diff --git a/airbyte_cdk/manifest_server/routers/manifest.py b/airbyte_cdk/manifest_server/routers/manifest.py
index ec27ca816..323088a88 100644
--- a/airbyte_cdk/manifest_server/routers/manifest.py
+++ b/airbyte_cdk/manifest_server/routers/manifest.py
@@ -13,6 +13,7 @@
 from airbyte_cdk.sources.declarative.parsers.custom_code_compiler import (
     INJECTED_COMPONENTS_PY,
     INJECTED_COMPONENTS_PY_CHECKSUMS,
+    AirbyteCustomCodeNotPermittedError,
 )
 from airbyte_cdk.utils.airbyte_secrets_utils import filter_secrets
 
@@ -57,6 +58,11 @@ def safe_build_source(
         )
     except jsonschema.exceptions.ValidationError as e:
         raise HTTPException(status_code=400, detail=f"Invalid manifest: {e.message}")
+    except AirbyteCustomCodeNotPermittedError as e:
+        raise HTTPException(
+            status_code=400,
+            detail="Custom connector code is not permitted in this environment.",
+        ) from e
 
 
 router = APIRouter(
@@ -85,6 +91,7 @@ def test_read(request: StreamTestReadRequest) -> StreamReadResponse:
         )
 
     config_dict = request.config.model_dump()
+    manifest = request.manifest.model_dump()
 
     catalog = build_catalog(request.stream_name)
     converted_state = [AirbyteStateMessageSerializer.load(state) for state in request.state]
@@ -97,7 +104,6 @@ def test_read(request: StreamTestReadRequest) -> StreamReadResponse:
 
     # We enforce a concurrency level of 1 so that the stream is processed on a single thread
     # to retain ordering for the grouping of the builder message responses.
-    manifest = request.manifest.model_dump()
     if "concurrency_level" in manifest:
         manifest["concurrency_level"]["default_concurrency"] = 1
     else:
diff --git a/unit_tests/manifest_server/routers/test_manifest.py b/unit_tests/manifest_server/routers/test_manifest.py
index e488380cb..ff43d19a0 100644
--- a/unit_tests/manifest_server/routers/test_manifest.py
+++ b/unit_tests/manifest_server/routers/test_manifest.py
@@ -6,6 +6,9 @@
 
 from airbyte_cdk.connector_builder.models import StreamRead as CDKStreamRead
 from airbyte_cdk.manifest_server.app import app
+from airbyte_cdk.sources.declarative.parsers.custom_code_compiler import (
+    AirbyteCustomCodeNotPermittedError,
+)
 
 client = TestClient(app)
 
@@ -188,6 +191,52 @@ def test_test_read_with_custom_components(
             2,  # slice_limit
         )
 
+    @patch("airbyte_cdk.manifest_server.routers.manifest.build_catalog")
+    @patch("airbyte_cdk.manifest_server.routers.manifest.build_source")
+    def test_test_read_returns_bad_request_for_disallowed_custom_components(
+        self,
+        mock_build_source,
+        mock_build_catalog,
+        sample_manifest,
+        sample_config,
+    ):
+        manifest = {
+            **sample_manifest,
+            "streams": [
+                {
+                    **sample_manifest["streams"][0],
+                    "retriever": {
+                        **sample_manifest["streams"][0]["retriever"],
+                        "record_selector": {
+                            "type": "RecordSelector",
+                            "extractor": {
+                                "type": "CustomRecordExtractor",
+                                "class_name": "components.CustomRecordExtractor",
+                            },
+                        },
+                    },
+                }
+            ],
+        }
+        request_data = {
+            "manifest": manifest,
+            "config": sample_config,
+            "stream_name": "products",
+            "state": [],
+            "custom_components_code": "class CustomRecordExtractor: pass",
+        }
+
+        mock_build_catalog.return_value = Mock()
+        mock_build_source.side_effect = AirbyteCustomCodeNotPermittedError
+
+        response = client.post("/v1/manifest/test_read", json=request_data)
+
+        assert response.status_code == 400
+        assert (
+            response.json()["detail"]
+            == "Custom connector code is not permitted in this environment."
+        )
+
     @patch("airbyte_cdk.manifest_server.routers.manifest.AirbyteStateMessageSerializer")
     @patch("airbyte_cdk.manifest_server.routers.manifest.ManifestCommandProcessor")
     @patch("airbyte_cdk.manifest_server.routers.manifest.build_catalog")