core/modules/rest/rest.install                     | 12 ++++-
 .../Update/RestConfigurationEntitiesUpdateTest.php | 61 +++++++++++++++++++++
 .../update/drupal-8.rest-rest_update_8201.php      | 63 ++++++++++++++++++++++
 3 files changed, 135 insertions(+), 1 deletion(-)

diff --git a/core/modules/rest/rest.install b/core/modules/rest/rest.install
index ac4ce9c..c40d8cf 100644
--- a/core/modules/rest/rest.install
+++ b/core/modules/rest/rest.install
@@ -25,11 +25,17 @@ function rest_requirements($phase) {
 }
 
 /**
+ * @defgroup updates-8.1.x-to-8.2.x Updates from 8.1.x to 8.2.x
+ * @{
+ * Update functions from 8.1.x to 8.2.x.
+ */
+
+/**
  * Install the REST config entity type and convert old settings-based config.
  *
  * @todo Automatically upgrade those REST resource config entities that have the same formats/auth mechanisms for all methods to "granular: resource" in https://www.drupal.org/node/2721595.
  */
-function rest_update_8100() {
+function rest_update_8201() {
   \Drupal::entityDefinitionUpdateManager()->installEntityType(\Drupal::entityTypeManager()->getDefinition('rest_resource_config'));
   foreach (\Drupal::config('rest.settings')->get('resources') as $key => $resource) {
     $resource = RestResourceConfig::create([
@@ -43,3 +49,7 @@ function rest_update_8100() {
     ->clear('resources')
     ->save();
 }
+
+/**
+ * @} End of "defgroup updates-8.1.x-to-8.2.x".
+ */
diff --git a/core/modules/rest/src/Tests/Update/RestConfigurationEntitiesUpdateTest.php b/core/modules/rest/src/Tests/Update/RestConfigurationEntitiesUpdateTest.php
new file mode 100644
index 0000000..3c861d7
--- /dev/null
+++ b/core/modules/rest/src/Tests/Update/RestConfigurationEntitiesUpdateTest.php
@@ -0,0 +1,61 @@
+<?php
+
+namespace Drupal\rest\Tests\Update;
+
+use Drupal\system\Tests\Update\UpdatePathTestBase;
+
+/**
+ * Tests that rest.settings is converted to rest_resource_config entities.
+ *
+ * @see https://www.drupal.org/node/2308745
+ *
+ * @group rest
+ */
+class RestConfigurationEntitiesUpdateTest extends UpdatePathTestBase {
+
+  /**
+   * {@inheritdoc}
+   */
+  protected static $modules = ['rest', 'serialization'];
+
+  /**
+   * {@inheritdoc}
+   */
+  public function setDatabaseDumpFiles() {
+    $this->databaseDumpFiles = [
+      __DIR__ . '/../../../../system/tests/fixtures/update/drupal-8.bare.standard.php.gz',
+      __DIR__ . '/../../../../rest/tests/fixtures/update/drupal-8.rest-rest_update_8201.php',
+    ];
+  }
+
+  /**
+   * Tests rest_update_8201().
+   */
+  public function testResourcesConvertedToConfigEntities() {
+    /** @var \Drupal\Core\Entity\EntityStorageInterface $resource_config_storage */
+    $resource_config_storage = $this->container->get('entity_type.manager')->getStorage('rest_resource_config');
+
+    // Make sure we have the expected values before the update.
+    $rest_settings = $this->config('rest.settings');
+    $this->assertTrue(array_key_exists('resources', $rest_settings->getRawData()));
+    $this->assertTrue(array_key_exists('entity:node', $rest_settings->getRawData()['resources']));
+    $resource_config_entities = $resource_config_storage->loadMultiple();
+    $this->assertIdentical([], array_keys($resource_config_entities));
+
+    // Read the existing 'entity:node' resource configuration so we can verify
+    // it after the update.
+    $node_configuration = $rest_settings->getRawData()['resources']['entity:node'];
+
+    $this->runUpdates();
+
+    // Make sure we have the expected values after the update.
+    $rest_settings = $this->config('rest.settings');
+    $this->assertFalse(array_key_exists('resources', $rest_settings->getRawData()));
+    $resource_config_entities = $resource_config_storage->loadMultiple();
+    $this->assertIdentical(['entity__node'], array_keys($resource_config_entities));
+    $node_resource_config_entity = $resource_config_entities['entity__node'];
+    $this->assertIdentical('method', $node_resource_config_entity->get('granularity'));
+    $this->assertIdentical($node_configuration,$node_resource_config_entity->get('configuration'));
+  }
+
+}
diff --git a/core/modules/rest/tests/fixtures/update/drupal-8.rest-rest_update_8201.php b/core/modules/rest/tests/fixtures/update/drupal-8.rest-rest_update_8201.php
new file mode 100644
index 0000000..f035e94
--- /dev/null
+++ b/core/modules/rest/tests/fixtures/update/drupal-8.rest-rest_update_8201.php
@@ -0,0 +1,63 @@
+<?php
+
+/**
+ * @file
+ * Contains database additions to drupal-8.bare.standard.php.gz for testing the
+ * upgrade path of rest_update_8201().
+ */
+
+use Drupal\Core\Database\Database;
+
+$connection = Database::getConnection();
+
+// Set the schema version.
+$connection->insert('key_value')
+  ->fields([
+    'collection' => 'system.schema',
+    'name' => 'rest',
+    'value' => 'i:8000;',
+  ])
+  ->fields([
+    'collection' => 'system.schema',
+    'name' => 'serialization',
+    'value' => 'i:8000;',
+  ])
+  ->execute();
+
+// Update core.extension.
+$extensions = $connection->select('config')
+  ->fields('config', ['data'])
+  ->condition('collection', '')
+  ->condition('name', 'core.extension')
+  ->execute()
+  ->fetchField();
+$extensions = unserialize($extensions);
+$extensions['module']['rest'] = 8000;
+$extensions['module']['serialization'] = 8000;
+$connection->update('config')
+  ->fields([
+    'data' => serialize($extensions),
+  ])
+  ->condition('collection', '')
+  ->condition('name', 'core.extension')
+  ->execute();
+
+// Install the rest configuration.
+$config = [
+  'resources' => [
+    'entity:node' => [
+      'GET' => [
+        'supported_formats' => ['json'],
+        'supported_auth' => [],
+      ],
+    ],
+  ],
+  'link_domain' => '~',
+];
+$data = $connection->insert('config')
+  ->fields([
+    'name' => 'rest.settings',
+    'data' => serialize($config),
+    'collection' => ''
+  ])
+  ->execute();