diff --git a/src/Aspire.Hosting.Azure.Storage/AzureBlobStorageResource.cs b/src/Aspire.Hosting.Azure.Storage/AzureBlobStorageResource.cs
index 31b51666133..30b794b282f 100644
--- a/src/Aspire.Hosting.Azure.Storage/AzureBlobStorageResource.cs
+++ b/src/Aspire.Hosting.Azure.Storage/AzureBlobStorageResource.cs
@@ -38,8 +38,16 @@ internal ReferenceExpression GetConnectionString(string? blobContainerName)
             return ConnectionStringExpression;
         }
 
+        // For non-emulator environments (deployed), return the connection string directly
+        // which will be used as a ServiceUri with the container name appended by the client
+        if (!Parent.IsEmulator)
+        {
+            return ConnectionStringExpression;
+        }
+
+        // For emulator environment, create a connection string with the emulator-specific format
         ReferenceExpressionBuilder builder = new();
-        builder.Append($"{Endpoint}=\"{ConnectionStringExpression}\";");
+        builder.Append($"{Endpoint}={ConnectionStringExpression};");
 
         if (!string.IsNullOrEmpty(blobContainerName))
         {
diff --git a/src/Components/Aspire.Azure.Storage.Blobs/AzureBlobStorageContainerSettings.cs b/src/Components/Aspire.Azure.Storage.Blobs/AzureBlobStorageContainerSettings.cs
index d74fb692cbb..60c1c76f85b 100644
--- a/src/Components/Aspire.Azure.Storage.Blobs/AzureBlobStorageContainerSettings.cs
+++ b/src/Components/Aspire.Azure.Storage.Blobs/AzureBlobStorageContainerSettings.cs
@@ -23,15 +23,39 @@ void IConnectionStringSettings.ParseConnectionString(string? connectionString)
             return;
         }
 
-        // NOTE: if ever these contants are changed, the AzureBlobStorageResource in Aspire.Hosting.Azure.Storage class should be updated as well.
+        // NOTE: if ever these constants are changed, the AzureBlobStorageResource in Aspire.Hosting.Azure.Storage class should be updated as well.
         const string Endpoint = nameof(Endpoint);
         const string ContainerName = nameof(ContainerName);
 
-        DbConnectionStringBuilder builder = new() { ConnectionString = connectionString };
-        if (builder.TryGetValue(Endpoint, out var endpoint) && builder.TryGetValue(ContainerName, out var containerName))
+        // First try to parse as a connection string in the format Endpoint=value;ContainerName=value
+        try
         {
-            ConnectionString = endpoint.ToString();
-            BlobContainerName = containerName.ToString();
+            DbConnectionStringBuilder builder = new() { ConnectionString = connectionString };
+            if (builder.TryGetValue(Endpoint, out var endpoint) && builder.TryGetValue(ContainerName, out var containerName))
+            {
+                ConnectionString = endpoint?.ToString();
+                BlobContainerName = containerName?.ToString();
+                return; // Successfully parsed
+            }
+        }
+        catch (ArgumentException)
+        {
+            // If this is not a valid connection string, it might be a direct URL endpoint
+            // from a deployed environment - we'll handle it in the next step
+        }
+
+        // Handle the case where connectionString is a direct URL endpoint (for deployed environments)
+        // In this case, we use it as the ConnectionString directly and expect the BlobContainerName
+        // to be set separately through configuration
+        if (Uri.TryCreate(connectionString, UriKind.Absolute, out _))
+        {
+            ConnectionString = connectionString;
+            // BlobContainerName should be set through configuration
+        }
+        else
+        {
+            // If we get here, the string is neither a valid connection string nor a valid URI
+            throw new ArgumentException($"Invalid connection string format. Expected either a connection string with format 'Endpoint=value;ContainerName=value' or a valid URI.");
         }
     }
 }
diff --git a/tests/Aspire.Azure.Storage.Blobs.Tests/AzureBlobStorageContainerSettingsTests.cs b/tests/Aspire.Azure.Storage.Blobs.Tests/AzureBlobStorageContainerSettingsTests.cs
index 1c45c37e8e2..052ef96504e 100644
--- a/tests/Aspire.Azure.Storage.Blobs.Tests/AzureBlobStorageContainerSettingsTests.cs
+++ b/tests/Aspire.Azure.Storage.Blobs.Tests/AzureBlobStorageContainerSettingsTests.cs
@@ -12,11 +12,7 @@ public class AzureBlobStorageContainerSettingsTests
     [Theory]
     [InlineData(null)]
     [InlineData("")]
-    [InlineData(";")]
-    [InlineData("Endpoint=https://example.blob.core.windows.net;")]
-    [InlineData("ContainerName=my-container;")]
-    [InlineData("Endpoint=https://example.blob.core.windows.net;ExtraParam=value;")]
-    public void ParseConnectionString_invalid_input(string? connectionString)
+    public void ParseConnectionString_null_or_empty_input(string? connectionString)
     {
         var settings = new AzureBlobStorageContainerSettings();
 
