diff --git a/app/assets/javascripts/pages/groups/edit/index.js b/app/assets/javascripts/pages/groups/edit/index.js
index 853d9fe9191aaae7b60d74ac803ac570aa8fa98d..f095ae0261974e38b7217c4923512916aef8413e 100644
--- a/app/assets/javascripts/pages/groups/edit/index.js
+++ b/app/assets/javascripts/pages/groups/edit/index.js
@@ -30,9 +30,7 @@ initFilePickers();
 initConfirmDanger();
 initSettingsPanels();
 initTransferGroupForm();
-dirtySubmitFactory(
-  document.querySelectorAll('.js-general-settings-form, .js-general-permissions-form'),
-);
+dirtySubmitFactory(document.querySelectorAll('.js-general-settings-form'));
 mountBadgeSettings(GROUP_BADGE);
 
 // Initialize Subgroups selector
diff --git a/app/assets/javascripts/vue_shared/components/entity_select/group_select.vue b/app/assets/javascripts/vue_shared/components/entity_select/group_select.vue
index a8f32db0c8baefe70d93a78fb63e9629427696a0..a72143ec4a9bf11fd8c652bd645c1e8f3c350feb 100644
--- a/app/assets/javascripts/vue_shared/components/entity_select/group_select.vue
+++ b/app/assets/javascripts/vue_shared/components/entity_select/group_select.vue
@@ -34,6 +34,11 @@ export default {
       required: false,
       default: '',
     },
+    description: {
+      type: String,
+      required: false,
+      default: '',
+    },
     inputName: {
       type: String,
       required: true,
@@ -126,6 +131,7 @@ export default {
 <template>
   <entity-select
     :label="label"
+    :description="description"
     :input-name="inputName"
     :input-id="inputId"
     :initial-selection="initialSelection"
diff --git a/app/assets/javascripts/vue_shared/components/entity_select/init_group_selects.js b/app/assets/javascripts/vue_shared/components/entity_select/init_group_selects.js
index dbfac8a03393161c2d7e71daa987c798cbf634e5..f8a7bf304f2c8f39c6ef0ca3aaa809951d0274d0 100644
--- a/app/assets/javascripts/vue_shared/components/entity_select/init_group_selects.js
+++ b/app/assets/javascripts/vue_shared/components/entity_select/init_group_selects.js
@@ -15,6 +15,7 @@ export const initGroupSelects = () => {
       parentId: parentGroupID,
       groupsFilter,
       label,
+      description,
       inputName,
       inputId,
       selected: initialSelection,
@@ -31,6 +32,7 @@ export const initGroupSelects = () => {
         return createElement(GroupSelect, {
           props: {
             label,
+            description,
             inputName,
             initialSelection,
             parentGroupID,
diff --git a/app/controllers/concerns/groups/params.rb b/app/controllers/concerns/groups/params.rb
index eafc24524bc3f110c9728bb0860c50c6bb6fc6ef..ed448270085e686310ca94cd263f976f88f070ce 100644
--- a/app/controllers/concerns/groups/params.rb
+++ b/app/controllers/concerns/groups/params.rb
@@ -55,6 +55,7 @@ def group_params_attributes
         :setup_for_company,
         :jobs_to_be_done,
         :crm_enabled,
+        :crm_source_group_id,
         :enable_namespace_descendants_cache
       ] + [group_feature_attributes: group_feature_attributes]
     end
diff --git a/app/models/customer_relations/contact.rb b/app/models/customer_relations/contact.rb
index f8971ef013c417a3bdd6647f1380a0dcd490c577..e0c7d9a619d9543b55ace8a1fb0aba0c0502b466 100644
--- a/app/models/customer_relations/contact.rb
+++ b/app/models/customer_relations/contact.rb
@@ -124,26 +124,6 @@ def self.exists_for_group?(group)
     exists?(group: group)
   end
 
-  def self.move_to_root_group(group)
-    update_query = <<~SQL
-      UPDATE #{CustomerRelations::IssueContact.table_name}
-      SET contact_id = new_contacts.id
-      FROM #{table_name} AS existing_contacts
-      JOIN #{table_name} AS new_contacts ON new_contacts.group_id = :old_group_id AND LOWER(new_contacts.email) = LOWER(existing_contacts.email)
-      WHERE existing_contacts.group_id = :new_group_id AND contact_id = existing_contacts.id
-    SQL
-    connection.execute(sanitize_sql([update_query, { old_group_id: group.root_ancestor.id, new_group_id: group.id }]))
-
-    dupes_query = <<~SQL
-      DELETE FROM #{table_name} AS existing_contacts
-      USING #{table_name} AS new_contacts
-      WHERE existing_contacts.group_id = :new_group_id AND new_contacts.group_id = :old_group_id AND LOWER(new_contacts.email) = LOWER(existing_contacts.email)
-    SQL
-    connection.execute(sanitize_sql([dupes_query, { old_group_id: group.root_ancestor.id, new_group_id: group.id }]))
-
-    where(group: group).update_all(group_id: group.root_ancestor.id)
-  end
-
   def self.counts_by_state
     group(:state).count
   end
diff --git a/app/models/customer_relations/organization.rb b/app/models/customer_relations/organization.rb
index 8b0e31f7298927299650be8eb35a35766bac7112..99fba66ec363ea92f462ea5997a93433116a0093 100644
--- a/app/models/customer_relations/organization.rb
+++ b/app/models/customer_relations/organization.rb
@@ -8,6 +8,7 @@ class CustomerRelations::Organization < ApplicationRecord
   self.table_name = "customer_relations_organizations"
 
   belongs_to :group, -> { where(type: Group.sti_name) }, foreign_key: 'group_id'
+  has_many :contacts
 
   strip_attributes! :name
 
@@ -58,26 +59,6 @@ def self.find_by_name(group_id, name)
     .where('LOWER(name) = LOWER(?)', name)
   end
 
