diff --git a/src/Config/ObjectModel/RuntimeConfig.cs b/src/Config/ObjectModel/RuntimeConfig.cs
index 659914a7ac..19598d16b4 100644
--- a/src/Config/ObjectModel/RuntimeConfig.cs
+++ b/src/Config/ObjectModel/RuntimeConfig.cs
@@ -353,10 +353,12 @@ public RuntimeConfig(
             // This loader is not used as a part of hot reload and therefore does not need a handler.
             FileSystemRuntimeConfigLoader loader = new(fileSystem, handler: null);
 
+            // Pass the parent's AKV options so @akv() references in child configs can
+            // be resolved using the parent's Key Vault configuration.
+            DeserializationVariableReplacementSettings replacementSettings = new(azureKeyVaultOptions: this.AzureKeyVault, doReplaceEnvVar: true, doReplaceAkvVar: true);
+
             foreach (string dataSourceFile in DataSourceFiles.SourceFiles)
             {
-                // Use default replacement settings for environment variable replacement
-                DeserializationVariableReplacementSettings replacementSettings = new(azureKeyVaultOptions: null, doReplaceEnvVar: true, doReplaceAkvVar: true);
 
                 if (loader.TryLoadConfig(dataSourceFile, out RuntimeConfig? config, replacementSettings: replacementSettings))
                 {
diff --git a/src/Service.Tests/Configuration/RuntimeConfigLoaderTests.cs b/src/Service.Tests/Configuration/RuntimeConfigLoaderTests.cs
index d6f19ec65f..d7b67eb23d 100644
--- a/src/Service.Tests/Configuration/RuntimeConfigLoaderTests.cs
+++ b/src/Service.Tests/Configuration/RuntimeConfigLoaderTests.cs
@@ -9,6 +9,7 @@
 using System.Linq;
 using System.Threading.Tasks;
 using Azure.DataApiBuilder.Config;
+using Azure.DataApiBuilder.Config.Converters;
 using Azure.DataApiBuilder.Config.ObjectModel;
 using Microsoft.VisualStudio.TestTools.UnitTesting;
 using Newtonsoft.Json.Linq;
@@ -131,4 +132,108 @@ public async Task CanLoadValidMultiSourceConfigWithAutoentities(string configPat
         Assert.IsTrue(runtimeConfig.SqlDataSourceUsed, "Should have Sql data source");
         Assert.AreEqual(expectedEntities, runtimeConfig.Entities.Entities.Count, "Number of entities is not what is expected.");
     }
+
+    /// <summary>
+    /// Validates that when a parent config has azure-key-vault options configured,
+    /// child configs can resolve @akv('...') references using the parent's AKV configuration.
+    /// Uses a local .akv file to simulate Azure Key Vault without requiring a real vault.
+    /// Regression test for https://github.com/Azure/data-api-builder/issues/3322
+    /// </summary>
+    [TestMethod]
+    public async Task ChildConfigResolvesAkvReferencesFromParentAkvOptions()
+    {
+        string akvFilePath = Path.Combine(Path.GetTempPath(), Path.GetRandomFileName() + ".akv");
+        string childFilePath = Path.Combine(Path.GetTempPath(), Path.GetRandomFileName() + ".json");
+
+        try
+        {
+            // Create a local .akv secrets file with test secrets.
+            await File.WriteAllTextAsync(akvFilePath, "my-connection-secret=Server=tcp:127.0.0.1,1433;Trusted_Connection=True;\n");
+
+            // Parent config with azure-key-vault pointing to the local .akv file.
+            string parentConfig = $@"{{
+                ""$schema"": ""https://github.com/Azure/data-api-builder/releases/download/vmajor.minor.patch/dab.draft.schema.json"",
+                ""data-source"": {{
+                    ""database-type"": ""mssql"",
+                    ""connection-string"": ""Server=tcp:127.0.0.1,1433;Persist Security Info=False;Trusted_Connection=True;TrustServerCertificate=True;MultipleActiveResultSets=False;Connection Timeout=5;""
+                }},
+                ""azure-key-vault"": {{
+                    ""endpoint"": ""{akvFilePath.Replace("\\", "\\\\")}""
+                }},
+                ""data-source-files"": [""{childFilePath.Replace("\\", "\\\\")}""],
+                ""runtime"": {{
+                    ""rest"": {{ ""enabled"": true }},
+                    ""graphql"": {{ ""enabled"": true }},
+                    ""host"": {{
+                        ""cors"": {{ ""origins"": [] }},
+                        ""authentication"": {{ ""provider"": ""StaticWebApps"" }}
+                    }}
+                }},
+                ""entities"": {{}}
+            }}";
+
+            // Child config with @akv('...') reference in its connection string.
+            string childConfig = @"{
+                ""$schema"": ""https://github.com/Azure/data-api-builder/releases/download/vmajor.minor.patch/dab.draft.schema.json"",
+                ""data-source"": {
+                    ""database-type"": ""mssql"",
+                    ""connection-string"": ""@akv('my-connection-secret')""
+                },
+                ""runtime"": {
+                    ""rest"": { ""enabled"": true },
+                    ""graphql"": { ""enabled"": true },
+                    ""host"": {
+                        ""cors"": { ""origins"": [] },
+                        ""authentication"": { ""provider"": ""StaticWebApps"" }
+                    }
+                },
+                ""entities"": {
+                    ""AkvChildEntity"": {
+                        ""source"": ""dbo.AkvTable"",
+                        ""permissions"": [{ ""role"": ""anonymous"", ""actions"": [""read""] }]
+                    }
+                }
+            }";
+
+            await File.WriteAllTextAsync(childFilePath, childConfig);
+
+            MockFileSystem fs = new(new Dictionary<string, MockFileData>()
+            {
+                { "dab-config.json", new MockFileData(parentConfig) }
+            });
+
+            FileSystemRuntimeConfigLoader loader = new(fs);
+
+            DeserializationVariableReplacementSettings replacementSettings = new(
+                azureKeyVaultOptions: new AzureKeyVaultOptions() { Endpoint = akvFilePath, UserProvidedEndpoint = true },
+                doReplaceEnvVar: true,
+                doReplaceAkvVar: true,
+                envFailureMode: EnvironmentVariableReplacementFailureMode.Ignore);
+
+            Assert.IsTrue(
+                loader.TryLoadConfig("dab-config.json", out RuntimeConfig runtimeConfig, replacementSettings: replacementSettings),
+                "Config should load successfully when child config has @akv() references resolvable via parent AKV options.");
+
+            Assert.IsTrue(runtimeConfig.Entities.ContainsKey("AkvChildEntity"), "Child config entity should be merged into the parent config.");
+
+            // Verify the child's connection string was resolved from the .akv file.
+            string childDataSourceName = runtimeConfig.GetDataSourceNameFromEntityName("AkvChildEntity");
+            DataSource childDataSource = runtimeConfig.GetDataSourceFromDataSourceName(childDataSourceName);
+            Assert.IsTrue(
+                childDataSource.ConnectionString.Contains("127.0.0.1"),
+                "Child config connection string should have the AKV secret resolved.");
+        }
+        finally
+        {
+            if (File.Exists(akvFilePath))
+            {
+                File.Delete(akvFilePath);
+            }
+
+            if (File.Exists(childFilePath))
+            {
+                File.Delete(childFilePath);
+            }
+        }
+    }
 }