diff --git a/CHANGES.rst b/CHANGES.rst
index c9e25e6f3e..bb38bc214e 100644
--- a/CHANGES.rst
+++ b/CHANGES.rst
@@ -21,11 +21,17 @@ Compute
   (#2135)
   [Steve Kowalik - @s-t-e-v-e-n-k]
 
+- [Azure ARM] Fix ``create_node`` failing with a JSON serialization error when
+  ``ex_customdata`` is provided. The base64 encoded custom data is now decoded
+  to a ``str`` and both ``str`` and ``bytes`` inputs are accepted.
+  (GITHUB-1893)
+  [Sanjay Santhanam - @Sanjays2402]
+
 - [UpCloud] 
 
   Add new functions to complete the Upcloud driver and move it to the
   last API version 1.3
-  (#2152)
+  (#2147)
   [Miguel Caballer - @micafer]
 
 Changes in Apache Libcloud 3.9.1
diff --git a/libcloud/compute/drivers/azure_arm.py b/libcloud/compute/drivers/azure_arm.py
index d540c10820..852c350e5d 100644
--- a/libcloud/compute/drivers/azure_arm.py
+++ b/libcloud/compute/drivers/azure_arm.py
@@ -609,7 +609,7 @@ def create_node(
             be placed in the file /var/lib/waagent/CustomData
             https://azure.microsoft.com/en-us/documentation/ \
             articles/virtual-machines-how-to-inject-custom-data/
-        :type ex_customdata: ``str``
+        :type ex_customdata: ``str`` or ``bytes``
 
         :param ex_use_managed_disks: Enable this feature to have Azure
             automatically manage the availability of disks to provide data
@@ -741,7 +741,11 @@ def create_node(
             data["properties"]["storageProfile"]["osDisk"].update({"diskSizeGB": ex_disk_size})
 
         if ex_customdata:
-            data["properties"]["osProfile"]["customData"] = base64.b64encode(ex_customdata)
+            if isinstance(ex_customdata, str):
+                ex_customdata = ex_customdata.encode("utf-8")
+            data["properties"]["osProfile"]["customData"] = base64.b64encode(ex_customdata).decode(
+                "utf-8"
+            )
 
         data["properties"]["osProfile"]["adminUsername"] = ex_user_name
 
diff --git a/libcloud/test/compute/test_azure_arm.py b/libcloud/test/compute/test_azure_arm.py
index 8efbc3c20a..cd0a255e5a 100644
--- a/libcloud/test/compute/test_azure_arm.py
+++ b/libcloud/test/compute/test_azure_arm.py
@@ -15,6 +15,7 @@
 
 import sys
 import json
+import base64
 import functools
 from datetime import datetime
 from unittest import mock
@@ -232,6 +233,56 @@ def test_create_node_ex_disk_size(self):
             },
         )
 
+    def test_create_node_ex_customdata(self):
+        location = NodeLocation("any_location", "", "", self.driver)
+        size = NodeSize("any_size", "", 0, 0, 0, 0, driver=self.driver)
+        image = AzureImage("1", "1", "ubuntu", "pub", location.id, self.driver)
+        auth = NodeAuthPassword("any_password")
+
+        customdata = "#!/bin/bash\necho hello"
+        expected = base64.b64encode(customdata.encode("utf-8")).decode("utf-8")
+
+        # ex_customdata provided as a str
+        node = self.driver.create_node(
+            "test-node-1",
+            size,
+            image,
+            auth,
+            location=location,
+            ex_resource_group="000000",
+            ex_storage_account="000000",
+            ex_user_name="any_user",
+            ex_network="000000",
+            ex_subnet="000000",
+            ex_use_managed_disks=True,
+            ex_customdata=customdata,
+        )
+        os_profile = node.extra["properties"]["osProfile"]
+        self.assertEqual(os_profile["customData"], expected)
+        # customData must be a JSON-serializable str, not bytes
+        self.assertIsInstance(os_profile["customData"], str)
+        json.dumps(node.extra["properties"])
+
+        # ex_customdata provided as bytes (regression for GH #1893)
+        node = self.driver.create_node(
+            "test-node-1",
+            size,
+            image,
+            auth,
+            location=location,
+            ex_resource_group="000000",
+            ex_storage_account="000000",
+            ex_user_name="any_user",
+            ex_network="000000",
+            ex_subnet="000000",
+            ex_use_managed_disks=True,
+            ex_customdata=customdata.encode("utf-8"),
+        )
+        os_profile = node.extra["properties"]["osProfile"]
+        self.assertEqual(os_profile["customData"], expected)
+        self.assertIsInstance(os_profile["customData"], str)
+        json.dumps(node.extra["properties"])
+
     def test_create_node_ex_os_disk_delete(self):
         location = NodeLocation("any_location", "", "", self.driver)
         size = NodeSize("any_size", "", 0, 0, 0, 0, driver=self.driver)