-  def self.move_to_root_group(group)
-    update_query = <<~SQL
-      UPDATE #{CustomerRelations::Contact.table_name}
-      SET organization_id = new_organizations.id
-      FROM #{table_name} AS existing_organizations
-      JOIN #{table_name} AS new_organizations ON new_organizations.group_id = :old_group_id AND LOWER(new_organizations.name) = LOWER(existing_organizations.name)
-      WHERE existing_organizations.group_id = :new_group_id AND organization_id = existing_organizations.id
-    SQL
-    connection.execute(sanitize_sql([update_query, { old_group_id: group.root_ancestor.id, new_group_id: group.id }]))
-
-    dupes_query = <<~SQL
-      DELETE FROM #{table_name} AS existing_organizations
-      USING #{table_name} AS new_organizations
-      WHERE existing_organizations.group_id = :new_group_id AND new_organizations.group_id = :old_group_id AND LOWER(new_organizations.name) = LOWER(existing_organizations.name)
-    SQL
-    connection.execute(sanitize_sql([dupes_query, { old_group_id: group.root_ancestor.id, new_group_id: group.id }]))
-
-    where(group: group).update_all(group_id: group.root_ancestor.id)
-  end
-
   def self.counts_by_state
     default_state_counts.merge(group(:state).count)
   end
diff --git a/app/models/group.rb b/app/models/group.rb
index 2640c26d6f23da1f17148530c209f3a1fc2a6d13..9509a7901a47154da0980045b6eb5e19c63d0ca9 100644
--- a/app/models/group.rb
+++ b/app/models/group.rb
@@ -108,7 +108,7 @@ def of_ancestors_and_self
   has_many :contacts, class_name: 'CustomerRelations::Contact', inverse_of: :group, dependent: :delete_all # rubocop:disable Cop/ActiveRecordDependent
   has_one :crm_settings, class_name: 'Group::CrmSettings', inverse_of: :group
   # Groups for which this is the source of CRM contacts/organizations
-  has_many :crm_targets, class_name: 'Group::CrmSettings', inverse_of: :source_group
+  has_many :crm_targets, class_name: 'Group::CrmSettings', inverse_of: :source_group, foreign_key: 'source_group_id'
 
   has_many :cluster_groups, class_name: 'Clusters::Group'
   has_many :clusters, through: :cluster_groups, class_name: 'Clusters::Cluster'
@@ -1071,6 +1071,18 @@ def crm_group?
   end
   strong_memoize_attr :crm_group?
 
+  def has_issues_with_contacts?
+    CustomerRelations::IssueContact.joins(:issue).where(issue: { project_id: Project.where(namespace_id: self_and_descendant_ids) }).exists?
+  end
+
+  def delete_contacts
+    CustomerRelations::Contact.where(group_id: id).delete_all
+  end
+
+  def delete_organizations
+    CustomerRelations::Organization.where(group_id: id).delete_all
+  end
+
   private
 
   def feature_flag_enabled_for_self_or_ancestor?(feature_flag, type: :development)
diff --git a/app/models/namespaces/user_namespace.rb b/app/models/namespaces/user_namespace.rb
index a6239ab9b3947703e20ced724612a8c3fa94275b..a8c5005d460afd89ee38f59d148ce4438f1be072 100644
--- a/app/models/namespaces/user_namespace.rb
+++ b/app/models/namespaces/user_namespace.rb
@@ -55,5 +55,9 @@ def max_member_access_for_user(user, only_concrete_membership: false)
 
       owner == user ? Gitlab::Access::OWNER : Gitlab::Access::NO_ACCESS
     end
+
+    def crm_group
+      nil
+    end
   end
 end
diff --git a/app/serializers/issue_sidebar_basic_entity.rb b/app/serializers/issue_sidebar_basic_entity.rb
index efb08fc08f122e6ca0fc2e581974c32b35f83ae7..fbc84fc6f5582872c5f253a4b5c56581d7add267 100644
--- a/app/serializers/issue_sidebar_basic_entity.rb
+++ b/app/serializers/issue_sidebar_basic_entity.rb
@@ -13,7 +13,7 @@ class IssueSidebarBasicEntity < IssuableSidebarBasicEntity
 
   expose :show_crm_contacts do |issuable|
     current_user&.can?(:read_crm_contacts, issuable) &&
-      CustomerRelations::Contact.exists_for_group?(issuable.project.root_ancestor)
+      CustomerRelations::Contact.exists_for_group?(issuable.project.crm_group)
   end
 end
 
