diff --git a/changelogs/fragments/587-ec2_instance-default-instance-type-launch-template.yml b/changelogs/fragments/587-ec2_instance-default-instance-type-launch-template.yml
new file mode 100644
index 00000000000..93545736656
--- /dev/null
+++ b/changelogs/fragments/587-ec2_instance-default-instance-type-launch-template.yml
@@ -0,0 +1,6 @@
+bugfixes:
+  - ec2_instance - Add a condition to handle default ```instance_type``` value
+    for fix breaking on instance creation with launch template (https://github.com/ansible-collections/amazon.aws/pull/587).
+deprecated_features:
+  - ec2_instance - The default value for ```instance_type``` has been deprecated,
+    in the future release you must set an instance_type or a launch_template".
diff --git a/plugins/modules/ec2_instance.py b/plugins/modules/ec2_instance.py
index 9eb99a3698a..4c61bfc64e0 100644
--- a/plugins/modules/ec2_instance.py
+++ b/plugins/modules/ec2_instance.py
@@ -54,7 +54,7 @@
     description:
       - Instance type to use for the instance, see U(https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/instance-types.html)
         Only required when instance is not already present.
-    default: t2.micro
+      - If not specified, t2.micro will be used.
     type: str
   count:
     description:
@@ -1232,7 +1232,7 @@ def build_top_level_options(params):
 
     if params.get('launch_template') is not None:
         spec['LaunchTemplate'] = {}
-        if not params.get('launch_template').get('id') or params.get('launch_template').get('name'):
+        if not params.get('launch_template').get('id') and not params.get('launch_template').get('name'):
             module.fail_json(msg="Could not create instance with launch template. Either launch_template.name or launch_template.id parameters are required")
 
         if params.get('launch_template').get('id') is not None:
@@ -1305,7 +1305,12 @@ def build_run_instance_spec(params):
         spec['MaxCount'] = module.params.get('count')
         spec['MinCount'] = module.params.get('count')
 
-    spec['InstanceType'] = params['instance_type']
+    if not module.params.get('launch_template'):
+        spec['InstanceType'] = params['instance_type'] if module.params.get('instance_type') else 't2.micro'
+
+    if module.params.get('launch_template') and module.params.get('instance_type'):
+        spec['InstanceType'] = params['instance_type']
+
     return spec
 
 
@@ -1921,7 +1926,7 @@ def main():
         exact_count=dict(type='int'),
         image=dict(type='dict'),
         image_id=dict(type='str'),
-        instance_type=dict(default='t2.micro', type='str'),
+        instance_type=dict(type='str'),
         user_data=dict(type='str'),
         tower_callback=dict(type='dict'),
         ebs_optimized=dict(type='bool'),
@@ -1967,6 +1972,10 @@ def main():
         ],
         supports_check_mode=True
     )
+
+    if not module.params.get('instance_type') and not module.params.get('launch_template'):
+        module.deprecate("Default value instance_type has been deprecated, in the future you must set an instance_type or a launch_template",
+                         date='2023-01-01', collection_name='amazon.aws')
     result = dict()
 
     if module.params.get('network'):
diff --git a/tests/sanity/ignore-2.9.txt b/tests/sanity/ignore-2.9.txt
index d228fed498b..9950c296ab7 100644
--- a/tests/sanity/ignore-2.9.txt
+++ b/tests/sanity/ignore-2.9.txt
@@ -9,3 +9,4 @@ plugins/modules/ec2_vpc_dhcp_option.py pylint:ansible-deprecated-no-version  # W
 plugins/modules/ec2_vpc_igw_info.py pylint:ansible-deprecated-no-version  # We use dates for deprecations, Ansible 2.9 only supports this for compatability
 plugins/modules/ec2_vpc_endpoint.py pylint:ansible-deprecated-no-version
 plugins/modules/ec2_vpc_endpoint_info.py pylint:ansible-deprecated-no-version
+plugins/modules/ec2_instance.py pylint:ansible-deprecated-no-version  # We use dates for deprecations, Ansible 2.9 only supports this for compatability