diff --git a/moto/iot/exceptions.py b/moto/iot/exceptions.py
index e3acf9690..46e6b93ee 100644
--- a/moto/iot/exceptions.py
+++ b/moto/iot/exceptions.py
@@ -60,3 +60,12 @@ class ResourceAlreadyExistsException(IoTClientError):
         super(ResourceAlreadyExistsException, self).__init__(
             "ResourceAlreadyExistsException", msg or "The resource already exists."
         )
+
+
+class VersionsLimitExceededException(IoTClientError):
+    def __init__(self, name):
+        self.code = 409
+        super(VersionsLimitExceededException, self).__init__(
+            "VersionsLimitExceededException",
+            "The policy %s already has the maximum number of versions (5)" % name,
+        )
diff --git a/moto/iot/models.py b/moto/iot/models.py
index 2af6eec9b..c1349224f 100644
--- a/moto/iot/models.py
+++ b/moto/iot/models.py
@@ -21,6 +21,7 @@ from .exceptions import (
     InvalidStateTransitionException,
     VersionConflictException,
     ResourceAlreadyExistsException,
+    VersionsLimitExceededException,
 )
 
 
@@ -815,6 +816,8 @@ class IoTBackend(BaseBackend):
         policy = self.get_policy(policy_name)
         if not policy:
             raise ResourceNotFoundException()
+        if len(policy.versions) >= 5:
+            raise VersionsLimitExceededException(policy_name)
         version = FakePolicyVersion(
             policy_name, policy_document, set_as_default, self.region_name
         )
diff --git a/tests/test_iot/test_iot.py b/tests/test_iot/test_iot.py
index 9bd0fbd52..1aa955313 100644
--- a/tests/test_iot/test_iot.py
+++ b/tests/test_iot/test_iot.py
@@ -139,8 +139,32 @@ def test_policy_versions():
         policy1["policyVersionId"]
     )
 
+    policy3 = client.create_policy_version(
+        policyName=policy_name,
+        policyDocument=json.dumps({"version": "version_3"}),
+        setAsDefault=False,
+    )
+    policy3.should.have.key("policyArn").which.should_not.be.none
+    policy3.should.have.key("policyDocument").which.should.equal(
+        json.dumps({"version": "version_3"})
+    )
+    policy3.should.have.key("policyVersionId").which.should.equal("4")
+    policy3.should.have.key("isDefaultVersion").which.should.equal(False)
+
+    policy4 = client.create_policy_version(
+        policyName=policy_name,
+        policyDocument=json.dumps({"version": "version_4"}),
+        setAsDefault=False,
+    )
+    policy4.should.have.key("policyArn").which.should_not.be.none
+    policy4.should.have.key("policyDocument").which.should.equal(
+        json.dumps({"version": "version_4"})
+    )
+    policy4.should.have.key("policyVersionId").which.should.equal("5")
+    policy4.should.have.key("isDefaultVersion").which.should.equal(False)
+
     policy_versions = client.list_policy_versions(policyName=policy_name)
-    policy_versions.should.have.key("policyVersions").which.should.have.length_of(3)
+    policy_versions.should.have.key("policyVersions").which.should.have.length_of(5)
     list(
         map(lambda item: item["isDefaultVersion"], policy_versions["policyVersions"])
     ).count(True).should.equal(1)
@@ -162,10 +186,10 @@ def test_policy_versions():
     )
 
     client.set_default_policy_version(
-        policyName=policy_name, policyVersionId=policy2["policyVersionId"]
+        policyName=policy_name, policyVersionId=policy4["policyVersionId"]
     )
     policy_versions = client.list_policy_versions(policyName=policy_name)
-    policy_versions.should.have.key("policyVersions").which.should.have.length_of(3)
+    policy_versions.should.have.key("policyVersions").which.should.have.length_of(5)
     list(
         map(lambda item: item["isDefaultVersion"], policy_versions["policyVersions"])
     ).count(True).should.equal(1)
@@ -173,25 +197,48 @@ def test_policy_versions():
         filter(lambda item: item["isDefaultVersion"], policy_versions["policyVersions"])
     )
     default_policy[0].should.have.key("versionId").should.equal(
-        policy2["policyVersionId"]
+        policy4["policyVersionId"]
     )
 
     policy = client.get_policy(policyName=policy_name)
     policy.should.have.key("policyName").which.should.equal(policy_name)
     policy.should.have.key("policyArn").which.should_not.be.none
     policy.should.have.key("policyDocument").which.should.equal(
-        json.dumps({"version": "version_2"})
+        json.dumps({"version": "version_4"})
     )
     policy.should.have.key("defaultVersionId").which.should.equal(
-        policy2["policyVersionId"]
+        policy4["policyVersionId"]
     )
 
+    try:
+        client.create_policy_version(
+            policyName=policy_name,
+            policyDocument=json.dumps({"version": "version_5"}),
+            setAsDefault=False,
+        )
+        assert False, "Should have failed in previous call"
+    except Exception as exception:
+        exception.response["Error"]["Message"].should.equal(
+            "The policy %s already has the maximum number of versions (5)" % policy_name
+        )
+
     client.delete_policy_version(policyName=policy_name, policyVersionId="1")
     policy_versions = client.list_policy_versions(policyName=policy_name)
+    policy_versions.should.have.key("policyVersions").which.should.have.length_of(4)
+
+    client.delete_policy_version(
+        policyName=policy_name, policyVersionId=policy1["policyVersionId"]
+    )
+    policy_versions = client.list_policy_versions(policyName=policy_name)
+    policy_versions.should.have.key("policyVersions").which.should.have.length_of(3)
+    client.delete_policy_version(
+        policyName=policy_name, policyVersionId=policy2["policyVersionId"]
+    )
+    policy_versions = client.list_policy_versions(policyName=policy_name)
     policy_versions.should.have.key("policyVersions").which.should.have.length_of(2)
 
     client.delete_policy_version(
-        policyName=policy_name, policyVersionId=policy1["policyVersionId"]
+        policyName=policy_name, policyVersionId=policy3["policyVersionId"]
     )
     policy_versions = client.list_policy_versions(policyName=policy_name)
     policy_versions.should.have.key("policyVersions").which.should.have.length_of(1)
@@ -199,7 +246,7 @@ def test_policy_versions():
     # should fail as it"s the default policy. Should use delete_policy instead
     try:
         client.delete_policy_version(
-            policyName=policy_name, policyVersionId=policy2["policyVersionId"]
+            policyName=policy_name, policyVersionId=policy4["policyVersionId"]
         )
         assert False, "Should have failed in previous call"
     except Exception as exception: