diff --git a/openedx_tagging/core/tagging/api.py b/openedx_tagging/core/tagging/api.py
index 2c78b10c..a8a4e7bc 100644
--- a/openedx_tagging/core/tagging/api.py
+++ b/openedx_tagging/core/tagging/api.py
@@ -129,13 +129,7 @@ def resync_object_tags(object_tags: QuerySet | None = None) -> int:
     if not object_tags:
         object_tags = ObjectTag.objects.select_related("tag", "taxonomy")
 
-    num_changed = 0
-    for object_tag in object_tags:
-        changed = object_tag.resync()
-        if changed:
-            object_tag.save()
-            num_changed += 1
-    return num_changed
+    return ObjectTag.resync_object_tags(object_tags)
 
 
 def get_object_tags(
@@ -329,3 +323,13 @@ def add_tag_to_taxonomy(
     Tag is returned
     """
     return taxonomy.cast().add_tag(tag, parent_tag_id, external_id)
+
+
+def update_tag_in_taxonomy(taxonomy: Taxonomy, tag: int, tag_value: str):
+    """
+    Update a Tag that belongs to a Taxonomy. The related ObjectTags are
+    updated accordingly.
+
+    Currently only support updates the Tag value.
+    """
+    return taxonomy.cast().update_tag(tag, tag_value)
diff --git a/openedx_tagging/core/tagging/models/base.py b/openedx_tagging/core/tagging/models/base.py
index ffcef13e..5e973c51 100644
--- a/openedx_tagging/core/tagging/models/base.py
+++ b/openedx_tagging/core/tagging/models/base.py
@@ -366,14 +366,12 @@ def add_tag(
                 "add_tag() doesn't work for system defined taxonomies. They cannot be modified."
             )
 
-        current_tags = self.get_tags()
-
         if self.tag_set.filter(value__iexact=tag_value).exists():
             raise ValueError(f"Tag with value '{tag_value}' already exists for taxonomy.")
 
         parent = None
         if parent_tag_id:
-            parent = Tag.objects.get(id=parent_tag_id)
+            parent = self.tag_set.get(id=parent_tag_id)
 
         tag = Tag.objects.create(
             taxonomy=self, value=tag_value, parent=parent, external_id=external_id
@@ -381,6 +379,33 @@ def add_tag(
 
         return tag
 
+    def update_tag(self, tag_id: int, tag_value: str) -> Tag:
+        """
+        Update an existing Tag in Taxonomy and return it. Currently only
+        supports updating the Tag's value.
+        """
+        self.check_casted()
+
+        if self.allow_free_text:
+            raise ValueError(
+                "update_tag() doesn't work for free text taxonomies. They don't use Tag instances."
+            )
+
+        if self.system_defined:
+            raise ValueError(
+                "update_tag() doesn't work for system defined taxonomies. They cannot be modified."
+            )
+
+        # Update Tag instance with new value
+        tag = self.tag_set.get(id=tag_id)
+        tag.value = tag_value
+        tag.save()
+
+        # Resync all related ObjectTags to update to the new Tag value
+        object_tags = self.objecttag_set.all()
+        ObjectTag.resync_object_tags(object_tags)
+        return tag
+
     def validate_value(self, value: str) -> bool:
         """
         Check if 'value' is part of this Taxonomy.
@@ -648,3 +673,18 @@ def copy(self, object_tag: ObjectTag) -> Self:
         self._value = object_tag._value  # pylint: disable=protected-access
         self._name = object_tag._name  # pylint: disable=protected-access
         return self
+
+    @classmethod
+    def resync_object_tags(cls, object_tags: models.QuerySet[ObjectTag]) -> int:
+        """
+        Reconciles ObjectTag entries with any changes made to their associated
+        taxonomies and tags. Return the number of changes made.
+        """
+        num_changed = 0
+        for object_tag in object_tags:
+            changed = object_tag.resync()
+            if changed:
+                object_tag.save()
+                num_changed += 1
+
+        return num_changed
diff --git a/openedx_tagging/core/tagging/rest_api/v1/serializers.py b/openedx_tagging/core/tagging/rest_api/v1/serializers.py
index b6912839..fb6d6c84 100644
--- a/openedx_tagging/core/tagging/rest_api/v1/serializers.py
+++ b/openedx_tagging/core/tagging/rest_api/v1/serializers.py
@@ -205,3 +205,14 @@ class TaxonomyTagCreateBodySerializer(serializers.Serializer):  # pylint: disabl
         queryset=Tag.objects.all(), required=False
     )
     external_id = serializers.CharField(required=False)
+
+
+class TaxonomyTagUpdateBodySerializer(serializers.Serializer):  # pylint: disable=abstract-method
+    """
+    Serializer of the body for the Taxonomy Tags UPDATE view
+    """
+
+    tag = serializers.PrimaryKeyRelatedField(
+        queryset=Tag.objects.all(), required=True
+    )
+    tag_value = serializers.CharField(required=True)
diff --git a/openedx_tagging/core/tagging/rest_api/v1/views.py b/openedx_tagging/core/tagging/rest_api/v1/views.py
index 733eefad..8392d35e 100644
--- a/openedx_tagging/core/tagging/rest_api/v1/views.py
+++ b/openedx_tagging/core/tagging/rest_api/v1/views.py
@@ -3,7 +3,7 @@
 """
 from __future__ import annotations
 
