diff --git a/docs/docs/settings/global.md b/docs/docs/settings/global.md
index efacfb4fbb2a..67638dba0cd9 100644
--- a/docs/docs/settings/global.md
+++ b/docs/docs/settings/global.md
@@ -225,6 +225,7 @@ Configuration of stock item options
 {{ globalsetting("STOCK_SHOW_INSTALLED_ITEMS") }}
 {{ globalsetting("STOCK_ENFORCE_BOM_INSTALLATION") }}
 {{ globalsetting("STOCK_ALLOW_OUT_OF_STOCK_TRANSFER") }}
+{{ globalsetting("STOCK_MERGE_ON_TRANSFER") }}
 {{ globalsetting("TEST_STATION_DATA") }}
 
 ### Build Orders
diff --git a/src/backend/InvenTree/InvenTree/api_version.py b/src/backend/InvenTree/InvenTree/api_version.py
index bfd21e84c52f..81e1432a603e 100644
--- a/src/backend/InvenTree/InvenTree/api_version.py
+++ b/src/backend/InvenTree/InvenTree/api_version.py
@@ -1,11 +1,17 @@
 """InvenTree API version information."""
 
 # InvenTree API version
-INVENTREE_API_VERSION = 501
+INVENTREE_API_VERSION = 502
 """Increment this API version number whenever there is a significant change to the API that any clients need to know about."""
 
 INVENTREE_API_TEXT = """
 
+
+v502 -> 2026-06-06 : https://github.com/inventree/InvenTree/pull/12022
+    - Adds optional "merge" field to each item in the Stock Transfer API endpoint
+    - When merge is enabled, transferred stock is combined into compatible existing stock at the destination
+    - Stock merge tracking entries now include an "added" delta field.
+
 v501 -> 2026-06-05 : https://github.com/inventree/InvenTree/pull/12093
     - Adds "read_only" attribute to PluginSetting API endpoint, which indicates whether a particular plugin setting is read-only (i.e. cannot be modified via the API)
 
diff --git a/src/backend/InvenTree/common/setting/system.py b/src/backend/InvenTree/common/setting/system.py
index f6b41a4cc0b7..e6713918687a 100644
--- a/src/backend/InvenTree/common/setting/system.py
+++ b/src/backend/InvenTree/common/setting/system.py
@@ -787,6 +787,14 @@ class SystemSetId:
         'default': False,
         'validator': bool,
     },
+    'STOCK_MERGE_ON_TRANSFER': {
+        'name': _('Merge stock with existing stock on transfer by default'),
+        'description': _(
+            'Default state for merge stock on transfer behaviour. (Can be changed per transfer if desired)'
+        ),
+        'default': False,
+        'validator': bool,
+    },
     'BUILDORDER_REFERENCE_PATTERN': {
         'name': _('Build Order Reference Pattern'),
         'description': _('Required pattern for generating Build Order reference field'),
diff --git a/src/backend/InvenTree/stock/models.py b/src/backend/InvenTree/stock/models.py
index c7c4f653febc..290377ff0be6 100644
--- a/src/backend/InvenTree/stock/models.py
+++ b/src/backend/InvenTree/stock/models.py
@@ -2206,6 +2206,35 @@ def can_merge(self, other=None, raise_error=False, **kwargs):
 
         return True
 
+    def find_merge_target(self, location):
+        """Find an existing stock item at location that can absorb this item."""
+        if location is None:
+            return None
+
+        candidates = list(
+            StockItem.objects
+            .filter(part=self.part, location=location)
+            .exclude(pk=self.pk)
+            .order_by('pk')
+        )
+
+        if not candidates:
+            return None
+
+        if self.batch:
+            batch_matches = [c for c in candidates if c.batch == self.batch]
+            search_order = batch_matches + [
+                c for c in candidates if c not in batch_matches
+            ]
+        else:
+            search_order = candidates
+
+        for target in search_order:
+            if target.can_merge(other=self, raise_error=False):
+                return target
+
+        return None
+
     @transaction.atomic
     def merge_stock_items(self, other_items, raise_error=False, **kwargs):
         """Merge another stock item into this one; the two become one!
@@ -2227,7 +2256,7 @@ def merge_stock_items(self, other_items, raise_error=False, **kwargs):
 
         user = kwargs.get('user')
         location = kwargs.get('location', self.location)
-        notes = kwargs.get('notes')
+        notes = kwargs.get('notes') or ''
 
         parent_id = self.parent.pk if self.parent else None
 
@@ -2245,9 +2274,12 @@ def merge_stock_items(self, other_items, raise_error=False, **kwargs):
                 )
                 return
 
