diff --git a/internal/services/containerapps/container_app_custom_domain_resource.go b/internal/services/containerapps/container_app_custom_domain_resource.go
index db607af67413..fc0f3930e351 100644
--- a/internal/services/containerapps/container_app_custom_domain_resource.go
+++ b/internal/services/containerapps/container_app_custom_domain_resource.go
@@ -53,14 +53,15 @@ func (a ContainerAppCustomDomainResource) Arguments() map[string]*pluginsdk.Sche
 
 		"container_app_environment_certificate_id": {
 			Type:         pluginsdk.TypeString,
-			Required:     true,
+			Optional:     true,
 			ForceNew:     true,
+			RequiredWith: []string{"certificate_binding_type"},
 			ValidateFunc: managedenvironments.ValidateCertificateID,
 		},
 
 		"certificate_binding_type": {
 			Type:         pluginsdk.TypeString,
-			Required:     true,
+			Optional:     true,
 			ForceNew:     true,
 			ValidateFunc: validation.StringInSlice(containerapps.PossibleValuesForBindingType(), false),
 			Description:  "The Binding type. Possible values include `Disabled` and `SniEnabled`.",
@@ -106,9 +107,12 @@ func (a ContainerAppCustomDomainResource) Create() sdk.ResourceFunc {
 
 			id := parse.NewContainerAppCustomDomainId(containerAppId.SubscriptionId, containerAppId.ResourceGroupName, containerAppId.ContainerAppName, model.Name)
 
-			certificateId, err := managedenvironments.ParseCertificateID(model.CertificateId)
-			if err != nil {
-				return err
+			var certificateId *managedenvironments.CertificateId
+			if model.CertificateId != "" {
+				certificateId, err = managedenvironments.ParseCertificateID(model.CertificateId)
+				if err != nil {
+					return err
+				}
 			}
 
 			containerApp, err := client.Get(ctx, *containerAppId)
@@ -149,11 +153,17 @@ func (a ContainerAppCustomDomainResource) Create() sdk.ResourceFunc {
 				customDomains = *existingCustomDomains
 			}
 
-			customDomains = append(customDomains, containerapps.CustomDomain{
-				BindingType:   pointer.To(containerapps.BindingType(model.BindingType)),
-				CertificateId: pointer.To(certificateId.ID()),
-				Name:          model.Name,
-			})
+			customDomain := containerapps.CustomDomain{
+				Name:        model.Name,
+				BindingType: pointer.To(containerapps.BindingTypeDisabled),
+			}
+
+			if certificateId != nil {
+				customDomain.CertificateId = pointer.To(certificateId.ID())
+				customDomain.BindingType = pointer.To(containerapps.BindingType(model.BindingType))
+			}
+
+			customDomains = append(customDomains, customDomain)
 
 			containerApp.Model.Properties.Configuration.Ingress.CustomDomains = pointer.To(customDomains)
 
@@ -200,11 +210,14 @@ func (a ContainerAppCustomDomainResource) Read() sdk.ResourceFunc {
 						found = true
 						state.Name = id.CustomDomainName
 						state.ContainerAppId = containerAppId.ID()
-						certId, err := managedenvironments.ParseCertificateIDInsensitively(pointer.From(v.CertificateId))
-						if err != nil {
-							return err
+						if pointer.From(v.CertificateId) != "" {
+							certId, err := managedenvironments.ParseCertificateIDInsensitively(pointer.From(v.CertificateId))
+							if err != nil {
+								return err
+							}
+							state.CertificateId = certId.ID()
 						}
-						state.CertificateId = certId.ID()
+
 						state.BindingType = string(pointer.From(v.BindingType))
 					}
 				}
diff --git a/internal/services/containerapps/container_app_custom_domain_resource_test.go b/internal/services/containerapps/container_app_custom_domain_resource_test.go
index 19b9e5d2470c..74f93e87be55 100644
--- a/internal/services/containerapps/container_app_custom_domain_resource_test.go
+++ b/internal/services/containerapps/container_app_custom_domain_resource_test.go
@@ -75,6 +75,25 @@ func TestAccContainerAppCustomDomainResource_basic(t *testing.T) {
 	})
 }
 
