diff --git a/pkg/recipes/configloader/environment.go b/pkg/recipes/configloader/environment.go
index 3da4c7c132..5731b2e3a4 100644
--- a/pkg/recipes/configloader/environment.go
+++ b/pkg/recipes/configloader/environment.go
@@ -163,8 +163,12 @@ func getConfigurationV20250801(environment *v20250801preview.EnvironmentResource
 	envDatamodel := env.(*datamodel.Environment_v20250801preview)
 	if envDatamodel.Properties.Providers != nil {
 		if envDatamodel.Properties.Providers.Azure != nil {
+			scope := "/subscriptions/" + envDatamodel.Properties.Providers.Azure.SubscriptionId
+			if envDatamodel.Properties.Providers.Azure.ResourceGroupName != "" {
+				scope += "/resourceGroups/" + envDatamodel.Properties.Providers.Azure.ResourceGroupName
+			}
 			config.Providers.Azure = datamodel.ProvidersAzure{
-				Scope: envDatamodel.Properties.Providers.Azure.SubscriptionId,
+				Scope: scope,
 			}
 		}
 		if envDatamodel.Properties.Providers.AWS != nil {
diff --git a/pkg/recipes/configloader/environment_test.go b/pkg/recipes/configloader/environment_test.go
index 7a3da020e9..dbdf7d7066 100644
--- a/pkg/recipes/configloader/environment_test.go
+++ b/pkg/recipes/configloader/environment_test.go
@@ -399,7 +399,7 @@ func TestGetConfigurationV20250801(t *testing.T) {
 		errString      string
 	}{
 		{
-			name: "azure provider with env resource v20250801",
+			name: "azure provider with subscription only v20250801",
 			envResource: &modelv20250801.EnvironmentResource{
 				Properties: &modelv20250801.EnvironmentProperties{
 					Providers: &modelv20250801.Providers{
@@ -423,7 +423,39 @@ func TestGetConfigurationV20250801(t *testing.T) {
 				},
 				Providers: datamodel.Providers{
 					Azure: datamodel.ProvidersAzure{
-						Scope: "test-subscription-id",
+						Scope: "/subscriptions/test-subscription-id",
+					},
+				},
+				Simulated: false,
+			},
+		},
+		{
+			name: "azure provider with subscription and resource group v20250801",
+			envResource: &modelv20250801.EnvironmentResource{
+				Properties: &modelv20250801.EnvironmentProperties{
+					Providers: &modelv20250801.Providers{
+						Azure: &modelv20250801.ProvidersAzure{
+							SubscriptionID:    to.Ptr("85716382-aaaa-aaaa-aaaa-2126e459a123"),
+							ResourceGroupName: to.Ptr("my-resource-group"),
+						},
+						Kubernetes: &modelv20250801.ProvidersKubernetes{
+							Namespace: to.Ptr(envNamespace),
+						},
+					},
+					Simulated: to.Ptr(false),
+				},
+			},
+			appResource: nil,
+			expectedConfig: &recipes.Configuration{
+				Runtime: recipes.RuntimeConfiguration{
+					Kubernetes: &recipes.KubernetesRuntime{
+						Namespace:            envNamespace,
+						EnvironmentNamespace: envNamespace,
+					},
+				},
+				Providers: datamodel.Providers{
+					Azure: datamodel.ProvidersAzure{
+						Scope: "/subscriptions/85716382-aaaa-aaaa-aaaa-2126e459a123/resourceGroups/my-resource-group",
 					},
 				},
 				Simulated: false,
diff --git a/pkg/recipes/recipecontext/context_test.go b/pkg/recipes/recipecontext/context_test.go
index 8441e696c7..3002daacda 100644
--- a/pkg/recipes/recipecontext/context_test.go
+++ b/pkg/recipes/recipecontext/context_test.go
@@ -383,3 +383,76 @@ func TestNewContext_WithConnectedResources(t *testing.T) {
 		"port": 6379,
 	}, cacheConn.Properties)
 }
+
