diff --git a/cli/start_test.go b/cli/start_test.go
index 29fa4cdb46e5f..24a91e6e4e192 100644
--- a/cli/start_test.go
+++ b/cli/start_test.go
@@ -359,7 +359,7 @@ func TestStartAutoUpdate(t *testing.T) {
 			coderdtest.AwaitWorkspaceBuildJobCompleted(t, client, workspace.LatestBuild.ID)
 
 			if c.Cmd == "start" {
-				coderdtest.MustTransitionWorkspace(t, member, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+				coderdtest.MustTransitionWorkspace(t, member, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 			}
 			version2 := coderdtest.CreateTemplateVersion(t, client, owner.OrganizationID, prepareEchoResponses(stringRichParameters), func(ctvr *codersdk.CreateTemplateVersionRequest) {
 				ctvr.TemplateID = template.ID
diff --git a/cli/stop.go b/cli/stop.go
index 218c42061db10..ef4813ff0a1a0 100644
--- a/cli/stop.go
+++ b/cli/stop.go
@@ -37,32 +37,11 @@ func (r *RootCmd) stop() *serpent.Command {
 			if err != nil {
 				return err
 			}
-			if workspace.LatestBuild.Job.Status == codersdk.ProvisionerJobPending {
-				// cliutil.WarnMatchedProvisioners also checks if the job is pending
-				// but we still want to avoid users spamming multiple builds that will
-				// not be picked up.
-				cliui.Warn(inv.Stderr, "The workspace is already stopping!")
-				cliutil.WarnMatchedProvisioners(inv.Stderr, workspace.LatestBuild.MatchedProvisioners, workspace.LatestBuild.Job)
-				if _, err := cliui.Prompt(inv, cliui.PromptOptions{
-					Text:      "Enqueue another stop?",
-					IsConfirm: true,
-					Default:   cliui.ConfirmNo,
-				}); err != nil {
-					return err
-				}
-			}
 
-			wbr := codersdk.CreateWorkspaceBuildRequest{
-				Transition: codersdk.WorkspaceTransitionStop,
-			}
-			if bflags.provisionerLogDebug {
-				wbr.LogLevel = codersdk.ProvisionerLogLevelDebug
-			}
-			build, err := client.CreateWorkspaceBuild(inv.Context(), workspace.ID, wbr)
+			build, err := stopWorkspace(inv, client, workspace, bflags)
 			if err != nil {
 				return err
 			}
-			cliutil.WarnMatchedProvisioners(inv.Stderr, build.MatchedProvisioners, build.Job)
 
 			err = cliui.WorkspaceBuild(inv.Context(), inv.Stdout, client, build.ID)
 			if err != nil {
@@ -71,8 +50,8 @@ func (r *RootCmd) stop() *serpent.Command {
 
 			_, _ = fmt.Fprintf(
 				inv.Stdout,
-				"\nThe %s workspace has been stopped at %s!\n", cliui.Keyword(workspace.Name),
-
+				"\nThe %s workspace has been stopped at %s!\n",
+				cliui.Keyword(workspace.Name),
 				cliui.Timestamp(time.Now()),
 			)
 			return nil
@@ -82,3 +61,27 @@ func (r *RootCmd) stop() *serpent.Command {
 
 	return cmd
 }
+
+func stopWorkspace(inv *serpent.Invocation, client *codersdk.Client, workspace codersdk.Workspace, bflags buildFlags) (codersdk.WorkspaceBuild, error) {
+	if workspace.LatestBuild.Job.Status == codersdk.ProvisionerJobPending {
+		// cliutil.WarnMatchedProvisioners also checks if the job is pending
+		// but we still want to avoid users spamming multiple builds that will
+		// not be picked up.
+		cliui.Warn(inv.Stderr, "The workspace is already stopping!")
+		cliutil.WarnMatchedProvisioners(inv.Stderr, workspace.LatestBuild.MatchedProvisioners, workspace.LatestBuild.Job)
+		if _, err := cliui.Prompt(inv, cliui.PromptOptions{
+			Text:      "Enqueue another stop?",
+			IsConfirm: true,
+			Default:   cliui.ConfirmNo,
+		}); err != nil {
+			return codersdk.WorkspaceBuild{}, err
+		}
+	}
+	wbr := codersdk.CreateWorkspaceBuildRequest{
+		Transition: codersdk.WorkspaceTransitionStop,
+	}
+	if bflags.provisionerLogDebug {
+		wbr.LogLevel = codersdk.ProvisionerLogLevelDebug
+	}
+	return client.CreateWorkspaceBuild(inv.Context(), workspace.ID, wbr)
+}
diff --git a/cli/testdata/coder_--help.golden b/cli/testdata/coder_--help.golden
index 1b2dbcf25056b..09dd4c3bce3a5 100644
--- a/cli/testdata/coder_--help.golden
+++ b/cli/testdata/coder_--help.golden
@@ -57,7 +57,8 @@ SUBCOMMANDS:
     tokens            Manage personal access tokens
     unfavorite        Remove a workspace from your favorites
     update            Will update and start a given workspace if it is out of
-                      date
+                      date. If the workspace is already running, it will be
+                      stopped first.
     users             Manage users
     version           Show coder version
     whoami            Fetch authenticated user info for Coder deployment
diff --git a/cli/testdata/coder_update_--help.golden b/cli/testdata/coder_update_--help.golden
index 501447add29a7..b7bd7c48ed1e0 100644
--- a/cli/testdata/coder_update_--help.golden
+++ b/cli/testdata/coder_update_--help.golden
@@ -3,7 +3,8 @@ coder v0.0.0-devel
 USAGE:
   coder update [flags] <workspace>
 
-  Will update and start a given workspace if it is out of date
+  Will update and start a given workspace if it is out of date. If the workspace
+  is already running, it will be stopped first.
 
   Use --always-prompt to change the parameter values of the workspace.
 
diff --git a/cli/update.go b/cli/update.go
index cf73992ea7ba4..21f090508d193 100644
--- a/cli/update.go
+++ b/cli/update.go
@@ -5,6 +5,7 @@ import (
 
 	"golang.org/x/xerrors"
 
+	"github.com/coder/coder/v2/cli/cliui"
 	"github.com/coder/coder/v2/codersdk"
 	"github.com/coder/serpent"
 )
@@ -18,7 +19,7 @@ func (r *RootCmd) update() *serpent.Command {
 	cmd := &serpent.Command{
 		Annotations: workspaceCommand,
 		Use:         "update <workspace>",
-		Short:       "Will update and start a given workspace if it is out of date",
+		Short:       "Will update and start a given workspace if it is out of date. If the workspace is already running, it will be stopped first.",
 		Long:        "Use --always-prompt to change the parameter values of the workspace.",
 		Middleware: serpent.Chain(
 			serpent.RequireNArgs(1),
@@ -34,6 +35,20 @@ func (r *RootCmd) update() *serpent.Command {
 				return nil
 			}
 
