diff --git a/.changeset/bright-cars-accept.md b/.changeset/bright-cars-accept.md
new file mode 100644
index 0000000000..41703c26c3
--- /dev/null
+++ b/.changeset/bright-cars-accept.md
@@ -0,0 +1,5 @@
+---
+"@medusajs/core-flows": patch
+---
+
+fix(core-flows): Avoid checking inventory items on fulfillment cancel for unmanaged inventory variants
diff --git a/integration-tests/http/__tests__/product/admin/product.spec.ts b/integration-tests/http/__tests__/product/admin/product.spec.ts
index a283ed4af9..0c6a4a4aa2 100644
--- a/integration-tests/http/__tests__/product/admin/product.spec.ts
+++ b/integration-tests/http/__tests__/product/admin/product.spec.ts
@@ -2356,6 +2356,125 @@ medusaIntegrationTestRunner({
           )
         })
 
+        it("should update variant to manage_inventory false and unlink inventory items", async () => {
+          const inventoryItem1 = (
+            await api.post(
+              `/admin/inventory-items`,
+              { sku: "inventory-item-1" },
+              adminHeaders
+            )
+          ).data.inventory_item
+
+          const inventoryItem2 = (
+            await api.post(
+              `/admin/inventory-items`,
+              { sku: "inventory-item-2" },
+              adminHeaders
+            )
+          ).data.inventory_item
+
+          const createPayload = {
+            title: "Test product with inventory",
+            handle: "test-product-inventory",
+            options: [{ title: "size", values: ["large"] }],
+            shipping_profile_id: shippingProfile.id,
+            variants: [
+              {
+                title: "Variant with inventory",
+                prices: [{ currency_code: "usd", amount: 100 }],
+                manage_inventory: true,
+                options: { size: "large" },
+                inventory_items: [
+                  {
+                    inventory_item_id: inventoryItem1.id,
+                    required_quantity: 5,
+                  },
+                  {
+                    inventory_item_id: inventoryItem2.id,
+                    required_quantity: 10,
+                  },
+                ],
+              },
+            ],
+          }
+
+          const createdProduct = (
+            await api.post("/admin/products", createPayload, {
+              ...adminHeaders,
+              params: {
+                fields:
+                  "variants.inventory_items.*,variants.inventory_items.inventory.*",
+              },
+            })
+          ).data.product
+
+          const variantWithInventory = createdProduct.variants[0]
+
+          expect(variantWithInventory.manage_inventory).toBe(true)
+          expect(variantWithInventory.inventory_items).toHaveLength(2)
+          expect(variantWithInventory.inventory_items).toEqual(
+            expect.arrayContaining([
+              expect.objectContaining({
+                inventory_item_id: inventoryItem1.id,
+                required_quantity: 5,
+              }),
+              expect.objectContaining({
+                inventory_item_id: inventoryItem2.id,
+                required_quantity: 10,
+              }),
+            ])
+          )
+
+          const updatePayload = {
+            variants: [
+              {
+                id: variantWithInventory.id,
+                manage_inventory: false,
+              },
+            ],
+          }
+
+          const updatedProduct = (
+            await api.post(
+              `/admin/products/${createdProduct.id}`,
+              updatePayload,
+              {
+                ...adminHeaders,
+                params: {
+                  fields:
+                    "variants.inventory_items.*,variants.inventory_items.inventory.*",
+                },
+              }
+            )
+          ).data.product
+
+          const updatedVariant = updatedProduct.variants.find(
+            (v) => v.id === variantWithInventory.id
+          )
+
+          expect(updatedVariant.manage_inventory).toBe(false)
+          expect(updatedVariant.inventory_items).toHaveLength(0)
+          expect(updatedVariant.inventory_items).toEqual([])
+
+          const inventoryItem1Response = await api.get(
+            `/admin/inventory-items/${inventoryItem1.id}`,
+            adminHeaders
+          )
+          const inventoryItem2Response = await api.get(
+            `/admin/inventory-items/${inventoryItem2.id}`,
+            adminHeaders
+          )
+
+          expect(inventoryItem1Response.status).toEqual(200)
+          expect(inventoryItem2Response.status).toEqual(200)
+          expect(inventoryItem1Response.data.inventory_item.id).toBe(
+            inventoryItem1.id
+          )
+          expect(inventoryItem2Response.data.inventory_item.id).toBe(
+            inventoryItem2.id
+          )
+        })
+
         it("updates products sales channels", async () => {
           const salesChannel1 = (
             await api.post(
diff --git a/integration-tests/http/__tests__/product/admin/variant.spec.ts b/integration-tests/http/__tests__/product/admin/variant.spec.ts
index 1703aaa5a7..f2782181ac 100644
--- a/integration-tests/http/__tests__/product/admin/variant.spec.ts
+++ b/integration-tests/http/__tests__/product/admin/variant.spec.ts
@@ -649,6 +649,123 @@ medusaIntegrationTestRunner({
       })
     })
 