diff --git a/app/services/customer_relations/group_migration_service.rb b/app/services/customer_relations/group_migration_service.rb
new file mode 100644
index 0000000000000000000000000000000000000000..e5c5cadb462329b209ad381da4d188e4f66d06b8
--- /dev/null
+++ b/app/services/customer_relations/group_migration_service.rb
@@ -0,0 +1,111 @@
+# frozen_string_literal: true
+
+module CustomerRelations
+  class GroupMigrationService
+    def initialize(old_group_id, new_group_id, was_crm_source)
+      @old_group_id = old_group_id
+      @new_group_id = new_group_id
+      @was_crm_source = was_crm_source
+    end
+
+    def execute
+      copy_organizations
+      copy_contacts
+      update_issues
+
+      return unless @was_crm_source
+
+      old_group = Group.find_by_id(@old_group_id)
+      old_group.delete_contacts
+      old_group.delete_organizations
+    end
+
+    private
+
+    def execute_sql(sql, args)
+      sanitized_sql = ApplicationRecord.sanitize_sql([sql, args])
+      ApplicationRecord.connection.execute(sanitized_sql, args)
+    end
+
+    def copy_organizations
+      sql = <<~SQL
+        -- Insert organizations deduplicating by name
+        INSERT INTO #{CustomerRelations::Organization.table_name} (
+          group_id,
+          created_at,
+          updated_at,
+          state,
+          default_rate,
+          name,
+          description
+        )
+        SELECT
+          :new_group_id,
+          source_organizations.created_at,
+          source_organizations.updated_at,
+          source_organizations.state,
+          source_organizations.default_rate,
+          source_organizations.name,
+          source_organizations.description
+        FROM #{CustomerRelations::Organization.table_name} source_organizations
+        LEFT JOIN #{CustomerRelations::Organization.table_name} target_organizations
+        ON target_organizations.group_id = :new_group_id AND LOWER(target_organizations.name) = LOWER(source_organizations.name)
+        WHERE source_organizations.group_id = :old_group_id AND target_organizations.id IS NULL
+      SQL
+      execute_sql(sql, { old_group_id: @old_group_id, new_group_id: @new_group_id })
+    end
+
+    def copy_contacts
+      sql = <<~SQL
+        WITH org_map AS (
+          -- Create a mapping of old organization IDs to new organization IDs
+          SELECT source_organizations.id AS old_id, target_organizations.id AS new_id
+          FROM #{CustomerRelations::Organization.table_name} source_organizations
+          JOIN #{CustomerRelations::Organization.table_name} target_organizations ON target_organizations.group_id = :new_group_id AND LOWER(target_organizations.name) = LOWER(source_organizations.name)
+          WHERE source_organizations.group_id = :old_group_id
+        )
+        -- Insert contacts linked to the new organization, deduplicating by email
+        INSERT INTO #{CustomerRelations::Contact.table_name} (
+          group_id,
+          organization_id,
+          created_at,
+          updated_at,
+          state,
+          phone,
+          first_name,
+          last_name,
+          email,
+          description
+        )
+        SELECT DISTINCT
+          :new_group_id,
+          org_map.new_id,
+          source_contacts.created_at,
+          source_contacts.updated_at,
+          source_contacts.state,
+          source_contacts.phone,
+          source_contacts.first_name,
+          source_contacts.last_name,
+          source_contacts.email,
+          source_contacts.description
+        FROM #{CustomerRelations::Contact.table_name} source_contacts
+        LEFT JOIN #{CustomerRelations::Contact.table_name} target_contacts
+        ON target_contacts.group_id = :new_group_id AND LOWER(target_contacts.email) = LOWER(source_contacts.email)
+        LEFT JOIN org_map ON org_map.old_id = source_contacts.organization_id
+        WHERE source_contacts.group_id = :old_group_id AND target_contacts.id IS NULL
+      SQL
+      execute_sql(sql, { old_group_id: @old_group_id, new_group_id: @new_group_id })
+    end
+
+    def update_issues
+      sql = <<~SQL
+        UPDATE #{CustomerRelations::IssueContact.table_name}
+        SET contact_id = target_contacts.id
+        FROM #{CustomerRelations::Contact.table_name} AS source_contacts
+        JOIN #{CustomerRelations::Contact.table_name} AS target_contacts ON target_contacts.group_id = :new_group_id AND LOWER(target_contacts.email) = LOWER(source_contacts.email)
+        WHERE source_contacts.group_id = :old_group_id AND contact_id = source_contacts.id
+      SQL
+      execute_sql(sql, { old_group_id: @old_group_id, new_group_id: @new_group_id })
+    end
+  end
+end
diff --git a/app/services/groups/transfer_service.rb b/app/services/groups/transfer_service.rb
index ff60c15430972e034f01c3534992ec1408a034c8..9ed183e649c2c8ccae5319a0a29c94c5a3ce205d 100644
--- a/app/services/groups/transfer_service.rb
+++ b/app/services/groups/transfer_service.rb
@@ -67,8 +67,7 @@ def proceed_to_transfer
           update_group_attributes
           ensure_ownership
           update_integrations
-          remove_issue_contacts(old_root_ancestor_id, was_root_group)
-          update_crm_objects(was_root_group)
+          update_crm_objects
           remove_namespace_commit_emails(was_root_group)
         end
       end
@@ -112,10 +111,11 @@ def ensure_allowed_transfer
 
     def no_permissions_to_migrate_crm?
       return false unless group && @new_parent_group
-      return false if group.root_ancestor == @new_parent_group.root_ancestor
+      return false if group.crm_settings&.source_group
+      return false if group.crm_group == @new_parent_group.crm_group
 
-      return true if group.contacts.exists? && !current_user.can?(:admin_crm_contact, @new_parent_group.root_ancestor)
-      return true if group.crm_organizations.exists? && !current_user.can?(:admin_crm_organization, @new_parent_group.root_ancestor)
+      return true if group.crm_group.contacts.exists? && !current_user.can?(:admin_crm_contact, @new_parent_group.root_ancestor)
+      return true if group.crm_group.crm_organizations.exists? && !current_user.can?(:admin_crm_organization, @new_parent_group.root_ancestor)
 
       false
     end
@@ -308,18 +308,13 @@ def pending_builds_params
       ::Ci::PendingBuild.namespace_transfer_params(group)
     end
 
-    def update_crm_objects(was_root_group)
-      return unless was_root_group
+    def update_crm_objects
+      return unless group && new_parent_group
+      return if group.crm_settings&.source_group
+      return if group.crm_group == new_parent_group.crm_group
 