+			// #17840: If the workspace is already running, we will stop it before
+			// updating. Simply performing a new start transition may not work if the
+			// template specifies ignore_changes.
+			if workspace.LatestBuild.Transition == codersdk.WorkspaceTransitionStart {
+				build, err := stopWorkspace(inv, client, workspace, bflags)
+				if err != nil {
+					return xerrors.Errorf("stop workspace: %w", err)
+				}
+				// Wait for the stop to complete.
+				if err := cliui.WorkspaceBuild(inv.Context(), inv.Stdout, client, build.ID); err != nil {
+					return xerrors.Errorf("wait for stop: %w", err)
+				}
+			}
+
 			build, err := startWorkspace(inv, client, workspace, parameterFlags, bflags, WorkspaceUpdate)
 			if err != nil {
 				return xerrors.Errorf("start workspace: %w", err)
diff --git a/cli/update_test.go b/cli/update_test.go
index 367a8196aa499..7a7480353c01d 100644
--- a/cli/update_test.go
+++ b/cli/update_test.go
@@ -34,28 +34,87 @@ func TestUpdate(t *testing.T) {
 	t.Run("OK", func(t *testing.T) {
 		t.Parallel()
 
+		// Given: a workspace exists on the latest template version.
 		client := coderdtest.New(t, &coderdtest.Options{IncludeProvisionerDaemon: true})
 		owner := coderdtest.CreateFirstUser(t, client)
-		member, memberUser := coderdtest.CreateAnotherUser(t, client, owner.OrganizationID)
+		member, _ := coderdtest.CreateAnotherUser(t, client, owner.OrganizationID)
 		version1 := coderdtest.CreateTemplateVersion(t, client, owner.OrganizationID, nil)
 
 		coderdtest.AwaitTemplateVersionJobCompleted(t, client, version1.ID)
 		template := coderdtest.CreateTemplate(t, client, owner.OrganizationID, version1.ID)
 
-		inv, root := clitest.New(t, "create",
-			"my-workspace",
-			"--template", template.Name,
-			"-y",
-		)
+		ws := coderdtest.CreateWorkspace(t, member, template.ID, func(cwr *codersdk.CreateWorkspaceRequest) {
+			cwr.Name = "my-workspace"
+		})
+		require.False(t, ws.Outdated, "newly created workspace with active template version must not be outdated")
+
+		// Given: the template version is updated
+		version2 := coderdtest.UpdateTemplateVersion(t, client, owner.OrganizationID, &echo.Responses{
+			Parse:          echo.ParseComplete,
+			ProvisionApply: echo.ApplyComplete,
+			ProvisionPlan:  echo.PlanComplete,
+		}, template.ID)
+		_ = coderdtest.AwaitTemplateVersionJobCompleted(t, client, version2.ID)
+
+		ctx := testutil.Context(t, testutil.WaitShort)
+		err := client.UpdateActiveTemplateVersion(ctx, template.ID, codersdk.UpdateActiveTemplateVersion{
+			ID: version2.ID,
+		})
+		require.NoError(t, err, "failed to update active template version")
+
+		// Then: the workspace is marked as 'outdated'
+		ws, err = member.WorkspaceByOwnerAndName(ctx, codersdk.Me, "my-workspace", codersdk.WorkspaceOptions{})
+		require.NoError(t, err, "member failed to get workspace they themselves own")
+		require.True(t, ws.Outdated, "workspace must be outdated after template version update")
+
+		// When: the workspace is updated
+		inv, root := clitest.New(t, "update", ws.Name)
 		clitest.SetupConfig(t, member, root)
 
-		err := inv.Run()
-		require.NoError(t, err)
+		err = inv.Run()
+		require.NoError(t, err, "update command failed")
+
+		// Then: the workspace is no longer 'outdated'
+		ws, err = member.WorkspaceByOwnerAndName(ctx, codersdk.Me, "my-workspace", codersdk.WorkspaceOptions{})
+		require.NoError(t, err, "member failed to get workspace they themselves own after update")
+		require.Equal(t, version2.ID.String(), ws.LatestBuild.TemplateVersionID.String(), "workspace must have latest template version after update")
+		require.False(t, ws.Outdated, "workspace must not be outdated after update")
+
+		// Then: the workspace must have been started with the new template version
+		require.Equal(t, int32(3), ws.LatestBuild.BuildNumber, "workspace must have 3 builds after update")
+		require.Equal(t, codersdk.WorkspaceTransitionStart, ws.LatestBuild.Transition, "latest build must be a start transition")
+
+		// Then: the previous workspace build must be a stop transition with the old
+		// template version.
+		// This is important to ensure that the workspace resources are recreated
+		// correctly. Simply running a start transition with the new template
+		// version may not recreate resources that were changed in the new
+		// template version. This can happen, for example, if a user specifies
+		// ignore_changes in the template.
+		prevBuild, err := member.WorkspaceBuildByUsernameAndWorkspaceNameAndBuildNumber(ctx, codersdk.Me, ws.Name, "2")
+		require.NoError(t, err, "failed to get previous workspace build")
+		require.Equal(t, codersdk.WorkspaceTransitionStop, prevBuild.Transition, "previous build must be a stop transition")
+		require.Equal(t, version1.ID.String(), prevBuild.TemplateVersionID.String(), "previous build must have the old template version")
+	})
 
-		ws, err := client.WorkspaceByOwnerAndName(context.Background(), memberUser.Username, "my-workspace", codersdk.WorkspaceOptions{})
-		require.NoError(t, err)
-		require.Equal(t, version1.ID.String(), ws.LatestBuild.TemplateVersionID.String())
+	t.Run("Stopped", func(t *testing.T) {
+		t.Parallel()
+
+		// Given: a workspace exists on the latest template version.
+		client := coderdtest.New(t, &coderdtest.Options{IncludeProvisionerDaemon: true})
+		owner := coderdtest.CreateFirstUser(t, client)
+		member, _ := coderdtest.CreateAnotherUser(t, client, owner.OrganizationID)
+		version1 := coderdtest.CreateTemplateVersion(t, client, owner.OrganizationID, nil)
+
+		coderdtest.AwaitTemplateVersionJobCompleted(t, client, version1.ID)
+		template := coderdtest.CreateTemplate(t, client, owner.OrganizationID, version1.ID)
 
+		ws := coderdtest.CreateWorkspace(t, member, template.ID, func(cwr *codersdk.CreateWorkspaceRequest) {
+			cwr.Name = "my-workspace"
+		})
+		require.False(t, ws.Outdated, "newly created workspace with active template version must not be outdated")
+
+		// Given: the template version is updated
 		version2 := coderdtest.UpdateTemplateVersion(t, client, owner.OrganizationID, &echo.Responses{
 			Parse:          echo.ParseComplete,
 			ProvisionApply: echo.ApplyComplete,
@@ -63,20 +122,37 @@ func TestUpdate(t *testing.T) {
 		}, template.ID)
 		_ = coderdtest.AwaitTemplateVersionJobCompleted(t, client, version2.ID)
 
