diff --git a/pkg/apis/application/v1alpha1/app_project_types.go b/pkg/apis/application/v1alpha1/app_project_types.go
index 0f2d268a866ce..af52730a1542c 100644
--- a/pkg/apis/application/v1alpha1/app_project_types.go
+++ b/pkg/apis/application/v1alpha1/app_project_types.go
@@ -479,6 +479,35 @@ func (proj AppProject) IsSourcePermitted(src ApplicationSource) bool {
 	return anySourceMatched
 }
 
+// IsCredentialPermittedForAnySource checks whether a credential template URL is a prefix of any
+// permitted source repo. Credential URLs are prefix-based by design (e.g. "reg.example.com"
+// provides auth for "reg.example.com/org/chart"), so a credential should be permitted if any
+// sourceRepo falls under its URL prefix.
+func (proj AppProject) IsCredentialPermittedForAnySource(credURL string) bool {
+	credNormalized := git.NormalizeGitURL(credURL)
+	if credNormalized == "" {
+		return false
+	}
+
+	for _, repoURL := range proj.Spec.SourceRepos {
+		if repoURL == "*" {
+			return true
+		}
+		if isDenyPattern(repoURL) {
+			continue
+		}
+		normalized := git.NormalizeGitURL(repoURL)
+		// Strip oci:// scheme for comparison since credential URLs are typically stored without it
+		normalizedNoScheme := strings.TrimPrefix(normalized, "oci://")
+		credNoScheme := strings.TrimPrefix(credNormalized, "oci://")
+		// Check if the sourceRepo URL starts with the credential URL prefix
+		if strings.HasPrefix(normalizedNoScheme, credNoScheme+"/") || normalizedNoScheme == credNoScheme {
+			return true
+		}
+	}
+	return false
+}
+
 // IsDestinationPermitted validates if the provided application's destination is one of the allowed destinations for the project
 func (proj AppProject) IsDestinationPermitted(destCluster *Cluster, destNamespace string, projectClusters func(project string) ([]*Cluster, error)) (bool, error) {
 	if destCluster == nil {
diff --git a/pkg/apis/application/v1alpha1/types_test.go b/pkg/apis/application/v1alpha1/types_test.go
index 66f22bcecf8de..c279ec27dc036 100644
--- a/pkg/apis/application/v1alpha1/types_test.go
+++ b/pkg/apis/application/v1alpha1/types_test.go
@@ -104,6 +104,81 @@ func TestAppProject_IsNegatedSourcePermitted(t *testing.T) {
 	}
 }
 
+func TestAppProject_IsCredentialPermittedForAnySource(t *testing.T) {
+	testData := []struct {
+		name        string
+		projSources []string
+		credURL     string
+		isPermitted bool
+	}{{
+		name:        "wildcard permits any credential",
+		projSources: []string{"*"},
+		credURL:     "reg.example.com",
+		isPermitted: true,
+	}, {
+		name:        "exact match permits credential",
+		projSources: []string{"reg.example.com"},
+		credURL:     "reg.example.com",
+		isPermitted: true,
+	}, {
+		name:        "credential URL is prefix of sourceRepo",
+		projSources: []string{"reg.example.com/org/charts"},
+		credURL:     "reg.example.com",
+		isPermitted: true,
+	}, {
+		name:        "credential URL is prefix of multiple sourceRepos",
+		projSources: []string{"https://github.com/test/repo.git", "reg.example.com/org/charts"},
+		credURL:     "reg.example.com",
+		isPermitted: true,
+	}, {
+		name:        "OCI sourceRepo with credential prefix",
+		projSources: []string{"oci://reg.example.com/org/charts"},
+		credURL:     "reg.example.com",
+		isPermitted: true,
+	}, {
+		name:        "OCI credential URL matches OCI sourceRepo",
+		projSources: []string{"oci://reg.example.com/org/charts"},
+		credURL:     "oci://reg.example.com",
+		isPermitted: true,
+	}, {
+		name:        "credential URL does not match any sourceRepo",
+		projSources: []string{"https://github.com/test/repo.git"},
+		credURL:     "reg.example.com",
+		isPermitted: false,
+	}, {
+		name:        "credential URL is more specific than sourceRepo",
+		projSources: []string{"reg.example.com"},
+		credURL:     "reg.example.com/org/charts",
+		isPermitted: false,
+	}, {
+		name:        "partial hostname match should not permit",
+		projSources: []string{"reg.example.com-evil/org/charts"},
+		credURL:     "reg.example.com",
+		isPermitted: false,
+	}, {
+		name:        "deny pattern does not permit credential",
+		projSources: []string{"!reg.example.com/org/charts"},
+		credURL:     "reg.example.com",
+		isPermitted: false,
+	}, {
+		name:        "empty sourceRepos does not permit credential",
+		projSources: []string{},
+		credURL:     "reg.example.com",
+		isPermitted: false,
+	}}
+
+	for _, data := range testData {
+		t.Run(data.name, func(t *testing.T) {
+			proj := AppProject{
+				Spec: AppProjectSpec{
+					SourceRepos: data.projSources,
+				},
+			}
+			assert.Equal(t, data.isPermitted, proj.IsCredentialPermittedForAnySource(data.credURL))
+		})
+	}
+}
+
 func TestAppProject_IsDestinationPermitted(t *testing.T) {
 	t.Parallel()
 
diff --git a/util/argo/argo.go b/util/argo/argo.go
index ddc0190db52ba..5d21d0eeb033f 100644
--- a/util/argo/argo.go
+++ b/util/argo/argo.go
@@ -1060,7 +1060,7 @@ func NormalizeSource(source *argoappv1.ApplicationSource) *argoappv1.Application
 func GetPermittedReposCredentials(proj *argoappv1.AppProject, repoCreds []*argoappv1.RepoCreds) ([]*argoappv1.RepoCreds, error) {
 	var permittedRepoCreds []*argoappv1.RepoCreds
 	for _, v := range repoCreds {
-		if proj.IsSourcePermitted(argoappv1.ApplicationSource{RepoURL: v.URL}) {
+		if proj.IsSourcePermitted(argoappv1.ApplicationSource{RepoURL: v.URL}) || proj.IsCredentialPermittedForAnySource(v.URL) {
 			permittedRepoCreds = append(permittedRepoCreds, v)
 		}
 	}