diff --git a/util/health/health.go b/util/health/health.go
index c69a5fee4daf7..865f60b84c8a5 100644
--- a/util/health/health.go
+++ b/util/health/health.go
@@ -48,10 +48,11 @@ func ignoreLiveObjectHealth(liveObj *unstructured.Unstructured, resHealth appv1.
 			return true
 		}
 		gvk := liveObj.GroupVersionKind()
-		if gvk.Group == "argoproj.io" && gvk.Kind == "Application" && (resHealth.Status == health.HealthStatusMissing || resHealth.Status == health.HealthStatusUnknown) {
+		if gvk.Group == "argoproj.io" && gvk.Kind == "Application" && (resHealth.Status == health.HealthStatusMissing || resHealth.Status == health.HealthStatusUnknown || resHealth.Status == health.HealthStatusDegraded) {
 			// Covers the app-of-apps corner case where child app is deployed but that app itself
 			// has a status of 'Missing', which we don't want to cause the parent's health status
-			// to also be Missing
+			// to also be Missing. Default changed so that if a child app has a degraded health status,
+			// it will not affect the parent's health status.
 			return true
 		}
 	}
diff --git a/util/health/health_test.go b/util/health/health_test.go
index 221793ac3f3c7..8ff361cdb133c 100644
--- a/util/health/health_test.go
+++ b/util/health/health_test.go
@@ -105,13 +105,13 @@ func TestAppOfAppsHealth(t *testing.T) {
 		assert.Equal(t, health.HealthStatusHealthy, healthStatus.Status)
 	}
 
-	// verify degraded does affect
+	// verify degraded does not affect app health
 	{
 		degradedAndHealthyStatuses := []*appv1.ResourceStatus{degradedStatus, healthyStatus}
 		degradedAndHealthyLiveObjects := []*unstructured.Unstructured{degradedApp, healthyApp}
 		healthStatus, err := SetApplicationHealth(degradedAndHealthyStatuses, degradedAndHealthyLiveObjects, nil, noFilter)
 		assert.NoError(t, err)
-		assert.Equal(t, health.HealthStatusDegraded, healthStatus.Status)
+		assert.Equal(t, health.HealthStatusHealthy, healthStatus.Status)
 	}
 
 }