Automate REST API Management with Terraform: AWS API Gateway Proxy Integration and Lambda

# Lambda Function
resource "aws_lambda_function" "lambda" {
  function_name = var.lambda_function_name
  role          = aws_iam_role.lambda_role.arn
  filename      = "location/of/package.zip"
  handler       = "index.handler"
  runtime       = "nodejs20.x"
  memory_size   = 512
  timeout       = 10
}

#Grants API Gateway permission to invoke the Lambda function.
resource "aws_lambda_permission" "apigw" {
  statement_id  = "AllowAPIGatewayInvoke"
  action        = "lambda:InvokeFunction"
  function_name = aws_lambda_function.lambda.function_name
  principal     = "apigateway.amazonaws.com"
  source_arn    = "${aws_api_gateway_rest_api.api.execution_arn}/${var.stage}/*"
}

#Creates an IAM role with the necessary permissions 
resource "aws_iam_role" "lambda_role" {
  name = "lambda_role"

  assume_role_policy = jsonencode({
    Version = "2012-10-17",
    Statement = [
      {
        Action = "sts:AssumeRole",
        Effect = "Allow",
        Principal = {
          Service = "lambda.amazonaws.com"
        }
      }
    ]
  })
}

resource "aws_iam_role_policy_attachment" "lambda_policy" {
  role       = aws_iam_role.lambda_role.name
  policy_arn = "arn:aws:iam::aws:policy/service-role/AWSLambdaBasicExecutionRole"
}

# API Gateway
resource "aws_api_gateway_rest_api" "api" {
  name = var.api_name
}

# Creates a proxy resource with the path `{proxy+}`.
resource "aws_api_gateway_resource" "proxy" {
  rest_api_id = aws_api_gateway_rest_api.api.id
  parent_id   = aws_api_gateway_rest_api.api.root_resource_id
  path_part   = "{proxy+}"
}

# Defines the `ANY` method for the proxy resource.
resource "aws_api_gateway_method" "proxy_method" {
  rest_api_id   = aws_api_gateway_rest_api.api.id
  resource_id   = aws_api_gateway_resource.proxy.id
  http_method   = "ANY"
  authorization = "NONE"
}

# Integrates proxy_method and proxy resource with each other
resource "aws_api_gateway_integration" "proxy_integration" {
  rest_api_id             = aws_api_gateway_rest_api.api.id
  resource_id             = aws_api_gateway_resource.proxy.id
  http_method             = aws_api_gateway_method.proxy_method.http_method
  type                    = "AWS_PROXY"
  integration_http_method = "POST"
  uri                     = aws_lambda_function.lambda.invoke_arn
}

resource "aws_api_gateway_deployment" "api_deployment" {
  depends_on = [
    aws_api_gateway_method.proxy_method,
    aws_api_gateway_integration.proxy_integration,
  ]
  rest_api_id = aws_api_gateway_rest_api.api.id
  lifecycle {
    create_before_destroy = true
  }
}

# Defines the deployment stage for the API Gateway.
resource "aws_api_gateway_stage" "api_stage" {
  stage_name    = var.stage
  rest_api_id   = aws_api_gateway_rest_api.api.id
  deployment_id = aws_api_gateway_deployment.api_deployment.id
}

data "aws_caller_identity" "current" {}

variable "api_name" {
  description = "The name of the API Gateway"
}

variable "stage" {
  description = "The deployment stage"
}

variable "lambda_function_name" {
  description = "The name of the Lambda function"
}