diff --git a/src/Aspire.Hosting/Orchestrator/ParameterProcessor.cs b/src/Aspire.Hosting/Orchestrator/ParameterProcessor.cs
index e8730049eab..549868e494c 100644
--- a/src/Aspire.Hosting/Orchestrator/ParameterProcessor.cs
+++ b/src/Aspire.Hosting/Orchestrator/ParameterProcessor.cs
@@ -96,11 +96,14 @@ public async Task InitializeParametersAsync(DistributedApplicationModel model, b
 
     private async Task CollectDependentParameterResourcesAsync(DistributedApplicationModel model, Dictionary<string, ParameterResource> referencedParameters, HashSet<object?> currentDependencySet, CancellationToken cancellationToken)
     {
-        var publishExecutionContext = new DistributedApplicationExecutionContext(DistributedApplicationOperation.Publish);
-
         foreach (var resource in model.Resources)
         {
-            await ProcessResourceDependenciesAsync(resource, publishExecutionContext, referencedParameters, currentDependencySet, cancellationToken).ConfigureAwait(false);
+            if (resource.IsExcludedFromPublish())
+            {
+                continue;
+            }
+
+            await ProcessResourceDependenciesAsync(resource, executionContext, referencedParameters, currentDependencySet, cancellationToken).ConfigureAwait(false);
         }
 
     }
diff --git a/tests/Aspire.Hosting.Tests/Orchestrator/ParameterProcessorTests.cs b/tests/Aspire.Hosting.Tests/Orchestrator/ParameterProcessorTests.cs
index a2d8f330652..79ccb9dabb0 100644
--- a/tests/Aspire.Hosting.Tests/Orchestrator/ParameterProcessorTests.cs
+++ b/tests/Aspire.Hosting.Tests/Orchestrator/ParameterProcessorTests.cs
@@ -679,6 +679,81 @@ public async Task InitializeParametersAsync_WithDistributedApplicationModel_Hand
         }
     }
 
+    [Fact]
+    public async Task InitializeParametersAsync_UsesExecutionContextOptions_DoesNotThrow()
+    {
+        // Arrange
+        using var builder = TestDistributedApplicationBuilder.Create();
+        var param = builder.AddParameter("testParam", () => "testValue");
+
+        var serviceProviderAccessed = false;
+        builder.AddContainer("testContainer", "nginx")
+               .WithEnvironment(context =>
+               {
+                   // This should not throw InvalidOperationException
+                   // when using the proper execution context constructor
+                   var sp = context.ExecutionContext.ServiceProvider;
+                   serviceProviderAccessed = sp is not null;
+                   context.EnvironmentVariables["TEST_ENV"] = param;
+               });
+
+        using var app = builder.Build();
+        var model = app.Services.GetRequiredService<DistributedApplicationModel>();
+
+        // Get the ParameterProcessor from the built app's service provider
+        // This ensures it has the proper execution context with ServiceProvider
+        var parameterProcessor = app.Services.GetRequiredService<ParameterProcessor>();
+
+        // Act - Should not throw InvalidOperationException about IServiceProvider not being available
+        await parameterProcessor.InitializeParametersAsync(model);
+
+        // Assert
+        Assert.True(serviceProviderAccessed);
+        var parameterResource = model.Resources.OfType<ParameterResource>().Single();
+        Assert.NotNull(parameterResource.WaitForValueTcs);
+        Assert.True(parameterResource.WaitForValueTcs.Task.IsCompletedSuccessfully);
+    }
+
+    [Fact]
+    public async Task InitializeParametersAsync_SkipsResourcesExcludedFromPublish()
+    {
+        // Arrange
+        using var builder = TestDistributedApplicationBuilder.Create();
+        var param = builder.AddParameter("excludedParam", () => "excludedValue");
+
+        var excludedContainer = builder.AddContainer("excludedContainer", "nginx")
+               .WithEnvironment(context =>
+               {
+                   context.EnvironmentVariables["EXCLUDED_ENV"] = param;
+               });
+
+        // Mark the container as excluded from publish
+        excludedContainer.ExcludeFromManifest();
+
+        using var app = builder.Build();
+        var model = app.Services.GetRequiredService<DistributedApplicationModel>();
+
+        var parameterProcessor = CreateParameterProcessor();
+
+        // Act - The excluded container should be skipped during parameter collection
+        await parameterProcessor.InitializeParametersAsync(model);
+
+        // Assert
+        // The environment callback should have been invoked during parameter collection
+        // because we now create a publish execution context to collect dependent parameters
+        // However, since we filter out excluded resources, the parameter should not be initialized
+        // unless it's explicitly in the model
+        var parameters = model.Resources.OfType<ParameterResource>().ToList();
+        Assert.Single(parameters);
+        
+        var parameterResource = parameters[0];
+        Assert.Equal("excludedParam", parameterResource.Name);
+        
+        // The parameter should be initialized since it's explicitly in the model
+        Assert.NotNull(parameterResource.WaitForValueTcs);
+        Assert.True(parameterResource.WaitForValueTcs.Task.IsCompletedSuccessfully);
+    }
+
     private static ParameterProcessor CreateParameterProcessor(
         ResourceNotificationService? notificationService = null,
         ResourceLoggerService? loggerService = null,