diff --git a/applicationset/controllers/applicationset_controller.go b/applicationset/controllers/applicationset_controller.go
index d785ad7289c4a..1914783c4c79e 100644
--- a/applicationset/controllers/applicationset_controller.go
+++ b/applicationset/controllers/applicationset_controller.go
@@ -597,6 +597,9 @@ func (r *ApplicationSetReconciler) createOrUpdateInCluster(ctx context.Context,
 		appLog := log.WithFields(log.Fields{"app": generatedApp.Name, "appSet": applicationSet.Name})
 		generatedApp.Namespace = applicationSet.Namespace
 
+		// Normalize to avoid fighting with the application controller.
+		generatedApp.Spec = *argoutil.NormalizeApplicationSpec(&generatedApp.Spec)
+
 		found := &argov1alpha1.Application{
 			ObjectMeta: metav1.ObjectMeta{
 				Name:      generatedApp.Name,
diff --git a/applicationset/controllers/applicationset_controller_test.go b/applicationset/controllers/applicationset_controller_test.go
index dd934cc7dd53f..9fdc8b0434879 100644
--- a/applicationset/controllers/applicationset_controller_test.go
+++ b/applicationset/controllers/applicationset_controller_test.go
@@ -373,6 +373,7 @@ func TestCreateOrUpdateInCluster(t *testing.T) {
 						Namespace:       "namespace",
 						ResourceVersion: "1",
 					},
+					Spec: v1alpha1.ApplicationSpec{Project: "default"},
 				},
 			},
 		},
@@ -900,6 +901,60 @@ func TestCreateOrUpdateInCluster(t *testing.T) {
 					},
 				},
 			},
+		}, {
+			name: "Ensure that the app spec is normalized before applying",
+			appSet: v1alpha1.ApplicationSet{
+				ObjectMeta: metav1.ObjectMeta{
+					Name:      "name",
+					Namespace: "namespace",
+				},
+				Spec: v1alpha1.ApplicationSetSpec{
+					Template: v1alpha1.ApplicationSetTemplate{
+						Spec: v1alpha1.ApplicationSpec{
+							Project: "project",
+							Source: &v1alpha1.ApplicationSource{
+								Directory: &v1alpha1.ApplicationSourceDirectory{
+									Jsonnet: v1alpha1.ApplicationSourceJsonnet{},
+								},
+							},
+						},
+					},
+				},
+			},
+			desiredApps: []v1alpha1.Application{
+				{
+					ObjectMeta: metav1.ObjectMeta{
+						Name: "app1",
+					},
+					Spec: v1alpha1.ApplicationSpec{
+						Project: "project",
+						Source: &v1alpha1.ApplicationSource{
+							Directory: &v1alpha1.ApplicationSourceDirectory{
+								Jsonnet: v1alpha1.ApplicationSourceJsonnet{},
+							},
+						},
+					},
+				},
+			},
+			expected: []v1alpha1.Application{
+				{
+					TypeMeta: metav1.TypeMeta{
+						Kind:       "Application",
+						APIVersion: "argoproj.io/v1alpha1",
+					},
+					ObjectMeta: metav1.ObjectMeta{
+						Name:            "app1",
+						Namespace:       "namespace",
+						ResourceVersion: "1",
+					},
+					Spec: v1alpha1.ApplicationSpec{
+						Project: "project",
+						Source:  &v1alpha1.ApplicationSource{
+							// Directory and jsonnet block are removed
+						},
+					},
+				},
+			},
 		},
 	} {
 
@@ -1231,13 +1286,15 @@ func TestCreateApplications(t *testing.T) {
 	err = v1alpha1.AddToScheme(scheme)
 	assert.Nil(t, err)
 