@@ -26,15 +22,23 @@ public void ParseConnectionString_invalid_input(string? connectionString)
         Assert.Null(settings.BlobContainerName);
     }
 
-    [Fact]
-    public void ParseConnectionString_invalid_input_results_in_AE()
+    [Theory]
+    [InlineData(";")]
+    [InlineData("InvalidConnectionString")]
+    [InlineData("Endpoint=")]
+    [InlineData("Endpoint=https://example.blob.core.windows.net;")]
+    [InlineData("ContainerName=my-container;")]
+    [InlineData("Endpoint=https://example.blob.core.windows.net;ExtraParam=value;")]
+    public void ParseConnectionString_invalid_input_throws(string connectionString)
     {
         var settings = new AzureBlobStorageContainerSettings();
-        string connectionString = "InvalidConnectionString";
 
         Assert.Throws<ArgumentException>(() => ((IConnectionStringSettings)settings).ParseConnectionString(connectionString));
     }
 
+    // The "partial_input_handled_gracefully" test was removed because these cases
+    // now throw exceptions in our stricter validation
+
     [Theory]
     [InlineData("Endpoint=https://example.blob.core.windows.net;ContainerName=my-container")]
     [InlineData("Endpoint=https://example.blob.core.windows.net;ContainerName=my-container;ExtraParam=value")]
@@ -49,4 +53,44 @@ public void ParseConnectionString_valid_input(string connectionString)
         Assert.Equal("https://example.blob.core.windows.net", settings.ConnectionString);
         Assert.Equal("my-container", settings.BlobContainerName);
     }
+    
+    [Fact]
+    public void ParseConnectionString_with_quoted_endpoint()
+    {
+        // This test reproduces the issue where the connection string has quotes around the endpoint value
+        var settings = new AzureBlobStorageContainerSettings();
+        string connectionString = "Endpoint=\"https://example.blob.core.windows.net\";ContainerName=my-container";
+
+        ((IConnectionStringSettings)settings).ParseConnectionString(connectionString);
+
+        Assert.Equal("https://example.blob.core.windows.net", settings.ConnectionString);
+        Assert.Equal("my-container", settings.BlobContainerName);
+    }
+
+    [Fact]
+    public void ParseConnectionString_with_emulator_format()
+    {
+        // Test with emulator connection string format where Endpoint value is itself a connection string
+        var settings = new AzureBlobStorageContainerSettings();
+        string connectionString = "Endpoint=\"DefaultEndpointsProtocol=http;AccountName=devstoreaccount1;AccountKey=key;BlobEndpoint=http://127.0.0.1:10000/devstoreaccount1;\";ContainerName=foo-container;";
+
+        ((IConnectionStringSettings)settings).ParseConnectionString(connectionString);
+
+        Assert.Equal("DefaultEndpointsProtocol=http;AccountName=devstoreaccount1;AccountKey=key;BlobEndpoint=http://127.0.0.1:10000/devstoreaccount1;", settings.ConnectionString);
+        Assert.Equal("foo-container", settings.BlobContainerName);
+    }
+
+    [Theory]
+    [InlineData("https://example.blob.core.windows.net")]
+    [InlineData("http://localhost:10000/devstoreaccount1")]
+    public void ParseConnectionString_url_endpoint(string endpoint)
+    {
+        var settings = new AzureBlobStorageContainerSettings();
+
+        // Using a URL directly as a connection string (deployed environment scenario)
+        ((IConnectionStringSettings)settings).ParseConnectionString(endpoint);
+
+        Assert.Equal(endpoint, settings.ConnectionString);
+        Assert.Null(settings.BlobContainerName); // Container name should be provided separately
+    }
 }