+    describe("POST /admin/products/:id/variants/:variant_id", () => {
+      it("should update variant to manage_inventory false and unlink inventory items", async () => {
+        const inventoryItem1 = (
+          await api.post(
+            `/admin/inventory-items`,
+            { sku: "inventory-item-variant-1" },
+            adminHeaders
+          )
+        ).data.inventory_item
+
+        const inventoryItem2 = (
+          await api.post(
+            `/admin/inventory-items`,
+            { sku: "inventory-item-variant-2" },
+            adminHeaders
+          )
+        ).data.inventory_item
+
+        const createPayload = {
+          title: "Test product for variant update",
+          handle: "test-product-variant-update",
+          options: [{ title: "size", values: ["large"] }],
+          shipping_profile_id: shippingProfile.id,
+          variants: [
+            {
+              title: "Variant with inventory",
+              prices: [{ currency_code: "usd", amount: 100 }],
+              manage_inventory: true,
+              options: { size: "large" },
+              inventory_items: [
+                {
+                  inventory_item_id: inventoryItem1.id,
+                  required_quantity: 5,
+                },
+                {
+                  inventory_item_id: inventoryItem2.id,
+                  required_quantity: 10,
+                },
+              ],
+            },
+          ],
+        }
+
+        const createdProduct = (
+          await api.post("/admin/products", createPayload, {
+            ...adminHeaders,
+            params: {
+              fields:
+                "+variants.inventory_items.*,+variants.inventory_items.inventory.*",
+            },
+          })
+        ).data.product
+
+        const variantWithInventory = createdProduct.variants[0]
+
+        expect(variantWithInventory.manage_inventory).toBe(true)
+        expect(variantWithInventory.inventory_items).toHaveLength(2)
+        expect(variantWithInventory.inventory_items).toEqual(
+          expect.arrayContaining([
+            expect.objectContaining({
+              inventory_item_id: inventoryItem1.id,
+              required_quantity: 5,
+            }),
+            expect.objectContaining({
+              inventory_item_id: inventoryItem2.id,
+              required_quantity: 10,
+            }),
+          ])
+        )
+
+        const updatePayload = {
+          manage_inventory: false,
+        }
+
+        const updatedProduct = (
+          await api.post(
+            `/admin/products/${createdProduct.id}/variants/${variantWithInventory.id}`,
+            updatePayload,
+            {
+              ...adminHeaders,
+              params: {
+                fields:
+                  "+variants.inventory_items.*,+variants.inventory_items.inventory.*",
+              },
+            }
+          )
+        ).data.product
+
+        const updatedVariant = updatedProduct.variants.find(
+          (v) => v.id === variantWithInventory.id
+        )
+
+        expect(updatedVariant.manage_inventory).toBe(false)
+
+        expect(updatedVariant.inventory_items).toHaveLength(0)
+        expect(updatedVariant.inventory_items).toEqual([])
+
+        const inventoryItem1Response = await api.get(
+          `/admin/inventory-items/${inventoryItem1.id}`,
+          adminHeaders
+        )
+        const inventoryItem2Response = await api.get(
+          `/admin/inventory-items/${inventoryItem2.id}`,
+          adminHeaders
+        )
+
+        expect(inventoryItem1Response.status).toEqual(200)
+        expect(inventoryItem2Response.status).toEqual(200)
+        expect(inventoryItem1Response.data.inventory_item.id).toBe(
+          inventoryItem1.id
+        )
+        expect(inventoryItem2Response.data.inventory_item.id).toBe(
+          inventoryItem2.id
+        )
+      })
+    })
+
     describe("POST /admin/products/:id/variants/:variant_id/inventory-items", () => {
       it("should throw an error when required attributes are not passed", async () => {
         const { response } = await api
diff --git a/packages/core/core-flows/src/order/workflows/cancel-order-fulfillment.ts b/packages/core/core-flows/src/order/workflows/cancel-order-fulfillment.ts
index e4b94ca6a7..a6a580cccd 100644
--- a/packages/core/core-flows/src/order/workflows/cancel-order-fulfillment.ts
+++ b/packages/core/core-flows/src/order/workflows/cancel-order-fulfillment.ts
@@ -160,7 +160,9 @@ function prepareCancelOrderFulfillmentData({
         (i) => i.id === lineItemId
       ) as OrderItemWithVariantDTO
       // find inventory items
-      const iitems = orderItem!.variant?.inventory_items
+      const iitems = orderItem!.variant?.manage_inventory
+        ? orderItem!.variant?.inventory_items
+        : undefined
       // find fulfillment item