+        merged_quantity = Decimal(0)
+
         for other in other_items:
             tree_ids.add(other.tree_id)
 
+            merged_quantity += other.quantity
             self.quantity += other.quantity
 
             if other.purchase_price:
@@ -2271,15 +2303,25 @@ def merge_stock_items(self, other_items, raise_error=False, **kwargs):
 
             other.delete()
 
+        transfer_deltas = kwargs.pop('transfer_deltas', None)
+
+        tracking_deltas = {
+            'quantity': float(self.quantity),
+            'added': float(merged_quantity),
+        }
+
+        if location:
+            tracking_deltas['location'] = location.pk
+
+        if transfer_deltas:
+            tracking_deltas = {**transfer_deltas, **tracking_deltas}
+
         self.add_tracking_entry(
             StockHistoryCode.MERGED_STOCK_ITEMS,
             user,
             quantity=self.quantity,
             notes=notes,
-            deltas={
-                'location': location.pk if location else None,
-                'quantity': self.quantity,
-            },
+            deltas=tracking_deltas,
         )
 
         # Update the location of the item
@@ -2340,6 +2382,8 @@ def splitStock(self, quantity, location=None, user=None, **kwargs):
             status: If provided, override the status (default = existing status)
             packaging: If provided, override the packaging (default = existing packaging)
             allow_production: If True, allow splitting of stock which is in production (default = False)
+            record_tracking: If False, skip tracking entries (for merge-on-transfer)
+            split_transfer_deltas: Optional dict to receive split tracking deltas
 
         Returns:
             The new StockItem object
@@ -2352,6 +2396,8 @@ def splitStock(self, quantity, location=None, user=None, **kwargs):
         """
         # Run initial checks to test if the stock item can actually be "split"
         allow_production = kwargs.get('allow_production', False)
+        record_tracking = kwargs.pop('record_tracking', True)
+        split_transfer_deltas = kwargs.pop('split_transfer_deltas', None)
 
         # Cannot split a stock item which is in production
         if self.is_building and not allow_production:
@@ -2424,15 +2470,23 @@ def splitStock(self, quantity, location=None, user=None, **kwargs):
 
         new_stock.save(add_note=False)
 
-        # Add a stock tracking entry for the newly created item
-        new_stock.add_tracking_entry(
-            StockHistoryCode.SPLIT_FROM_PARENT,
-            user,
-            quantity=quantity,
-            notes=notes,
-            location=location,
-            deltas=deltas,
-        )
+        if split_transfer_deltas is not None:
+            split_transfer_deltas.clear()
+            split_transfer_deltas.update(deltas)
+
+            if location:
+                split_transfer_deltas['location'] = location.pk
+
+        if record_tracking:
+            # Add a stock tracking entry for the newly created item
+            new_stock.add_tracking_entry(
+                StockHistoryCode.SPLIT_FROM_PARENT,
+                user,
+                quantity=quantity,
+                notes=notes,
+                location=location,
+                deltas=deltas,
+            )
 
         # Copy the test results of this part to the new one
         new_stock.copyTestResultsFrom(self)
@@ -2445,6 +2499,7 @@ def splitStock(self, quantity, location=None, user=None, **kwargs):
             notes=notes,
             location=location,
             stockitem=new_stock,
+            record_tracking=record_tracking,
         )
 