-		err = client.UpdateActiveTemplateVersion(context.Background(), template.ID, codersdk.UpdateActiveTemplateVersion{
+		ctx := testutil.Context(t, testutil.WaitShort)
+		err := client.UpdateActiveTemplateVersion(ctx, template.ID, codersdk.UpdateActiveTemplateVersion{
 			ID: version2.ID,
 		})
-		require.NoError(t, err)
+		require.NoError(t, err, "failed to update active template version")
+
+		// Given: the workspace is in a stopped state.
+		coderdtest.MustTransitionWorkspace(t, member, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
-		inv, root = clitest.New(t, "update", ws.Name)
+		// Then: the workspace is marked as 'outdated'
+		ws, err = member.WorkspaceByOwnerAndName(ctx, codersdk.Me, "my-workspace", codersdk.WorkspaceOptions{})
+		require.NoError(t, err, "member failed to get workspace they themselves own")
+		require.True(t, ws.Outdated, "workspace must be outdated after template version update")
+
+		// When: the workspace is updated
+		inv, root := clitest.New(t, "update", ws.Name)
 		clitest.SetupConfig(t, member, root)
 
 		err = inv.Run()
-		require.NoError(t, err)
-
-		ws, err = member.WorkspaceByOwnerAndName(context.Background(), memberUser.Username, "my-workspace", codersdk.WorkspaceOptions{})
-		require.NoError(t, err)
-		require.Equal(t, version2.ID.String(), ws.LatestBuild.TemplateVersionID.String())
+		require.NoError(t, err, "update command failed")
+
+		// Then: the workspace is no longer 'outdated'
+		ws, err = member.WorkspaceByOwnerAndName(ctx, codersdk.Me, "my-workspace", codersdk.WorkspaceOptions{})
+		require.NoError(t, err, "member failed to get workspace they themselves own after update")
+		require.Equal(t, version2.ID.String(), ws.LatestBuild.TemplateVersionID.String(), "workspace must have latest template version after update")
+		require.False(t, ws.Outdated, "workspace must not be outdated after update")
+
+		// Then: the workspace must have been started with the new template version
+		require.Equal(t, codersdk.WorkspaceTransitionStart, ws.LatestBuild.Transition, "latest build must be a start transition")
+		// Then: we expect 3 builds, as we manually stopped the workspace.
+		require.Equal(t, int32(3), ws.LatestBuild.BuildNumber, "workspace must have 3 builds after update")
 	})
 }
 
diff --git a/coderd/autobuild/lifecycle_executor_test.go b/coderd/autobuild/lifecycle_executor_test.go
index 453de63031a47..e195e07145079 100644
--- a/coderd/autobuild/lifecycle_executor_test.go
+++ b/coderd/autobuild/lifecycle_executor_test.go
@@ -47,7 +47,7 @@ func TestExecutorAutostartOK(t *testing.T) {
 		})
 	)
 	// Given: workspace is stopped
-	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 	// When: the autobuild executor ticks after the scheduled time
 	go func() {
@@ -105,7 +105,7 @@ func TestMultipleLifecycleExecutors(t *testing.T) {
 	)
 
 	// Have the workspace stopped so we can perform an autostart
-	workspace = coderdtest.MustTransitionWorkspace(t, clientA, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+	workspace = coderdtest.MustTransitionWorkspace(t, clientA, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 	// Get both clients to perform a lifecycle execution tick
 	next := sched.Next(workspace.LatestBuild.CreatedAt)
@@ -204,7 +204,7 @@ func TestExecutorAutostartTemplateUpdated(t *testing.T) {
 			)
 			// Given: workspace is stopped
 			workspace = coderdtest.MustTransitionWorkspace(
-				t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+				t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 			orgs, err := client.OrganizationsByUser(ctx, workspace.OwnerID.String())
 			require.NoError(t, err)
@@ -345,7 +345,7 @@ func TestExecutorAutostartNotEnabled(t *testing.T) {
 	require.Empty(t, workspace.AutostartSchedule)
 
 	// Given: workspace is stopped
-	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 	// When: the autobuild executor ticks way into the future
 	go func() {
@@ -385,7 +385,7 @@ func TestExecutorAutostartUserSuspended(t *testing.T) {
 	workspace = coderdtest.MustWorkspace(t, userClient, workspace.ID)
 
 	// Given: workspace is stopped, and the user is suspended.
-	workspace = coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+	workspace = coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 	ctx := testutil.Context(t, testutil.WaitShort)
 
@@ -508,7 +508,7 @@ func TestExecutorAutostopAlreadyStopped(t *testing.T) {
 	)
 
 	// Given: workspace is stopped
-	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 	// When: the autobuild executor ticks past the TTL
 	go func() {
@@ -579,7 +579,7 @@ func TestExecutorWorkspaceDeleted(t *testing.T) {
 	)
 
 	// Given: workspace is deleted
-	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionDelete)
+	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionDelete)
 
 	// When: the autobuild executor ticks
 	go func() {
@@ -768,7 +768,7 @@ func TestExecutorAutostartMultipleOK(t *testing.T) {
 		})
 	)
 	// Given: workspace is stopped
-	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 	// When: the autobuild executor ticks past the scheduled time
 	go func() {
@@ -833,7 +833,7 @@ func TestExecutorAutostartWithParameters(t *testing.T) {
 		})
 	)
 	// Given: workspace is stopped
-	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 	// When: the autobuild executor ticks after the scheduled time
 	go func() {
@@ -883,7 +883,7 @@ func TestExecutorAutostartTemplateDisabled(t *testing.T) {
 		})
 	)
 	// Given: workspace is stopped
-	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 	// When: the autobuild executor ticks before the next scheduled time
 	go func() {
@@ -1002,7 +1002,7 @@ func TestExecutorRequireActiveVersion(t *testing.T) {
 		cwr.AutostartSchedule = ptr.Ref(sched.String())
 	})
 	_ = coderdtest.AwaitWorkspaceBuildJobCompleted(t, ownerClient, ws.LatestBuild.ID)
-	ws = coderdtest.MustTransitionWorkspace(t, memberClient, ws.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop, func(req *codersdk.CreateWorkspaceBuildRequest) {
+	ws = coderdtest.MustTransitionWorkspace(t, memberClient, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop, func(req *codersdk.CreateWorkspaceBuildRequest) {
 		req.TemplateVersionID = inactiveVersion.ID
 	})
 	require.Equal(t, inactiveVersion.ID, ws.LatestBuild.TemplateVersionID)
@@ -1160,7 +1160,7 @@ func TestNotifications(t *testing.T) {
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, userClient, workspace.LatestBuild.ID)
 
 		// Stop workspace
-		workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 		_ = coderdtest.AwaitWorkspaceBuildJobCompleted(t, userClient, workspace.LatestBuild.ID)
 
 		// Wait for workspace to become dormant
diff --git a/coderd/coderdtest/coderdtest.go b/coderd/coderdtest/coderdtest.go
index a8f444c8f632e..b509db10e3eba 100644
--- a/coderd/coderdtest/coderdtest.go
+++ b/coderd/coderdtest/coderdtest.go
@@ -1245,16 +1245,16 @@ func CreateWorkspace(t testing.TB, client *codersdk.Client, templateID uuid.UUID
 }
 
 // TransitionWorkspace is a convenience method for transitioning a workspace from one state to another.
-func MustTransitionWorkspace(t testing.TB, client *codersdk.Client, workspaceID uuid.UUID, from, to database.WorkspaceTransition, muts ...func(req *codersdk.CreateWorkspaceBuildRequest)) codersdk.Workspace {
+func MustTransitionWorkspace(t testing.TB, client *codersdk.Client, workspaceID uuid.UUID, from, to codersdk.WorkspaceTransition, muts ...func(req *codersdk.CreateWorkspaceBuildRequest)) codersdk.Workspace {
 	t.Helper()
 	ctx := context.Background()
 	workspace, err := client.Workspace(ctx, workspaceID)
 	require.NoError(t, err, "unexpected error fetching workspace")
-	require.Equal(t, workspace.LatestBuild.Transition, codersdk.WorkspaceTransition(from), "expected workspace state: %s got: %s", from, workspace.LatestBuild.Transition)
+	require.Equal(t, workspace.LatestBuild.Transition, from, "expected workspace state: %s got: %s", from, workspace.LatestBuild.Transition)
 
