diff --git a/staging/src/k8s.io/apiextensions-apiserver/pkg/registry/customresource/strategy.go b/staging/src/k8s.io/apiextensions-apiserver/pkg/registry/customresource/strategy.go
index 3f298d5c3a4f4..851b9d6ca98c1 100644
--- a/staging/src/k8s.io/apiextensions-apiserver/pkg/registry/customresource/strategy.go
+++ b/staging/src/k8s.io/apiextensions-apiserver/pkg/registry/customresource/strategy.go
@@ -33,6 +33,7 @@ import (
 	"k8s.io/apimachinery/pkg/runtime"
 	"k8s.io/apimachinery/pkg/runtime/schema"
 	"k8s.io/apimachinery/pkg/util/validation/field"
+	genericapirequest "k8s.io/apiserver/pkg/endpoints/request"
 	"k8s.io/apiserver/pkg/features"
 	apiserverstorage "k8s.io/apiserver/pkg/storage"
 	"k8s.io/apiserver/pkg/storage/names"
@@ -114,6 +115,15 @@ func (a customResourceStrategy) PrepareForCreate(ctx context.Context, obj runtim
 	}
 
 	accessor, _ := meta.Accessor(obj)
+	if _, found := accessor.GetAnnotations()[genericapirequest.AnnotationKey]; found {
+		// in general the shard annotation is not attached to objects, instead, it is assigned by the storage layer on the fly
+		// to avoid an additional UPDATE request (mismatch on the generation field) replicated objects have the shard annotation set
+		// thus we need to remove the shard annotation and simply return early so that the generation is not reset to 1
+		annotations := accessor.GetAnnotations()
+		delete(annotations, genericapirequest.AnnotationKey)
+		accessor.SetAnnotations(annotations)
+		return
+	}
 	accessor.SetGeneration(1)
 }
 
@@ -144,6 +154,11 @@ func (a customResourceStrategy) PrepareForUpdate(ctx context.Context, obj, old r
 	if !apiequality.Semantic.DeepEqual(newCopyContent, oldCopyContent) {
 		oldAccessor, _ := meta.Accessor(oldCustomResourceObject)
 		newAccessor, _ := meta.Accessor(newCustomResourceObject)
+		if _, found := oldAccessor.GetAnnotations()[genericapirequest.AnnotationKey]; found {
+			// the presence of the annotation indicates the object is from the cache server.
+			// since the objects from the cache should not be modified in any way, just return early.
+			return
+		}
 		newAccessor.SetGeneration(oldAccessor.GetGeneration() + 1)
 	}
 }
diff --git a/staging/src/k8s.io/apiserver/pkg/registry/rest/update.go b/staging/src/k8s.io/apiserver/pkg/registry/rest/update.go
index e5ae7af0ebba6..de34ef8d69b64 100644
--- a/staging/src/k8s.io/apiserver/pkg/registry/rest/update.go
+++ b/staging/src/k8s.io/apiserver/pkg/registry/rest/update.go
@@ -126,7 +126,12 @@ func BeforeUpdate(strategy RESTUpdateStrategy, ctx context.Context, obj, old run
 	if err != nil {
 		return err
 	}
-	objectMeta.SetGeneration(oldMeta.GetGeneration())
+	if len(oldMeta.GetAnnotations()[genericapirequest.AnnotationKey]) == 0 || objectMeta.GetGeneration() == 0 {
+		// the absence of the annotation indicates the object is NOT from the cache server,
+		// if the new object doesn't have its generation set, just rewrite it from the old object
+		// otherwise  we are dealing with an object from the cache server that wants its generation to be updated
+		objectMeta.SetGeneration(oldMeta.GetGeneration())
+	}
 
 	// Ensure managedFields state is removed unless ServerSideApply is enabled
 	if !utilfeature.DefaultFeatureGate.Enabled(features.ServerSideApply) {