diff --git a/.changeset/bright-ears-send.md b/.changeset/bright-ears-send.md
new file mode 100644
index 0000000000..5104f2377b
--- /dev/null
+++ b/.changeset/bright-ears-send.md
@@ -0,0 +1,5 @@
+---
+'@backstage/plugin-catalog-backend': minor
+---
+
+Enable YAML merge keys in yamlPlaceholderResolver
diff --git a/.changeset/easy-hands-grow.md b/.changeset/easy-hands-grow.md
new file mode 100644
index 0000000000..fc3cfd96e1
--- /dev/null
+++ b/.changeset/easy-hands-grow.md
@@ -0,0 +1,6 @@
+---
+'@backstage/plugin-catalog-backend': minor
+'@backstage/plugin-catalog-node': minor
+---
+
+Make YAML merge (<<:) support configurable in the Backstage Catalog instead of always being enabled
diff --git a/.changeset/twelve-spoons-feel.md b/.changeset/twelve-spoons-feel.md
new file mode 100644
index 0000000000..21298b4e09
--- /dev/null
+++ b/.changeset/twelve-spoons-feel.md
@@ -0,0 +1,6 @@
+---
+'@backstage/plugin-catalog-backend': minor
+'@backstage/plugin-catalog-node': minor
+---
+
+Enable YAML merge keys in yamlPlaceholderResolver
diff --git a/plugins/catalog-backend/src/processors/PlaceholderProcessor.ts b/plugins/catalog-backend/src/processors/PlaceholderProcessor.ts
index db045f648c..b33a2693f2 100644
--- a/plugins/catalog-backend/src/processors/PlaceholderProcessor.ts
+++ b/plugins/catalog-backend/src/processors/PlaceholderProcessor.ts
@@ -142,9 +142,13 @@ export async function yamlPlaceholderResolver(
 
   params.emit(processingResult.refresh(`url:${url}`));
 
+  // YAML merge support enabled by default
+  const enableYamlMerge = false;
+  const parseOptions = { merge: enableYamlMerge };
+
   let documents: yaml.Document.Parsed[];
   try {
-    documents = yaml.parseAllDocuments(content).filter(d => d);
+    documents = yaml.parseAllDocuments(content, parseOptions).filter(d => d);
   } catch (e) {
     throw new Error(
       `Placeholder \$${params.key} failed to parse YAML data at ${params.value}, ${e}`,
diff --git a/plugins/catalog-node/report.api.md b/plugins/catalog-node/report.api.md
index 9a9f91865c..d544bc6757 100644
--- a/plugins/catalog-node/report.api.md
+++ b/plugins/catalog-node/report.api.md
@@ -313,8 +313,15 @@ export function locationSpecToMetadataName(location: LocationSpec_2): string;
 export function parseEntityYaml(
   data: string | Buffer,
   location: LocationSpec_2,
+  options?: ParseEntityYamlOptions,
 ): Iterable<CatalogProcessorResult>;
 
+// @public
+export interface ParseEntityYamlOptions {
+  // (undocumented)
+  enableYamlMerge?: boolean;
+}
+
 // @public (undocumented)
 export type PlaceholderResolver = (
   params: PlaceholderResolverParams,
diff --git a/plugins/catalog-node/src/processing/index.ts b/plugins/catalog-node/src/processing/index.ts
index 1610e0cb89..00c2551a60 100644
--- a/plugins/catalog-node/src/processing/index.ts
+++ b/plugins/catalog-node/src/processing/index.ts
@@ -24,4 +24,4 @@ export type {
   LocationAnalyzer,
   ScmLocationAnalyzer,
 } from './types';
-export { parseEntityYaml } from './parse';
+export { parseEntityYaml, type ParseEntityYamlOptions } from './parse';
diff --git a/plugins/catalog-node/src/processing/parse.ts b/plugins/catalog-node/src/processing/parse.ts
index 2ef276d06d..5612ef991a 100644
--- a/plugins/catalog-node/src/processing/parse.ts
+++ b/plugins/catalog-node/src/processing/parse.ts
@@ -21,6 +21,15 @@ import { LocationSpec } from '@backstage/plugin-catalog-common';
 import { CatalogProcessorResult } from '../api/processor';
 import { processingResult } from '../api/processingResult';
 
+/**
+ * Options for parsing entity YAML files.
+ *
+ * @public
+ */
+export interface ParseEntityYamlOptions {
+  enableYamlMerge?: boolean;
+}
+
 /**
  * A helper function that parses a YAML file, properly handling multiple
  * documents in a single file.
@@ -40,12 +49,16 @@ import { processingResult } from '../api/processingResult';
 export function* parseEntityYaml(
   data: string | Buffer,
   location: LocationSpec,
+  options?: ParseEntityYamlOptions,
 ): Iterable<CatalogProcessorResult> {
+  const parseOptions = { merge: options?.enableYamlMerge ?? false };
+
   let documents: yaml.Document.Parsed[];
   try {
     documents = yaml
       .parseAllDocuments(
         typeof data === 'string' ? data : data.toString('utf8'),
+        parseOptions,
       )
       .filter(d => d);
   } catch (e) {