 	req := codersdk.CreateWorkspaceBuildRequest{
 		TemplateVersionID: workspace.LatestBuild.TemplateVersionID,
-		Transition:        codersdk.WorkspaceTransition(to),
+		Transition:        to,
 	}
 
 	for _, mut := range muts {
@@ -1267,7 +1267,7 @@ func MustTransitionWorkspace(t testing.TB, client *codersdk.Client, workspaceID
 	_ = AwaitWorkspaceBuildJobCompleted(t, client, build.ID)
 
 	updated := MustWorkspace(t, client, workspace.ID)
-	require.Equal(t, codersdk.WorkspaceTransition(to), updated.LatestBuild.Transition, "expected workspace to be in state %s but got %s", to, updated.LatestBuild.Transition)
+	require.Equal(t, to, updated.LatestBuild.Transition, "expected workspace to be in state %s but got %s", to, updated.LatestBuild.Transition)
 	return updated
 }
 
diff --git a/coderd/workspaceapps/apptest/apptest.go b/coderd/workspaceapps/apptest/apptest.go
index 4e48e60d2d47f..93f8bef10bece 100644
--- a/coderd/workspaceapps/apptest/apptest.go
+++ b/coderd/workspaceapps/apptest/apptest.go
@@ -27,7 +27,6 @@ import (
 	"golang.org/x/xerrors"
 
 	"github.com/coder/coder/v2/coderd/coderdtest"
-	"github.com/coder/coder/v2/coderd/database"
 	"github.com/coder/coder/v2/coderd/jwtutils"
 	"github.com/coder/coder/v2/coderd/rbac"
 	"github.com/coder/coder/v2/coderd/workspaceapps"
@@ -1824,7 +1823,7 @@ func Run(t *testing.T, appHostIsPrimary bool, factory DeploymentFactory) {
 		ctx, cancel := context.WithTimeout(context.Background(), testutil.WaitLong)
 		defer cancel()
 
-		_ = coderdtest.MustTransitionWorkspace(t, appDetails.SDKClient, appDetails.Workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		_ = coderdtest.MustTransitionWorkspace(t, appDetails.SDKClient, appDetails.Workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		u := appDetails.PathAppURL(appDetails.Apps.Owner)
 		resp, err := appDetails.AppClient(t).Request(ctx, http.MethodGet, u.String(), nil)
diff --git a/coderd/workspacebuilds_test.go b/coderd/workspacebuilds_test.go
index ac33c9e92c4f7..081accd097d69 100644
--- a/coderd/workspacebuilds_test.go
+++ b/coderd/workspacebuilds_test.go
@@ -585,7 +585,7 @@ func TestWorkspaceBuildWithUpdatedTemplateVersionSendsNotification(t *testing.T)
 		// Create a workspace using this template
 		workspace := coderdtest.CreateWorkspace(t, userClient, template.ID)
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, userClient, workspace.LatestBuild.ID)
-		coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// Create a new version of the template
 		newVersion := coderdtest.CreateTemplateVersion(t, templateAdminClient, first.OrganizationID, nil, func(ctvr *codersdk.CreateTemplateVersionRequest) {
@@ -598,7 +598,7 @@ func TestWorkspaceBuildWithUpdatedTemplateVersionSendsNotification(t *testing.T)
 			cwbr.TemplateVersionID = newVersion.ID
 		})
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, userClient, build.ID)
-		coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// Create the workspace build _again_. We are doing this to
 		// ensure we do not create _another_ notification. This is
@@ -610,7 +610,7 @@ func TestWorkspaceBuildWithUpdatedTemplateVersionSendsNotification(t *testing.T)
 			cwbr.TemplateVersionID = newVersion.ID
 		})
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, userClient, build.ID)
-		coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// We're going to have two notifications (one for the first user and one for the template admin)
 		// By ensuring we only have these two, we are sure the second build didn't trigger more
@@ -659,7 +659,7 @@ func TestWorkspaceBuildWithUpdatedTemplateVersionSendsNotification(t *testing.T)
 		// Create a workspace using this template
 		workspace := coderdtest.CreateWorkspace(t, userClient, template.ID)
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, userClient, workspace.LatestBuild.ID)
-		coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// Create a new version of the template
 		newVersion := coderdtest.CreateTemplateVersion(t, templateAdminClient, first.OrganizationID, nil, func(ctvr *codersdk.CreateTemplateVersionRequest) {
@@ -675,7 +675,7 @@ func TestWorkspaceBuildWithUpdatedTemplateVersionSendsNotification(t *testing.T)
 		})
 		require.NoError(t, err)
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, userClient, build.ID)
-		coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		coderdtest.MustTransitionWorkspace(t, userClient, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// Ensure we receive only 1 workspace manually updated notification and to the right user
 		sent := notify.Sent(notificationstest.WithTemplateID(notifications.TemplateWorkspaceManuallyUpdated))
diff --git a/coderd/workspaces_test.go b/coderd/workspaces_test.go
index 018dd363bdee6..6d45372a90227 100644
--- a/coderd/workspaces_test.go
+++ b/coderd/workspaces_test.go
@@ -3998,7 +3998,7 @@ func TestWorkspaceDormant(t *testing.T) {
 		require.NoError(t, err)
 
 		// Should be able to stop a workspace while it is dormant.
-		coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// Should not be able to start a workspace while it is dormant.
 		_, err = client.CreateWorkspaceBuild(ctx, workspace.ID, codersdk.CreateWorkspaceBuildRequest{
@@ -4011,7 +4011,7 @@ func TestWorkspaceDormant(t *testing.T) {
 			Dormant: false,
 		})
 		require.NoError(t, err)
-		coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStop, database.WorkspaceTransitionStart)
+		coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStop, codersdk.WorkspaceTransitionStart)
 	})
 }
 
diff --git a/docs/manifest.json b/docs/manifest.json
index 2aa9cb0ead9ce..083a38cf0bb45 100644
--- a/docs/manifest.json
+++ b/docs/manifest.json
@@ -1694,7 +1694,7 @@
 						},
 						{
 							"title": "update",
-							"description": "Will update and start a given workspace if it is out of date",
+							"description": "Will update and start a given workspace if it is out of date. If the workspace is already running, it will be stopped first.",
 							"path": "reference/cli/update.md"
 						},
 						{
diff --git a/docs/reference/cli/index.md b/docs/reference/cli/index.md
index d72790fc3bfdb..6dae32c4c615c 100644
--- a/docs/reference/cli/index.md
+++ b/docs/reference/cli/index.md
@@ -22,50 +22,50 @@ Coder — A tool for provisioning self-hosted development environments with Terr
 
