diff --git a/resources/Materials/TestSuite/stdlib/upgrade/syntax_1_38.mtlx b/resources/Materials/TestSuite/stdlib/upgrade/syntax_1_38.mtlx
index 575edbd800..215c6d776a 100644
--- a/resources/Materials/TestSuite/stdlib/upgrade/syntax_1_38.mtlx
+++ b/resources/Materials/TestSuite/stdlib/upgrade/syntax_1_38.mtlx
@@ -35,4 +35,32 @@
     <input name="surfaceshader" type="surfaceshader" nodename="N_surface_2" />
   </surfacematerial>
 
+  <normal name="N_objectnormal" type="vector3">
+    <input name="space" type="string" value="object" />
+  </normal>
+  <multiply name="N_multiply" type="vector3">
+    <input name="in1" type="vector3" nodename="N_objectnormal" />
+    <input name="in2" type="float" value="0.5" />
+  </multiply>
+  <add name="N_add" type="vector3">
+    <input name="in1" type="vector3" nodename="N_multiply" />
+    <input name="in2" type="float" value="0.5" />
+  </add>
+  <normalmap name="N_normalmap_3" type="vector3" nodedef="ND_normalmap">
+    <input name="in" type="vector3" nodename="N_add" />
+    <input name="space" type="string" value="object" />
+  </normalmap>
+  <transformnormal name="N_transformnormal" type="vector3">
+    <input name="in" type="vector3" nodename="N_normalmap_3" />
+    <input name="fromspace" type="string" value="object" />
+    <input name="tospace" type="string" value="world" />
+  </transformnormal>
+  <standard_surface name="N_surface_3" type="surfaceshader">
+    <input name="metalness" type="float" value="1" />
+    <input name="normal" type="vector3" nodename="N_transformnormal" />
+  </standard_surface>
+  <surfacematerial name="N_material_3" type="material">
+    <input name="surfaceshader" type="surfaceshader" nodename="N_surface_3" />
+  </surfacematerial>
+
 </materialx>
diff --git a/source/MaterialXCore/Version.cpp b/source/MaterialXCore/Version.cpp
index b4aa28bcd7..d1c60e1629 100644
--- a/source/MaterialXCore/Version.cpp
+++ b/source/MaterialXCore/Version.cpp
@@ -1316,30 +1316,59 @@ void Document::upgradeVersion()
             }
             else if (nodeCategory == "normalmap")
             {
-                // Handle a rename of the float-typed nodedef.
-                if (node->getNodeDefString() == "ND_normalmap")
+                InputPtr space = node->getInput("space");
+                if (space && space->getValueString() == "object")
                 {
-                    node->setNodeDefString("ND_normalmap_float");
-                }
-
-                node->removeInput("space");
+                    // Replace object-space normalmap with a graph.
+                    GraphElementPtr graph = node->getAncestorOfType<GraphElement>();
+                    NodePtr multiply = graph->addNode("multiply", graph->createValidChildName("multiply"), "vector3");
+                    copyInputWithBindings(node, "in", multiply, "in1");
+                    multiply->setInputValue("in2", 2.0f);
+                    NodePtr subtract = graph->addNode("subtract", graph->createValidChildName("subtract"), "vector3");
+                    subtract->addInput("in1", "vector3")->setConnectedNode(multiply);
+                    subtract->setInputValue("in2", 1.0f);
+                    node->setCategory("normalize");
+                    vector<InputPtr> origInputs = node->getInputs();
+                    for (InputPtr input : origInputs)
+                    {
+                        node->removeChild(input->getName());
+                    }
+                    node->addInput("in", "vector3")->setConnectedNode(subtract);
 
-                // If the normal or tangent inputs are set and the bitangent input is not, 
-                // the bitangent should be set to normalize(cross(N, T))
-                InputPtr normalInput = node->getInput("normal");
-                InputPtr tangentInput = node->getInput("tangent");
-                InputPtr bitangentInput = node->getInput("bitangent");
-                if ((normalInput || tangentInput) && !bitangentInput)
+                    // Update nodedef name if present.
+                    if (node->hasNodeDefString())
+                    {
+                        node->setNodeDefString("ND_normalize_vector3");
+                    }
+                }
+                else
                 {
-                    GraphElementPtr graph = node->getAncestorOfType<GraphElement>();
-                    NodePtr crossNode = graph->addNode("crossproduct", graph->createValidChildName("normalmap_cross"), "vector3");
-                    copyInputWithBindings(node, "normal", crossNode, "in1");
-                    copyInputWithBindings(node, "tangent", crossNode, "in2");
+                    // Clear tangent-space input.
+                    node->removeInput("space");
+
+                    // If the normal or tangent inputs are set and the bitangent input is not, 
+                    // the bitangent should be set to normalize(cross(N, T))
+                    InputPtr normalInput = node->getInput("normal");
+                    InputPtr tangentInput = node->getInput("tangent");
+                    InputPtr bitangentInput = node->getInput("bitangent");
+                    if ((normalInput || tangentInput) && !bitangentInput)
+                    {
+                        GraphElementPtr graph = node->getAncestorOfType<GraphElement>();
+                        NodePtr crossNode = graph->addNode("crossproduct", graph->createValidChildName("normalmap_cross"), "vector3");
+                        copyInputWithBindings(node, "normal", crossNode, "in1");
+                        copyInputWithBindings(node, "tangent", crossNode, "in2");
 
-                    NodePtr normalizeNode = graph->addNode("normalize", graph->createValidChildName("normalmap_cross_norm"), "vector3");
-                    normalizeNode->addInput("in", "vector3")->setConnectedNode(crossNode);
+                        NodePtr normalizeNode = graph->addNode("normalize", graph->createValidChildName("normalmap_cross_norm"), "vector3");
+                        normalizeNode->addInput("in", "vector3")->setConnectedNode(crossNode);
 
-                    node->addInput("bitangent", "vector3")->setConnectedNode(normalizeNode);
+                        node->addInput("bitangent", "vector3")->setConnectedNode(normalizeNode);
+                    }
+
+                    // Update nodedef name if present.
+                    if (node->getNodeDefString() == "ND_normalmap")
+                    {
+                        node->setNodeDefString("ND_normalmap_float");
+                    }
                 }
             }
         }