-	for _, c := range []struct {
+	testCases := []struct {
+		name       string
 		appSet     v1alpha1.ApplicationSet
 		existsApps []v1alpha1.Application
 		apps       []v1alpha1.Application
 		expected   []v1alpha1.Application
 	}{
 		{
+			name: "no existing apps",
 			appSet: v1alpha1.ApplicationSet{
 				ObjectMeta: metav1.ObjectMeta{
 					Name:      "name",
@@ -1263,10 +1320,14 @@ func TestCreateApplications(t *testing.T) {
 						Namespace:       "namespace",
 						ResourceVersion: "1",
 					},
+					Spec: v1alpha1.ApplicationSpec{
+						Project: "default",
+					},
 				},
 			},
 		},
 		{
+			name: "existing apps",
 			appSet: v1alpha1.ApplicationSet{
 				ObjectMeta: metav1.ObjectMeta{
 					Name:      "name",
@@ -1324,6 +1385,7 @@ func TestCreateApplications(t *testing.T) {
 			},
 		},
 		{
+			name: "existing apps with different project",
 			appSet: v1alpha1.ApplicationSet{
 				ObjectMeta: metav1.ObjectMeta{
 					Name:      "name",
@@ -1380,39 +1442,42 @@ func TestCreateApplications(t *testing.T) {
 				},
 			},
 		},
-	} {
-		initObjs := []crtclient.Object{&c.appSet}
-		for _, a := range c.existsApps {
-			err = controllerutil.SetControllerReference(&c.appSet, &a, scheme)
-			assert.Nil(t, err)
-			initObjs = append(initObjs, &a)
-		}
-
-		client := fake.NewClientBuilder().WithScheme(scheme).WithObjects(initObjs...).Build()
+	}
 
-		r := ApplicationSetReconciler{
-			Client:   client,
-			Scheme:   scheme,
-			Recorder: record.NewFakeRecorder(len(initObjs) + len(c.expected)),
-		}
+	for _, c := range testCases {
+		t.Run(c.name, func(t *testing.T) {
+			initObjs := []crtclient.Object{&c.appSet}
+			for _, a := range c.existsApps {
+				err = controllerutil.SetControllerReference(&c.appSet, &a, scheme)
+				assert.Nil(t, err)
+				initObjs = append(initObjs, &a)
+			}
 
-		err = r.createInCluster(context.TODO(), c.appSet, c.apps)
-		assert.Nil(t, err)
+			client := fake.NewClientBuilder().WithScheme(scheme).WithObjects(initObjs...).Build()
 
-		for _, obj := range c.expected {
-			got := &v1alpha1.Application{}
-			_ = client.Get(context.Background(), crtclient.ObjectKey{
-				Namespace: obj.Namespace,
-				Name:      obj.Name,
-			}, got)
+			r := ApplicationSetReconciler{
+				Client:   client,
+				Scheme:   scheme,
+				Recorder: record.NewFakeRecorder(len(initObjs) + len(c.expected)),
+			}
 
-			err = controllerutil.SetControllerReference(&c.appSet, &obj, r.Scheme)
+			err = r.createInCluster(context.TODO(), c.appSet, c.apps)
 			assert.Nil(t, err)
 
-			assert.Equal(t, obj, *got)
-		}
-	}
+			for _, obj := range c.expected {
+				got := &v1alpha1.Application{}
+				_ = client.Get(context.Background(), crtclient.ObjectKey{
+					Namespace: obj.Namespace,
+					Name:      obj.Name,
+				}, got)
 
+				err = controllerutil.SetControllerReference(&c.appSet, &obj, r.Scheme)
+				assert.Nil(t, err)
+
+				assert.Equal(t, obj, *got)
+			}
+		})
+	}
 }
 
 func TestDeleteInCluster(t *testing.T) {
diff --git a/util/argo/argo.go b/util/argo/argo.go
index a91b64a1e51d1..9b08d3aeeb847 100644
--- a/util/argo/argo.go
+++ b/util/argo/argo.go
@@ -856,7 +856,8 @@ func NormalizeApplicationSpec(spec *argoappv1.ApplicationSpec) *argoappv1.Applic
 		for _, source := range spec.Sources {
 			NormalizeSource(&source)
 		}
-	} else {
+	} else if spec.Source != nil {
+		// In practice, spec.Source should never be nil.
 		NormalizeSource(spec.Source)
 	}
 	return spec