diff --git a/controller/appcontroller.go b/controller/appcontroller.go
index 964bcc1aa0dec..23bd1bd6fa552 100644
--- a/controller/appcontroller.go
+++ b/controller/appcontroller.go
@@ -1697,13 +1697,53 @@ func (ctrl *ApplicationController) persistAppStatus(orig *appv1.Application, new
 		}
 		delete(newAnnotations, appv1.AnnotationKeyRefresh)
 	}
+
+	// false on first run (Create) but that's ok, original diff logic can handle nulls; avoid nil pointer deref
+	hasHelmValuesObject := orig.Status.Sync.ComparedTo.Source.Helm != nil && newStatus.Sync.ComparedTo.Source.Helm != nil
+
+	valuesObjectPatch, valuesModified, valuesErr := []byte{}, false, error(nil)
+	if hasHelmValuesObject {
+		valuesObjectPatch, valuesModified, valuesErr = createMergePatchValuesObject(
+			orig.Status.Sync.ComparedTo.Source.Helm.ValuesObject,
+			newStatus.Sync.ComparedTo.Source.Helm.ValuesObject,
+		)
+		if valuesErr != nil {
+			logCtx.Errorf("Error constructing status patch in valuesObject: %v", valuesErr)
+			return
+		}
+	}
+
+	var origTmp, newStatusTmp *apiruntime.RawExtension
+	if hasHelmValuesObject {
+		// strategic merge patching should ignore valuesObject
+		origTmp = orig.Status.Sync.ComparedTo.Source.Helm.ValuesObject
+		orig.Status.Sync.ComparedTo.Source.Helm.ValuesObject = nil
+
+		newStatusTmp = newStatus.Sync.ComparedTo.Source.Helm.ValuesObject
+		newStatus.Sync.ComparedTo.Source.Helm.ValuesObject = nil
+	}
 	patch, modified, err := diff.CreateTwoWayMergePatch(
 		&appv1.Application{ObjectMeta: metav1.ObjectMeta{Annotations: orig.GetAnnotations()}, Status: orig.Status},
 		&appv1.Application{ObjectMeta: metav1.ObjectMeta{Annotations: newAnnotations}, Status: *newStatus}, appv1.Application{})
+
+	if hasHelmValuesObject {
+		orig.Status.Sync.ComparedTo.Source.Helm.ValuesObject = origTmp
+		newStatus.Sync.ComparedTo.Source.Helm.ValuesObject = newStatusTmp
+	}
 	if err != nil {
 		logCtx.Errorf("Error constructing app status patch: %v", err)
 		return
 	}
+
+	if valuesModified {
+		modified = true
+		patch, err = jsonpatch.MergeMergePatches(patch, valuesObjectPatch)
+		if err != nil {
+			logCtx.Errorf("error merging operation state patch: %v", err)
+			return
+		}
+	}
+
 	if !modified {
 		logCtx.Infof("No status changes. Skipping patch")
 		return
@@ -2142,3 +2182,46 @@ func (ctrl *ApplicationController) toAppQualifiedName(appName, appNamespace stri
 }
 
 type ClusterFilterFunction func(c *argov1alpha.Cluster, distributionFunction sharding.DistributionFunction) bool
+
+// jsonCreateMergePatch is a wrapper func to calculate the diff between two objects
+// instead of bytes.
+func jsonCreateMergePatch(orig, new interface{}) ([]byte, bool, error) {
+	origBytes, err := json.Marshal(orig)
+	if err != nil {
+		return nil, false, err
+	}
+	newBytes, err := json.Marshal(new)
+	if err != nil {
+		return nil, false, err
+	}
+	patch, err := jsonpatch.CreateMergePatch(origBytes, newBytes)
+	return patch, string(patch) != "{}", err
+}
+
+// createMergePatchValuesObject compute patch just for the Helm valuesObject using jsonpatch.
+func createMergePatchValuesObject(orig, new *apiruntime.RawExtension) ([]byte, bool, error) {
+	return jsonCreateMergePatch(
+		&appv1.Application{ObjectMeta: metav1.ObjectMeta{}, Status: appv1.ApplicationStatus{
+			Sync: appv1.SyncStatus{
+				ComparedTo: appv1.ComparedTo{
+					Source: appv1.ApplicationSource{
+						Helm: &appv1.ApplicationSourceHelm{
+							ValuesObject: orig,
+						},
+					},
+				},
+			},
+		}},
+		&appv1.Application{ObjectMeta: metav1.ObjectMeta{}, Status: appv1.ApplicationStatus{
+			Sync: appv1.SyncStatus{
+				ComparedTo: appv1.ComparedTo{
+					Source: appv1.ApplicationSource{
+						Helm: &appv1.ApplicationSourceHelm{
+							ValuesObject: new,
+						},
+					},
+				},
+			},
+		}},
+	)
+}