 ## Subcommands
 
-| Name                                               | Purpose                                                                                               |
-|----------------------------------------------------|-------------------------------------------------------------------------------------------------------|
-| [<code>completion</code>](./completion.md)         | Install or update shell completion scripts for the detected or chosen shell.                          |
-| [<code>dotfiles</code>](./dotfiles.md)             | Personalize your workspace by applying a canonical dotfiles repository                                |
-| [<code>external-auth</code>](./external-auth.md)   | Manage external authentication                                                                        |
-| [<code>login</code>](./login.md)                   | Authenticate with Coder deployment                                                                    |
-| [<code>logout</code>](./logout.md)                 | Unauthenticate your local session                                                                     |
-| [<code>netcheck</code>](./netcheck.md)             | Print network debug information for DERP and STUN                                                     |
-| [<code>notifications</code>](./notifications.md)   | Manage Coder notifications                                                                            |
-| [<code>organizations</code>](./organizations.md)   | Organization related commands                                                                         |
-| [<code>port-forward</code>](./port-forward.md)     | Forward ports from a workspace to the local machine. For reverse port forwarding, use "coder ssh -R". |
-| [<code>publickey</code>](./publickey.md)           | Output your Coder public key used for Git operations                                                  |
-| [<code>reset-password</code>](./reset-password.md) | Directly connect to the database to reset a user's password                                           |
-| [<code>state</code>](./state.md)                   | Manually manage Terraform state to fix broken workspaces                                              |
-| [<code>templates</code>](./templates.md)           | Manage templates                                                                                      |
-| [<code>tokens</code>](./tokens.md)                 | Manage personal access tokens                                                                         |
-| [<code>users</code>](./users.md)                   | Manage users                                                                                          |
-| [<code>version</code>](./version.md)               | Show coder version                                                                                    |
-| [<code>autoupdate</code>](./autoupdate.md)         | Toggle auto-update policy for a workspace                                                             |
-| [<code>config-ssh</code>](./config-ssh.md)         | Add an SSH Host entry for your workspaces "ssh workspace.coder"                                       |
-| [<code>create</code>](./create.md)                 | Create a workspace                                                                                    |
-| [<code>delete</code>](./delete.md)                 | Delete a workspace                                                                                    |
-| [<code>favorite</code>](./favorite.md)             | Add a workspace to your favorites                                                                     |
-| [<code>list</code>](./list.md)                     | List workspaces                                                                                       |
-| [<code>open</code>](./open.md)                     | Open a workspace                                                                                      |
-| [<code>ping</code>](./ping.md)                     | Ping a workspace                                                                                      |
-| [<code>rename</code>](./rename.md)                 | Rename a workspace                                                                                    |
-| [<code>restart</code>](./restart.md)               | Restart a workspace                                                                                   |
-| [<code>schedule</code>](./schedule.md)             | Schedule automated start and stop times for workspaces                                                |
-| [<code>show</code>](./show.md)                     | Display details of a workspace's resources and agents                                                 |
-| [<code>speedtest</code>](./speedtest.md)           | Run upload and download tests from your machine to a workspace                                        |
-| [<code>ssh</code>](./ssh.md)                       | Start a shell into a workspace or run a command                                                       |
-| [<code>start</code>](./start.md)                   | Start a workspace                                                                                     |
-| [<code>stat</code>](./stat.md)                     | Show resource usage for the current workspace.                                                        |
-| [<code>stop</code>](./stop.md)                     | Stop a workspace                                                                                      |
-| [<code>unfavorite</code>](./unfavorite.md)         | Remove a workspace from your favorites                                                                |
-| [<code>update</code>](./update.md)                 | Will update and start a given workspace if it is out of date                                          |
-| [<code>whoami</code>](./whoami.md)                 | Fetch authenticated user info for Coder deployment                                                    |
-| [<code>support</code>](./support.md)               | Commands for troubleshooting issues with a Coder deployment.                                          |
-| [<code>server</code>](./server.md)                 | Start a Coder server                                                                                  |
-| [<code>features</code>](./features.md)             | List Enterprise features                                                                              |
-| [<code>licenses</code>](./licenses.md)             | Add, delete, and list licenses                                                                        |
-| [<code>groups</code>](./groups.md)                 | Manage groups                                                                                         |
-| [<code>provisioner</code>](./provisioner.md)       | View and manage provisioner daemons and jobs                                                          |
+| Name                                               | Purpose                                                                                                                      |
+|----------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|
+| [<code>completion</code>](./completion.md)         | Install or update shell completion scripts for the detected or chosen shell.                                                 |
+| [<code>dotfiles</code>](./dotfiles.md)             | Personalize your workspace by applying a canonical dotfiles repository                                                       |
+| [<code>external-auth</code>](./external-auth.md)   | Manage external authentication                                                                                               |
+| [<code>login</code>](./login.md)                   | Authenticate with Coder deployment                                                                                           |
+| [<code>logout</code>](./logout.md)                 | Unauthenticate your local session                                                                                            |
+| [<code>netcheck</code>](./netcheck.md)             | Print network debug information for DERP and STUN                                                                            |
+| [<code>notifications</code>](./notifications.md)   | Manage Coder notifications                                                                                                   |
+| [<code>organizations</code>](./organizations.md)   | Organization related commands                                                                                                |
+| [<code>port-forward</code>](./port-forward.md)     | Forward ports from a workspace to the local machine. For reverse port forwarding, use "coder ssh -R".                        |
+| [<code>publickey</code>](./publickey.md)           | Output your Coder public key used for Git operations                                                                         |
+| [<code>reset-password</code>](./reset-password.md) | Directly connect to the database to reset a user's password                                                                  |
+| [<code>state</code>](./state.md)                   | Manually manage Terraform state to fix broken workspaces                                                                     |
+| [<code>templates</code>](./templates.md)           | Manage templates                                                                                                             |
+| [<code>tokens</code>](./tokens.md)                 | Manage personal access tokens                                                                                                |
+| [<code>users</code>](./users.md)                   | Manage users                                                                                                                 |
+| [<code>version</code>](./version.md)               | Show coder version                                                                                                           |
+| [<code>autoupdate</code>](./autoupdate.md)         | Toggle auto-update policy for a workspace                                                                                    |
+| [<code>config-ssh</code>](./config-ssh.md)         | Add an SSH Host entry for your workspaces "ssh workspace.coder"                                                              |
+| [<code>create</code>](./create.md)                 | Create a workspace                                                                                                           |
+| [<code>delete</code>](./delete.md)                 | Delete a workspace                                                                                                           |
+| [<code>favorite</code>](./favorite.md)             | Add a workspace to your favorites                                                                                            |
+| [<code>list</code>](./list.md)                     | List workspaces                                                                                                              |
+| [<code>open</code>](./open.md)                     | Open a workspace                                                                                                             |
+| [<code>ping</code>](./ping.md)                     | Ping a workspace                                                                                                             |
+| [<code>rename</code>](./rename.md)                 | Rename a workspace                                                                                                           |
+| [<code>restart</code>](./restart.md)               | Restart a workspace                                                                                                          |
+| [<code>schedule</code>](./schedule.md)             | Schedule automated start and stop times for workspaces                                                                       |
+| [<code>show</code>](./show.md)                     | Display details of a workspace's resources and agents                                                                        |
+| [<code>speedtest</code>](./speedtest.md)           | Run upload and download tests from your machine to a workspace                                                               |
+| [<code>ssh</code>](./ssh.md)                       | Start a shell into a workspace or run a command                                                                              |
+| [<code>start</code>](./start.md)                   | Start a workspace                                                                                                            |
+| [<code>stat</code>](./stat.md)                     | Show resource usage for the current workspace.                                                                               |
+| [<code>stop</code>](./stop.md)                     | Stop a workspace                                                                                                             |
+| [<code>unfavorite</code>](./unfavorite.md)         | Remove a workspace from your favorites                                                                                       |
+| [<code>update</code>](./update.md)                 | Will update and start a given workspace if it is out of date. If the workspace is already running, it will be stopped first. |
+| [<code>whoami</code>](./whoami.md)                 | Fetch authenticated user info for Coder deployment                                                                           |
+| [<code>support</code>](./support.md)               | Commands for troubleshooting issues with a Coder deployment.                                                                 |
+| [<code>server</code>](./server.md)                 | Start a Coder server                                                                                                         |
+| [<code>features</code>](./features.md)             | List Enterprise features                                                                                                     |
+| [<code>licenses</code>](./licenses.md)             | Add, delete, and list licenses                                                                                               |
+| [<code>groups</code>](./groups.md)                 | Manage groups                                                                                                                |
+| [<code>provisioner</code>](./provisioner.md)       | View and manage provisioner daemons and jobs                                                                                 |
 
 ## Options
 
diff --git a/docs/reference/cli/update.md b/docs/reference/cli/update.md
index dd2bfa5ff76b5..35c5b34312420 100644
--- a/docs/reference/cli/update.md
+++ b/docs/reference/cli/update.md
@@ -1,7 +1,7 @@
 <!-- DO NOT EDIT | GENERATED CONTENT -->
 # update
 
-Will update and start a given workspace if it is out of date
+Will update and start a given workspace if it is out of date. If the workspace is already running, it will be stopped first.
 
