diff --git a/server/secops/secops_mcp/tools/security_rules.py b/server/secops/secops_mcp/tools/security_rules.py
index c3ffe23..31d2f1c 100644
--- a/server/secops/secops_mcp/tools/security_rules.py
+++ b/server/secops/secops_mcp/tools/security_rules.py
@@ -514,6 +514,121 @@ async def create_rule(
         return f"Error creating rule: {str(e)}"
 
 
+@server.tool()
+async def update_rule(
+    rule_id: str,
+    rule_text: str,
+    project_id: Optional[str] = None,
+    customer_id: Optional[str] = None,
+    region: Optional[str] = None,
+) -> str:
+    """Update an existing detection rule in Chronicle SIEM.
+
+    Replaces the text of an existing YARA-L 2.0 detection rule in place. Chronicle
+    preserves the full version history of the rule, so the previous version remains
+    accessible for audit purposes. The rule's deployment state (enabled/disabled,
+    alerting on/off) is not affected by this operation.
+
+    Use this tool instead of `create_rule` when iterating on an existing rule, to
+    avoid accumulating orphaned rule versions that must be manually cleaned up.
+
+    **Workflow Integration:**
+    - Preferred over `create_rule` for rule edits — same rule ID, same deployment state.
+    - Use after `test_rule` confirms the revised rule text behaves as expected.
+    - Follows the same development lifecycle as `create_rule`: edit → test → update → monitor.
+
+    **Use Cases:**
+    - Fix a false-positive condition in a deployed rule without disabling it first.
+    - Tighten detection logic based on alert review findings.
+    - Add new event types or conditions to an existing rule.
+    - Update rule metadata (description, severity, MITRE mappings) without changing detection logic.
+    - Apply YARA-L syntax corrections identified during rule validation.
+
+    **Rule Update Best Practices:**
+    - Validate the updated rule text with `validate_rule` or `test_rule` before applying.
+    - Retrieve the current rule text with `get_detection_rule` to use as a baseline.
+    - Supply the complete rule text — the API replaces the entire rule body, not a diff.
+    - Update the `last_modified` date in the rule's metadata section to reflect the change.
+
+    Args:
+        rule_id (str): Unique ID of the rule to update, in the format "ru_<UUID>".
+            Obtain this from `list_security_rules` or `get_detection_rule`.
+        rule_text (str): Complete, updated YARA-L 2.0 rule definition. This replaces
+            the existing rule text in full.
+        project_id (str): Google Cloud project ID (required).
+        customer_id (str): Chronicle customer ID (required).
+        region (str): Chronicle region (e.g., "us", "europe") (required).
+
+    Returns:
+        str: Success message with the rule ID, rule name, and new version information.
+             Returns an error message if the update fails.
+
+    Example Usage:
+        update_rule(
+            rule_id="ru_12345678-1234-1234-1234-123456789012",
+            rule_text='''
+            rule suspicious_powershell_download {
+                meta:
+                    description = "Detects PowerShell downloading files"
+                    author = "Security Team"
+                    severity = "High"
+                    yara_version = "YL2.0"
+                    rule_version = "1.1"
+                    mitre_attack_tactic = "TA0011"
+                    mitre_attack_technique = "T1059.001"
+                events:
+                    $process.metadata.event_type = "PROCESS_LAUNCH"
+                    $process.principal.process.command_line = /powershell.*downloadfile/i
+                    $process.principal.hostname != ""
+                condition:
+                    $process
+            }
+            ''',
+            project_id="my-project",
+            customer_id="my-customer",
+            region="us"
+        )
+
+    Next Steps (using MCP-enabled tools):
+        - Verify the update with `get_detection_rule` to confirm the new rule text is live.
+        - Run `test_rule` with the same rule text to validate detection behavior post-update.
+        - Monitor alerts with `get_security_alerts` to confirm the rule is performing as expected.
+    """
+    try:
+        logger.info(f"Updating detection rule {rule_id}")
+
+        chronicle = get_chronicle_client(project_id, customer_id, region)
+
+        rule = chronicle.update_rule(rule_id, rule_text)
+
+        # Chronicle returns the versioned resource name: .../rules/ru_<UUID>@v_<sec>_<ns>
+        rule_id_out = rule.get("name", "").split("/")[-1]
+
+        result = "Successfully updated detection rule.\n"
+        result += f"Rule ID: {rule_id}\n"
+        if "@" in rule_id_out:
+            result += f"New version: {rule_id_out}\n"
+
+        for line in rule_text.strip().split("\n"):
+            if line.strip().startswith("rule "):
+                rule_name = (
+                    line.strip().replace("rule ", "").replace(" {", "").strip()
+                )
+                result += f"Rule Name: {rule_name}\n"
+                break
+
+        result += (
+            "Rule updated successfully. Deployment state (enabled/alerting) is unchanged. "
+            "Use test_rule to validate the updated rule before relying on new alerts."
