diff --git a/CHANGELOG.md b/CHANGELOG.md
index 6f666dbf3b8d5..e836521332541 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -71,6 +71,7 @@ The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/),
 - Refactoring FilterPath.parse by using an iterative approach ([#14200](https://github.com/opensearch-project/OpenSearch/pull/14200))
 - Refactoring Grok.validatePatternBank by using an iterative approach ([#14206](https://github.com/opensearch-project/OpenSearch/pull/14206))
 - Update help output for _cat ([#14722](https://github.com/opensearch-project/OpenSearch/pull/14722))
+- Fix bulk upsert ignores the default_pipeline and final_pipeline when auto-created index matches the index template ([#12891](https://github.com/opensearch-project/OpenSearch/pull/12891))
 
 ### Security
 
diff --git a/modules/ingest-common/src/yamlRestTest/resources/rest-api-spec/test/ingest/70_bulk.yml b/modules/ingest-common/src/yamlRestTest/resources/rest-api-spec/test/ingest/70_bulk.yml
index edb7b77eb8d28..8830503940f4d 100644
--- a/modules/ingest-common/src/yamlRestTest/resources/rest-api-spec/test/ingest/70_bulk.yml
+++ b/modules/ingest-common/src/yamlRestTest/resources/rest-api-spec/test/ingest/70_bulk.yml
@@ -41,6 +41,10 @@ teardown:
       ingest.delete_pipeline:
         id: "pipeline2"
         ignore: 404
+  - do:
+      indices.delete_index_template:
+        name: test_index_template_for_bulk
+        ignore: 404
 
 ---
 "Test bulk request without default pipeline":
@@ -168,6 +172,40 @@ teardown:
         id: test_id3
   - match: { _source: {"f1": "v2", "f2": 47, "field1": "value1"}}
 
+# related issue: https://github.com/opensearch-project/OpenSearch/issues/12888
+---
+"Test bulk upsert honors default_pipeline and final_pipeline when the auto-created index matches with the index template":
+  - skip:
+      version: " - 2.99.99"
+      reason: "fixed in 3.0.0"
+  - do:
+      indices.put_index_template:
+        name: test_for_bulk_upsert_index_template
+        body:
+          index_patterns: test_bulk_upsert_*
+          template:
+            settings:
+              number_of_shards:   1
+              number_of_replicas: 0
+              default_pipeline: pipeline1
+              final_pipeline: pipeline2
+
+  - do:
+      bulk:
+        refresh: true
+        body:
+          - '{"update": {"_index": "test_bulk_upsert_index", "_id": "test_id3"}}'
+          - '{"upsert": {"f1": "v2", "f2": 47}, "doc": {"x": 1}}'
+
+  - match: { errors: false }
+  - match: { items.0.update.result: created }
+
+  - do:
+      get:
+        index: test_bulk_upsert_index
+        id: test_id3
+  - match: { _source: {"f1": "v2", "f2": 47, "field1": "value1", "field2": "value2"}}
+
 ---
 "Test bulk API with batch enabled happy case":
   - skip:
diff --git a/server/src/main/java/org/opensearch/action/update/UpdateRequest.java b/server/src/main/java/org/opensearch/action/update/UpdateRequest.java
index 9654bd1c114ba..6cb5e049e0f1e 100644
--- a/server/src/main/java/org/opensearch/action/update/UpdateRequest.java
+++ b/server/src/main/java/org/opensearch/action/update/UpdateRequest.java
@@ -717,7 +717,7 @@ public IndexRequest doc() {
 
     private IndexRequest safeDoc() {
         if (doc == null) {
-            doc = new IndexRequest();
+            doc = new IndexRequest(index);
         }
         return doc;
     }
@@ -803,7 +803,7 @@ public IndexRequest upsertRequest() {
 
