+    image_gradient_entity = EditorEntity.create_editor_entity_at(entity_position, "Image Gradient")
+    image_gradient_entity.add_components(components_to_add)
+    test_img_gradient_path = os.path.join("Assets", "ImageGradients", "image_grad_test_gsi.png.streamingimage")
+    asset = Asset.find_asset_by_path(test_img_gradient_path)
+    image_gradient_entity.components[0].set_component_property_value("Configuration|Image Asset", asset.id)
+    success = image_gradient_entity.components[0].get_component_property_value("Configuration|Image Asset") == asset.id
+    Report.result(Tests.image_gradient_assigned, success)
+
+    # 3) Create vegetation and planting surface entities, and assign the Image Gradient entity's Shape Reference
+
+    # Create vegetation entity
+    purple_flower_prefab_path = os.path.join("assets", "prefabs", "PurpleFlower.spawnable")
+    spawner_entity = dynveg.create_prefab_vegetation_area("Instance Spawner", entity_position, 50.0, 50.0, 10.0,
+                                                          purple_flower_prefab_path)
+    spawner_entity.add_component("Vegetation Surface Mask Filter")
+
+    # Create surface entity
+    dynveg.create_surface_entity("Box Shape", entity_position, 50.0, 50.0, 1.0)
+
+    # Assign Image Gradient entity's Shape Reference
+    image_gradient_entity.components[2].set_component_property_value("Configuration|Shape Entity Id", spawner_entity.id)
+
+    # 4) Assign surface tags to the required components
+    tag_list = [surface_data.SurfaceTag("terrain")]
+
+    # Set the Veg Spawner entity's Surface Tag Mask Filter component to include the "terrain" tag
+    hydra.get_set_test(spawner_entity, 3, "Configuration|Inclusion|Surface Tags", tag_list)
+
+    # Set the Image Gradient entity's Gradient Surface Tag Emitter component to modify the "terrain" tag
+    # NOTE: This requires a disable/re-enable of the component to force a refresh as assigning a tag via script does not
+    grad_surf_tag_emitter_component = image_gradient_entity.components[3]
+    grad_surf_tag_emitter_component.add_container_item("Configuration|Extended Tags", 0, tag_list[0])
+    grad_surf_tag_emitter_component.set_enabled(False)
+    grad_surf_tag_emitter_component.set_enabled(True)
+
+    # 5) Validate the expected number of vegetation instances. Instances should only spawn on the modified surface
+    num_expected_instances = 168
+    success = helper.wait_for_condition(lambda: dynveg.validate_instance_count_in_entity_shape(
+        spawner_entity.id, num_expected_instances), 5.0)
+    Report.result(Tests.instance_validation, success)
+
+
+if __name__ == "__main__":
+
+    from editor_python_test_tools.utils import Report
+    Report.start_test(ImageGradient_ModifiesSurfaces)
diff --git a/AutomatedTesting/Gem/PythonTests/largeworlds/gradient_signal/TestSuite_Periodic.py b/AutomatedTesting/Gem/PythonTests/largeworlds/gradient_signal/TestSuite_Periodic.py
index d4199c31f6..7482d2b04a 100644
--- a/AutomatedTesting/Gem/PythonTests/largeworlds/gradient_signal/TestSuite_Periodic.py
+++ b/AutomatedTesting/Gem/PythonTests/largeworlds/gradient_signal/TestSuite_Periodic.py
@@ -48,6 +48,9 @@ class TestAutomation(EditorTestSuite):
     class test_GradientTransform_RequiresShape(EditorSharedTest):
         from .EditorScripts import GradientTransform_RequiresShape as test_module
 
+    class test_ImageGradient_ModifiesSurfaces(EditorSharedTest):
+        from .EditorScripts import ImageGradient_ModifiesSurfaces as test_module
+
     class test_ImageGradient_ProcessedImageAssignedSuccessfully(EditorSharedTest):
         from .EditorScripts import ImageGradient_ProcessedImageAssignedSuccessfully as test_module