         # Rebuild the tree for this parent item
@@ -2754,7 +2809,10 @@ def take_stock(self, quantity, user, code=StockHistoryCode.STOCK_REMOVE, **kwarg
             code: The stock history code to use
             notes: Optional notes for the stock removal
             status: Optionally adjust the stock status
+            record_tracking: If False, skip creating a tracking entry
         """
+        record_tracking = kwargs.pop('record_tracking', True)
+
         # Cannot remove items from a serialized part
         if self.serialized:
             return False
@@ -2804,9 +2862,10 @@ def take_stock(self, quantity, user, code=StockHistoryCode.STOCK_REMOVE, **kwarg
 
             self.save(add_note=False)
 
-            self.add_tracking_entry(
-                code, user, notes=kwargs.get('notes', ''), deltas=deltas
-            )
+            if record_tracking:
+                self.add_tracking_entry(
+                    code, user, notes=kwargs.get('notes', ''), deltas=deltas
+                )
 
         return True
 
diff --git a/src/backend/InvenTree/stock/serializers.py b/src/backend/InvenTree/stock/serializers.py
index 4943dd6dfee6..0936e8a22e3d 100644
--- a/src/backend/InvenTree/stock/serializers.py
+++ b/src/backend/InvenTree/stock/serializers.py
@@ -1637,7 +1637,7 @@ class StockAdjustmentItemSerializer(serializers.Serializer):
     class Meta:
         """Metaclass options."""
 
-        fields = ['pk', 'quantity', 'batch', 'status', 'packaging']
+        fields = ['pk', 'quantity', 'batch', 'status', 'packaging', 'merge']
 
     def __init__(self, *args, **kwargs):
         """Initialize the serializer."""
@@ -1711,6 +1711,15 @@ def validate_quantity(self, quantity):
         help_text=_('Packaging this stock item is stored in'),
     )
 
+    merge = serializers.BooleanField(
+        default=False,
+        required=False,
+        label=_('Merge into existing stock'),
+        help_text=_(
+            'Merge this item into existing stock at the destination if possible'
+        ),
+    )
+
 
 class StockAdjustmentSerializer(serializers.Serializer):
     """Base class for managing stock adjustment actions via the API."""
@@ -1877,6 +1886,7 @@ def save(self):
                 # Required fields
                 stock_item = item['pk']
                 quantity = item['quantity']
+                merge = item.get('merge', False)
 
                 # Optional fields
                 kwargs = {}
@@ -1885,6 +1895,47 @@ def save(self):
                     if field_value := item.get(field_name, None):
                         kwargs[field_name] = field_value
 
+                if merge:
+                    target = stock_item.find_merge_target(location)
+
+                    if target:
+                        merge_kwargs = {
+                            'location': location,
+                            'notes': notes,
+                            'user': request.user,
+                            **kwargs,
+                        }
+
+                        if quantity < stock_item.quantity:
+                            transfer_deltas = {}
+
+                            piece = stock_item.splitStock(
+                                quantity,
+                                location,
+                                request.user,
+                                notes=notes,
+                                allow_production=True,
+                                record_tracking=False,
+                                split_transfer_deltas=transfer_deltas,
+                                **kwargs,
+                            )
+                            merge_kwargs['transfer_deltas'] = transfer_deltas
+                            target.merge_stock_items([piece], **merge_kwargs)
+                        else:
+                            transfer_deltas = {'stockitem': stock_item.pk}
+
+                            if location:
+                                transfer_deltas['location'] = location.pk
+
+                            for field_name in StockItem.optional_transfer_fields():
+                                if field_name in kwargs:
+                                    transfer_deltas[field_name] = kwargs[field_name]
+
+                            merge_kwargs['transfer_deltas'] = transfer_deltas
+                            target.merge_stock_items([stock_item], **merge_kwargs)
+
+                        continue
+
                 stock_item.move(
                     location, notes, request.user, quantity=quantity, **kwargs
                 )
diff --git a/src/backend/InvenTree/stock/test_api.py b/src/backend/InvenTree/stock/test_api.py
index 4299cfa83c95..fdc0ebce54e2 100644
--- a/src/backend/InvenTree/stock/test_api.py
+++ b/src/backend/InvenTree/stock/test_api.py
@@ -2412,6 +2412,178 @@ def test_count_with_location(self):
         self.assertIn('does not exist', str(response.data['location']))
 