-      CustomerRelations::Contact.move_to_root_group(group)
-      CustomerRelations::Organization.move_to_root_group(group)
-    end
-
-    def remove_issue_contacts(old_root_ancestor_id, was_root_group)
-      return if was_root_group
-      return if old_root_ancestor_id == @group.root_ancestor.id
-
-      CustomerRelations::IssueContact.delete_for_group(@group)
+      was_crm_source = group.crm_group == group
+      CustomerRelations::GroupMigrationService.new(group.crm_group.id, new_parent_group.crm_group.id, was_crm_source).execute
     end
 
     def publish_event(old_root_ancestor_id)
diff --git a/app/services/groups/update_service.rb b/app/services/groups/update_service.rb
index 6d11660c3093ed9aa3812ef0969e82a8a213e7ff..11d0b00bcc412791046d01f192ebee0320cc7efa 100644
--- a/app/services/groups/update_service.rb
+++ b/app/services/groups/update_service.rb
@@ -23,21 +23,17 @@ def execute
       end
 
       return false unless valid_visibility_level_change?(group, group.visibility_attribute_value(params))
-
       return false unless valid_share_with_group_lock_change?
-
       return false unless valid_path_change?
-
       return false unless update_shared_runners
 
       handle_changes
-
       handle_namespace_settings
-
       handle_hierarchy_cache_update
-
       group.assign_attributes(params)
 
+      return false if group.errors.present?
+
       begin
         success = group.save
 
@@ -157,7 +153,7 @@ def remove_unallowed_params
 
     def handle_changes
       handle_settings_update
-      handle_crm_settings_update unless params[:crm_enabled].nil?
+      handle_crm_settings_update
     end
 
     def handle_settings_update
@@ -169,11 +165,21 @@ def handle_settings_update
     end
 
     def handle_crm_settings_update
+      return if params[:crm_enabled].nil? && params[:crm_source_group_id].nil?
+
       crm_enabled = params.delete(:crm_enabled)
-      return if group.crm_enabled? == crm_enabled
+      crm_enabled = true if crm_enabled.nil?
+      crm_source_group_id = params.delete(:crm_source_group_id)
+      return if group.crm_enabled? == crm_enabled && group.crm_settings&.source_group_id == crm_source_group_id
+
+      if group.crm_settings&.source_group_id != crm_source_group_id && group.has_issues_with_contacts?
+        group.errors.add(:base, s_('GroupSettings|Contact source cannot be changed when issues already have contacts assigned from a different source.'))
+        return
+      end
 
       crm_settings = group.crm_settings || group.build_crm_settings
       crm_settings.enabled = crm_enabled
+      crm_settings.source_group_id = crm_source_group_id.presence
       crm_settings.save
     end
 
diff --git a/app/services/projects/transfer_service.rb b/app/services/projects/transfer_service.rb
index a2becd385c35231f16b4fee2b4dbea744554328a..0688d207a7cf4d76fdd129b31e343f13dfa77f93 100644
--- a/app/services/projects/transfer_service.rb
+++ b/app/services/projects/transfer_service.rb
@@ -278,7 +278,7 @@ def pending_builds_params
     end
 
     def remove_issue_contacts
-      return unless @old_group&.root_ancestor != @new_namespace&.root_ancestor
+      return unless @old_group&.crm_group != @new_namespace&.crm_group
 
       CustomerRelations::IssueContact.delete_for_project(project.id)
     end
diff --git a/app/views/groups/settings/_permissions.html.haml b/app/views/groups/settings/_permissions.html.haml
index 25b0b34b32ef6804dda9b2ec08a9d7cd9cc5b139..061890fe5c645dfa991bb4879d508eb6c0e8ec50 100644
--- a/app/views/groups/settings/_permissions.html.haml
+++ b/app/views/groups/settings/_permissions.html.haml
@@ -52,6 +52,15 @@
           s_('GroupSettings|Customer relations is enabled'),
           checkbox_options: { checked: @group.crm_enabled? },
           help_text: s_('GroupSettings|Organizations and contacts can be created and associated with issues.')
+    .form-group.gl-mb-3
+      = s_('GroupSettings|Contact source')
+      .js-vue-group-select{ data: {
+        input_name: 'group[crm_source_group_id]',
+        input_id: 'group_crm_source_group_id',
+        selected: @group.crm_settings&.source_group_id,
+        clearable: 'true',
+        description: s_("GroupSettings|The group from which to source contacts for issues in this group and it's subgroups.")
+      } }
 
     - if Feature.enabled?(:group_hierarchy_optimization, @group, type: :beta)
       %h5= _('Performance')
@@ -61,4 +70,4 @@
             checkbox_options: { checked: @group.namespace_descendants.present? },
             help_text: s_('GroupSettings|Building the cache is asynchronous, happens in a background job. The cache invalidation is synchronous with strong consistency guarantees.')
 
-  = f.submit _('Save changes'), pajamas_button: true, class: 'gl-mt-3 js-dirty-submit', data: { testid: 'save-permissions-changes-button' }
+  = f.submit _('Save changes'), pajamas_button: true, class: 'gl-mt-3', data: { testid: 'save-permissions-changes-button' }
diff --git a/config/bounded_contexts.yml b/config/bounded_contexts.yml
index a47afeb213083b3f70d563847208ab6dd57b1c24..ab93da40b15f61a105409dadba8afffc29195279 100644
--- a/config/bounded_contexts.yml
+++ b/config/bounded_contexts.yml
@@ -30,7 +30,7 @@ domains:
       - duo_chat
       - ai_abstraction_layer
       - code_suggestions # Also in CodeSuggestions
-      - cloud_connector  # Also in CloudConnector
+      - cloud_connector # Also in CloudConnector
       - duo_workflow
 
   Analytics:
@@ -116,6 +116,11 @@ domains:
     feature_categories:
       - container_registry
 
+  CustomerRelations:
+    description:
+    feature_categories:
+      - team_planning
+
   DependencyProxy:
     description: Dependency Proxy for container images.
     feature_categories:
@@ -159,7 +164,8 @@ domains:
       - integrations
 
   Issuables:
-    description: Common concerns between work items and merge requests such as setting milestone,
+    description:
+      Common concerns between work items and merge requests such as setting milestone,
       support discussions, adding labels, etc.
     feature_categories:
       - team_planning
@@ -369,7 +375,8 @@ domains:
 # Modules from the platform layer could potentially be extracted as gems.
 platform:
   Gitlab:
-    description: Platform layer containing infrastructure and technical concerns.
+    description:
+      Platform layer containing infrastructure and technical concerns.
       For example observability tools, generic base classes, utilities, database helpers, etc.
       Each functionality in this layer should be isolated and extracted into gems.
   Banzai:
diff --git a/doc/user/crm/index.md b/doc/user/crm/index.md
index 41e4cd9276ef7cb2c03e8e06bd498c88479b0f9a..228a56fc9460cd1705f12487eac11808dd5fee49 100644
--- a/doc/user/crm/index.md
+++ b/doc/user/crm/index.md
@@ -18,7 +18,8 @@ DETAILS:
 With customer relations management (CRM) you can create a record of contacts
 (individuals) and organizations (companies) and relate them to issues.
 
