diff --git a/extensions/mssql/src/objectManagement/ui/loginDialog.ts b/extensions/mssql/src/objectManagement/ui/loginDialog.ts
index f396b93eb3..c8a5277684 100644
--- a/extensions/mssql/src/objectManagement/ui/loginDialog.ts
+++ b/extensions/mssql/src/objectManagement/ui/loginDialog.ts
@@ -64,7 +64,7 @@ export class LoginDialog extends PrincipalDialogBase<ObjectManagement.Login, Obj
 
 			if (this.objectInfo.password && (this.objectInfo.enforcePasswordPolicy || !this.viewInfo.supportAdvancedPasswordOptions)
 				&& !isValidSQLPassword(this.objectInfo.password, this.objectInfo.name)
-				&& (this.options.isNewObject || this.objectInfo.password !== this.originalObjectInfo.password)) {
+				&& (this.options.isNewObject || this.isPasswordChanged())) {
 				errors.push(objectManagementLoc.InvalidPasswordError);
 			}
 
@@ -132,6 +132,11 @@ export class LoginDialog extends PrincipalDialogBase<ObjectManagement.Login, Obj
 		const items: azdata.Component[] = [];
 		this.passwordInput = this.createPasswordInputBox(objectManagementLoc.PasswordText, async (newValue) => {
 			this.objectInfo.password = newValue;
+			this.mustChangePasswordCheckbox.enabled = this.objectInfo.enforcePasswordPolicy && this.isPasswordChanged();
+			// this handles the case where the mustChangePasswordCheckbox is disabled when a user changes the password input and reverts the change. In that case we want to reset the check state of this checkbox to its original value instead of using the potentially dirty state set during password input changes.
+			if (!this.mustChangePasswordCheckbox.enabled) {
+				this.mustChangePasswordCheckbox.checked = this.objectInfo.mustChangePassword;
+			}
 		}, this.objectInfo.password ?? '');
 		const passwordRow = this.createLabelInputContainer(objectManagementLoc.PasswordText, this.passwordInput);
 		this.confirmPasswordInput = this.createPasswordInputBox(objectManagementLoc.ConfirmPasswordText, async () => { }, this.objectInfo.password ?? '');
@@ -158,21 +163,26 @@ export class LoginDialog extends PrincipalDialogBase<ObjectManagement.Login, Obj
 				const enforcePolicy = checked;
 				this.objectInfo.enforcePasswordPolicy = enforcePolicy;
 				this.enforcePasswordExpirationCheckbox.enabled = enforcePolicy;
-				this.mustChangePasswordCheckbox.enabled = enforcePolicy;
 				this.enforcePasswordExpirationCheckbox.checked = enforcePolicy;
-				this.mustChangePasswordCheckbox.checked = enforcePolicy;
+				if (this.options.isNewObject || this.isPasswordChanged()) {
+					this.mustChangePasswordCheckbox.enabled = enforcePolicy;
+					this.mustChangePasswordCheckbox.checked = enforcePolicy;
+				}
+				this.mustChangePasswordCheckbox.checked = enforcePolicy && (this.options.isNewObject || this.isPasswordChanged());
 			}, this.objectInfo.enforcePasswordPolicy);
 
 			this.enforcePasswordExpirationCheckbox = this.createCheckbox(objectManagementLoc.EnforcePasswordExpirationText, async (checked) => {
 				const enforceExpiration = checked;
 				this.objectInfo.enforcePasswordExpiration = enforceExpiration;
-				this.mustChangePasswordCheckbox.enabled = enforceExpiration;
-				this.mustChangePasswordCheckbox.checked = enforceExpiration;
+				if (this.options.isNewObject || this.isPasswordChanged()) {
+					this.mustChangePasswordCheckbox.enabled = enforceExpiration;
+					this.mustChangePasswordCheckbox.checked = enforceExpiration;
+				}
 			}, this.objectInfo.enforcePasswordPolicy);
 
 			this.mustChangePasswordCheckbox = this.createCheckbox(objectManagementLoc.MustChangePasswordText, async (checked) => {
 				this.objectInfo.mustChangePassword = checked;
-			}, this.objectInfo.mustChangePassword);
+			}, this.objectInfo.mustChangePassword, this.options.isNewObject);
 
 			items.push(this.enforcePasswordPolicyCheckbox, this.enforcePasswordExpirationCheckbox, this.mustChangePasswordCheckbox);
 
@@ -187,6 +197,10 @@ export class LoginDialog extends PrincipalDialogBase<ObjectManagement.Login, Obj
 		this.sqlAuthSection = this.createGroup(objectManagementLoc.SQLAuthenticationSectionHeader, items);
 	}
 
+	private isPasswordChanged(): boolean {
+		return this.objectInfo.password !== this.originalObjectInfo.password
+	}
+
 	private initializeAdvancedSection(): void {
 		const items: azdata.Component[] = [];
 		if (this.viewInfo.supportAdvancedOptions) {