+func TestAccContainerAppCustomDomainResource_managedCertificate(t *testing.T) {
+	if os.Getenv("ARM_TEST_DNS_ZONE") == "" || os.Getenv("ARM_TEST_DATA_RESOURCE_GROUP") == "" {
+		t.Skipf("Skipping as either ARM_TEST_DNS_ZONE or ARM_TEST_DATA_RESOURCE_GROUP is not set")
+	}
+
+	data := acceptance.BuildTestData(t, "azurerm_container_app_custom_domain", "test")
+	r := ContainerAppCustomDomainResource{}
+
+	data.ResourceTest(t, r, []acceptance.TestStep{
+		{
+			Config: r.managedCertificate(data),
+			Check: acceptance.ComposeTestCheckFunc(
+				check.That(data.ResourceName).ExistsInAzure(r),
+			),
+		},
+		data.ImportStep(),
+	})
+}
+
 func TestAccContainerAppCustomDomainResource_multiple(t *testing.T) {
 	if os.Getenv("ARM_TEST_DNS_ZONE") == "" || os.Getenv("ARM_TEST_DATA_RESOURCE_GROUP") == "" {
 		t.Skipf("Skipping as either ARM_TEST_DNS_ZONE or ARM_TEST_DATA_RESOURCE_GROUP is not set")
@@ -142,6 +161,27 @@ resource "azurerm_container_app_custom_domain" "test" {
   certificate_binding_type                 = "SniEnabled"
 }
 
+`, r.template(data))
+}
+
+func (r ContainerAppCustomDomainResource) managedCertificate(data acceptance.TestData) string {
+	return fmt.Sprintf(`
+provider azurerm {
+  features {}
+}
+
+%s
+
+resource "azurerm_container_app_custom_domain" "test" {
+  name             = trimprefix(azurerm_dns_txt_record.test.fqdn, "asuid.")
+  container_app_id = azurerm_container_app.test.id
+
+  lifecycle {
+    ignore_changes = [certificate_binding_type, container_app_environment_certificate_id]
+  }
+}
+
+
 `, r.template(data))
 }
 
diff --git a/website/docs/r/container_app_custom_domain.html.markdown b/website/docs/r/container_app_custom_domain.html.markdown
index 15d8fcd232e0..8ed03c7a5952 100644
--- a/website/docs/r/container_app_custom_domain.html.markdown
+++ b/website/docs/r/container_app_custom_domain.html.markdown
@@ -91,6 +91,22 @@ resource "azurerm_container_app_custom_domain" "example" {
 
 ```
 
+## Example Usage - Managed Certificate
+
+```hcl
+resource "azurerm_container_app_custom_domain" "example" {
+  name             = trimprefix(azurerm_dns_txt_record.example.fqdn, "asuid.")
+  container_app_id = azurerm_container_app.example.id
+
+  lifecycle {
+    // When using an Azure created Managed Certificate these values must be added to ignore_changes to prevent resource recreation.
+    ignore_changes = [certificate_binding_type, container_app_environment_certificate_id]
+  }
+}
+
+```
+
+
 ## Arguments Reference
 
 The following arguments are supported:
@@ -101,9 +117,13 @@ The following arguments are supported:
 
 * `container_app_id` - (Required) The ID of the Container App to which this Custom Domain should be bound. Changing this forces a new resource to be created. 
 
-* `container_app_environment_certificate_id` - (Required) The ID of the Container App Environment Certificate to use. Changing this forces a new resource to be created.
+* `container_app_environment_certificate_id` - (Optional) The ID of the Container App Environment Certificate to use. Changing this forces a new resource to be created.
+
+-> **NOTE:** Omit this value if you wish to use an Azure Managed certificate. You must create the relevant DNS verification steps before this process will be successful.
+
+* `certificate_binding_type` - (Optional) The Certificate Binding type. Possible values include `Disabled` and `SniEnabled`.  Required with `container_app_environment_certificate_id`. Changing this forces a new resource to be created.
 
-* `certificate_binding_type` - (Required) The Certificate Binding type. Possible values include `Disabled` and `SniEnabled`. Changing this forces a new resource to be created. 
+!> **NOTE:** If using an Azure Managed Certificate `container_app_environment_certificate_id` and `certificate_binding_type` should be added to `ignore_changes` to prevent resource recreation due to these values being modified asynchronously outside of Terraform.
 
 ## Timeouts