-Contacts and organizations can only be created for top-level groups.
+By default, contacts and organizations can only be created for top-level groups.
+To create contacts and organizations in other groups, [assign the group as a contact source](#configure-the-contact-source).
 
 You can use contacts and organizations to tie work to customers for billing and reporting purposes.
 For more information about what is planned for the future, see [issue 2256](https://gitlab.com/gitlab-org/gitlab/-/issues/2256).
@@ -48,6 +49,24 @@ To enable customer relations management in a group or subgroup:
 1. Select **Customer relations is enabled**.
 1. Select **Save changes**.
 
+## Configure the contact source
+
+> - [Available](https://gitlab.com/gitlab-org/gitlab/-/merge_requests/164945) in GitLab 17.4.
+
+By default, contacts are sourced from an issue's top-level group.
+
+The contact source for a group will apply to all subgroups,
+unless they have a contact source configured.
+
+To configure the contact source for a group or subgroup:
+
+1. On the left sidebar, select **Search or go to** and find your group or subgroup.
+1. Select **Settings > General**.
+1. Expand the **Permissions and group features** section.
+1. Select **Contact source > Search for a group**.
+1. Select the group from which you wish to source contacts.
+1. Select **Save changes**.
+
 ## Contacts
 
 ### View contacts linked to a group
@@ -256,15 +275,17 @@ When you use the `/remove_contacts` quick action, follow it with `[contact:` and
 
 ## Moving objects with CRM entries
 
-The top-level group is the topmost group in the group hierarchy.
-
-When you move an issue, project, or group in the same group hierarchy,
+When you move an issue or project and the **parent group contact source matches**,
 issues retain their contacts.
 
-When you move an issue or project and the top-level group changes,
+When you move an issue or project and the **parent group contact source changes**,
 issues lose their contacts.
 
-When you move a group and its top-level group changes:
+When you move a group with a [contact source configured](#configure-the-contact-source)
+or it's **contact source remains unchanged**,
+issues retain their contacts.
+
+When you move a group and its **contact source changes**:
 
 - All unique contacts and organizations are migrated to the new top-level group.
 - Contacts that already exist (by email address) are deemed duplicates and deleted.
diff --git a/ee/app/views/groups/_seat_controls_setting.html.haml b/ee/app/views/groups/_seat_controls_setting.html.haml
index ff4b4c632f093b2c51441d72e6a33172e531bfa5..4b29c0c0b9573320b0fdb318fe3ef55c9544e665 100644
--- a/ee/app/views/groups/_seat_controls_setting.html.haml
+++ b/ee/app/views/groups/_seat_controls_setting.html.haml
@@ -17,7 +17,7 @@
       = f.number_field :new_user_signups_cap, min: 1,
         class: 'form-control form-control-sm gl-form-input gl-w-auto gl-mt-3',
         disabled: group.shared_externally?, required: true,
-        data: { testid: 'user-cap-limit-field' }
+        data: { testid: 'user-cap-limit-field', dirty_submit_original_value: @group.new_user_signups_cap }
   .gl-my-5
     = f.gitlab_ui_radio_component :seat_control, :off, "Open access",
       help_text: _("Invitations do not require administrator approval"),
diff --git a/ee/spec/features/groups/group_settings_spec.rb b/ee/spec/features/groups/group_settings_spec.rb
index 858f8ea4e39dff212b70e1152c7bf912e9aca897..42afef5b2826e747c925cafe3102e6d599d4a726 100644
--- a/ee/spec/features/groups/group_settings_spec.rb
+++ b/ee/spec/features/groups/group_settings_spec.rb
@@ -249,7 +249,9 @@ def remove_with_confirm(button_text, confirm_with, confirm_button_text = 'Confir
 
       context 'group selection menu', :js do
         it 'shows only the subgroups' do
-          click_button 'Search for a group'
+          within_testid('custom-project-templates-container') do
+            click_button 'Search for a group'
+          end
 
           expect_listbox_items(["#{nested_group.full_name}\n#{nested_group.full_path}"])
         end
diff --git a/locale/gitlab.pot b/locale/gitlab.pot
index 63e060e08c76fdd85473666ef922dbe3c266f911..5c8aa89711dbfe92f5331c440848019cf2bd7281 100644
--- a/locale/gitlab.pot
+++ b/locale/gitlab.pot
@@ -26739,6 +26739,12 @@ msgstr ""
 msgid "GroupSettings|Configure limits on the number of repositories users can download, clone, or fork in a given time."
 msgstr ""
 
+msgid "GroupSettings|Contact source"
+msgstr ""
+
+msgid "GroupSettings|Contact source cannot be changed when issues already have contacts assigned from a different source."
+msgstr ""
+
 msgid "GroupSettings|Custom project templates"
 msgstr ""
 
@@ -26883,6 +26889,9 @@ msgstr ""
 msgid "GroupSettings|The Auto DevOps pipeline runs if no alternative CI configuration file is found."
 msgstr ""
 
