diff --git a/src/hooks/useOptimisticNextStep.ts b/src/hooks/useOptimisticNextStep.ts
index 5a80fae71dab..0a81fdee2367 100644
--- a/src/hooks/useOptimisticNextStep.ts
+++ b/src/hooks/useOptimisticNextStep.ts
@@ -5,6 +5,7 @@ import {
     buildOptimisticNextStepForDynamicExternalWorkflowSubmitError,
     buildOptimisticNextStepForStrictPolicyRuleViolations,
     getReportNextStep,
+    shouldShowDynamicExternalWorkflowApproveErrorNextStep,
 } from '@libs/NextStepUtils';
 import {hasDynamicExternalWorkflow} from '@libs/PolicyUtils';
 import {getFilteredReportActionsForReportView, hasPendingDEWApprove, hasPendingDEWSubmit} from '@libs/ReportActionsUtils';
@@ -96,7 +97,7 @@ function useOptimisticNextStep(reportID: string | undefined) {
             const gbrResult = getReasonAndReportActionThatRequiresAttention(moneyRequestReport, currentUserLogin ?? '', accountID, undefined, isArchivedReport);
             const hasDEWApproveFailed = gbrResult?.reason === CONST.REQUIRES_ATTENTION_REASONS.HAS_DEW_APPROVE_FAILED;
             const isCurrentUserTheApprover = moneyRequestReport?.managerID === accountID;
-            if (hasDEWApproveFailed && isCurrentUserTheApprover) {
+            if (shouldShowDynamicExternalWorkflowApproveErrorNextStep(gbrResult?.reportAction, hasDEWApproveFailed, isCurrentUserTheApprover)) {
                 optimisticNextStep = buildOptimisticNextStepForDynamicExternalWorkflowApproveError(theme.danger);
             } else if (isOffline && hasPendingDEWApprove(reportMetadata, isDEWPolicy)) {
                 optimisticNextStep = buildOptimisticNextStepForDEWOffline();
diff --git a/src/libs/NextStepUtils.ts b/src/libs/NextStepUtils.ts
index d046cefc29fd..1c0da837aca4 100644
--- a/src/libs/NextStepUtils.ts
+++ b/src/libs/NextStepUtils.ts
@@ -1,7 +1,7 @@
 import type {LocaleContextProps} from '@components/LocaleContextProvider';
 
 import CONST from '@src/CONST';
-import type {Policy, Report, ReportNextStepDeprecated, Transaction, TransactionViolations} from '@src/types/onyx';
+import type {Policy, Report, ReportAction, ReportNextStepDeprecated, Transaction, TransactionViolations} from '@src/types/onyx';
 import type {ReportNextStep} from '@src/types/onyx/Report';
 import type {Message} from '@src/types/onyx/ReportNextStepDeprecated';
 import type DeepValueOf from '@src/types/utils/DeepValueOf';
@@ -16,6 +16,7 @@ import EmailUtils from './EmailUtils';
 import {formatPhoneNumber as formatPhoneNumberPhoneUtils} from './LocalePhoneNumber';
 import {deprecatedGetLoginsByAccountIDs, deprecatedGetPersonalDetailsByIDs} from './PersonalDetailsUtils';
 import {getApprovalWorkflow, getCorrectedAutoReportingFrequency, getReimburserAccountID} from './PolicyUtils';
+import {getOriginalMessage, isDynamicExternalWorkflowApproveFailedAction} from './ReportActionsUtils';
 import {
     getDisplayNameForParticipant,
     getMoneyRequestSpendBreakdown,
@@ -461,6 +462,20 @@ function buildOptimisticNextStepForDynamicExternalWorkflowApproveError(iconFill?
     return optimisticNextStep;
 }
 
