diff --git a/acceptance/bundle/variables/variable_overrides_in_target/databricks.yml b/acceptance/bundle/variables/variable_overrides_in_target/databricks.yml
index 3a26996dd8..9c1512dd87 100644
--- a/acceptance/bundle/variables/variable_overrides_in_target/databricks.yml
+++ b/acceptance/bundle/variables/variable_overrides_in_target/databricks.yml
@@ -22,6 +22,11 @@ variables:
     default: true
     description: "A boolean variable"
 
+  w_lookup:
+    description: "A variable with a lookup"
+    lookup:
+      cluster: "some-test-cluster" # id 4321
+
 targets:
   use-default-variable-values:
 
@@ -37,3 +42,13 @@ targets:
     variables:
       foo: "overridden_string"
       baz: false
+
+  override-lookup-variable-with-value:
+    variables:
+      w_lookup: "my-specific-cluster-id"
+
+  override-lookup-variable-with-lookup:
+    variables:
+      w_lookup:
+        lookup:
+          cluster: "some-other-cluster" # id 9876
diff --git a/acceptance/bundle/variables/variable_overrides_in_target/output.txt b/acceptance/bundle/variables/variable_overrides_in_target/output.txt
index 106253110f..e34e2df930 100644
--- a/acceptance/bundle/variables/variable_overrides_in_target/output.txt
+++ b/acceptance/bundle/variables/variable_overrides_in_target/output.txt
@@ -86,3 +86,9 @@
     }
   }
 }
+
+>>> [CLI] bundle validate -o json -t override-lookup-variable-with-value
+"my-specific-cluster-id"
+
+>>> [CLI] bundle validate -o json -t override-lookup-variable-with-lookup
+"9876"
diff --git a/acceptance/bundle/variables/variable_overrides_in_target/script b/acceptance/bundle/variables/variable_overrides_in_target/script
index 686b3102a6..e814802893 100644
--- a/acceptance/bundle/variables/variable_overrides_in_target/script
+++ b/acceptance/bundle/variables/variable_overrides_in_target/script
@@ -2,3 +2,5 @@ trace $CLI bundle validate -o json -t use-default-variable-values | jq .resource
 trace $CLI bundle validate -o json -t override-string-variable | jq .resources
 trace $CLI bundle validate -o json -t override-int-variable | jq .resources
 trace $CLI bundle validate -o json -t override-both-bool-and-string-variables | jq .resources
+trace $CLI bundle validate -o json -t override-lookup-variable-with-value | jq .variables.w_lookup.value
+trace $CLI bundle validate -o json -t override-lookup-variable-with-lookup | jq .variables.w_lookup.value
diff --git a/bundle/config/root.go b/bundle/config/root.go
index 861791fc34..a32ca8ea28 100644
--- a/bundle/config/root.go
+++ b/bundle/config/root.go
@@ -347,12 +347,28 @@ func (r *Root) MergeTargetOverrides(name string) error {
 			if vDefault.Kind() != dyn.KindInvalid {
 				defaultPath := varPath.Append(dyn.Key("default"))
 				root, err = dyn.SetByPath(root, defaultPath, vDefault)
+				if err != nil {
+					return root, err
+				}
+
+				// If the target explicitly sets a default value, drop any lookup from the
+				// root variable definition so SetVariables can assign this default.
+				lookupPath := varPath.Append(dyn.Key("lookup"))
+				root, err = dyn.SetByPath(root, lookupPath, dyn.NilValue)
 			}
 
 			vLookup := variable.Get("lookup")
 			if vLookup.Kind() != dyn.KindInvalid {
 				lookupPath := varPath.Append(dyn.Key("lookup"))
 				root, err = dyn.SetByPath(root, lookupPath, vLookup)
+				if err != nil {
+					return root, err
+				}
+
+				// If the target explicitly sets a lookup, drop any default value from the
+				// root variable definition so lookup resolution remains authoritative.
+				defaultPath := varPath.Append(dyn.Key("default"))
+				root, err = dyn.SetByPath(root, defaultPath, dyn.NilValue)
 			}
 
 			return root, err