+msgid "GroupSettings|The group from which to source contacts for issues in this group and it's subgroups."
+msgstr ""
+
 msgid "GroupSettings|There was a problem updating Auto DevOps pipeline: %{error_messages}."
 msgstr ""
 
diff --git a/spec/features/groups_spec.rb b/spec/features/groups_spec.rb
index 1e964b9ee0cc5fa7842dc52b2d1bba528db39dd0..b8712a61e270f31900a70795465f090e5c9aebb0 100644
--- a/spec/features/groups_spec.rb
+++ b/spec/features/groups_spec.rb
@@ -353,17 +353,6 @@
       visit path
     end
 
-    it_behaves_like 'dirty submit form', [
-      { form: '.js-general-settings-form', input: 'input[name="group[name]"]', submit: 'button[type="submit"]' },
-      { form: '.js-general-settings-form', input: '#group_visibility_level_0', submit: 'button[type="submit"]' },
-      { form: '.js-general-permissions-form', input: '#group_request_access_enabled', submit: 'button[type="submit"]' },
-      {
-        form: '.js-general-permissions-form',
-        input: 'input[name="group[two_factor_grace_period]"]',
-        submit: 'button[type="submit"]'
-      }
-    ]
-
     it 'saves new settings' do
       within_testid('general-settings') do
         # Have to reset it to '' so it overwrites rather than appends
diff --git a/spec/frontend/vue_shared/components/entity_select/group_select_spec.js b/spec/frontend/vue_shared/components/entity_select/group_select_spec.js
index ae5511165601868d2116a88a6619e1208320a627..fa8da7bd24f4c3e7f7c7d75e1899839996953779 100644
--- a/spec/frontend/vue_shared/components/entity_select/group_select_spec.js
+++ b/spec/frontend/vue_shared/components/entity_select/group_select_spec.js
@@ -31,6 +31,7 @@ describe('GroupSelect', () => {
 
   // Props
   const label = 'label';
+  const description = 'description';
   const inputName = 'inputName';
   const inputId = 'inputId';
 
@@ -46,6 +47,7 @@ describe('GroupSelect', () => {
     wrapper = shallowMountExtended(GroupSelect, {
       propsData: {
         label,
+        description,
         inputName,
         inputId,
         ...props,
@@ -77,6 +79,7 @@ describe('GroupSelect', () => {
     it.each`
       prop                   | expectedValue
       ${'label'}             | ${label}
+      ${'description'}       | ${description}
       ${'inputName'}         | ${inputName}
       ${'inputId'}           | ${inputId}
       ${'defaultToggleText'} | ${GROUP_TOGGLE_TEXT}
diff --git a/spec/models/customer_relations/contact_spec.rb b/spec/models/customer_relations/contact_spec.rb
index af8ac7b698db9f89d989892d0a91b33e4bd3c877..9fc746476224d73728b4127b32431f6ef9e28295 100644
--- a/spec/models/customer_relations/contact_spec.rb
+++ b/spec/models/customer_relations/contact_spec.rb
@@ -129,35 +129,6 @@
     end
   end
 
-  describe '#self.move_to_root_group' do
-    let!(:old_root_group) { create(:group) }
-    let!(:contacts) { create_list(:contact, 4, group: old_root_group) }
-    let!(:project) { create(:project, group: old_root_group) }
-    let!(:issue) { create(:issue, project: project) }
-    let!(:issue_contact1) { create(:issue_customer_relations_contact, issue: issue, contact: contacts[0]) }
-    let!(:issue_contact2) { create(:issue_customer_relations_contact, issue: issue, contact: contacts[1]) }
-    let!(:new_root_group) { create(:group) }
-    let!(:dupe_contact1) { create(:contact, group: new_root_group, email: contacts[1].email) }
-    let!(:dupe_contact2) { create(:contact, group: new_root_group, email: contacts[3].email.upcase) }
-
-    before do
-      old_root_group.update!(parent: new_root_group)
-      described_class.move_to_root_group(old_root_group)
-    end
-
-    it 'moves contacts with unique emails and deletes the rest' do
-      expect(contacts[0].reload.group_id).to eq(new_root_group.id)
-      expect(contacts[2].reload.group_id).to eq(new_root_group.id)
-      expect { contacts[1].reload }.to raise_error(ActiveRecord::RecordNotFound)
-      expect { contacts[3].reload }.to raise_error(ActiveRecord::RecordNotFound)
-    end
-
-    it 'updates issue_contact.contact_id for dupes and leaves the rest untouched' do
-      expect(issue_contact1.reload.contact_id).to eq(contacts[0].id)
-      expect(issue_contact2.reload.contact_id).to eq(dupe_contact1.id)
-    end
-  end
-
   describe '.search' do
     let_it_be(:contact_a) do
       create(
diff --git a/spec/models/customer_relations/organization_spec.rb b/spec/models/customer_relations/organization_spec.rb
index 9896099df4c90b9c72e208901dfe14dd7524a392..c90f468a6bf1185f9cc9cb1afa4992ad6bed9935 100644
--- a/spec/models/customer_relations/organization_spec.rb
+++ b/spec/models/customer_relations/organization_spec.rb
@@ -7,6 +7,7 @@
 
   describe 'associations' do
     it { is_expected.to belong_to(:group).with_foreign_key('group_id') }
+    it { is_expected.to have_many(:contacts) }
   end
 