 
+class StockTransferMergeTest(StockAPITestCase):
+    """Tests for optional merge-on-transfer behavior."""
+
+    def setUp(self):
+        """Set up stock items for merge transfer tests."""
+        super().setUp()
+
+        self.part = Part.objects.get(pk=1)
+        self.dest = StockLocation.objects.get(pk=2)
+        self.source_loc = StockLocation.objects.get(pk=5)
+        self.url = reverse('api-stock-transfer')
+
+        # Remove fixture stock at the destination so merge targets are deterministic
+        StockItem.objects.filter(part=self.part, location=self.dest).delete()
+
+    def test_transfer_without_merge_creates_separate_lot(self):
+        """Transfer without merge leaves multiple stock rows at destination."""
+        existing = StockItem.objects.create(
+            part=self.part, location=self.dest, quantity=100
+        )
+        incoming = StockItem.objects.create(
+            part=self.part, location=self.source_loc, quantity=50
+        )
+
+        self.post(
+            self.url,
+            {
+                'items': [{'pk': incoming.pk, 'quantity': 50, 'merge': False}],
+                'location': self.dest.pk,
+            },
+            expected_code=201,
+        )
+
+        self.assertEqual(
+            StockItem.objects.filter(part=self.part, location=self.dest).count(), 2
+        )
+
+        existing.refresh_from_db()
+        self.assertEqual(existing.quantity, 100)
+
+    def test_transfer_with_merge_combines_lots(self):
+        """Transfer with merge combines into an existing compatible lot."""
+        existing = StockItem.objects.create(
+            part=self.part, location=self.dest, quantity=100
+        )
+        incoming = StockItem.objects.create(
+            part=self.part, location=self.source_loc, quantity=50
+        )
+
+        self.post(
+            self.url,
+            {
+                'items': [{'pk': incoming.pk, 'quantity': 50, 'merge': True}],
+                'location': self.dest.pk,
+            },
+            expected_code=201,
+        )
+
+        self.assertEqual(
+            StockItem.objects.filter(part=self.part, location=self.dest).count(), 1
+        )
+
+        existing.refresh_from_db()
+        self.assertEqual(existing.quantity, 150)
+        self.assertFalse(StockItem.objects.filter(pk=incoming.pk).exists())
+
+    def test_transfer_mixed_merge_per_item(self):
+        """Each transfer line can merge or move independently."""
+        existing = StockItem.objects.create(
+            part=self.part, location=self.dest, quantity=100
+        )
+        merge_incoming = StockItem.objects.create(
+            part=self.part, location=self.source_loc, quantity=30
+        )
+        separate_incoming = StockItem.objects.create(
+            part=self.part, location=self.source_loc, quantity=20
+        )
+
+        self.post(
+            self.url,
+            {
+                'items': [
+                    {'pk': merge_incoming.pk, 'quantity': 30, 'merge': True},
+                    {'pk': separate_incoming.pk, 'quantity': 20, 'merge': False},
+                ],
+                'location': self.dest.pk,
+            },
+            expected_code=201,
+        )
+
+        self.assertEqual(
+            StockItem.objects.filter(part=self.part, location=self.dest).count(), 2
+        )
+
+        existing.refresh_from_db()
+        self.assertEqual(existing.quantity, 130)
+        self.assertFalse(StockItem.objects.filter(pk=merge_incoming.pk).exists())
+        self.assertTrue(StockItem.objects.filter(pk=separate_incoming.pk).exists())
+
+    def test_transfer_merge_does_not_copy_source_tracking(self):
+        """Transfer merge keeps destination history and adds a single merge entry."""
+        existing = StockItem.objects.create(
+            part=self.part, location=self.dest, quantity=100
+        )
+        incoming = StockItem.objects.create(
+            part=self.part, location=self.source_loc, quantity=50
+        )
+
+        incoming.add_tracking_entry(
+            StockHistoryCode.STOCK_UPDATE, self.user, notes='Source tracking entry'
+        )
+
+        incoming_pk = incoming.pk
+        tracking_count = existing.tracking_info.count()
+
+        self.post(
+            self.url,
+            {
+                'items': [{'pk': incoming.pk, 'quantity': 50, 'merge': True}],
+                'location': self.dest.pk,
+            },
+            expected_code=201,
+        )
+
+        existing.refresh_from_db()
+
+        self.assertFalse(
+            existing.tracking_info.filter(notes='Source tracking entry').exists()
+        )
+        self.assertEqual(existing.tracking_info.count(), tracking_count + 1)
+        merge_entry = existing.tracking_info.filter(
+            tracking_type=StockHistoryCode.MERGED_STOCK_ITEMS
+        ).first()
+        self.assertIsNotNone(merge_entry)
+        self.assertEqual(merge_entry.deltas['added'], 50.0)
+        self.assertEqual(merge_entry.deltas['quantity'], 150.0)
+        self.assertEqual(merge_entry.deltas['stockitem'], incoming_pk)
+        self.assertEqual(merge_entry.deltas['location'], self.dest.pk)
+
+    def test_transfer_merge_partial_reuses_split_transfer_deltas(self):
+        """Partial merge reuses split transfer deltas on the merge tracking entry."""
+        existing = StockItem.objects.create(
+            part=self.part, location=self.dest, quantity=100
+        )
+        incoming = StockItem.objects.create(
+            part=self.part, location=self.source_loc, quantity=100
+        )
+
+        self.post(
+            self.url,
+            {
+                'items': [{'pk': incoming.pk, 'quantity': 30, 'merge': True}],
+                'location': self.dest.pk,
+            },
+            expected_code=201,
+        )
+
+        incoming.refresh_from_db()
+        self.assertEqual(incoming.quantity, 70)
+
+        merge_entry = existing.tracking_info.filter(
+            tracking_type=StockHistoryCode.MERGED_STOCK_ITEMS
+        ).first()
+        self.assertEqual(merge_entry.deltas['stockitem'], incoming.pk)
+        self.assertEqual(merge_entry.deltas['location'], self.dest.pk)
+        self.assertFalse(
+            incoming.tracking_info.filter(
+                tracking_type=StockHistoryCode.SPLIT_CHILD_ITEM
+            ).exists()
+        )
+
+
 class StockItemDeletionTest(StockAPITestCase):
     """Tests for stock item deletion via the API."""
 
