diff --git a/nexus/reconfigurator/execution/src/datasets.rs b/nexus/reconfigurator/execution/src/datasets.rs
index 30c656eca5..92506718bc 100644
--- a/nexus/reconfigurator/execution/src/datasets.rs
+++ b/nexus/reconfigurator/execution/src/datasets.rs
@@ -49,7 +49,7 @@ pub(crate) async fn deploy_datasets(
                 &log,
             );
 
-            let config: DatasetsConfig = config.clone().into();
+            let config: DatasetsConfig = config.clone().into_in_service_datasets();
             let result =
                 client.datasets_put(&config).await.with_context(
                     || format!("Failed to put {config:#?} to sled {sled_id}"),
@@ -100,3 +100,103 @@ pub(crate) async fn deploy_datasets(
         Err(errors)
     }
 }
+
+#[cfg(test)]
+mod tests {
+    use super::*;
+    use nexus_sled_agent_shared::inventory::SledRole;
+    use nexus_test_utils_macros::nexus_test;
+    use nexus_types::deployment::id_map::IdMap;
+    use nexus_types::deployment::BlueprintDatasetConfig;
+    use nexus_types::deployment::BlueprintDatasetDisposition;
+    use nexus_types::deployment::BlueprintDatasetsConfig;
+    use omicron_common::api::external::Generation;
+    use omicron_common::api::internal::shared::DatasetKind;
+    use omicron_common::disk::CompressionAlgorithm;
+    use omicron_common::zpool_name::ZpoolName;
+    use omicron_uuid_kinds::DatasetUuid;
+    use omicron_uuid_kinds::ZpoolUuid;
+    use std::net::SocketAddr;
+
+    type ControlPlaneTestContext =
+        nexus_test_utils::ControlPlaneTestContext<omicron_nexus::Server>;
+
+    #[nexus_test]
+    async fn test_deploy_datasets(cptestctx: &ControlPlaneTestContext) {
+        // Set up.
+        let nexus = &cptestctx.server.server_context().nexus;
+        let datastore = nexus.datastore();
+        let opctx = OpContext::for_tests(
+            cptestctx.logctx.log.clone(),
+            datastore.clone(),
+        );
+
+        let sim_sled_agent_addr = match cptestctx.sled_agents[0].local_addr() {
+            SocketAddr::V6(addr) => addr,
+            _ => panic!("Unexpected address type for sled agent (wanted IPv6)"),
+        };
+        let sim_sled_agent = &cptestctx.sled_agents[0].sled_agent();
+
+        // This is a fully fabricated dataset list for a simulated sled agent.
+        //
+        // We're testing the validity of the deployment calls here, not of any
+        // blueprint.
+
+        let sleds_by_id = BTreeMap::from([(
+            sim_sled_agent.id,
+            Sled::new(
+                sim_sled_agent.id,
+                sim_sled_agent_addr,
+                SledRole::Scrimlet,
+            ),
+        )]);
+
+        // Create two datasets which look like they came from the blueprint: One
+        // which is in-service, and one which is expunged.
+        //
+        // During deployment, the in-service dataset should be deployed, but the
+        // expunged dataset should be ignored.
+        let dataset_id = DatasetUuid::new_v4();
+        let expunged_dataset_id = DatasetUuid::new_v4();
+        let mut datasets = IdMap::new();
+        datasets.insert(BlueprintDatasetConfig {
+            disposition: BlueprintDatasetDisposition::InService,
+            id: dataset_id,
+            pool: ZpoolName::new_external(ZpoolUuid::new_v4()),
+            kind: DatasetKind::Crucible,
+            address: None,
+            quota: None,
+            reservation: None,
+            compression: CompressionAlgorithm::Off,
+        });
+        datasets.insert(BlueprintDatasetConfig {
+            disposition: BlueprintDatasetDisposition::Expunged,
+            id: expunged_dataset_id,
+            pool: ZpoolName::new_external(ZpoolUuid::new_v4()),
+            kind: DatasetKind::Crucible,
+            address: None,
+            quota: None,
+            reservation: None,
+            compression: CompressionAlgorithm::Off,
+        });
+
+        let datasets_config =
+            BlueprintDatasetsConfig { generation: Generation::new(), datasets };
+        let sled_configs =
+            BTreeMap::from([(sim_sled_agent.id, datasets_config.clone())]);
+
+        // Give the simulated sled agent a configuration to deploy
+        deploy_datasets(&opctx, &sleds_by_id, &sled_configs)
+            .await
+            .expect("Deploying datasets should have succeeded");
+
+        // Observe the latest configuration stored on the simulated sled agent,
+        // and verify that this output matches the "deploy_datasets" input.
+        let observed_config = sim_sled_agent.datasets_config_list().unwrap();
+        assert_eq!(observed_config, datasets_config.into_in_service_datasets());
+
+        // We expect to see the single in-service dataset we supplied as input.
+        assert_eq!(observed_config.datasets.len(), 1,);
+        assert!(observed_config.datasets.contains_key(&dataset_id));
+    }
+}
diff --git a/nexus/types/src/deployment.rs b/nexus/types/src/deployment.rs
index a11435c8be..39e417e1ed 100644
--- a/nexus/types/src/deployment.rs
+++ b/nexus/types/src/deployment.rs
@@ -949,14 +949,29 @@ pub struct BlueprintDatasetsConfig {
     pub datasets: IdMap<BlueprintDatasetConfig>,
 }
 
-impl From<BlueprintDatasetsConfig> for DatasetsConfig {
-    fn from(config: BlueprintDatasetsConfig) -> Self {
-        Self {
-            generation: config.generation,
-            datasets: config
+impl BlueprintDatasetsConfig {
+    /// Converts [Self] into [DatasetsConfig].
+    ///
+    /// [DatasetsConfig] is a format of the dataset configuration that can be
+    /// passed to Sled Agents for deployment.
+    ///
+    /// This function is effectively a [std::convert::From] implementation, but
+    /// is named slightly more explicitly, as it filters the blueprint
+    /// configuration to only consider in-service datasets.
+    pub fn into_in_service_datasets(self) -> DatasetsConfig {
+        DatasetsConfig {
+            generation: self.generation,
+            datasets: self
                 .datasets
                 .into_iter()
-                .map(|d| (d.id, d.into()))
+                .filter_map(|d| {
+                    if d.disposition.matches(BlueprintDatasetFilter::InService)
+                    {
+                        Some((d.id, d.into()))
+                    } else {
+                        None
+                    }
+                })
                 .collect(),
         }
     }