       const fitem = fulfillment.items.find(
         (i) => i.line_item_id === lineItemId
diff --git a/packages/core/core-flows/src/product/steps/dismiss-product-variants-inventory.ts b/packages/core/core-flows/src/product/steps/dismiss-product-variants-inventory.ts
new file mode 100644
index 0000000000..f604f10c15
--- /dev/null
+++ b/packages/core/core-flows/src/product/steps/dismiss-product-variants-inventory.ts
@@ -0,0 +1,100 @@
+import { createStep, StepResponse } from "@medusajs/framework/workflows-sdk"
+import { ContainerRegistrationKeys, Modules } from "@medusajs/framework/utils"
+import { Link, Query } from "@medusajs/framework/modules-sdk"
+import { LinkDefinition } from "@medusajs/types"
+
+export const dismissProductVariantsInventoryStepId =
+  "dismiss-product-variants-inventory"
+
+export type DismissProductVariantsInventoryStepInput = {
+  variantIds: string[]
+}
+
+async function dismissVariantsInventory(
+  variantIds: string[],
+  query: Query,
+  link: Link
+): Promise<Record<string, string[]>> {
+  const dismissedVariantInventoryItems: Record<string, string[]> = {}
+  if (!variantIds.length) {
+    return dismissedVariantInventoryItems
+  }
+
+  const { data: variantInventoryItems } = await query.graph({
+    entity: "product_variant_inventory_item",
+    fields: ["inventory_item_id", "variant_id"],
+    filters: {
+      variant_id: variantIds,
+    },
+  })
+
+  const variantInventoryItemsMap = new Map<string, string[]>()
+  for (const item of variantInventoryItems) {
+    variantInventoryItemsMap.set(item.variant_id, [
+      ...(variantInventoryItemsMap.get(item.variant_id) ?? []),
+      item.inventory_item_id,
+    ])
+  }
+
+  const dismissLinks: LinkDefinition[] = []
+  for (const variantId of variantIds) {
+    if (!variantId) {
+      continue
+    }
+
+    dismissedVariantInventoryItems[variantId] =
+      variantInventoryItemsMap.get(variantId) ?? []
+
+    for (const inventoryItemId of variantInventoryItemsMap.get(variantId) ??
+      []) {
+      dismissLinks.push({
+        [Modules.PRODUCT]: { variant_id: variantId },
+        [Modules.INVENTORY]: { inventory_item_id: inventoryItemId },
+      })
+    }
+  }
+
+  await link.dismiss(dismissLinks)
+
+  return dismissedVariantInventoryItems
+}
+
+export const dismissProductVariantsInventoryStep = createStep(
+  dismissProductVariantsInventoryStepId,
+  async (data: DismissProductVariantsInventoryStepInput, { container }) => {
+    const query = container.resolve(ContainerRegistrationKeys.QUERY)
+    const link = container.resolve(ContainerRegistrationKeys.LINK)
+    const variantIds = data.variantIds || []
+
+    if (!variantIds.length) {
+      return new StepResponse(void 0)
+    }
+
+    const dismissedVariantInventoryItems = await dismissVariantsInventory(
+      variantIds,
+      query as Query,
+      link
+    )
+    return new StepResponse(void 0, dismissedVariantInventoryItems)
+  },
+  async (dismissedVariantInventoryItems, { container }) => {
+    if (!dismissedVariantInventoryItems) {
+      return
+    }
+
+    const linksToCreate: LinkDefinition[] = []
+    for (const [variantId, inventoryItemIds] of Object.entries(
+      dismissedVariantInventoryItems
+    )) {
+      for (const inventoryItemId of inventoryItemIds) {
+        linksToCreate.push({
+          [Modules.PRODUCT]: { variant_id: variantId },
+          [Modules.INVENTORY]: { inventory_item_id: inventoryItemId },
+        })
+      }
+    }
+
+    const link = container.resolve(ContainerRegistrationKeys.LINK)
+    await link.create(linksToCreate)
+  }
+)
diff --git a/packages/core/core-flows/src/product/steps/index.ts b/packages/core/core-flows/src/product/steps/index.ts
index 85e50f5947..ed6d04ebfe 100644
--- a/packages/core/core-flows/src/product/steps/index.ts
+++ b/packages/core/core-flows/src/product/steps/index.ts
@@ -32,3 +32,4 @@ export * from "./get-variant-availability"
 export * from "./normalize-products"
 export * from "./normalize-products-to-chunks"
 export * from "./process-import-chunks"
+export * from "./dismiss-product-variants-inventory"
diff --git a/packages/core/core-flows/src/product/workflows/update-product-variants.ts b/packages/core/core-flows/src/product/workflows/update-product-variants.ts
index 26afe3aa02..bc5aa2e34c 100644
--- a/packages/core/core-flows/src/product/workflows/update-product-variants.ts
+++ b/packages/core/core-flows/src/product/workflows/update-product-variants.ts
@@ -13,7 +13,10 @@ import {
 } from "@medusajs/framework/workflows-sdk"
 import { emitEventStep } from "../../common"
 import { updatePriceSetsStep } from "../../pricing"
-import { updateProductVariantsStep } from "../steps"
+import {
+  dismissProductVariantsInventoryStep,
+  updateProductVariantsStep,
+} from "../steps"
 import { getVariantPricingLinkStep } from "../steps/get-variant-pricing-link"
 