diff --git a/src/backend/InvenTree/stock/tests.py b/src/backend/InvenTree/stock/tests.py
index 94954323667e..999fc030b0d2 100644
--- a/src/backend/InvenTree/stock/tests.py
+++ b/src/backend/InvenTree/stock/tests.py
@@ -729,6 +729,13 @@ def test_merge(self):
         self.assertEqual(s1.quantity, 60)
         self.assertIsNone(s1.purchase_price)
 
+        merge_entry = s1.tracking_info.filter(
+            tracking_type=StockHistoryCode.MERGED_STOCK_ITEMS
+        ).first()
+        self.assertIsNotNone(merge_entry)
+        self.assertEqual(merge_entry.deltas['added'], 50.0)
+        self.assertEqual(merge_entry.deltas['quantity'], 60.0)
+
         part.stock_items.all().delete()
 
         # Create some stock items with pricing information
diff --git a/src/frontend/src/forms/StockForms.tsx b/src/frontend/src/forms/StockForms.tsx
index 99255cf0d5e5..a0de3608b250 100644
--- a/src/frontend/src/forms/StockForms.tsx
+++ b/src/frontend/src/forms/StockForms.tsx
@@ -33,8 +33,16 @@ import {
   IconUsersGroup
 } from '@tabler/icons-react';
 import { useQuery, useSuspenseQuery } from '@tanstack/react-query';
+
 import dayjs from 'dayjs';
-import { type JSX, Suspense, useEffect, useMemo, useState } from 'react';
+import {
+  type JSX,
+  Suspense,
+  useCallback,
+  useEffect,
+  useMemo,
+  useState
+} from 'react';
 import { useFormContext } from 'react-hook-form';
 import { useNavigate } from 'react-router-dom';
 import { api } from '../App';
@@ -566,6 +574,7 @@ function StockOperationsRow({
   add = false,
   setMax = false,
   merge = false,
+  transferMerge = false,
   returnStock = false,
   record
 }: {
@@ -575,6 +584,7 @@ function StockOperationsRow({
   add?: boolean;
   setMax?: boolean;
   merge?: boolean;
+  transferMerge?: boolean;
   returnStock?: boolean;
   record?: any;
 }) {
@@ -742,6 +752,17 @@ function StockOperationsRow({
                 variant={packagingOpen ? 'filled' : 'transparent'}
               />
             )}
+            {transferMerge && (
+              <ActionButton
+                size='sm'
+                icon={<InvenTreeIcon icon='merge' />}
+                tooltip={t`Merge into existing stock`}
+                onClick={() =>
+                  callChangeFn(props.idx, 'merge', !props.item?.merge)
+                }
+                variant={props.item?.merge ? 'filled' : 'transparent'}
+              />
+            )}
             <RemoveRowButton onClick={() => props.removeFn(props.idx)} />
           </Flex>
         </Table.Td>
@@ -789,9 +810,10 @@ type StockAdjustmentItem = {
   batch?: string;
   status?: number | '' | null;
   packaging?: string;
+  merge?: boolean;
 };
 
