diff --git a/Jenkinsfile b/Jenkinsfile
index bfcdf24f0cf..211882d16f4 100644
--- a/Jenkinsfile
+++ b/Jenkinsfile
@@ -43,7 +43,7 @@ def quay_creds = [
   )
 ]
 
-def default_builder_image = 'quay.io/coreos/tectonic-builder:v1.35'
+def default_builder_image = 'quay.io/coreos/tectonic-builder:v1.36'
 def tectonic_smoke_test_env_image = 'quay.io/coreos/tectonic-smoke-test-env:v2.0'
 
 pipeline {
diff --git a/images/tectonic-builder/Dockerfile b/images/tectonic-builder/Dockerfile
index f33507d5494..98cab673b9e 100644
--- a/images/tectonic-builder/Dockerfile
+++ b/images/tectonic-builder/Dockerfile
@@ -4,10 +4,16 @@
 # Node install inspired by: https://github.com/dockerfile/nodejs/blob/master/Dockerfile
 #
 # Update the builder image manually by running:
+# (See README.md/##Upstream-and-CoreOS-Terraform)
 #
-# docker build -f builder/Dockerfile .
-# docker tag <resulting-image-id> quay.io/coreos/tectonic-builder:<next-semver>
+# docker build -t quay.io/coreos/tectonic-builder:<next-semver> -f images/builder/Dockerfile .
 # docker push quay.io/coreos/tectonic-builder:<next-semver>
+#
+# docker build \
+# --build-arg TERRAFORM_URL=<upstream terraform download url> \
+# -t quay.io/coreos/tectonic-builder:<next-semver>-upstream-terraform \
+# -f images/builder/Dockerfile .
+# docker push quay.io/coreos/tectonic-builder:<next-semver>-upstream-terraform
 ###
 
 FROM golang:1.8.3-stretch
@@ -46,7 +52,10 @@ RUN apt-get update && \
     openvpn xvfb xauth
 
 # Install Terraform
-RUN curl -L https://github.com/coreos/terraform/releases/download/${TERRAFORM_VERSION}/linux_amd64.zip | funzip > /usr/local/bin/terraform && chmod +x /usr/local/bin/terraform
+# TERRAFORM_URL enables us to build the upstream-terraform Tectonic builder
+# image (See README.md/##Upstream-and-CoreOS-Terraform)
+ARG TERRAFORM_URL=https://github.com/coreos/terraform/releases/download/${TERRAFORM_VERSION}/linux_amd64.zip
+RUN curl -L ${TERRAFORM_URL} | funzip > /usr/local/bin/terraform && chmod +x /usr/local/bin/terraform
 
 # Install NodeJS
 RUN cd /tmp && \
diff --git a/images/tectonic-builder/README.md b/images/tectonic-builder/README.md
index 9ebd97d29f8..c10d2b0237b 100644
--- a/images/tectonic-builder/README.md
+++ b/images/tectonic-builder/README.md
@@ -5,4 +5,20 @@
 This container image contains the environment required to build and test the
 [Tectonic Installer](../installer) and aims at facilitating the implementation
 of CI/CD pipelines. More particularly, this image is used in several Jenkins
-jobs today for testing purposes.
\ No newline at end of file
+jobs today for testing purposes.
+
+## Upstream and CoreOS Terraform
+
+The Tectonic CI is currently using a custom Terraform version for the default
+pipeline (See https://github.com/coreos/tectonic-installer/pull/1247). As end
+users of Tectonic installer use upstream Terraform we need to test with upstream
+Terraform as well. We are building and publishing the Tectonic builder image
+both with CoreOS Terraform as well as upstream Terraform. This is done via
+docker `--build-arg` `TERRAFORM_URL`. CoreOS Terraform is used for normal PR and
+branch tests, upstream Terraform is used once per day on master.
+
+Example:
+- CoreOS Terraform (default):
+`docker build -t quay.io/coreos/tectonic-builder:v1.33 -f images/tectonic-builder/Dockerfile .`
+- Upstream Terraform:
+`docker build -t quay.io/coreos/tectonic-builder:v1.33-upstream-terraform --build-arg TERRAFORM_URL=https://releases.hashicorp.com/terraform/0.9.11/terraform_0.9.11_linux_amd64.zip -f images/tectonic-builder/Dockerfile .`
diff --git a/release.groovy b/release.groovy
index 382d472c9fc..d5d1a4c792e 100644
--- a/release.groovy
+++ b/release.groovy
@@ -20,7 +20,7 @@ def creds = [
   ]
 ]
 
-def builder_image = 'quay.io/coreos/tectonic-builder:v1.35'
+def builder_image = 'quay.io/coreos/tectonic-builder:v1.36'
 
 pipeline {
   agent none
diff --git a/tests/conformance/conformance.sh b/tests/conformance/conformance.sh
index a055da4e97b..485a63bb779 100755
--- a/tests/conformance/conformance.sh
+++ b/tests/conformance/conformance.sh
@@ -7,7 +7,7 @@ export PLATFORM=aws
 export CLUSTER="tf-${PLATFORM}-${BUILD_ID}"
 export TF_VAR_tectonic_pull_secret_path=${TF_VAR_tectonic_pull_secret_path}
 export TF_VAR_tectonic_license_path=${TF_VAR_tectonic_license_path}
-export TECTONIC_BUILDER=quay.io/coreos/tectonic-builder:v1.35
+export TECTONIC_BUILDER=quay.io/coreos/tectonic-builder:v1.36
 export KUBE_CONFORMANCE=quay.io/coreos/kube-conformance:v1.7.1_coreos.0
 
 # Create an env var file
diff --git a/upstream-terraform-trigger.groovy b/upstream-terraform-trigger.groovy
new file mode 100644
index 00000000000..1c16b207493
--- /dev/null
+++ b/upstream-terraform-trigger.groovy
@@ -0,0 +1,9 @@
+node {
+    build job: 'tectonic-installer/master',
+    parameters: [
+        string(
+            name: 'builder_image',
+            value: 'quay.io/coreos/tectonic-builder:v1.36-upstream-terraform'
+        )
+    ]
+}