   describe 'validations' do
@@ -66,36 +67,6 @@
     end
   end
 
-  describe '#self.move_to_root_group' do
-    let!(:old_root_group) { create(:group) }
-    let!(:crm_organizations) { create_list(:crm_organization, 4, group: old_root_group) }
-    let!(:new_root_group) { create(:group) }
-    let!(:contact1) { create(:contact, group: new_root_group, organization: crm_organizations[0]) }
-    let!(:contact2) { create(:contact, group: new_root_group, organization: crm_organizations[1]) }
-
-    let!(:dupe_crm_organization1) { create(:crm_organization, group: new_root_group, name: crm_organizations[1].name) }
-    let!(:dupe_crm_organization2) do
-      create(:crm_organization, group: new_root_group, name: crm_organizations[3].name.upcase)
-    end
-
-    before do
-      old_root_group.update!(parent: new_root_group)
-      described_class.move_to_root_group(old_root_group)
-    end
-
-    it 'moves organizations with unique names and deletes the rest' do
-      expect(crm_organizations[0].reload.group_id).to eq(new_root_group.id)
-      expect(crm_organizations[2].reload.group_id).to eq(new_root_group.id)
-      expect { crm_organizations[1].reload }.to raise_error(ActiveRecord::RecordNotFound)
-      expect { crm_organizations[3].reload }.to raise_error(ActiveRecord::RecordNotFound)
-    end
-
-    it 'updates contact.organization_id for dupes and leaves the rest untouched' do
-      expect(contact1.reload.organization_id).to eq(crm_organizations[0].id)
-      expect(contact2.reload.organization_id).to eq(dupe_crm_organization1.id)
-    end
-  end
-
   describe '.search' do
     let_it_be(:crm_organization_a) do
       create(
diff --git a/spec/models/group_spec.rb b/spec/models/group_spec.rb
index 7ff9af46645c050541f96db86eeb9581c34d4302..d691428a7a3aaee9a77cb099d5c2ddcb3d66dc23 100644
--- a/spec/models/group_spec.rb
+++ b/spec/models/group_spec.rb
@@ -4096,4 +4096,33 @@ def define_cache_expectations(cache_key)
       end
     end
   end
+
+  describe '#has_issues_with_contacts?' do
+    context 'when group has no issues with contacts' do
+      it 'returns false' do
+        expect(group.has_issues_with_contacts?).to be_falsey
+      end
+    end
+
+    context 'when group has issues with contacts' do
+      let!(:issue) { create(:issue, project: create(:project, group: group)) }
+      let!(:contact) { create(:contact, group: group) }
+      let!(:issue_contact) { create(:issue_customer_relations_contact, issue: issue, contact: contact) }
+
+      it 'returns true' do
+        expect(group.has_issues_with_contacts?).to be_truthy
+      end
+    end
+
+    context 'when a subgroup has issues with contacts' do
+      let!(:subgroup) { create(:group, parent: group) }
+      let!(:issue) { create(:issue, project: create(:project, group: subgroup)) }
+      let!(:contact) { create(:contact, group: group) }
+      let!(:issue_contact) { create(:issue_customer_relations_contact, issue: issue, contact: contact) }
+
+      it 'returns true' do
+        expect(group.has_issues_with_contacts?).to be_truthy
+      end
+    end
+  end
 end
diff --git a/spec/services/customer_relations/group_migration_service_spec.rb b/spec/services/customer_relations/group_migration_service_spec.rb
new file mode 100644
index 0000000000000000000000000000000000000000..08bb0493f3371e3fd8077096ddc8f26061c99e58
--- /dev/null
+++ b/spec/services/customer_relations/group_migration_service_spec.rb
@@ -0,0 +1,70 @@
+# frozen_string_literal: true
+
+require 'spec_helper'
+
+RSpec.describe CustomerRelations::GroupMigrationService, feature_category: :service_desk do
+  let(:old_group) { create(:group) }
+  let(:new_group) { create(:group) }
+  let(:was_crm_source) { true }
+  let(:service) { described_class.new(old_group.id, new_group.id, was_crm_source) }
+
+  let!(:duplicate_organization) { create(:crm_organization, group: old_group, name: "Organization A") }
+  let!(:unique_organization) { create(:crm_organization, group: old_group, name: "Organization B") }
+  let!(:duplicate_contact) do
+    create(:contact, group: old_group, organization: duplicate_organization, email: "duplicate_contact@example.com")
+  end
+
+  let!(:unique_contact) do
+    create(:contact, group: old_group, organization: unique_organization, email: "unique_contact@example.com")
+  end
+
+  let!(:existing_organization) { create(:crm_organization, group: new_group, name: "Organization A") }
+  let!(:existing_contact) do
+    create(:contact, group: new_group, organization: existing_organization, email: "duplicate_contact@example.com")
+  end
+
+  describe '#execute' do
+    it "copies unique organizations and contacts to the new group" do
+      service.execute
+
+      expect(CustomerRelations::Organization.where(group_id: new_group.id).count).to eq(2)
+      expect(CustomerRelations::Organization.where(group_id: new_group.id).pluck(:name))
+        .to include("Organization A", "Organization B")
+
+      expect(CustomerRelations::Contact.where(group_id: new_group.id).count).to eq(2)
+      expect(CustomerRelations::Contact.where(group_id: new_group.id).pluck(:email))
+        .to include("duplicate_contact@example.com", "unique_contact@example.com")
+    end
+
+    it 'updates the issues with the contact_ids from the new group' do
+      duplicate_issue_contact = create(:issue_customer_relations_contact, :for_contact, contact: duplicate_contact)
+      unique_issue_contact = create(:issue_customer_relations_contact, :for_contact, contact: unique_contact)
+
+      service.execute
+
+      expect { duplicate_issue_contact.reload }.to change { duplicate_issue_contact.contact_id }
+        .from(duplicate_contact.id).to(existing_contact.id)
+      expect { unique_issue_contact.reload }.not_to change { unique_issue_contact.contact.email }
+    end
+
+    context 'when was_crm_source flag is true' do
+      it 'deletes the organizations and contacts from the old group' do
+        service.execute
+
+        expect(CustomerRelations::Organization.where(group_id: old_group.id)).to be_empty
+        expect(CustomerRelations::Contact.where(group_id: old_group.id)).to be_empty
+      end
+    end
+
+    context 'when was_crm_source flag is false' do
+      let(:was_crm_source) { false }
+
+      it 'leaves the organizations and contacts in the old group' do
+        service.execute
+
+        expect(CustomerRelations::Organization.where(group_id: old_group.id).count).to eq(2)
+        expect(CustomerRelations::Contact.where(group_id: old_group.id).count).to eq(2)
+      end
+    end
+  end
+end
diff --git a/spec/services/groups/update_service_spec.rb b/spec/services/groups/update_service_spec.rb
index f10809e4d9d1987130b6f12010b1d411a53e4d2f..2caa62990773271e58a4374e1a00dbe09af3ff7c 100644
--- a/spec/services/groups/update_service_spec.rb
+++ b/spec/services/groups/update_service_spec.rb
@@ -148,18 +148,18 @@
       end
     end
 
