diff --git a/src/azure-cli/azure/cli/command_modules/vm/_vm_utils.py b/src/azure-cli/azure/cli/command_modules/vm/_vm_utils.py
index a84048061f9..399161b5ddd 100644
--- a/src/azure-cli/azure/cli/command_modules/vm/_vm_utils.py
+++ b/src/azure-cli/azure/cli/command_modules/vm/_vm_utils.py
@@ -711,34 +711,48 @@ def import_aaz_by_profile(profile, module_name):
 
 
 def generate_ssh_keys_ed25519(private_key_filepath, public_key_filepath):
+    def _open(filename, mode):
+        return os.open(filename, flags=os.O_WRONLY | os.O_TRUNC | os.O_CREAT, mode=mode)
+
     from cryptography.hazmat.primitives import serialization
     from cryptography.hazmat.primitives.asymmetric.ed25519 import Ed25519PrivateKey
 
     ssh_dir = os.path.dirname(private_key_filepath)
     if not os.path.exists(ssh_dir):
-        os.makedirs(ssh_dir)
-        os.chmod(ssh_dir, 0o700)
+        os.makedirs(ssh_dir, mode=0o700)
 
-    private_key = Ed25519PrivateKey.generate()
-    public_key = private_key.public_key()
-    private_bytes = private_key.private_bytes(
-        encoding=serialization.Encoding.PEM,
-        format=serialization.PrivateFormat.OpenSSH,
-        encryption_algorithm=serialization.NoEncryption()
-    )
-
-    with os.fdopen(os.open(private_key_filepath, flags=os.O_WRONLY | os.O_TRUNC | os.O_CREAT, mode=384, ), "w", ) as f:
-        f.write(
-            private_bytes.decode()
+    if os.path.isfile(private_key_filepath):
+        # Try to use existing private key if it exists.
+        with open(private_key_filepath, "rb") as f:
+            private_bytes = f.read()
+        private_key = serialization.load_ssh_private_key(private_bytes, password=None)
+        logger.warning("Private SSH key file '%s' was found in the directory: '%s'. "
+                       "A paired public key file '%s' will be generated.",
+                       private_key_filepath, ssh_dir, public_key_filepath)
+
+    else:
+        # Otherwise generate new private key.
+        private_key = Ed25519PrivateKey.generate()
+
+        # The private key will look like:
+        # -----BEGIN OPENSSH PRIVATE KEY-----
+        # ...
+        # -----END OPENSSH PRIVATE KEY-----
+        private_bytes = private_key.private_bytes(
+            encoding=serialization.Encoding.PEM,
+            format=serialization.PrivateFormat.OpenSSH,
+            encryption_algorithm=serialization.NoEncryption()
         )
-    os.chmod(private_key_filepath, 0o600)
 
-    with open(public_key_filepath, 'w') as public_key_file:
-        s = public_key.public_bytes(
-            encoding=serialization.Encoding.OpenSSH,
-            format=serialization.PublicFormat.OpenSSH)
-        public_key = s.decode(encoding="utf8").replace("\n", "")
-        public_key_file.write(public_key)
-    os.chmod(public_key_filepath, 0o644)
+        with os.fdopen(_open(private_key_filepath, 0o600), "wb") as f:
+            f.write(private_bytes)
+
+    public_key = private_key.public_key()
+    public_bytes = public_key.public_bytes(
+        encoding=serialization.Encoding.OpenSSH,
+        format=serialization.PublicFormat.OpenSSH)
+
+    with os.fdopen(_open(public_key_filepath, 0o644), 'wb') as f:
+        f.write(public_bytes)
 
-    return public_key
+    return public_bytes.decode()