diff --git a/src/control-plane-services/nats-auth-callout/internal/plugins/manager.go b/src/control-plane-services/nats-auth-callout/internal/plugins/manager.go
index 28f3367312..6f6732b3c3 100644
--- a/src/control-plane-services/nats-auth-callout/internal/plugins/manager.go
+++ b/src/control-plane-services/nats-auth-callout/internal/plugins/manager.go
@@ -104,13 +104,14 @@ func (pm *Manager) initializePlugins() {
 			if alias == "" {
 				alias = plugin.ID // Default to plugin ID if no alias
 			}
+			pluginAccountName := accountName
 			if plugin.ID == "nkey" {
 				// the nkey plugin maintains its own internal account list and is special cased.
 				// we don't know the account name until the nkey is looked up by the plugin.
-				accountName = ""
+				pluginAccountName = ""
 			}
 			pluginKey := PluginKey{
-				AccountName: accountName,
+				AccountName: pluginAccountName,
 				PluginName:  alias,
 			}
 
diff --git a/src/control-plane-services/nats-auth-callout/internal/plugins/manager_test.go b/src/control-plane-services/nats-auth-callout/internal/plugins/manager_test.go
new file mode 100644
index 0000000000..06c9dfb730
--- /dev/null
+++ b/src/control-plane-services/nats-auth-callout/internal/plugins/manager_test.go
@@ -0,0 +1,77 @@
+/*
+SPDX-FileCopyrightText: Copyright (c) 2026 NVIDIA CORPORATION & AFFILIATES. All rights reserved.
+SPDX-License-Identifier: Apache-2.0
+
+Licensed under the Apache License, Version 2.0 (the "License");
+you may not use this file except in compliance with the License.
+You may obtain a copy of the License at
+
+    http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing, software
+distributed under the License is distributed on an "AS IS" BASIS,
+WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+See the License for the specific language governing permissions and
+limitations under the License.
+*/
+
+package plugins
+
+import (
+	"testing"
+
+	"github.com/NVIDIA/nvcf/src/control-plane-services/nats-auth-callout/internal/config"
+	"github.com/NVIDIA/nvcf/src/control-plane-services/nats-auth-callout/internal/plugins/types"
+	"go.uber.org/zap/zaptest"
+)
+
+// TestInitializePlugins_NkeyDoesNotClobberAccountName is a regression test for
+// the nkey plugin special-case in initializePlugins. The nkey plugin maintains
+// its own internal account list, so it is registered under an empty account
+// name. That special-case must not overwrite the account loop variable: a
+// plugin processed after the nkey entry for the same account must still be
+// registered under that account's name.
+func TestInitializePlugins_NkeyDoesNotClobberAccountName(t *testing.T) {
+	cfg := &config.ServiceConfig{
+		AccountConfigs: map[string]config.AccountConfig{
+			"APP": {
+				EnabledPlugins: []config.EnabledPlugin{
+					{ID: "nkey"},
+					{ID: "webhook", Alias: "webhook"},
+				},
+			},
+		},
+		PluginConfigs: map[string]config.PluginConfig{
+			"nkey": {
+				PluginType: "nkey",
+				Config:     map[string]any{},
+			},
+			"webhook": {
+				PluginType: "webhook",
+				Config: map[string]any{
+					"url": "https://example.com/hook",
+				},
+			},
+		},
+	}
+
+	pm := NewManager(cfg, zaptest.NewLogger(t))
+
+	if _, ok := pm.plugins[PluginKey{AccountName: "APP", PluginName: "webhook"}]; !ok {
+		t.Errorf("webhook plugin for account APP was not registered under APP; got keys %v", pluginKeys(pm.plugins))
+	}
+	if _, ok := pm.plugins[PluginKey{AccountName: "", PluginName: "webhook"}]; ok {
+		t.Errorf("webhook plugin was registered under an empty account name")
+	}
+	if _, ok := pm.plugins[PluginKey{AccountName: "", PluginName: "nkey"}]; !ok {
+		t.Errorf("nkey plugin was not registered under the empty account name; got keys %v", pluginKeys(pm.plugins))
+	}
+}
+
+func pluginKeys(m map[PluginKey]types.AuthPlugin) []PluginKey {
+	ks := make([]PluginKey, 0, len(m))
+	for k := range m {
+		ks = append(ks, k)
+	}
+	return ks
+}