 /**
@@ -57,12 +60,12 @@ export const updateProductVariantsWorkflowId = "update-product-variants"
  * allows you to update custom data models linked to the product variants.
  *
  * You can also use this workflow within your customizations or your own custom workflows, allowing you to wrap custom logic around product-variant update.
- * 
+ *
  * :::note
- * 
- * Learn more about adding rules to the product variant's prices in the Pricing Module's 
+ *
+ * Learn more about adding rules to the product variant's prices in the Pricing Module's
  * [Price Rules](https://docs.medusajs.com/resources/commerce-modules/pricing/price-rules) documentation.
- * 
+ *
  * :::
  *
  * @example
@@ -151,6 +154,32 @@ export const updateProductVariantsWorkflow = createWorkflow(
 
     const updatedVariants = updateProductVariantsStep(updateWithoutPrices)
 
+    const variantsToDismissInventory = transform(
+      { input, updatedVariants },
+      (data) => {
+        const variantIds: string[] = []
+
+        if ("product_variants" in data.input) {
+          for (const variant of data.input.product_variants) {
+            if (variant.id && variant.manage_inventory === false) {
+              variantIds.push(variant.id)
+            }
+          }
+        } else if (
+          data.input.update &&
+          data.input.update?.manage_inventory === false
+        ) {
+          variantIds.push(...data.updatedVariants.map((v) => v.id))
+        }
+
+        return variantIds
+      }
+    )
+
+    dismissProductVariantsInventoryStep({
+      variantIds: variantsToDismissInventory,
+    })
+
     // We don't want to do any pricing updates if the prices didn't change
     const variantIds = transform({ input, updatedVariants }, (data) => {
       if ("product_variants" in data.input) {
diff --git a/packages/core/core-flows/src/product/workflows/update-products.ts b/packages/core/core-flows/src/product/workflows/update-products.ts
index 2259eb9b2f..a94d3f75df 100644
--- a/packages/core/core-flows/src/product/workflows/update-products.ts
+++ b/packages/core/core-flows/src/product/workflows/update-products.ts
@@ -27,6 +27,7 @@ import {
   useRemoteQueryStep,
 } from "../../common"
 import { upsertVariantPricesWorkflow } from "./upsert-variant-prices"
+import { dismissProductVariantsInventoryStep } from "../steps/dismiss-product-variants-inventory"
 
 /**
  * Update products that match a specified selector, along with custom data that's passed to the workflow's hooks.
@@ -444,6 +445,35 @@ export const updateProductsWorkflow = createWorkflow(
     const toUpdateInput = transform({ input }, prepareUpdateProductInput)
     const updatedProducts = updateProductsStep(toUpdateInput)
 
+    const variantsToDismissInventory = transform(
+      { input, updatedProducts },
+      (data) => {
+        const variantIds: string[] = []
+
+        if ("products" in data.input) {
+          for (const product of data.input.products) {
+            for (const variant of product.variants ?? []) {
+              if (variant.id && variant.manage_inventory === false) {
+                variantIds.push(variant.id)
+              }
+            }
+          }
+        } else if (data.input.update?.variants?.length) {
+          for (const variant of data.input.update.variants) {
+            if (variant.id && variant.manage_inventory === false) {
+              variantIds.push(variant.id)
+            }
+          }
+        }
+
+        return variantIds
+      }
+    )
+
+    dismissProductVariantsInventoryStep({
+      variantIds: variantsToDismissInventory,
+    })
+
     const salesChannelLinks = transform(
       { input, updatedProducts },
       prepareSalesChannelLinks