-from django.db import model
+from django.db import models
 from django.http import Http404, HttpResponse
 from rest_framework import mixins, status
 from rest_framework.decorators import action
@@ -15,6 +15,7 @@
 from openedx_tagging.core.tagging.models.base import Tag
 
 from ...api import (
+    add_tag_to_taxonomy,
     create_taxonomy,
     get_children_tags,
     get_object_tags,
@@ -23,7 +24,7 @@
     get_taxonomy,
     search_tags,
     tag_object,
-    add_tag_to_taxonomy,
+    update_tag_in_taxonomy,
 )
 from ...import_export.api import export_tags
 from ...import_export.parsers import ParserFormat
@@ -43,6 +44,7 @@
     TaxonomyListQueryParamsSerializer,
     TaxonomySerializer,
     TaxonomyTagCreateBodySerializer,
+    TaxonomyTagUpdateBodySerializer,
 )
 from .utils import view_auth_classes
 
@@ -602,9 +604,40 @@ def post(self, request, *args, **kwargs):
             new_tag = add_tag_to_taxonomy(
                 taxonomy, tag, parent_tag_id, external_id
             )
+        except Tag.DoesNotExist as e:
+            raise Http404("Parent Tag not found") from e
+        except ValueError as e:
+            raise ValidationError from e
+
+        serializer_context = self.get_serializer_context()
+        return Response(
+            self.serializer_class(new_tag, context=serializer_context).data,
+            status=status.HTTP_201_CREATED
+        )
+
+    def update(self, request, *args, **kwargs):
+        """
+        Updates a Tag that belongs to the Taxonomy and returns it.
+        Currently only updating the Tag value is supported.
+        """
+        pk = self.kwargs.get("pk")
+        taxonomy = self.get_taxonomy(pk)
+
+        body = TaxonomyTagUpdateBodySerializer(data=request.data)
+        body.is_valid(raise_exception=True)
+
+        tag = body.data.get("tag")
+        tag_value = body.data.get("tag_value")
+
+        try:
+            updated_tag = update_tag_in_taxonomy(taxonomy, tag, tag_value)
+        except Tag.DoesNotExist as e:
+            raise Http404("Tag not found") from e
         except ValueError as e:
             raise ValidationError from e
 
+        serializer_context = self.get_serializer_context()
         return Response(
-            TagsSerializer(new_tag).data, status=status.HTTP_201_CREATED
+            self.serializer_class(updated_tag, context=serializer_context).data,
+            status=status.HTTP_200_OK
         )
diff --git a/tests/openedx_tagging/core/tagging/test_views.py b/tests/openedx_tagging/core/tagging/test_views.py
index b137bd37..66ea85bb 100644
--- a/tests/openedx_tagging/core/tagging/test_views.py
+++ b/tests/openedx_tagging/core/tagging/test_views.py
@@ -1310,6 +1310,22 @@ def test_create_tag_in_taxonomy_with_invalid_parent_tag_id(self):
 
         assert response.status_code == status.HTTP_400_BAD_REQUEST
 
+    def test_create_tag_in_taxonomy_with_parent_tag_id_in_other_taxonomy(self):
+        self.client.force_authenticate(user=self.user)
+        invalid_parent_tag_id = 1
+        new_tag_value = "New Child Tag"
+
+        create_data = {
+            "tag": new_tag_value,
+            "parent_tag_id": invalid_parent_tag_id,
+        }
+
+        response = self.client.post(
+            self.large_taxonomy_url, create_data, format="json"
+        )
+
+        assert response.status_code == status.HTTP_404_NOT_FOUND
+
     def test_create_tag_in_taxonomy_with_already_existing_value(self):
         self.client.force_authenticate(user=self.user)
         new_tag_value = "New Tag"
@@ -1330,3 +1346,165 @@ def test_create_tag_in_taxonomy_with_already_existing_value(self):
         )
 