+        )
+
+        return result
+
+    except Exception as e:
+        logger.error(f"Error updating rule {rule_id}: {str(e)}", exc_info=True)
+        return f"Error updating rule: {str(e)}"
+
+
 @server.tool()
 async def test_rule(
     rule_text: str,
diff --git a/server/secops/tests/test_secops_rules_unit.py b/server/secops/tests/test_secops_rules_unit.py
new file mode 100644
index 0000000..25eb9af
--- /dev/null
+++ b/server/secops/tests/test_secops_rules_unit.py
@@ -0,0 +1,263 @@
+# Copyright 2025 Google LLC
+#
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+#
+#     http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+"""Unit tests for security rule management tools."""
+
+import sys
+import os
+import pytest
+from unittest.mock import MagicMock, patch
+
+# Ensure server/secops is in path to import secops_mcp
+current_dir = os.path.dirname(os.path.abspath(__file__))
+server_secops_dir = os.path.dirname(current_dir)
+if server_secops_dir not in sys.path:
+    sys.path.append(server_secops_dir)
+
+# Mock secops if not installed (for unit testing without dependencies)
+try:
+    import secops
+except ImportError:
+    mock_secops = MagicMock()
+    sys.modules["secops"] = mock_secops
+    sys.modules["secops.chronicle"] = MagicMock()
+    sys.modules["secops.exceptions"] = MagicMock()
+
+# Mock mcp if not installed
+try:
+    import mcp
+except ImportError:
+    mock_mcp = MagicMock()
+    sys.modules["mcp"] = mock_mcp
+    sys.modules["mcp.server"] = MagicMock()
+    sys.modules["mcp.server.fastmcp"] = MagicMock()
+
+    def tool_decorator(*args, **kwargs):
+        def wrapper(func):
+            return func
+        return wrapper
+
+    mock_fastmcp_instance = MagicMock()
+    mock_fastmcp_instance.tool.side_effect = tool_decorator
+    sys.modules["mcp.server.fastmcp"].FastMCP.return_value = mock_fastmcp_instance
+
+from secops_mcp.tools.security_rules import create_rule, update_rule
+
+
+# ---------------------------------------------------------------------------
+# Fixtures
+# ---------------------------------------------------------------------------
+
+SAMPLE_RULE_TEXT = """rule suspicious_powershell_download {
+    meta:
+        description = "Detects PowerShell downloading files"
+        author = "Security Team"
+        severity = "Medium"
+    events:
+        $process.metadata.event_type = "PROCESS_LAUNCH"
+        $process.principal.process.command_line = /powershell.*downloadfile/i
+        $process.principal.hostname != ""
+    condition:
+        $process
+}"""
+
+SAMPLE_RULE_ID = "ru_12345678-1234-1234-1234-123456789012"
+
+VERSIONED_RULE_NAME = (
+    "projects/my-project/locations/us/instances/my-customer"
+    f"/rules/{SAMPLE_RULE_ID}@v_1234567890_123456789"
+)
+
+
+@pytest.fixture
+def mock_chronicle_client():
+    client = MagicMock()
+    client.update_rule.return_value = {"name": VERSIONED_RULE_NAME}
+    client.create_rule.return_value = {
+        "name": f"projects/my-project/locations/us/instances/my-customer/rules/{SAMPLE_RULE_ID}"
+    }
+    return client
+
+
+@pytest.fixture
+def mock_get_client(mock_chronicle_client):
+    with patch(
+        "secops_mcp.tools.security_rules.get_chronicle_client",
+        return_value=mock_chronicle_client,
+    ):
+        yield mock_chronicle_client
+
+
+# ---------------------------------------------------------------------------
+# update_rule tests
+# ---------------------------------------------------------------------------
+
+
+@pytest.mark.asyncio
+async def test_update_rule_success(mock_get_client):
+    """update_rule returns a success message containing the rule ID and name."""
+    result = await update_rule(
+        rule_id=SAMPLE_RULE_ID,
+        rule_text=SAMPLE_RULE_TEXT,
+        project_id="my-project",
+        customer_id="my-customer",
+        region="us",
+    )
+
+    assert isinstance(result, str)
+    assert SAMPLE_RULE_ID in result
+    assert "suspicious_powershell_download" in result
+    assert "successfully" in result.lower()
+
+
+@pytest.mark.asyncio
+async def test_update_rule_calls_chronicle_client(mock_get_client):
+    """update_rule passes the correct rule_id and rule_text to the Chronicle client."""