+func TestNewContext_AzureProviderWithResourceGroup(t *testing.T) {
+	// This test verifies the fix for the issue where Azure provider config
+	// with separate subscriptionId and resourceGroupName fields should construct
+	// the full Azure resource ID path correctly
+	testMetadata := &recipes.ResourceMetadata{
+		ResourceID:    "/planes/radius/local/resourceGroups/testGroup/providers/applications.datastores/mongodatabases/mongo0",
+		EnvironmentID: "/planes/radius/local/resourceGroups/test-group/providers/Applications.Core/environments/env0",
+		ApplicationID: "/planes/radius/local/resourceGroups/test-group/providers/Applications.Core/applications/testApplication",
+		Properties: map[string]any{
+			"throughput": 100,
+		},
+	}
+
+	testConfig := &recipes.Configuration{
+		Runtime: recipes.RuntimeConfiguration{
+			Kubernetes: &recipes.KubernetesRuntime{
+				Namespace:            "radius-test-app",
+				EnvironmentNamespace: "radius-test-env",
+			},
+		},
+		Providers: coredm.Providers{
+			Azure: coredm.ProvidersAzure{
+				Scope: "/subscriptions/85716382-aaaa-aaaa-aaaa-2126e459a123/resourceGroups/my-resource-group",
+			},
+		},
+	}
+
+	recipeContext, err := New(testMetadata, testConfig)
+	require.NoError(t, err)
+	require.NotNil(t, recipeContext)
+	require.NotNil(t, recipeContext.Azure)
+
+	// Verify the Azure provider fields are correctly parsed
+	require.Equal(t, "85716382-aaaa-aaaa-aaaa-2126e459a123", recipeContext.Azure.Subscription.SubscriptionID)
+	require.Equal(t, "/subscriptions/85716382-aaaa-aaaa-aaaa-2126e459a123", recipeContext.Azure.Subscription.ID)
+	require.Equal(t, "my-resource-group", recipeContext.Azure.ResourceGroup.Name)
+	require.Equal(t, "/subscriptions/85716382-aaaa-aaaa-aaaa-2126e459a123/resourceGroups/my-resource-group", recipeContext.Azure.ResourceGroup.ID)
+}
+
+func TestNewContext_AzureProviderSubscriptionOnly(t *testing.T) {
+	// Test that Azure provider with only subscription ID also works correctly
+	testMetadata := &recipes.ResourceMetadata{
+		ResourceID:    "/planes/radius/local/resourceGroups/testGroup/providers/applications.datastores/mongodatabases/mongo0",
+		EnvironmentID: "/planes/radius/local/resourceGroups/test-group/providers/Applications.Core/environments/env0",
+		ApplicationID: "/planes/radius/local/resourceGroups/test-group/providers/Applications.Core/applications/testApplication",
+	}
+
+	testConfig := &recipes.Configuration{
+		Runtime: recipes.RuntimeConfiguration{
+			Kubernetes: &recipes.KubernetesRuntime{
+				Namespace:            "radius-test-app",
+				EnvironmentNamespace: "radius-test-env",
+			},
+		},
+		Providers: coredm.Providers{
+			Azure: coredm.ProvidersAzure{
+				Scope: "/subscriptions/test-subscription-id",
+			},
+		},
+	}
+
+	recipeContext, err := New(testMetadata, testConfig)
+	require.NoError(t, err)
+	require.NotNil(t, recipeContext)
+	require.NotNil(t, recipeContext.Azure)
+
+	// Verify the Azure provider fields are correctly parsed (no resource group)
+	require.Equal(t, "test-subscription-id", recipeContext.Azure.Subscription.SubscriptionID)
+	require.Equal(t, "/subscriptions/test-subscription-id", recipeContext.Azure.Subscription.ID)
+	require.Equal(t, "", recipeContext.Azure.ResourceGroup.Name)
+	require.Equal(t, "/subscriptions/test-subscription-id/resourceGroups/", recipeContext.Azure.ResourceGroup.ID)
+}