-function mapAdjustmentItems(items: any[]) {
+function mapAdjustmentItems(items: any[], mergeDefault?: boolean) {
   const mappedItems: StockAdjustmentItemWithRecord[] = items.map((elem) => {
     return {
       pk: elem.pk,
@@ -799,6 +821,7 @@ function mapAdjustmentItems(items: any[]) {
       batch: elem.batch || undefined,
       status: elem.status || undefined,
       packaging: elem.packaging || undefined,
+      merge: elem.merge ?? mergeDefault ?? false,
       obj: elem
     };
   });
@@ -806,7 +829,10 @@ function mapAdjustmentItems(items: any[]) {
   return mappedItems;
 }
 
-function stockTransferFields(items: any[]): ApiFormFieldSet {
+function stockTransferFields(
+  items: any[],
+  mergeDefault = false
+): ApiFormFieldSet {
   if (!items) {
     return {};
   }
@@ -819,7 +845,7 @@ function stockTransferFields(items: any[]): ApiFormFieldSet {
   const fields: ApiFormFieldSet = {
     items: {
       field_type: 'table',
-      value: mapAdjustmentItems(items),
+      value: mapAdjustmentItems(items, mergeDefault),
       modelRenderer: (row: TableFieldRowProps) => {
         const record = records[row.item.pk];
 
@@ -829,6 +855,7 @@ function stockTransferFields(items: any[]): ApiFormFieldSet {
             transfer
             changeStatus
             setMax
+            transferMerge
             key={record.pk}
             record={record}
           />
@@ -1379,9 +1406,20 @@ export function useRemoveStockItem(props: StockOperationProps) {
 }
 
 export function useTransferStockItem(props: StockOperationProps) {
+  const globalSettings = useGlobalSettingsState();
+
+  const fieldGenerator = useCallback(
+    (items: any[]) =>
+      stockTransferFields(
+        items,
+        globalSettings.isSet('STOCK_MERGE_ON_TRANSFER')
+      ),
+    [globalSettings]
+  );
+
   return useStockOperationModal({
     ...props,
-    fieldGenerator: stockTransferFields,
+    fieldGenerator: fieldGenerator,
     endpoint: ApiEndpoints.stock_transfer,
     title: t`Transfer Stock`,
     successMessage: t`Stock transferred`,
diff --git a/src/frontend/src/pages/Index/Settings/SystemSettings.tsx b/src/frontend/src/pages/Index/Settings/SystemSettings.tsx
index 61123741c552..11fa0bca4b94 100644
--- a/src/frontend/src/pages/Index/Settings/SystemSettings.tsx
+++ b/src/frontend/src/pages/Index/Settings/SystemSettings.tsx
@@ -272,6 +272,7 @@ export default function SystemSettings() {
                 'STOCK_SHOW_INSTALLED_ITEMS',
                 'STOCK_ENFORCE_BOM_INSTALLATION',
                 'STOCK_ALLOW_OUT_OF_STOCK_TRANSFER',
+                'STOCK_MERGE_ON_TRANSFER',
                 'TEST_STATION_DATA'
               ]}
             />