diff --git a/controller/appcontroller.go b/controller/appcontroller.go
index 400e314ec4eec..89353d755076b 100644
--- a/controller/appcontroller.go
+++ b/controller/appcontroller.go
@@ -1497,17 +1497,7 @@ func (ctrl *ApplicationController) refreshAppConditions(app *appv1.Application)
 	errorConditions := make([]appv1.ApplicationCondition, 0)
 	proj, err := ctrl.getAppProj(app)
 	if err != nil {
-		if apierr.IsNotFound(err) {
-			errorConditions = append(errorConditions, appv1.ApplicationCondition{
-				Type:    appv1.ApplicationConditionInvalidSpecError,
-				Message: fmt.Sprintf("Application referencing project %s which does not exist", app.Spec.Project),
-			})
-		} else {
-			errorConditions = append(errorConditions, appv1.ApplicationCondition{
-				Type:    appv1.ApplicationConditionUnknownError,
-				Message: err.Error(),
-			})
-		}
+		errorConditions = append(errorConditions, ctrl.projectErrorToCondition(err, app))
 	} else {
 		specConditions, err := argo.ValidatePermissions(context.Background(), &app.Spec, proj, ctrl.db)
 		if err != nil {
@@ -1798,7 +1788,7 @@ func (ctrl *ApplicationController) newApplicationInformerAndLister() (cache.Shar
 					// If the application is not allowed to use the project,
 					// log an error.
 					if _, err := ctrl.getAppProj(app); err != nil {
-						ctrl.setAppCondition(app, appv1.ApplicationCondition{Type: appv1.ApplicationConditionUnknownError, Message: err.Error()})
+						ctrl.setAppCondition(app, ctrl.projectErrorToCondition(err, app))
 					}
 				}
 
@@ -1869,6 +1859,19 @@ func (ctrl *ApplicationController) newApplicationInformerAndLister() (cache.Shar
 	return informer, lister
 }
 
+func (ctrl *ApplicationController) projectErrorToCondition(err error, app *appv1.Application) appv1.ApplicationCondition {
+	var condition appv1.ApplicationCondition
+	if apierr.IsNotFound(err) {
+		condition = appv1.ApplicationCondition{
+			Type:    appv1.ApplicationConditionInvalidSpecError,
+			Message: fmt.Sprintf("Application referencing project %s which does not exist", app.Spec.Project),
+		}
+	} else {
+		condition = appv1.ApplicationCondition{Type: appv1.ApplicationConditionUnknownError, Message: err.Error()}
+	}
+	return condition
+}
+
 func (ctrl *ApplicationController) RegisterClusterSecretUpdater(ctx context.Context) {
 	updater := NewClusterInfoUpdater(ctrl.stateCache, ctrl.db, ctrl.appLister.Applications(""), ctrl.cache, ctrl.clusterFilter, ctrl.getAppProj, ctrl.namespace)
 	go updater.Run(ctx)
diff --git a/controller/appcontroller_test.go b/controller/appcontroller_test.go
index 6113d48989812..037af67ef715f 100644
--- a/controller/appcontroller_test.go
+++ b/controller/appcontroller_test.go
@@ -1068,6 +1068,34 @@ func TestUpdateReconciledAt(t *testing.T) {
 
 }
 
+func TestProjectErrorToCondition(t *testing.T) {
+	app := newFakeApp()
+	app.Spec.Project = "wrong project"
+	ctrl := newFakeController(&fakeData{
+		apps: []runtime.Object{app, &defaultProj},
+		manifestResponse: &apiclient.ManifestResponse{
+			Manifests: []string{},
+			Namespace: test.FakeDestNamespace,
+			Server:    test.FakeClusterURL,
+			Revision:  "abc123",
+		},
+		managedLiveObjs: make(map[kube.ResourceKey]*unstructured.Unstructured),
+	})
+	key, _ := cache.MetaNamespaceKeyFunc(app)
+	ctrl.appRefreshQueue.Add(key)
+	ctrl.requestAppRefresh(app.Name, CompareWithRecent.Pointer(), nil)
+
+	ctrl.processAppRefreshQueueItem()
+
+	obj, ok, err := ctrl.appInformer.GetIndexer().GetByKey(key)
+	assert.True(t, ok)
+	assert.NoError(t, err)
+	updatedApp := obj.(*argoappv1.Application)
+	assert.Equal(t, argoappv1.ApplicationConditionInvalidSpecError, updatedApp.Status.Conditions[0].Type)
+	assert.Equal(t, "Application referencing project wrong project which does not exist", updatedApp.Status.Conditions[0].Message)
+	assert.Equal(t, argoappv1.ApplicationConditionInvalidSpecError, updatedApp.Status.Conditions[0].Type)
+}
+
 func TestFinalizeProjectDeletion_HasApplications(t *testing.T) {
 	app := newFakeApp()
 	proj := &argoappv1.AppProject{ObjectMeta: metav1.ObjectMeta{Name: "default", Namespace: test.FakeArgoCDNamespace}}