 ## Usage
 
diff --git a/enterprise/cli/start_test.go b/enterprise/cli/start_test.go
index dd86b20d44fb6..ea7457f7d5aad 100644
--- a/enterprise/cli/start_test.go
+++ b/enterprise/cli/start_test.go
@@ -9,7 +9,6 @@ import (
 
 	"github.com/coder/coder/v2/cli/clitest"
 	"github.com/coder/coder/v2/coderd/coderdtest"
-	"github.com/coder/coder/v2/coderd/database"
 	"github.com/coder/coder/v2/coderd/rbac"
 	"github.com/coder/coder/v2/codersdk"
 	"github.com/coder/coder/v2/enterprise/coderd/coderdenttest"
@@ -146,7 +145,7 @@ func TestStart(t *testing.T) {
 
 						if cmd == "start" {
 							// Stop the workspace so that we can start it.
-							coderdtest.MustTransitionWorkspace(t, c.Client, ws.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+							coderdtest.MustTransitionWorkspace(t, c.Client, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 						}
 						// Start the workspace. Every test permutation should
 						// pass.
@@ -198,7 +197,7 @@ func TestStart(t *testing.T) {
 		memberClient, _ := coderdtest.CreateAnotherUser(t, ownerClient, owner.OrganizationID)
 		workspace := coderdtest.CreateWorkspace(t, memberClient, template.ID)
 		_ = coderdtest.AwaitWorkspaceBuildJobCompleted(t, memberClient, workspace.LatestBuild.ID)
-		_ = coderdtest.MustTransitionWorkspace(t, memberClient, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		_ = coderdtest.MustTransitionWorkspace(t, memberClient, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 		err := memberClient.UpdateWorkspaceDormancy(ctx, workspace.ID, codersdk.UpdateWorkspaceDormancy{
 			Dormant: true,
 		})
diff --git a/enterprise/coderd/workspaces_test.go b/enterprise/coderd/workspaces_test.go
index ce86151f9b883..374e4656315e6 100644
--- a/enterprise/coderd/workspaces_test.go
+++ b/enterprise/coderd/workspaces_test.go
@@ -963,7 +963,7 @@ func TestWorkspaceAutobuild(t *testing.T) {
 
 		// Stop the workspace so we can assert autobuild does nothing
 		// if we breach our inactivity threshold.
-		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// Simulate not having accessed the workspace in a while.
 		ticker <- ws.LastUsedAt.Add(2 * inactiveTTL)
@@ -1151,7 +1151,7 @@ func TestWorkspaceAutobuild(t *testing.T) {
 			cwr.AutostartSchedule = ptr.Ref(sched.String())
 		})
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, client, ws.LatestBuild.ID)
-		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// Assert that autostart works when the workspace isn't dormant..
 		tickCh <- sched.Next(ws.LatestBuild.CreatedAt)
@@ -1320,7 +1320,7 @@ func TestWorkspaceAutobuild(t *testing.T) {
 		})
 
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, client, ws.LatestBuild.ID)
-		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// Create a new version so that we can assert we don't update
 		// to the latest by default.
@@ -1361,7 +1361,7 @@ func TestWorkspaceAutobuild(t *testing.T) {
 
 		// Reset the workspace to the stopped state so we can try
 		// to autostart again.
-		coderdtest.MustTransitionWorkspace(t, client, ws.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop, func(req *codersdk.CreateWorkspaceBuildRequest) {
+		coderdtest.MustTransitionWorkspace(t, client, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop, func(req *codersdk.CreateWorkspaceBuildRequest) {
 			req.TemplateVersionID = ws.LatestBuild.TemplateVersionID
 		})
 
@@ -1421,7 +1421,7 @@ func TestWorkspaceAutobuild(t *testing.T) {
 		})
 
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, client, ws.LatestBuild.ID)
-		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 		next := ws.LatestBuild.CreatedAt
 
 		// For each day of the week (Monday-Sunday)
@@ -1449,7 +1449,7 @@ func TestWorkspaceAutobuild(t *testing.T) {
 				assert.Equal(t, database.WorkspaceTransitionStart, stats.Transitions[ws.ID])
 
 				coderdtest.AwaitWorkspaceBuildJobCompleted(t, client, ws.LatestBuild.ID)
-				ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+				ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 			}
 
 			// Ensure that there is a valid next start at and that is is after
@@ -1512,7 +1512,7 @@ func TestWorkspaceAutobuild(t *testing.T) {
 		})
 
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, client, ws.LatestBuild.ID)
-		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// Our next start at should be Monday
 		require.NotNil(t, ws.NextStartAt)
@@ -1574,7 +1574,7 @@ func TestWorkspaceAutobuild(t *testing.T) {
 		})
 
 		coderdtest.AwaitWorkspaceBuildJobCompleted(t, client, ws.LatestBuild.ID)
-		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+		ws = coderdtest.MustTransitionWorkspace(t, client, ws.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 		// Check we have a 'NextStartAt'
 		require.NotNil(t, ws.NextStartAt)
@@ -2101,7 +2101,7 @@ func TestExecutorAutostartBlocked(t *testing.T) {
 	)
 
 	// Given: workspace is stopped
-	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, database.WorkspaceTransitionStart, database.WorkspaceTransitionStop)
+	workspace = coderdtest.MustTransitionWorkspace(t, client, workspace.ID, codersdk.WorkspaceTransitionStart, codersdk.WorkspaceTransitionStop)
 
 	// When: the autobuild executor ticks into the future
 	go func() {
diff --git a/site/src/api/api.test.ts b/site/src/api/api.test.ts
index e72dd5f8d0bad..04536675f8943 100644
--- a/site/src/api/api.test.ts
+++ b/site/src/api/api.test.ts
@@ -1,5 +1,7 @@
 import {
+	MockStoppedWorkspace,
 	MockTemplate,
+	MockTemplateVersion2,
 	MockTemplateVersionParameter1,
 	MockTemplateVersionParameter2,
 	MockWorkspace,
@@ -171,65 +173,112 @@ describe("api.ts", () => {
 	});
 
 	describe("update", () => {
-		it("creates a build with start and the latest template", async () => {
-			jest
-				.spyOn(API, "postWorkspaceBuild")
-				.mockResolvedValueOnce(MockWorkspaceBuild);
-			jest.spyOn(API, "getTemplate").mockResolvedValueOnce(MockTemplate);
-			await API.updateWorkspace(MockWorkspace);
-			expect(API.postWorkspaceBuild).toHaveBeenCalledWith(MockWorkspace.id, {
-				transition: "start",
-				template_version_id: MockTemplate.active_version_id,
-				rich_parameter_values: [],
+		describe("given a running workspace", () => {
+			it("stops with current version before starting with the latest version", async () => {
+				jest.spyOn(API, "postWorkspaceBuild").mockResolvedValueOnce({
+					...MockWorkspaceBuild,
+					transition: "stop",
+				});
+				jest.spyOn(API, "postWorkspaceBuild").mockResolvedValueOnce({
+					...MockWorkspaceBuild,
+					template_version_id: MockTemplateVersion2.id,
+					transition: "start",
+				});
+				jest.spyOn(API, "getTemplate").mockResolvedValueOnce({
+					...MockTemplate,
+					active_version_id: MockTemplateVersion2.id,
+				});
+				await API.updateWorkspace(MockWorkspace);
+				expect(API.postWorkspaceBuild).toHaveBeenCalledWith(MockWorkspace.id, {
+					transition: "stop",
+					log_level: undefined,
+				});
+				expect(API.postWorkspaceBuild).toHaveBeenCalledWith(MockWorkspace.id, {
+					transition: "start",
+					template_version_id: MockTemplateVersion2.id,
+					rich_parameter_values: [],
+				});
 			});
-		});
 