+    await update_rule(
+        rule_id=SAMPLE_RULE_ID,
+        rule_text=SAMPLE_RULE_TEXT,
+        project_id="my-project",
+        customer_id="my-customer",
+        region="us",
+    )
+
+    mock_get_client.update_rule.assert_called_once_with(SAMPLE_RULE_ID, SAMPLE_RULE_TEXT)
+
+
+@pytest.mark.asyncio
+async def test_update_rule_passes_connection_params():
+    """update_rule forwards project_id, customer_id, and region to get_chronicle_client."""
+    mock_client = MagicMock()
+    mock_client.update_rule.return_value = {"name": VERSIONED_RULE_NAME}
+
+    with patch(
+        "secops_mcp.tools.security_rules.get_chronicle_client",
+        return_value=mock_client,
+    ) as mock_get_client_fn:
+        await update_rule(
+            rule_id=SAMPLE_RULE_ID,
+            rule_text=SAMPLE_RULE_TEXT,
+            project_id="proj-123",
+            customer_id="cust-456",
+            region="europe",
+        )
+
+    mock_get_client_fn.assert_called_once_with("proj-123", "cust-456", "europe")
+
+
+@pytest.mark.asyncio
+async def test_update_rule_includes_version_info(mock_get_client):
+    """update_rule surfaces the new version string when the API returns it."""
+    result = await update_rule(
+        rule_id=SAMPLE_RULE_ID,
+        rule_text=SAMPLE_RULE_TEXT,
+        project_id="my-project",
+        customer_id="my-customer",
+        region="us",
+    )
+
+    # The versioned ID (@v_...) should appear in the output.
+    assert f"{SAMPLE_RULE_ID}@v_" in result
+
+
+@pytest.mark.asyncio
+async def test_update_rule_no_version_in_response(mock_get_client):
+    """update_rule handles a response without a version suffix gracefully."""
+    mock_get_client.update_rule.return_value = {
+        "name": f"projects/my-project/locations/us/instances/my-customer/rules/{SAMPLE_RULE_ID}"
+    }
+
+    result = await update_rule(
+        rule_id=SAMPLE_RULE_ID,
+        rule_text=SAMPLE_RULE_TEXT,
+        project_id="my-project",
+        customer_id="my-customer",
+        region="us",
+    )
+
+    assert isinstance(result, str)
+    assert "successfully" in result.lower()
+    # No version line emitted — the output should not contain "@v_".
+    assert "@v_" not in result
+
+
+@pytest.mark.asyncio
+async def test_update_rule_extracts_rule_name(mock_get_client):
+    """update_rule correctly parses the rule name from the rule text header."""
+    rule_text = "rule detect_lateral_movement {\n    condition: true\n}"
+
+    result = await update_rule(
+        rule_id=SAMPLE_RULE_ID,
+        rule_text=rule_text,
+        project_id="my-project",
+        customer_id="my-customer",
+        region="us",
+    )
+
+    assert "detect_lateral_movement" in result
+
+
+@pytest.mark.asyncio
+async def test_update_rule_api_error(mock_get_client):
+    """update_rule returns an error message when the Chronicle API raises an exception."""
+    mock_get_client.update_rule.side_effect = Exception("API request failed: 404 Not Found")
+
+    result = await update_rule(
+        rule_id=SAMPLE_RULE_ID,
+        rule_text=SAMPLE_RULE_TEXT,
+        project_id="my-project",
+        customer_id="my-customer",
+        region="us",
+    )
+
+    assert isinstance(result, str)
+    assert "Error" in result
+    assert "API request failed" in result
+
+
+@pytest.mark.asyncio
+async def test_update_rule_empty_name_response(mock_get_client):
+    """update_rule handles an empty name field in the API response without crashing."""
+    mock_get_client.update_rule.return_value = {}
+
+    result = await update_rule(
+        rule_id=SAMPLE_RULE_ID,
+        rule_text=SAMPLE_RULE_TEXT,
+        project_id="my-project",
+        customer_id="my-customer",
+        region="us",
+    )
+
+    assert isinstance(result, str)
+    assert SAMPLE_RULE_ID in result
+
+
+# ---------------------------------------------------------------------------
+# create_rule smoke test (establishes baseline parity with update_rule)
+# ---------------------------------------------------------------------------
+
+
+@pytest.mark.asyncio
+async def test_create_rule_success(mock_get_client):
+    """create_rule returns a success message with the rule ID and name."""
+    result = await create_rule(
+        rule_text=SAMPLE_RULE_TEXT,
+        project_id="my-project",
+        customer_id="my-customer",
+        region="us",
+    )
+
+    assert isinstance(result, str)
+    assert SAMPLE_RULE_ID in result
+    assert "suspicious_powershell_download" in result
+    assert "successfully" in result.lower()