diff --git a/Makefile b/Makefile
index b717c928..e045129f 100644
--- a/Makefile
+++ b/Makefile
@@ -9,7 +9,7 @@ IMAGE ?= $(REPO):$(VERSION)
 PREVIEW=false
 ENABLE_BACKEND_GROUPS?=false
 WAIT_PROXY_READY=false
-SIDECAR_IMAGE_TAG=v1.26.4.0-prod
+SIDECAR_IMAGE_TAG=v1.27.0.0-prod
 
 # Produce CRDs that work back to Kubernetes 1.11 (no version conversion)
 CRD_OPTIONS ?= "crd:trivialVersions=true,crdVersions=v1"
diff --git a/config/helm/appmesh-controller/test.yaml b/config/helm/appmesh-controller/test.yaml
index 843c0afa..9d87feee 100644
--- a/config/helm/appmesh-controller/test.yaml
+++ b/config/helm/appmesh-controller/test.yaml
@@ -18,7 +18,7 @@ image:
 sidecar:
   image:
     repository: 840364872350.dkr.ecr.us-west-2.amazonaws.com/aws-appmesh-envoy
-    tag: v1.26.4.0-prod
+    tag: v1.27.0.0-prod
     # sidecar.logLevel: Envoy log level can be info, warn, error or debug
   logLevel: info
   envoyAdminAccessPort: 9901
diff --git a/config/helm/appmesh-controller/values.yaml b/config/helm/appmesh-controller/values.yaml
index 6444e251..86edbfdd 100644
--- a/config/helm/appmesh-controller/values.yaml
+++ b/config/helm/appmesh-controller/values.yaml
@@ -19,7 +19,7 @@ image:
 sidecar:
   image:
     repository: 840364872350.dkr.ecr.us-west-2.amazonaws.com/aws-appmesh-envoy
-    tag: v1.26.4.0-prod
+    tag: v1.27.0.0-prod
     # sidecar.logLevel: Envoy log level can be info, warn, error or debug
   logLevel: info
   envoyAdminAccessPort: 9901
diff --git a/pkg/inject/config.go b/pkg/inject/config.go
index 0cf38a09..7afdb532 100644
--- a/pkg/inject/config.go
+++ b/pkg/inject/config.go
@@ -147,7 +147,7 @@ func (cfg *Config) BindFlags(fs *pflag.FlagSet) {
 	fs.BoolVar(&cfg.EnableBackendGroups, flagEnableBackendGroups, false, "If enabled, experimental Backend Groups feature will be enabled.")
 	fs.StringVar(&cfg.SidecarImageRepository, flagSidecarImageRepository, "public.ecr.aws/appmesh/aws-appmesh-envoy",
 		"Envoy sidecar container image repository.")
-	fs.StringVar(&cfg.SidecarImageTag, flagSidecarImageTag, "v1.26.4.0-prod", "Envoy sidecar container image tag.")
+	fs.StringVar(&cfg.SidecarImageTag, flagSidecarImageTag, "v1.27.0.0-prod", "Envoy sidecar container image tag.")
 	fs.StringVar(&cfg.SidecarCpuRequests, flagSidecarCpuRequests, "10m",
 		"Sidecar CPU resources requests.")
 	fs.StringVar(&cfg.SidecarMemoryRequests, flagSidecarMemoryRequests, "32Mi",
diff --git a/pkg/inject/inject_test.go b/pkg/inject/inject_test.go
index b02b3259..c4c4039c 100644
--- a/pkg/inject/inject_test.go
+++ b/pkg/inject/inject_test.go
@@ -24,7 +24,7 @@ func getConfig(fp func(Config) Config) Config {
 		LogLevel:                    "debug",
 		Preview:                     false,
 		SidecarImageRepository:      "public.ecr.aws/appmesh/aws-appmesh-envoy",
-		SidecarImageTag:             "v1.26.4.0-prod",
+		SidecarImageTag:             "v1.27.0.0-prod",
 		InitImage:                   "840364872350.dkr.ecr.us-west-2.amazonaws.com/aws-appmesh-proxy-route-manager:v7-prod",
 		SidecarMemoryRequests:       "32Mi",
 		SidecarCpuRequests:          "10m",
diff --git a/scripts/test-with-kind.sh b/scripts/test-with-kind.sh
index 194c1ef7..7c73cfef 100755
--- a/scripts/test-with-kind.sh
+++ b/scripts/test-with-kind.sh
@@ -83,7 +83,7 @@ CONTROLLER_TAG="local"
 IMAGE_HOST="840364872350.dkr.ecr.us-west-2.amazonaws.com"
 
 ENVOY_IMAGE="$IMAGE_HOST/aws-appmesh-envoy"
-ENVOY_LATEST_TAG="v1.26.4.0-prod"
+ENVOY_LATEST_TAG="v1.27.0.0-prod"
 ENVOY_1_22_TAG="v1.22.2.0-prod"
 
 PROXY_ROUTE_IMAGE="$IMAGE_HOST/aws-appmesh-proxy-route-manager"