diff --git a/.changeset/short-pots-remember.md b/.changeset/short-pots-remember.md
new file mode 100644
index 0000000000..9a30bc222c
--- /dev/null
+++ b/.changeset/short-pots-remember.md
@@ -0,0 +1,5 @@
+---
+'@backstage/plugin-catalog-backend': patch
+---
+
+Fixed an issue where entities would not be marked for restitching if only the target of a relationship changed.
diff --git a/plugins/catalog-backend/src/processing/DefaultCatalogProcessingEngine.test.ts b/plugins/catalog-backend/src/processing/DefaultCatalogProcessingEngine.test.ts
index 3f283a5b38..de7c3600c2 100644
--- a/plugins/catalog-backend/src/processing/DefaultCatalogProcessingEngine.test.ts
+++ b/plugins/catalog-backend/src/processing/DefaultCatalogProcessingEngine.test.ts
@@ -464,6 +464,111 @@ describe('DefaultCatalogProcessingEngine', () => {
     await engine.stop();
   });
 
+  it('should stitch both the previous and new sources when relation target changes', async () => {
+    const engine = new DefaultCatalogProcessingEngine({
+      config: new ConfigReader({}),
+      logger: mockServices.logger.mock(),
+      processingDatabase: db,
+      knex: {} as any,
+      orchestrator: orchestrator,
+      stitcher: stitcher,
+      createHash: () => hash,
+      pollingIntervalMs: 100,
+    });
+
+    db.transaction.mockImplementation(cb => cb((() => {}) as any));
+
+    const entity = {
+      apiVersion: '1',
+      kind: 'k',
+      metadata: { name: 'me', namespace: 'ns' },
+    };
+    const processableEntity = {
+      entityRef: 'foo',
+      id: '1',
+      unprocessedEntity: entity,
+      resultHash: '',
+      state: [] as any,
+      nextUpdateAt: DateTime.now(),
+      lastDiscoveryAt: DateTime.now(),
+    };
+
+    db.listParents.mockResolvedValue({ entityRefs: [] });
+    db.getProcessableEntities
+      .mockResolvedValueOnce({
+        items: [processableEntity],
+      })
+      .mockResolvedValueOnce({
+        items: [processableEntity],
+      });
+    db.updateProcessedEntity
+      .mockImplementationOnce(async () => ({
+        previous: { relations: [] },
+      }))
+      .mockImplementationOnce(async () => ({
+        previous: {
+          relations: [
+            {
+              originating_entity_id: '',
+              type: 't',
+              source_entity_ref: 'k:ns/other1',
+              target_entity_ref: 'k:ns/me',
+            },
+          ],
+        },
+      }));
+
+    orchestrator.process
+      .mockResolvedValueOnce({
+        ok: true,
+        completedEntity: entity,
+        relations: [
+          {
+            type: 't',
+            source: { kind: 'k', namespace: 'ns', name: 'other1' },
+            target: { kind: 'k', namespace: 'ns', name: 'me' },
+          },
+        ],
+        errors: [],
+        deferredEntities: [],
+        state: {},
+        refreshKeys: [],
+      })
+      .mockResolvedValueOnce({
+        ok: true,
+        completedEntity: entity,
+        // change just the target of the relationship to a new entity,
+        // leaving the source and relation type the same.
+        // see: https://github.com/backstage/backstage/issues/27325
+        relations: [
+          {
+            type: 't',
+            source: { kind: 'k', namespace: 'ns', name: 'other1' },
+            target: { kind: 'k', namespace: 'ns', name: 'newtarget' },
+          },
+        ],
+        errors: [],
+        deferredEntities: [],
+        state: {},
+        refreshKeys: [],
+      });
+
+    await engine.start();
+    await waitForExpect(() => {
+      expect(stitcher.stitch).toHaveBeenCalledTimes(2);
+    });
+    expect([...stitcher.stitch.mock.calls[0][0].entityRefs!]).toEqual(
+      expect.arrayContaining(['k:ns/me', 'k:ns/other1']),
+    );
+    // As a result of switching the relationship for source other1 to
+    // a new target entity, the other1 relationship source must be
+    // restitched.
+    expect([...stitcher.stitch.mock.calls[1][0].entityRefs!]).toEqual(
+      expect.arrayContaining(['k:ns/me', 'k:ns/other1']),
+    );
+    await engine.stop();
+  });
+
   it('should not stitch sources entities when relations are the same', async () => {
     const engine = new DefaultCatalogProcessingEngine({
       config: new ConfigReader({}),
diff --git a/plugins/catalog-backend/src/processing/DefaultCatalogProcessingEngine.ts b/plugins/catalog-backend/src/processing/DefaultCatalogProcessingEngine.ts
index e42847bafe..0f7acba652 100644
--- a/plugins/catalog-backend/src/processing/DefaultCatalogProcessingEngine.ts
+++ b/plugins/catalog-backend/src/processing/DefaultCatalogProcessingEngine.ts
@@ -295,7 +295,7 @@ export class DefaultCatalogProcessingEngine {
                 });
               oldRelationSources = new Map(
                 previous.relations.map(r => [
-                  `${r.source_entity_ref}:${r.type}`,
+                  `${r.source_entity_ref}:${r.type}->${r.target_entity_ref}`,
                   r.source_entity_ref,
                 ]),
               );
@@ -304,7 +304,11 @@ export class DefaultCatalogProcessingEngine {
             const newRelationSources = new Map<string, string>(
               result.relations.map(relation => {
                 const sourceEntityRef = stringifyEntityRef(relation.source);
-                return [`${sourceEntityRef}:${relation.type}`, sourceEntityRef];
+                const targetEntityRef = stringifyEntityRef(relation.target);
+                return [
+                  `${sourceEntityRef}:${relation.type}->${targetEntityRef}`,
+                  sourceEntityRef,
+                ];
               }),
             );