diff --git a/mmv1/products/cloudidentity/terraform.yaml b/mmv1/products/cloudidentity/terraform.yaml
index bf8bfce81406..d489e82b1ff2 100644
--- a/mmv1/products/cloudidentity/terraform.yaml
+++ b/mmv1/products/cloudidentity/terraform.yaml
@@ -42,6 +42,7 @@ overrides: !ruby/object:Overrides::ResourceOverrides
       post_create: templates/terraform/post_create/set_computed_name.erb
       custom_import: templates/terraform/custom_import/set_id_name_with_slashes.go.erb
   GroupMembership: !ruby/object:Overrides::Terraform::ResourceOverride
+    read_error_transform: "transformCloudIdentityGroupMembershipReadError"
     docs: !ruby/object:Provider::Terraform::Docs
       warning: |
         If you are using User ADCs (Application Default Credentials) with this resource,
diff --git a/mmv1/third_party/terraform/tests/resource_cloud_identity_group_membership_test.go.erb b/mmv1/third_party/terraform/tests/resource_cloud_identity_group_membership_test.go.erb
index 7932b8bd5488..dbd9e5f8cd2b 100644
--- a/mmv1/third_party/terraform/tests/resource_cloud_identity_group_membership_test.go.erb
+++ b/mmv1/third_party/terraform/tests/resource_cloud_identity_group_membership_test.go.erb
@@ -5,6 +5,7 @@ import (
 	"testing"
 
 	"github.com/hashicorp/terraform-plugin-sdk/v2/helper/resource"
+	"google.golang.org/api/iam/v1"
 )
 
 func TestAccCloudIdentityGroupMembership_update(t *testing.T) {
@@ -176,6 +177,90 @@ resource "google_cloud_identity_group_membership" "basic" {
 `, context)
 }
 
+func TestAccCloudIdentityGroupMembership_membershipDoesNotExist(t *testing.T) {
+	// Skip VCR because the service account needs to be created/deleted out of
+	// band, and so those calls aren't recorded
+	skipIfVcr(t)
+	t.Parallel()
+
+	context := map[string]interface{}{
+		"org_domain":    getTestOrgDomainFromEnv(t),
+		"cust_id":       getTestCustIdFromEnv(t),
+		"random_suffix": randString(t, 10),
+	}
+
+	saId := "tf-test-sa-" + randString(t, 10)
+	project := getTestProjectFromEnv()
+	config := BootstrapConfig(t)
+
+	r := &iam.CreateServiceAccountRequest{
+		AccountId:      saId,
+		ServiceAccount: &iam.ServiceAccount{},
+	}
+
+	sa, err := config.NewIamClient(config.userAgent).Projects.ServiceAccounts.Create("projects/" + project, r).Do()
+	if err != nil {
+		t.Fatalf("Error creating service account: %s", err)
+	}
+
+	context["member_id"] = sa.Email
+
+	vcrTest(t, resource.TestCase{
+		PreCheck:  func() { testAccPreCheck(t) },
+		Providers: testAccProviders,
+		CheckDestroy: testAccCheckCloudIdentityGroupMembershipDestroyProducer(t),
+		Steps: []resource.TestStep{
+			{
+				Config: testAccCloudIdentityGroupMembership_dne(context),
+			},
+			{
+				PreConfig: func() {
+					config := googleProviderConfig(t)
+
+					_, err := config.NewIamClient(config.userAgent).Projects.ServiceAccounts.Delete(sa.Name).Do()
+					if err != nil {
+						t.Errorf("cannot delete service account %s: %v", sa.Name, err)
+						return
+					}
+				},
+				Config:             testAccCloudIdentityGroupMembership_dne(context),
+				PlanOnly:           true,
+				ExpectNonEmptyPlan: true,
+			},
+		},
+	})
+}
+
+func testAccCloudIdentityGroupMembership_dne(context map[string]interface{}) string {
+	return Nprintf(`
+resource "google_cloud_identity_group" "group" {
+  display_name = "tf-test-my-identity-group-%{random_suffix}"
+
+  parent = "customers/%{cust_id}"
+
+  group_key {
+    id = "tf-test-my-identity-group-%{random_suffix}@%{org_domain}"
+  }
+
+  labels = {
+    "cloudidentity.googleapis.com/groups.discussion_forum" = ""
+  }
+}
+
+resource "google_cloud_identity_group_membership" "basic" {
+  group = google_cloud_identity_group.group.id
+
+  preferred_member_key {
+    id = "%{member_id}"
+  }
+
+  roles {
+    name = "MEMBER"
+  }
+}
+`, context)
+}
+
 <% unless version == 'ga' -%>
 func TestAccCloudIdentityGroupMembership_cloudIdentityGroupMembershipWithMemberKey(t *testing.T) {
 	t.Parallel()
diff --git a/mmv1/third_party/terraform/utils/cloud_identity_group_membership_utils.go b/mmv1/third_party/terraform/utils/cloud_identity_group_membership_utils.go
new file mode 100644
index 000000000000..e2a1e22b81f7
--- /dev/null
+++ b/mmv1/third_party/terraform/utils/cloud_identity_group_membership_utils.go
@@ -0,0 +1,27 @@
+package google
+
+import (
+	"log"
+	"strings"
+
+	"github.com/hashicorp/errwrap"
+	"google.golang.org/api/googleapi"
+)
+
+func transformCloudIdentityGroupMembershipReadError(err error) error {
+	if gErr, ok := errwrap.GetType(err, &googleapi.Error{}).(*googleapi.Error); ok {
+		if gErr.Code == 403 && strings.Contains(gErr.Message, "(or it may not exist)") {
+			// This error occurs when either the group membership does not exist, or permission is denied. It is
+			// deliberately ambiguous so that existence information is not revealed to the caller. However, for
+			// the Read function, we can only assume that the membership does not exist, and proceed with attempting
+			// other operations. Since handleNotFoundError(...) expects an error code of 404 when a resource does not
+			// exist, to get the desired behavior, we modify the error code to be 404.
+			gErr.Code = 404
+		}
+
+		log.Printf("[DEBUG] Transformed CloudIdentityGroupMembership error")
+		return gErr
+	}
+
+	return err
+}