diff --git a/.changeset/orange-socks-cheat.md b/.changeset/orange-socks-cheat.md
new file mode 100644
index 00000000000..09039d8f368
--- /dev/null
+++ b/.changeset/orange-socks-cheat.md
@@ -0,0 +1,5 @@
+---
+"@fuel-ts/wallet-manager": minor
+---
+
+Enable passphrase update on wallet manager
diff --git a/packages/wallet-manager/src/wallet-manager.test.ts b/packages/wallet-manager/src/wallet-manager.test.ts
index 980db911030..3bc3b7a03a8 100644
--- a/packages/wallet-manager/src/wallet-manager.test.ts
+++ b/packages/wallet-manager/src/wallet-manager.test.ts
@@ -309,4 +309,35 @@ describe('Wallet Manager', () => {
       walletManager.exportVault(1);
     }).toThrow();
   });
+
+  it('Update manager passphrase', async () => {
+    const { walletManager, password } = await setupWallet({
+      type: 'mnemonic',
+      secret: WalletManagerSpec.mnemonic,
+    });
+    const newPassword = 'newpass';
+
+    await walletManager.unlock(password);
+    const mnemonic = walletManager.exportVault(0).secret;
+    expect(mnemonic).toEqual(WalletManagerSpec.mnemonic);
+    await walletManager.updatePassphrase(password, newPassword);
+    await walletManager.unlock(newPassword);
+    const mnemonicPass2 = walletManager.exportVault(0).secret;
+    expect(mnemonicPass2).toEqual(WalletManagerSpec.mnemonic);
+  });
+
+  it('Update manager passphrase locked wallet', async () => {
+    const { walletManager, password } = await setupWallet({
+      type: 'mnemonic',
+      secret: WalletManagerSpec.mnemonic,
+    });
+    const newPassword = 'newpass';
+
+    await walletManager.lock();
+    expect(walletManager.isLocked).toBeTruthy();
+    await walletManager.updatePassphrase(password, newPassword);
+    expect(walletManager.isLocked).toBeTruthy();
+    await walletManager.unlock(newPassword);
+    expect(walletManager.isLocked).toBeFalsy();
+  });
 });
diff --git a/packages/wallet-manager/src/wallet-manager.ts b/packages/wallet-manager/src/wallet-manager.ts
index 4388b9c564b..bae190f1551 100644
--- a/packages/wallet-manager/src/wallet-manager.ts
+++ b/packages/wallet-manager/src/wallet-manager.ts
@@ -206,6 +206,25 @@ export class WalletManager extends EventEmitter {
     this.emit('unlock');
   }
 
+  /**
+   * Update WalletManager encryption passphrase
+   */
+  async updatePassphrase(oldpass: string, newpass: string) {
+    const isLocked = this.#isLocked;
+    // Unlock wallet to decrypt data
+    await this.unlock(oldpass);
+    // Set new password on state
+    this.#passphrase = newpass;
+    // Persist data on storage
+    await this.saveState();
+    // Load state with new password
+    await this.loadState();
+    // If wallet was locked, lock the wallet again
+    if (isLocked) {
+      await this.lock();
+    }
+  }
+
   /**
    * Retrieve and decrypt WalletManager state from storage
    */