+/**
+ * Whether to show the DEW approve-error next step.
+ * Only manual approve failures (`automaticAction` false/absent) for the current approver should show it.
+ * Auto-approval blocks keep the normal workflow next step.
+ */
+function shouldShowDynamicExternalWorkflowApproveErrorNextStep(reportAction: OnyxEntry<ReportAction>, hasDEWApproveFailed: boolean, isCurrentUserTheApprover: boolean): boolean {
+    if (!hasDEWApproveFailed || !isCurrentUserTheApprover || !isDynamicExternalWorkflowApproveFailedAction(reportAction)) {
+        return false;
+    }
+
+    const {automaticAction} = getOriginalMessage(reportAction) ?? {};
+    return !automaticAction;
+}
+
 function buildOptimisticNextStepForDEWOffline() {
     const optimisticNextStep: ReportNextStepDeprecated = {
         type: 'neutral',
@@ -875,6 +890,7 @@ export {
     buildOptimisticNextStepForStrictPolicyRuleViolations,
     buildOptimisticNextStepForDynamicExternalWorkflowSubmitError,
     buildOptimisticNextStepForDynamicExternalWorkflowApproveError,
+    shouldShowDynamicExternalWorkflowApproveErrorNextStep,
     buildOptimisticNextStepForDEWOffline,
     buildOptimisticNextStepForPreventSelfApprovalsEnabled,
     buildNextStepNew,
diff --git a/tests/unit/NextStepUtilsTest.ts b/tests/unit/NextStepUtilsTest.ts
index 6163aa8173bd..8dc756ddf617 100644
--- a/tests/unit/NextStepUtilsTest.ts
+++ b/tests/unit/NextStepUtilsTest.ts
@@ -3,17 +3,19 @@ import type {LocalizedTranslate} from '@components/LocaleContextProvider';
 import {
     buildNextStepMessage,
     buildNextStepNew,
+    buildOptimisticNextStepForDynamicExternalWorkflowApproveError,
     buildOptimisticNextStepForDynamicExternalWorkflowSubmitError,
     buildOptimisticNextStepForPreventSelfApprovalsEnabled,
     buildOptimisticNextStepForStrictPolicyRuleViolations,
     getReportNextStep,
     buildOptimisticNextStep,
+    shouldShowDynamicExternalWorkflowApproveErrorNextStep,
 } from '@libs/NextStepUtils';
 import {buildOptimisticEmptyReport, buildOptimisticExpenseReport} from '@libs/ReportUtils';
 
 import CONST from '@src/CONST';
 import ONYXKEYS from '@src/ONYXKEYS';
-import type {Policy, Report, ReportNextStepDeprecated, Transaction, TransactionViolations} from '@src/types/onyx';
+import type {Policy, Report, ReportAction, ReportNextStepDeprecated, Transaction, TransactionViolations} from '@src/types/onyx';
 import type {ReportNextStep} from '@src/types/onyx/Report';
 import {toCollectionDataSet} from '@src/types/utils/CollectionDataSet';
 
@@ -1123,6 +1125,56 @@ describe('libs/NextStepUtils', () => {
         });
     });
 
+    describe('buildOptimisticNextStepForDynamicExternalWorkflowApproveError', () => {
+        test('should return alert next step with error message when DEW approve fails', () => {
+            const result = buildOptimisticNextStepForDynamicExternalWorkflowApproveError();
+
+            expect(result).toEqual({
+                type: 'alert',
+                icon: CONST.NEXT_STEP.ICONS.DOT_INDICATOR,
+                message: [
+                    {
+                        text: "This report can't be approved. Please review the comments to resolve.",
+                        type: 'alert-text',
+                    },
+                ],
+            });
+        });
+    });
+
+    describe('shouldShowDynamicExternalWorkflowApproveErrorNextStep', () => {
+        const createDEWApproveFailedAction = (automaticAction?: boolean): ReportAction<typeof CONST.REPORT.ACTIONS.TYPE.DEW_APPROVE_FAILED> => ({
+            actionName: CONST.REPORT.ACTIONS.TYPE.DEW_APPROVE_FAILED,
+            reportActionID: '1',
+            created: '2026-01-01 00:00:00.000',
+            message: [],
+            originalMessage: {
+                message: 'DEW blocked approval',
+                automaticAction,
+            },
+        });
+
+        it('returns true for manual approve failures when the current user is the approver', () => {
+            expect(shouldShowDynamicExternalWorkflowApproveErrorNextStep(createDEWApproveFailedAction(false), true, true)).toBe(true);
+        });
+
+        it('returns true when automaticAction is absent (treated as manual failure)', () => {
+            expect(shouldShowDynamicExternalWorkflowApproveErrorNextStep(createDEWApproveFailedAction(), true, true)).toBe(true);
+        });
+
+        it('returns false for auto-approve failures so the normal workflow next step is kept', () => {
+            expect(shouldShowDynamicExternalWorkflowApproveErrorNextStep(createDEWApproveFailedAction(true), true, true)).toBe(false);
+        });
+
+        it('returns false when the current user is not the approver', () => {
+            expect(shouldShowDynamicExternalWorkflowApproveErrorNextStep(createDEWApproveFailedAction(false), true, false)).toBe(false);
+        });
+
+        it('returns false when there is no active DEW approve failure', () => {
+            expect(shouldShowDynamicExternalWorkflowApproveErrorNextStep(createDEWApproveFailedAction(false), false, true)).toBe(false);
+        });
+    });
+
     describe('getReportNextStep', () => {
         const currentUserEmail = 'current-user@expensify.com';
         const currentUserAccountID = 37;