diff --git a/.changeset/tall-hornets-live.md b/.changeset/tall-hornets-live.md
new file mode 100644
index 0000000000000..522c6bdc00d1f
--- /dev/null
+++ b/.changeset/tall-hornets-live.md
@@ -0,0 +1,5 @@
+---
+'@rocket.chat/meteor': patch
+---
+
+Fixes an issue where a federated user's display name would be overwritten by its username
diff --git a/apps/meteor/server/services/federation/domain/FederatedUser.ts b/apps/meteor/server/services/federation/domain/FederatedUser.ts
index 02f08708d9db1..7d5818aa3cedb 100644
--- a/apps/meteor/server/services/federation/domain/FederatedUser.ts
+++ b/apps/meteor/server/services/federation/domain/FederatedUser.ts
@@ -115,7 +115,23 @@ export class FederatedUser {
 	}
 
 	public shouldUpdateDisplayName(displayName: string): boolean {
-		return this.internalReference.name !== displayName;
+		// If there is no change, then we don't need to update
+		if (this.internalReference.name === displayName) {
+			return false;
+		}
+
+		// If we don't have a name yet, then use whatever we're receiving
+		if (!this.internalReference.name) {
+			return true;
+		}
+
+		// If the displayName received is based on the username, then ignore it and keep the existing name instead
+		if (this.internalReference.username?.includes(displayName) || this.externalId.includes(displayName)) {
+			return false;
+		}
+
+		// It's a new value and an actual display name
+		return true;
 	}
 
 	public getInternalId(): string {
diff --git a/apps/meteor/tests/unit/server/federation/application/user/sender/UserServiceSender.spec.ts b/apps/meteor/tests/unit/server/federation/application/user/sender/UserServiceSender.spec.ts
index 1c5213c91acb9..c94758214992a 100644
--- a/apps/meteor/tests/unit/server/federation/application/user/sender/UserServiceSender.spec.ts
+++ b/apps/meteor/tests/unit/server/federation/application/user/sender/UserServiceSender.spec.ts
@@ -238,7 +238,7 @@ describe('Federation - Application - FederationUserServiceSender', () => {
 					existsOnlyOnProxyServer: false,
 				}),
 			);
-			bridge.getUserProfileInformation.resolves({ displayname: 'normalizedInviterId' });
+			bridge.getUserProfileInformation.resolves({ displayName: 'normalizedInviterId' });
 			await service.afterUserRealNameChanged('id', 'name');
 
 			expect(bridge.setUserDisplayName.called).to.be.false;
@@ -252,7 +252,7 @@ describe('Federation - Application - FederationUserServiceSender', () => {
 					_id: '_id',
 				}),
 			);
-			bridge.getUserProfileInformation.resolves({ displayname: 'different' });
+			bridge.getUserProfileInformation.resolves({ displayName: 'different' });
 			await service.afterUserRealNameChanged('id', 'name');
 
 			expect(bridge.setUserDisplayName.calledWith('externalInviterId', 'name')).to.be.true;