-		it("fails when having missing parameters", async () => {
-			jest
-				.spyOn(API, "postWorkspaceBuild")
-				.mockResolvedValue(MockWorkspaceBuild);
-			jest.spyOn(API, "getTemplate").mockResolvedValue(MockTemplate);
-			jest.spyOn(API, "getWorkspaceBuildParameters").mockResolvedValue([]);
-			jest
-				.spyOn(API, "getTemplateVersionRichParameters")
-				.mockResolvedValue([
+			it("fails when having missing parameters", async () => {
+				jest
+					.spyOn(API, "postWorkspaceBuild")
+					.mockResolvedValue(MockWorkspaceBuild);
+				jest.spyOn(API, "getTemplate").mockResolvedValue(MockTemplate);
+				jest.spyOn(API, "getWorkspaceBuildParameters").mockResolvedValue([]);
+				jest
+					.spyOn(API, "getTemplateVersionRichParameters")
+					.mockResolvedValue([
+						MockTemplateVersionParameter1,
+						{ ...MockTemplateVersionParameter2, mutable: false },
+					]);
+
+				let error = new Error();
+				try {
+					await API.updateWorkspace(MockWorkspace);
+				} catch (e) {
+					error = e as Error;
+				}
+
+				expect(error).toBeInstanceOf(MissingBuildParameters);
+				// Verify if the correct missing parameters are being passed
+				expect((error as MissingBuildParameters).parameters).toEqual([
 					MockTemplateVersionParameter1,
 					{ ...MockTemplateVersionParameter2, mutable: false },
 				]);
+			});
 
-			let error = new Error();
-			try {
+			it("creates a build with no parameters if it is already filled", async () => {
+				jest.spyOn(API, "postWorkspaceBuild").mockResolvedValueOnce({
+					...MockWorkspaceBuild,
+					transition: "stop",
+				});
+				jest.spyOn(API, "postWorkspaceBuild").mockResolvedValueOnce({
+					...MockWorkspaceBuild,
+					template_version_id: MockTemplateVersion2.id,
+					transition: "start",
+				});
+				jest.spyOn(API, "getTemplate").mockResolvedValueOnce(MockTemplate);
+				jest
+					.spyOn(API, "getWorkspaceBuildParameters")
+					.mockResolvedValue([MockWorkspaceBuildParameter1]);
+				jest.spyOn(API, "getTemplateVersionRichParameters").mockResolvedValue([
+					{
+						...MockTemplateVersionParameter1,
+						required: true,
+						mutable: false,
+					},
+				]);
 				await API.updateWorkspace(MockWorkspace);
-			} catch (e) {
-				error = e as Error;
-			}
-
-			expect(error).toBeInstanceOf(MissingBuildParameters);
-			// Verify if the correct missing parameters are being passed
-			expect((error as MissingBuildParameters).parameters).toEqual([
-				MockTemplateVersionParameter1,
-				{ ...MockTemplateVersionParameter2, mutable: false },
-			]);
+				expect(API.postWorkspaceBuild).toHaveBeenCalledWith(MockWorkspace.id, {
+					transition: "stop",
+					log_level: undefined,
+				});
+				expect(API.postWorkspaceBuild).toHaveBeenCalledWith(MockWorkspace.id, {
+					transition: "start",
+					template_version_id: MockTemplate.active_version_id,
+					rich_parameter_values: [],
+				});
+			});
 		});
-
-		it("creates a build with the no parameters if it is already filled", async () => {
-			jest
-				.spyOn(API, "postWorkspaceBuild")
-				.mockResolvedValueOnce(MockWorkspaceBuild);
-			jest.spyOn(API, "getTemplate").mockResolvedValueOnce(MockTemplate);
-			jest
-				.spyOn(API, "getWorkspaceBuildParameters")
-				.mockResolvedValue([MockWorkspaceBuildParameter1]);
-			jest
-				.spyOn(API, "getTemplateVersionRichParameters")
-				.mockResolvedValue([
-					{ ...MockTemplateVersionParameter1, required: true, mutable: false },
-				]);
-			await API.updateWorkspace(MockWorkspace);
-			expect(API.postWorkspaceBuild).toHaveBeenCalledWith(MockWorkspace.id, {
-				transition: "start",
-				template_version_id: MockTemplate.active_version_id,
-				rich_parameter_values: [],
+		describe("given a stopped workspace", () => {
+			it("creates a build with start and the latest template", async () => {
+				jest
+					.spyOn(API, "postWorkspaceBuild")
+					.mockResolvedValueOnce(MockWorkspaceBuild);
+				jest.spyOn(API, "getTemplate").mockResolvedValueOnce({
+					...MockTemplate,
+					active_version_id: MockTemplateVersion2.id,
+				});
+				await API.updateWorkspace(MockStoppedWorkspace);
+				expect(API.postWorkspaceBuild).toHaveBeenCalledWith(
+					MockStoppedWorkspace.id,
+					{
+						transition: "start",
+						template_version_id: MockTemplateVersion2.id,
+						rich_parameter_values: [],
+					},
+				);
 			});
 		});
 	});
diff --git a/site/src/api/api.ts b/site/src/api/api.ts
index 5b7cde65fb2ce..094502939821b 100644
--- a/site/src/api/api.ts
+++ b/site/src/api/api.ts
@@ -2237,6 +2237,7 @@ class ApiMethods {
 	 * - Update the build parameters and check if there are missed parameters for
 	 *   the newest version
 	 *   - If there are missing parameters raise an error
+	 * - Stop the workspace with the current template version if it is already running
 	 * - Create a build with the latest version and updated build parameters
 	 */
 	updateWorkspace = async (
@@ -2274,6 +2275,19 @@ class ApiMethods {
 			throw new MissingBuildParameters(missingParameters, activeVersionId);
 		}
 