     private IndexRequest safeUpsertRequest() {
         if (upsertRequest == null) {
-            upsertRequest = new IndexRequest();
+            upsertRequest = new IndexRequest(index);
         }
         return upsertRequest;
     }
diff --git a/server/src/test/java/org/opensearch/action/update/UpdateRequestTests.java b/server/src/test/java/org/opensearch/action/update/UpdateRequestTests.java
index b70fda0d86240..e85dfa8cca556 100644
--- a/server/src/test/java/org/opensearch/action/update/UpdateRequestTests.java
+++ b/server/src/test/java/org/opensearch/action/update/UpdateRequestTests.java
@@ -247,6 +247,7 @@ public void testFromXContent() throws Exception {
         assertThat(params, notNullValue());
         assertThat(params.size(), equalTo(1));
         assertThat(params.get("param1").toString(), equalTo("value1"));
+        assertThat(request.upsertRequest().index(), equalTo("test"));
         Map<String, Object> upsertDoc = XContentHelper.convertToMap(
             request.upsertRequest().source(),
             true,
@@ -304,6 +305,7 @@ public void testFromXContent() throws Exception {
             )
         );
         Map<String, Object> doc = request.doc().sourceAsMap();
+        assertThat(request.doc().index(), equalTo("test"));
         assertThat(doc.get("field1").toString(), equalTo("value1"));
         assertThat(((Map<String, Object>) doc.get("compound")).get("field2").toString(), equalTo("value2"));
     }
@@ -662,7 +664,7 @@ public void testToString() throws IOException {
             request.toString(),
             equalTo(
                 "update {[test][1], doc_as_upsert[false], "
-                    + "doc[index {[null][null], source[{\"body\":\"bar\"}]}], scripted_upsert[false], detect_noop[true]}"
+                    + "doc[index {[test][null], source[{\"body\":\"bar\"}]}], scripted_upsert[false], detect_noop[true]}"
             )
         );
     }
diff --git a/server/src/test/java/org/opensearch/ingest/IngestServiceTests.java b/server/src/test/java/org/opensearch/ingest/IngestServiceTests.java
index 684297c11c140..e61fbb6e1dbff 100644
--- a/server/src/test/java/org/opensearch/ingest/IngestServiceTests.java
+++ b/server/src/test/java/org/opensearch/ingest/IngestServiceTests.java
@@ -1605,6 +1605,13 @@ public void testResolveRequiredOrDefaultPipelineDefaultPipeline() {
         assertThat(result, is(true));
         assertThat(indexRequest.isPipelineResolved(), is(true));
         assertThat(indexRequest.getPipeline(), equalTo("default-pipeline"));
+
+        // index name matches with ITMD for bulk upsert
+        UpdateRequest updateRequest = new UpdateRequest("idx", "id1").upsert(emptyMap()).script(mockScript("1"));
+        result = IngestService.resolvePipelines(updateRequest, TransportBulkAction.getIndexWriteRequest(updateRequest), metadata);
+        assertThat(result, is(true));
+        assertThat(updateRequest.upsertRequest().isPipelineResolved(), is(true));
+        assertThat(updateRequest.upsertRequest().getPipeline(), equalTo("default-pipeline"));
     }
 
     public void testResolveFinalPipeline() {
@@ -1642,6 +1649,13 @@ public void testResolveFinalPipeline() {
         assertThat(indexRequest.isPipelineResolved(), is(true));
         assertThat(indexRequest.getPipeline(), equalTo("_none"));
         assertThat(indexRequest.getFinalPipeline(), equalTo("final-pipeline"));
+
+        // index name matches with ITMD for bulk upsert:
+        UpdateRequest updateRequest = new UpdateRequest("idx", "id1").upsert(emptyMap()).script(mockScript("1"));
+        result = IngestService.resolvePipelines(updateRequest, TransportBulkAction.getIndexWriteRequest(updateRequest), metadata);
+        assertThat(result, is(true));
+        assertThat(updateRequest.upsertRequest().isPipelineResolved(), is(true));
+        assertThat(updateRequest.upsertRequest().getFinalPipeline(), equalTo("final-pipeline"));
     }
 
     public void testResolveRequestOrDefaultPipelineAndFinalPipeline() {