diff --git a/.gitmodules b/.gitmodules
index 67e37410aa..224ee10052 100644
--- a/.gitmodules
+++ b/.gitmodules
@@ -36,7 +36,7 @@
 [submodule "atmos_phys"]
 	path = src/atmos_phys
 	url = https://github.com/ESCOMP/atmospheric_physics
-        fxtag = atmos_phys0_05_000
+        fxtag = atmos_phys0_05_001
         fxrequired = AlwaysRequired
 	fxDONOTUSEurl = https://github.com/ESCOMP/atmospheric_physics
 
diff --git a/bld/configure b/bld/configure
index e64e78b6a6..74da5d389f 100755
--- a/bld/configure
+++ b/bld/configure
@@ -2191,9 +2191,9 @@ sub write_filepath
 
     if ($simple_phys) {
       print $fh "$camsrcdir/src/physics/simple\n";
-      print $fh "$camsrcdir/src/atmos_phys/kessler\n";
-      print $fh "$camsrcdir/src/atmos_phys/held_suarez\n";
-      print $fh "$camsrcdir/src/atmos_phys/tj2016\n";
+      print $fh "$camsrcdir/src/atmos_phys/schemes/kessler\n";
+      print $fh "$camsrcdir/src/atmos_phys/schemes/held_suarez\n";
+      print $fh "$camsrcdir/src/atmos_phys/schemes/tj2016\n";
     }
 
     # Weak scaling fix. This has to come before physics/cam and before dycores
@@ -2334,9 +2334,10 @@ sub write_filepath
     print $fh "$camsrcdir/src/physics/cam\n";
 
     #Add the CCPP'ized subdirectories
-    print $fh "$camsrcdir/src/atmos_phys/tropopause_find\n";
-    print $fh "$camsrcdir/src/atmos_phys/zhang_mcfarlane\n";
-    print $fh "$camsrcdir/src/atmos_phys/dry_adiabatic_adjust\n";
+    print $fh "$camsrcdir/src/atmos_phys/schemes/tropopause_find\n";
+    print $fh "$camsrcdir/src/atmos_phys/schemes/zhang_mcfarlane\n";
+    print $fh "$camsrcdir/src/atmos_phys/schemes/dry_adiabatic_adjust\n";
+    print $fh "$camsrcdir/src/atmos_phys/schemes/utilities\n";
 
     # Dynamics package and test utilities
     print $fh "$camsrcdir/src/dynamics/$dyn\n";
@@ -2362,8 +2363,6 @@ sub write_filepath
     print $fh "$camsrcdir/src/control\n";
     print $fh "$camsrcdir/src/utils\n";
     print $fh "$camsrcdir/src/utils/cam_ccpp\n";
-    print $fh "$camsrcdir/src/atmos_phys/utilities\n";
-
 
     $fh->close;
 }
diff --git a/doc/ChangeLog b/doc/ChangeLog
index 3cb43cfdfc..ca3a39c57d 100644
--- a/doc/ChangeLog
+++ b/doc/ChangeLog
@@ -1,5 +1,76 @@
 ===============================================================
 
+Tag name: cam6_4_040
+Originator(s): nusbaume
+Date: Oct 2, 2024
+One-line Summary: Bring in re-organized atmospheric_physics repo
+Github PR URL: https://github.com/ESCOMP/CAM/pull/1160
+
+Purpose of changes (include the issue number and title text for each relevant
+GitHub issue):
+
+Fixes #1156 -> Modify CAM build system to handle re-organized
+atmospheric_physics repo
+
+Describe any changes made to build system:
+
+Updated the 'configure' script to use the new atmospheric_physics directory
+locations
+
+Describe any changes made to the namelist: N/A
+
+List any changes to the defaults for the boundary datasets: N/A
+
+Describe any substantial timing or memory changes: N/A
+
+Code reviewed by:
+
+List all files eliminated: N/A
+
+List all files added and what they do: N/A
+
+List all existing files that have been modified, and describe the changes:
+M       .gitmodules
+ - Update the atmos_phys external
+
+M       bld/configure
+ - Update atmos_phys paths to correctly point to new source code locations
+
+If there were any failures reported from running test_driver.sh on any test
+platform, and checkin with these failures has been OK'd by the gatekeeper,
+then copy the lines from the td.*.status files for the failed tests to the
+appropriate machine below.  All failed tests must be justified.
+
+derecho/intel/aux_cam:
+
+ERP_Ln9.f09_f09_mg17.FCSD_HCO.derecho_intel.cam-outfrq9s (Overall: FAIL)
+SMS_Ld1.f09_f09_mg17.FCHIST_GC.derecho_intel.cam-outfrq1d (Overall: DIFF)
+- pre-existing failure due to HEMCO not having reproducible results issues #1018 and #856
+
+ERP_Ln9_P24x3.f45_f45_mg37.QPWmaC6.derecho_intel.cam-outfrq9s_mee_fluxes (Overall: PEND)
+ERS_Ld3.f10_f10_mg37.F1850.derecho_intel.cam-outfrq1d_14dec_ghg_cam7 (Overall: PEND)
+ERS_Ln9_P36x1.mpasa480_mpasa480.F2000climo.derecho_intel.cam-outfrq9s_mpasa480 (Overall: PEND)
+SMS_Lm13.f10_f10_mg37.F2000climo.derecho_intel.cam-outfrq1m (Overall: PEND)
+- Running into resource limits due to being switched to run in the 'develop' queue rather than 'main'
+- Should be fixed in future CIME/ccs_config update.
+
+SMS_D_Ln9.f19_f19_mg17.FXHIST.derecho_intel.cam-outfrq9s_amie (Overall: FAIL)
+SMS_D_Ln9_P1280x1.ne0CONUSne30x8_ne0CONUSne30x8_mt12.FCHIST.derecho_intel.cam-outfrq9s (Overall: PEND)
+- build-namelist error requiring CLM/CTSM external update.
+
+derecho/nvhpc/aux_cam: ALL PASS
+
+izumi/nag/aux_cam:
+
+DAE.f45_f45_mg37.FHS94.izumi_nag.cam-dae (Overall: FAIL)
+- pre-existing failure - issue #670
+
+izumi/gnu/aux_cam: ALL PASS
+
+Summarize any changes to answers: bit-for-bit
+
+===============================================================
+
 Tag name: cam6_4_039
 Originator(s): eaton
 Date: 10 October 2024
@@ -48,7 +119,7 @@ cime_config/SystemTests/plb.py
 cime_config/SystemTests/sub.py
 cime_config/SystemTests/sct.py
 cime_config/SystemTests/tmc.py
-. 'from CIME.utils import append_testlog' changed to 
+. 'from CIME.utils import append_testlog' changed to
   'from CIME.status import append_testlog'
 
 test/system/test_driver.sh
diff --git a/src/atmos_phys b/src/atmos_phys
index 93a1dbf9c4..f8ce60bf40 160000
--- a/src/atmos_phys
+++ b/src/atmos_phys
@@ -1 +1 @@
-Subproject commit 93a1dbf9c47ccedb8d8a48eba640e48ab2048774
+Subproject commit f8ce60bf40f800623f8eb3065021ec5dfa9e6b45