+		// Stop the workspace if it is already running.
+		if (workspace.latest_build.status === "running") {
+			const stopBuild = await this.stopWorkspace(workspace.id);
+			const awaitedStopBuild = await this.waitForBuild(stopBuild);
+			// If the stop is canceled halfway through, we bail.
+			// This is the same behaviour as restartWorkspace.
+			if (awaitedStopBuild?.status === "canceled") {
+				return Promise.reject(
+					new Error("Workspace stop was canceled, not proceeding with update."),
+				);
+			}
+		}
+
 		return this.postWorkspaceBuild(workspace.id, {
 			transition: "start",
 			template_version_id: activeVersionId,
diff --git a/site/src/modules/workspaces/actions.ts b/site/src/modules/workspaces/actions.ts
index 6a255e2cd2c88..2149569e0dc88 100644
--- a/site/src/modules/workspaces/actions.ts
+++ b/site/src/modules/workspaces/actions.ts
@@ -6,16 +6,19 @@ import type { Workspace } from "api/typesGenerated";
 const actionTypes = [
 	"start",
 	"starting",
-	// Replaces start when an update is required.
+	// Replaces start when an update is available.
 	"updateAndStart",
+	// Replaces start when an update is required.
+	"updateAndStartRequireActiveVersion",
 	"stop",
 	"stopping",
 	"restart",
 	"restarting",
-	// Replaces restart when an update is required.
+	// Replaces restart when an update is available.
 	"updateAndRestart",
+	// Replaces restart when an update is required.
+	"updateAndRestartRequireActiveVersion",
 	"deleting",
-	"update",
 	"updating",
 	"activate",
 	"activating",
@@ -74,10 +77,10 @@ export const abilitiesByWorkspaceStatus = (
 			const actions: ActionType[] = ["stop"];
 
 			if (workspace.template_require_active_version && workspace.outdated) {
-				actions.push("updateAndRestart");
+				actions.push("updateAndRestartRequireActiveVersion");
 			} else {
 				if (workspace.outdated) {
-					actions.unshift("update");
+					actions.unshift("updateAndRestart");
 				}
 				actions.push("restart");
 			}
@@ -99,10 +102,10 @@ export const abilitiesByWorkspaceStatus = (
 			const actions: ActionType[] = [];
 
 			if (workspace.template_require_active_version && workspace.outdated) {
-				actions.push("updateAndStart");
+				actions.push("updateAndStartRequireActiveVersion");
 			} else {
 				if (workspace.outdated) {
-					actions.unshift("update");
+					actions.unshift("updateAndStart");
 				}
 				actions.push("start");
 			}
@@ -128,7 +131,7 @@ export const abilitiesByWorkspaceStatus = (
 			}
 
 			if (workspace.outdated) {
-				actions.unshift("update");
+				actions.unshift("updateAndStart");
 			}
 
 			return {
diff --git a/site/src/pages/WorkspacePage/WorkspaceActions/Buttons.tsx b/site/src/pages/WorkspacePage/WorkspaceActions/Buttons.tsx
index b02e4473eb57f..ec2ee59c0e31b 100644
--- a/site/src/pages/WorkspacePage/WorkspaceActions/Buttons.tsx
+++ b/site/src/pages/WorkspacePage/WorkspaceActions/Buttons.tsx
@@ -5,7 +5,6 @@ import {
 	BanIcon,
 	CirclePlayIcon,
 	CircleStopIcon,
-	CloudIcon,
 	PowerIcon,
 	RotateCcwIcon,
 	StarIcon,
@@ -21,19 +20,39 @@ export interface ActionButtonProps {
 	tooltipText?: string;
 }
 
-export const UpdateButton: FC<ActionButtonProps> = ({
+export const UpdateAndStartButton: FC<ActionButtonProps> = ({
 	handleAction,
 	loading,
 }) => {
 	return (
-		<TopbarButton
-			disabled={loading}
-			data-testid="workspace-update-button"
-			onClick={() => handleAction()}
-		>
-			<CloudIcon />
-			{loading ? <>Updating&hellip;</> : <>Update&hellip;</>}
-		</TopbarButton>
+		<Tooltip title="Start workspace with the latest template version.">
+			<TopbarButton
+				disabled={loading}
+				data-testid="workspace-update-button"
+				onClick={() => handleAction()}
+			>
+				<CirclePlayIcon />
+				{loading ? <>Updating&hellip;</> : <>Update&hellip;</>}
+			</TopbarButton>
+		</Tooltip>
+	);
+};
+
+export const UpdateAndRestartButton: FC<ActionButtonProps> = ({
+	handleAction,
+	loading,
+}) => {
+	return (
+		<Tooltip title="Stop workspace, if running, and restart it with the latest template version.">
+			<TopbarButton
+				disabled={loading}
+				data-testid="workspace-update-and-restart-button"
+				onClick={() => handleAction()}
+			>
+				<RotateCcwIcon />
+				{loading ? <>Updating&hellip;</> : <>Update and restart&hellip;</>}
+			</TopbarButton>
+		</Tooltip>
 	);
 };
 
@@ -84,9 +103,9 @@ export const StartButton: FC<ActionButtonPropsWithWorkspace> = ({
 	);
 };
 
-export const UpdateAndStartButton: FC<ActionButtonProps> = ({
-	handleAction,
-}) => {
+export const UpdateAndStartButtonRequireActiveVersion: FC<
+	ActionButtonProps
+> = ({ handleAction }) => {
 	return (
 		<Tooltip title="This template requires automatic updates on workspace startup. Contact your administrator if you want to preserve the template version.">
 			<TopbarButton onClick={() => handleAction()}>
@@ -138,9 +157,9 @@ export const RestartButton: FC<ActionButtonPropsWithWorkspace> = ({
 	);
 };
 
-export const UpdateAndRestartButton: FC<ActionButtonProps> = ({
-	handleAction,
-}) => {
+export const UpdateAndRestartButtonRequireActiveVersion: FC<
+	ActionButtonProps
+> = ({ handleAction }) => {
 	return (
 		<Tooltip title="This template requires automatic updates on workspace startup. Contact your administrator if you want to preserve the template version.">
 			<TopbarButton onClick={() => handleAction()}>
diff --git a/site/src/pages/WorkspacePage/WorkspaceActions/WorkspaceActions.tsx b/site/src/pages/WorkspacePage/WorkspaceActions/WorkspaceActions.tsx
index 708c90bac6d35..9ea8998097904 100644
--- a/site/src/pages/WorkspacePage/WorkspaceActions/WorkspaceActions.tsx
+++ b/site/src/pages/WorkspacePage/WorkspaceActions/WorkspaceActions.tsx
@@ -19,8 +19,9 @@ import {
 	StartButton,
 	StopButton,
 	UpdateAndRestartButton,
+	UpdateAndRestartButtonRequireActiveVersion,
 	UpdateAndStartButton,
-	UpdateButton,
+	UpdateAndStartButtonRequireActiveVersion,
 } from "./Buttons";
 import { DebugButton } from "./DebugButton";
 import { RetryButton } from "./RetryButton";
@@ -81,10 +82,15 @@ export const WorkspaceActions: FC<WorkspaceActionsProps> = ({
 
 	// A mapping of button type to the corresponding React component
 	const buttonMapping: Record<ActionType, ReactNode> = {
-		update: <UpdateButton handleAction={handleUpdate} />,
 		updateAndStart: <UpdateAndStartButton handleAction={handleUpdate} />,
+		updateAndStartRequireActiveVersion: (
+			<UpdateAndStartButtonRequireActiveVersion handleAction={handleUpdate} />
+		),
 		updateAndRestart: <UpdateAndRestartButton handleAction={handleUpdate} />,
-		updating: <UpdateButton loading handleAction={handleUpdate} />,
+		updateAndRestartRequireActiveVersion: (
+			<UpdateAndRestartButtonRequireActiveVersion handleAction={handleUpdate} />
+		),
+		updating: <UpdateAndStartButton loading handleAction={handleUpdate} />,
 		start: (
 			<StartButton
 				workspace={workspace}