diff --git a/packages/bundler-plugin-core/src/build-plugin-manager.ts b/packages/bundler-plugin-core/src/build-plugin-manager.ts
index 31f5a2eb..f0716178 100644
--- a/packages/bundler-plugin-core/src/build-plugin-manager.ts
+++ b/packages/bundler-plugin-core/src/build-plugin-manager.ts
@@ -220,6 +220,12 @@ export function createSentryBuildPluginManager(
     "SENTRY_PIPELINE"
   ] = `${bundlerPluginMetaContext.buildTool}-plugin/${__PACKAGE_VERSION__}`;
 
+  // Propagate debug flag to Sentry CLI via environment variable
+  // Only set if not already defined to respect user's explicit configuration
+  if (options.debug && !process.env["SENTRY_LOG_LEVEL"]) {
+    process.env["SENTRY_LOG_LEVEL"] = "debug";
+  }
+
   // Not a bulletproof check but should be good enough to at least sometimes determine
   // if the plugin is called in dev/watch mode or for a  prod build. The important part
   // here is to avoid a false positive. False negatives are okay.
diff --git a/packages/bundler-plugin-core/test/build-plugin-manager.test.ts b/packages/bundler-plugin-core/test/build-plugin-manager.test.ts
index d9886ede..be6a2f20 100644
--- a/packages/bundler-plugin-core/test/build-plugin-manager.test.ts
+++ b/packages/bundler-plugin-core/test/build-plugin-manager.test.ts
@@ -44,6 +44,174 @@ const mockPrepareBundleForDebugIdUpload = prepareBundleForDebugIdUpload as jest.
 describe("createSentryBuildPluginManager", () => {
   beforeEach(() => {
     jest.clearAllMocks();
+    // Clean up environment variables
+    delete process.env["SENTRY_LOG_LEVEL"];
+  });
+
+  describe("debug option", () => {
+    it("should set SENTRY_LOG_LEVEL environment variable when debug is true", () => {
+      createSentryBuildPluginManager(
+        {
+          authToken: "test-token",
+          org: "test-org",
+          project: "test-project",
+          debug: true,
+        },
+        {
+          buildTool: "webpack",
+          loggerPrefix: "[sentry-webpack-plugin]",
+        }
+      );
+
+      expect(process.env["SENTRY_LOG_LEVEL"]).toBe("debug");
+    });
+
+    it("should NOT override existing SENTRY_LOG_LEVEL even when debug is true", () => {
+      // User explicitly set SENTRY_LOG_LEVEL to "info"
+      process.env["SENTRY_LOG_LEVEL"] = "info";
+
+      createSentryBuildPluginManager(
+        {
+          authToken: "test-token",
+          org: "test-org",
+          project: "test-project",
+          debug: true,
+        },
+        {
+          buildTool: "webpack",
+          loggerPrefix: "[sentry-webpack-plugin]",
+        }
+      );
+
+      // Should respect the user's explicit setting
+      expect(process.env["SENTRY_LOG_LEVEL"]).toBe("info");
+    });
+
+    it("should not set SENTRY_LOG_LEVEL environment variable when debug is false", () => {
+      createSentryBuildPluginManager(
+        {
+          authToken: "test-token",
+          org: "test-org",
+          project: "test-project",
+          debug: false,
+        },
+        {
+          buildTool: "webpack",
+          loggerPrefix: "[sentry-webpack-plugin]",
+        }
+      );
+
+      expect(process.env["SENTRY_LOG_LEVEL"]).toBeUndefined();
+    });
+
+    it("should not set SENTRY_LOG_LEVEL environment variable when debug is not specified", () => {
+      createSentryBuildPluginManager(
+        {
+          authToken: "test-token",
+          org: "test-org",
+          project: "test-project",
+        },
+        {
+          buildTool: "webpack",
+          loggerPrefix: "[sentry-webpack-plugin]",
+        }
+      );
+
+      expect(process.env["SENTRY_LOG_LEVEL"]).toBeUndefined();
+    });
+
+    it("should have SENTRY_LOG_LEVEL set when CLI operations are performed with debug enabled", async () => {
+      mockCliExecute.mockImplementation(() => {
+        // Verify the environment variable is set at the time the CLI is called
+        expect(process.env["SENTRY_LOG_LEVEL"]).toBe("debug");
+        return Promise.resolve(undefined);
+      });
+
+      const buildPluginManager = createSentryBuildPluginManager(
+        {
+          authToken: "test-token",
+          org: "test-org",
+          project: "test-project",
+          debug: true,
+        },
+        {
+          buildTool: "webpack",
+          loggerPrefix: "[sentry-webpack-plugin]",
+        }
+      );
+
+      // Verify it's set immediately after creation
+      expect(process.env["SENTRY_LOG_LEVEL"]).toBe("debug");
+
+      // Perform a CLI operation and verify the env var is still set
+      await buildPluginManager.injectDebugIds(["/path/to/bundle"]);
+
+      expect(mockCliExecute).toHaveBeenCalled();
+    });
+
+    it("should have SENTRY_LOG_LEVEL set during error scenarios with debug enabled", async () => {
+      // Simulate CLI error
+      mockCliExecute.mockImplementation(() => {
+        // Verify the environment variable is set even when CLI encounters an error
+        // This ensures the CLI won't emit the "Add --log-level=debug" warning
+        expect(process.env["SENTRY_LOG_LEVEL"]).toBe("debug");
+        return Promise.reject(new Error("CLI error"));
+      });
+
+      const buildPluginManager = createSentryBuildPluginManager(
+        {
+          authToken: "test-token",
+          org: "test-org",
+          project: "test-project",
+          debug: true,
+        },
+        {
+          buildTool: "webpack",
+          loggerPrefix: "[sentry-webpack-plugin]",
+        }
+      );
+
+      // Verify it's set before the error
+      expect(process.env["SENTRY_LOG_LEVEL"]).toBe("debug");
+
+      // Perform a CLI operation that will fail
+      await buildPluginManager.injectDebugIds(["/path/to/bundle"]);
+
+      // The error should have been caught, but env var should still be set
+      expect(process.env["SENTRY_LOG_LEVEL"]).toBe("debug");
+    });
+
+    it("should NOT have SENTRY_LOG_LEVEL set during error scenarios when debug is disabled", async () => {
+      // Simulate CLI error
+      mockCliExecute.mockImplementation(() => {
+        // Verify the environment variable is NOT set
+        // In this case, the CLI WOULD emit the "Add --log-level=debug" warning
+        expect(process.env["SENTRY_LOG_LEVEL"]).toBeUndefined();
+        return Promise.reject(new Error("CLI error"));
+      });
+
+      const buildPluginManager = createSentryBuildPluginManager(
+        {
+          authToken: "test-token",
+          org: "test-org",
+          project: "test-project",
+          debug: false,
+        },
+        {
+          buildTool: "webpack",
+          loggerPrefix: "[sentry-webpack-plugin]",
+        }
+      );
+
+      // Verify it's not set
+      expect(process.env["SENTRY_LOG_LEVEL"]).toBeUndefined();
+
+      // Perform a CLI operation that will fail
+      await buildPluginManager.injectDebugIds(["/path/to/bundle"]);
+
+      // The error should have been caught, and env var should still not be set
+      expect(process.env["SENTRY_LOG_LEVEL"]).toBeUndefined();
+    });
   });
 
   describe("when disabled", () => {