diff --git a/pkg/isbsvc/jetstream_service.go b/pkg/isbsvc/jetstream_service.go
index c1f1bd489e..867d8a655e 100644
--- a/pkg/isbsvc/jetstream_service.go
+++ b/pkg/isbsvc/jetstream_service.go
@@ -120,11 +120,35 @@ func (jss *jetStreamSvc) CreateBuffersAndBuckets(ctx context.Context, buffers, b
 			if !errors.Is(err, nats.ErrStreamNotFound) {
 				return fmt.Errorf("failed to query information of stream %q during buffer creating, %w", streamName, err)
 			}
+			// get the retention policy from the stream config
+			retention := nats.RetentionPolicy(v.GetInt("stream.retention"))
+			discard := nats.DiscardNew
+
+			// Based on the retention policy we use the following discard policy
+			// 1) Limits Policy -> DiscardOld
+			// 2) WorkQueuePolicy/Interest -> DiscardNew
+
+			// In WorkQueuePolicy the messages will be removed as soon as the Consumer received an Acknowledgement.
+			// In InterestPolicy messages will be removed as soon as all Consumers of the stream for that subject have
+			// received an Acknowledgement for the message.
+			// For Numaflow, workqueue and interest is the same, because we only have one consumer
+			// Old messages should be deleted once, they are acknowledged, hence we use DiscardNew with these two
+			// policies in which during a buffer full we will not write more message to the stream and wait
+			// for the older messages to get cleared
+
+			// When operating with DiscardNew and Limits, on reaching the maxMsgs limit, it will result in the stream
+			// returning an error when attempting to write new messages and old messages will not be deleted from the stream
+			// so the pipeline will get stuck. Hence, we cannot use Limits with DiscardNew.
+			//
+			if retention == nats.LimitsPolicy {
+				discard = nats.DiscardOld
+			}
+
 			if _, err := jss.js.AddStream(&nats.StreamConfig{
 				Name:       streamName,
 				Subjects:   []string{streamName}, // Use the stream name as the only subject
-				Retention:  nats.RetentionPolicy(v.GetInt("stream.retention")),
-				Discard:    nats.DiscardOld,
+				Retention:  retention,
+				Discard:    discard,
 				MaxMsgs:    v.GetInt64("stream.maxMsgs"),
 				MaxAge:     v.GetDuration("stream.maxAge"),
 				MaxBytes:   v.GetInt64("stream.maxBytes"),