         assert response.status_code == status.HTTP_400_BAD_REQUEST
+
+    def test_update_tag_in_taxonomy_with_different_methods(self):
+        self.client.force_authenticate(user=self.user)
+        updated_tag_value = "Updated Tag"
+        updated_tag_value_2 = "Updated Tag 2"
+
+        # Existing Tag that will be updated
+        existing_tag = self.small_taxonomy.tag_set.filter(parent=None).first()
+
+        update_data = {
+            "tag": existing_tag.id,
+            "tag_value": updated_tag_value
+        }
+
+        # Test updating using the PUT method
+        response = self.client.put(
+            self.small_taxonomy_url, update_data, format="json"
+        )
+
+        assert response.status_code == status.HTTP_200_OK
+
+        data = response.data
+
+        # Check that Tag value got updated
+        self.assertEqual(data.get("id"), existing_tag.id)
+        self.assertEqual(data.get("value"), updated_tag_value)
+        self.assertEqual(data.get("taxonomy_id"), self.small_taxonomy.pk)
+        self.assertEqual(data.get("parent_id"), existing_tag.parent)
+        self.assertEqual(data.get("external_id"), existing_tag.external_id)
+
+        # Test updating using the PATCH method
+        update_data["tag_value"] = updated_tag_value_2
+        response = self.client.patch(
+            self.small_taxonomy_url, update_data, format="json"
+        )
+
+        assert response.status_code == status.HTTP_200_OK
+
+        data = response.data
+
+        # Check the Tag value got updated again
+        self.assertEqual(data.get("id"), existing_tag.id)
+        self.assertEqual(data.get("value"), updated_tag_value_2)
+        self.assertEqual(data.get("taxonomy_id"), self.small_taxonomy.pk)
+        self.assertEqual(data.get("parent_id"), existing_tag.parent)
+        self.assertEqual(data.get("external_id"), existing_tag.external_id)
+
+    def test_update_tag_in_taxonomy_reflects_changes_in_object_tags(self):
+        self.client.force_authenticate(user=self.user)
+
+        existing_tag = self.small_taxonomy.tag_set.filter(parent=None).first()
+
+        # Setup ObjectTags
+        # _value=existing_tag.value
+        object_tag_1 = ObjectTag.objects.create(
+            object_id="abc", taxonomy=self.small_taxonomy, tag=existing_tag
+        )
+        object_tag_2 = ObjectTag.objects.create(
+            object_id="def", taxonomy=self.small_taxonomy, tag=existing_tag
+        )
+        object_tag_3 = ObjectTag.objects.create(
+            object_id="ghi", taxonomy=self.small_taxonomy, tag=existing_tag
+        )
+
+        assert object_tag_1.value == existing_tag.value
+        assert object_tag_2.value == existing_tag.value
+        assert object_tag_3.value == existing_tag.value
+
+        updated_tag_value = "Updated Tag"
+        update_data = {
+            "tag": existing_tag.id,
+            "tag_value": updated_tag_value
+        }
+
+        # Test updating using the PUT method
+        response = self.client.put(
+            self.small_taxonomy_url, update_data, format="json"
+        )
+
+        assert response.status_code == status.HTTP_200_OK
+
+        data = response.data
+
+        # Check that Tag value got updated
+        self.assertEqual(data.get("id"), existing_tag.id)
+        self.assertEqual(data.get("value"), updated_tag_value)
+        self.assertEqual(data.get("taxonomy_id"), self.small_taxonomy.pk)
+        self.assertEqual(data.get("parent_id"), existing_tag.parent)
+        self.assertEqual(data.get("external_id"), existing_tag.external_id)
+
+        # Check that the ObjectTags got updated as well
+        object_tag_1.refresh_from_db()
+        self.assertEqual(object_tag_1.value, updated_tag_value)
+        object_tag_2.refresh_from_db()
+        self.assertEqual(object_tag_2.value, updated_tag_value)
+        object_tag_3.refresh_from_db()
+        self.assertEqual(object_tag_3.value, updated_tag_value)
+
+    def test_update_tag_in_taxonomy_with_invalid_tag_id(self):
+        self.client.force_authenticate(user=self.user)
+        updated_tag_value = "Updated Tag"
+
+        update_data = {
+            "tag": 919191,
+            "tag_value": updated_tag_value
+        }
+
+        response = self.client.put(
+            self.small_taxonomy_url, update_data, format="json"
+        )
+
+        assert response.status_code == status.HTTP_400_BAD_REQUEST
+
+    def test_update_tag_in_taxonomy_with_tag_id_in_other_taxonomy(self):
+        self.client.force_authenticate(user=self.user)
+        updated_tag_value = "Updated Tag"
+
+        update_data = {
+            "tag": 1,
+            "tag_value": updated_tag_value
+        }
+
+        response = self.client.put(
+            self.large_taxonomy_url, update_data, format="json"
+        )
+
+        assert response.status_code == status.HTTP_404_NOT_FOUND
+
+    def test_update_tag_in_taxonomy_with_no_tag_value_provided(self):
+        self.client.force_authenticate(user=self.user)
+
+        # Existing Tag that will be updated
+        existing_tag = self.small_taxonomy.tag_set.filter(parent=None).first()
+
+        update_data = {
+            "tag": existing_tag.id
+        }
+
+        response = self.client.put(
+            self.small_taxonomy_url, update_data, format="json"
+        )
+
+        assert response.status_code == status.HTTP_400_BAD_REQUEST
+
+    def test_update_tag_in_invalid_taxonomy(self):
+        self.client.force_authenticate(user=self.user)
+
+        # Existing Tag that will be updated
+        existing_tag = self.small_taxonomy.tag_set.filter(parent=None).first()
+
+        updated_tag_value = "Updated Tag"
+        update_data = {
+            "tag": existing_tag.id,
+            "tag_value": updated_tag_value
+        }
+
+        invalid_taxonomy_url = TAXONOMY_TAGS_URL.format(pk=919191)
+        response = self.client.put(
+            invalid_taxonomy_url, update_data, format="json"
+        )
+
+        assert response.status_code == status.HTTP_404_NOT_FOUND