diff --git a/poetry.lock b/poetry.lock
index 1354057e..2deb7c43 100644
--- a/poetry.lock
+++ b/poetry.lock
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-    {file = "PyYAML-6.0.1-cp312-cp312-win_amd64.whl", hash = "sha256:0d3304d8c0adc42be59c5f8a4d9e3d7379e6955ad754aa9d6ab7a398b59dd1df"},
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     {file = "PyYAML-6.0.1.tar.gz", hash = "sha256:bfdf460b1736c775f2ba9f6a92bca30bc2095067b8a9d77876d1fad6cc3b4a43"},
diff --git a/src/events/password_actions.py b/src/events/password_actions.py
index a3354da2..d7d6b348 100644
--- a/src/events/password_actions.py
+++ b/src/events/password_actions.py
@@ -43,6 +43,12 @@ def _set_password_action(self, event: ActionEvent) -> None:
             event.fail(msg)
             return
 
+        if not self.charm.upgrade.idle:
+            msg = f"Cannot set password while upgrading (upgrade_stack: {self.charm.upgrade.upgrade_stack})"
+            logger.error(msg)
+            event.fail(msg)
+            return
+
         if not self.charm.healthy:
             msg = "Unit is not healthy"
             logger.error(msg)
diff --git a/src/events/upgrade.py b/src/events/upgrade.py
index d3fbd6b9..aff5cc50 100644
--- a/src/events/upgrade.py
+++ b/src/events/upgrade.py
@@ -41,6 +41,15 @@ def __init__(self, charm: "KafkaCharm", **kwargs):
         super().__init__(charm, **kwargs)
         self.charm = charm
 
+    @property
+    def idle(self) -> bool:
+        """Checks if cluster state is idle.
+
+        Returns:
+            True if cluster state is idle. Otherwise False
+        """
+        return not bool(self.upgrade_stack)
+
     @property
     def current_version(self) -> str:
         """Get current Kafka version."""
diff --git a/tests/unit/test_upgrade.py b/tests/unit/test_upgrade.py
index e979c89e..d4a1075a 100644
--- a/tests/unit/test_upgrade.py
+++ b/tests/unit/test_upgrade.py
@@ -79,6 +79,28 @@ def test_build_upgrade_stack(harness: Harness):
     assert len(stack) == len(set(stack))
 
 
+@pytest.mark.parametrize("upgrade_stack", ([], [0]))
+def test_run_password_rotation_while_upgrading(harness, upgrade_stack):
+    harness.charm.upgrade.upgrade_stack = upgrade_stack
+    harness.set_leader(True)
+
+    mock_event = MagicMock()
+    mock_event.params = {"username": "admin"}
+
+    with (
+        patch("charm.KafkaCharm.healthy", new_callable=PropertyMock, return_value=True),
+        patch("managers.auth.AuthManager.add_user"),
+    ):
+        harness.charm.password_action_events._set_password_action(mock_event)
+
+    if not upgrade_stack:
+        mock_event.set_results.assert_called()
+    else:
+        mock_event.fail.assert_called_with(
+            f"Cannot set password while upgrading (upgrade_stack: {upgrade_stack})"
+        )
+
+
 def test_kafka_dependency_model():
     assert sorted(KafkaDependencyModel.__fields__.keys()) == sorted(DEPENDENCIES.keys())