-    context 'crm_enabled param' do
-      context 'when no existing crm_settings' do
-        it 'when param not present, leave crm enabled' do
-          params = {}
+    context 'crm params' do
+      let(:params) { {} }
 
+      context 'when no existing crm_settings' do
+        it 'when params not present, leave crm enabled' do
           described_class.new(public_group, user, params).execute
           updated_group = public_group.reload
 
           expect(updated_group.crm_enabled?).to be_truthy
         end
 
-        it 'when param set false, disables crm' do
+        it 'when crm_enabled param set false, disables crm' do
           params = { crm_enabled: false }
 
           described_class.new(public_group, user, params).execute
@@ -167,47 +167,117 @@
 
           expect(updated_group.crm_enabled?).to be_falsy
         end
+
+        it 'when crm_source_group_id present, updates crm_group' do
+          params = { crm_source_group_id: internal_group.id }
+
+          described_class.new(public_group, user, params).execute
+          updated_group = public_group.reload
+
+          expect(updated_group.crm_enabled?).to be_truthy
+          expect(updated_group.crm_group).to eq(internal_group)
+        end
       end
 
       context 'with existing crm_settings' do
-        it 'when param set true, enables crm' do
-          params = { crm_enabled: true }
-          create(:crm_settings, group: public_group, enabled: false)
+        let(:init_enabled) { true }
+
+        before do
+          create(:crm_settings, group: public_group, enabled: init_enabled)
+        end
+
+        context 'when crm initially disabled' do
+          let(:init_enabled) { false }
+
+          context 'when crm_enabled param set true' do
+            let(:params) { { crm_enabled: true } }
+
+            it 'enables crm' do
+              described_class.new(public_group, user, params).execute
+
+              updated_group = public_group.reload
+              expect(updated_group.crm_enabled?).to be_truthy
+            end
+          end
+
+          it 'when crm_enabled param not present, crm remains disabled' do
+            described_class.new(public_group, user, params).execute
+
+            updated_group = public_group.reload
+            expect(updated_group.crm_enabled?).to be_falsy
+          end
+        end
+
+        context 'when crm_enabled param set false' do
+          let(:init_enabled) { true }
+          let(:params) { { crm_enabled: false } }
 
+          it 'disables crm' do
+            described_class.new(public_group, user, params).execute
+
+            updated_group = public_group.reload
+            expect(updated_group.crm_enabled?).to be_falsy
+          end
+        end
+
+        it 'when crm_enabled param not present, crm remains enabled' do
           described_class.new(public_group, user, params).execute
 
           updated_group = public_group.reload
           expect(updated_group.crm_enabled?).to be_truthy
         end
 
-        it 'when param set false, disables crm' do
-          params = { crm_enabled: false }
-          create(:crm_settings, group: public_group, enabled: true)
+        context 'when crm_source_group_id present' do
+          let(:params) { { crm_source_group_id: internal_group.id } }
 
-          described_class.new(public_group, user, params).execute
+          it 'updates crm_group' do
+            described_class.new(public_group, user, params).execute
+            updated_group = public_group.reload
 
-          updated_group = public_group.reload
-          expect(updated_group.crm_enabled?).to be_falsy
+            expect(updated_group.crm_enabled?).to be_truthy
+            expect(updated_group.crm_settings.source_group).to eq(internal_group)
+            expect(updated_group.crm_group).to eq(internal_group)
+          end
         end
 
-        it 'when param not present, crm remains disabled' do
-          params = {}
-          create(:crm_settings, group: public_group, enabled: false)
+        context 'when crm_source_group_id blank' do
+          let(:params) { { crm_source_group_id: '' } }
 
-          described_class.new(public_group, user, params).execute
+          it 'clears source_group and resets crm_group' do
+            described_class.new(public_group, user, params).execute
+            updated_group = public_group.reload
 
-          updated_group = public_group.reload
-          expect(updated_group.crm_enabled?).to be_falsy
+            expect(updated_group.crm_enabled?).to be_truthy
+            expect(updated_group.crm_settings.source_group).to be_nil
+            expect(updated_group.crm_group).to eq(public_group)
+          end
         end
+      end
 
-        it 'when param not present, crm remains enabled' do
-          params = {}
-          create(:crm_settings, group: public_group, enabled: true)
+      context 'when changing source' do
+        let(:params) { { crm_source_group_id: internal_group.id } }
 
-          described_class.new(public_group, user, params).execute
+        context 'when issues do not have contacts' do
+          it 'updates crm_group' do
+            described_class.new(public_group, user, params).execute
+            updated_group = public_group.reload
 
-          updated_group = public_group.reload
-          expect(updated_group.crm_enabled?).to be_truthy
+            expect(updated_group.crm_group).to eq(internal_group)
+          end
+        end
+
+        context 'when issues do have contacts' do
+          let!(:issue) { create(:issue, project: create(:project, group: public_group)) }
+          let!(:contact) { create(:contact, group: public_group) }
+          let!(:issue_contact) { create(:issue_customer_relations_contact, issue: issue, contact: contact) }
+
+          it 'returns an error and does not update crm_group' do
+            described_class.new(public_group, user, params).execute
+            updated_group = public_group.reload
+
+            expect(public_group.errors).to contain_exactly('Contact source cannot be changed when issues already have contacts assigned from a different source.')
+            expect(updated_group.crm_group).to eq(public_group)
+          end
         end
       end
     end