diff --git a/internal/app/azldev/cmds/component/preparesources.go b/internal/app/azldev/cmds/component/preparesources.go
index 6bff06b..1d2fbeb 100644
--- a/internal/app/azldev/cmds/component/preparesources.go
+++ b/internal/app/azldev/cmds/component/preparesources.go
@@ -6,6 +6,7 @@ package component
 import (
 	"errors"
 	"fmt"
+	"log/slog"
 
 	"github.com/microsoft/azure-linux-dev-tools/internal/app/azldev"
 	"github.com/microsoft/azure-linux-dev-tools/internal/app/azldev/core/components"
@@ -117,6 +118,11 @@ func PrepareComponentSources(env *azldev.Env, options *PrepareSourcesOptions) er
 		return err
 	}
 
+	if options.SkipOverlays && options.WithGitRepo {
+		slog.Warn("--with-git has no effect when --skip-overlays is set; " +
+			"synthetic history requires overlays to be applied")
+	}
+
 	var preparerOpts []sources.PreparerOption
 	if options.WithGitRepo {
 		preparerOpts = append(preparerOpts, sources.WithGitRepo())
diff --git a/internal/app/azldev/core/sources/release.go b/internal/app/azldev/core/sources/release.go
new file mode 100644
index 0000000..de006a1
--- /dev/null
+++ b/internal/app/azldev/core/sources/release.go
@@ -0,0 +1,177 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT License.
+
+package sources
+
+import (
+	"fmt"
+	"log/slog"
+	"regexp"
+	"strconv"
+	"strings"
+
+	"github.com/microsoft/azure-linux-dev-tools/internal/app/azldev/core/components"
+	"github.com/microsoft/azure-linux-dev-tools/internal/global/opctx"
+	"github.com/microsoft/azure-linux-dev-tools/internal/projectconfig"
+	"github.com/microsoft/azure-linux-dev-tools/internal/rpm/spec"
+)
+
+// autoreleasePattern matches the %autorelease macro invocation in a Release tag value.
+// This covers both the bare form (%autorelease) and the braced form (%{autorelease}).
+var autoreleasePattern = regexp.MustCompile(`%(\{autorelease\}|autorelease($|\s))`)
+
+// staticReleasePattern matches a leading integer in a static Release tag value,
+// followed by an optional suffix (e.g. "%{?dist}").
+var staticReleasePattern = regexp.MustCompile(`^(\d+)(.*)$`)
+
+// GetReleaseTagValue reads the Release tag value from the spec file at specPath.
+// It returns the raw value string as written in the spec (e.g. "1%{?dist}" or "%autorelease").
+// Returns [spec.ErrNoSuchTag] if no Release tag is found.
+func GetReleaseTagValue(fs opctx.FS, specPath string) (string, error) {
+	specFile, err := fs.Open(specPath)
+	if err != nil {
+		return "", fmt.Errorf("failed to open spec %#q:\n%w", specPath, err)
+	}
+	defer specFile.Close()
+
+	openedSpec, err := spec.OpenSpec(specFile)
+	if err != nil {
+		return "", fmt.Errorf("failed to parse spec %#q:\n%w", specPath, err)
+	}
+
+	var releaseValue string
+
+	err = openedSpec.VisitTagsPackage("", func(tagLine *spec.TagLine, _ *spec.Context) error {
+		if strings.EqualFold(tagLine.Tag, "Release") {
+			releaseValue = tagLine.Value
+		}
+
+		return nil
+	})
+	if err != nil {
+		return "", fmt.Errorf("failed to visit tags in spec %#q:\n%w", specPath, err)
+	}
+
+	if releaseValue == "" {
+		return "", fmt.Errorf("release tag not found in spec %#q:\n%w", specPath, spec.ErrNoSuchTag)
+	}
+
+	return releaseValue, nil
+}
+
+// ReleaseUsesAutorelease reports whether the given Release tag value uses the
+// %autorelease macro (either bare or braced form).
+func ReleaseUsesAutorelease(releaseValue string) bool {
+	return autoreleasePattern.MatchString(releaseValue)
+}
+
+// BumpStaticRelease increments the leading integer in a static Release tag value
+// by the given commit count.
+func BumpStaticRelease(releaseValue string, commitCount int) (string, error) {
+	matches := staticReleasePattern.FindStringSubmatch(releaseValue)
+	if matches == nil {
+		return "", fmt.Errorf("release value %#q does not start with an integer", releaseValue)
+	}
+
+	currentRelease, err := strconv.Atoi(matches[1])
+	if err != nil {
+		return "", fmt.Errorf("failed to parse release number from %#q:\n%w", releaseValue, err)
+	}
+
+	newRelease := currentRelease + commitCount
+	suffix := matches[2]
+
+	return fmt.Sprintf("%d%s", newRelease, suffix), nil
+}
+
+// HasUserReleaseOverlay reports whether the given overlay list contains an overlay
+// that explicitly sets or updates the Release tag. This is used to determine whether
+// a user has configured the component to handle a non-standard Release value
+// (e.g. one using a custom macro like %{pkg_release}).
+func HasUserReleaseOverlay(overlays []projectconfig.ComponentOverlay) bool {
+	for _, overlay := range overlays {
+		if !strings.EqualFold(overlay.Tag, "Release") {
+			continue
+		}
+
+		if overlay.Type == projectconfig.ComponentOverlaySetSpecTag ||
+			overlay.Type == projectconfig.ComponentOverlayUpdateSpecTag {
+			return true
+		}
+	}
+
+	return false
+}
+
+// tryBumpStaticRelease checks whether the component's spec uses %autorelease.
+// If not, it bumps the static Release tag by commitCount and applies the change
+// as an overlay to the spec file in-place. This ensures that components with static
+// release numbers get deterministic version bumps matching the number of synthetic
+// commits applied from the project repository.
+//
+// When the spec uses %autorelease, this function is a no-op because rpmautospec
+// already resolves the release number from git history.
+//
+// When the Release tag uses a non-standard value (not %autorelease and not a leading
+// integer, e.g. %{pkg_release}), the component must define an explicit overlay that
+// sets the Release tag. If no such overlay exists, an error is returned.
+func (p *sourcePreparerImpl) tryBumpStaticRelease(
+	component components.Component,
+	sourcesDirPath string,
+	commitCount int,
+) error {
+	specPath, err := p.resolveSpecPath(component, sourcesDirPath)
+	if err != nil {
+		return err
+	}
+
+	releaseValue, err := GetReleaseTagValue(p.fs, specPath)
+	if err != nil {
+		return fmt.Errorf("failed to read Release tag for component %#q:\n%w",
+			component.GetName(), err)
+	}
+
+	if ReleaseUsesAutorelease(releaseValue) {
+		slog.Debug("Spec uses %%autorelease; skipping static release bump",
+			"component", component.GetName())
+
+		return nil
+	}
+
+	// Skip static release bump if the user has defined an explicit overlay for the Release tag.
+	if HasUserReleaseOverlay(component.GetConfig().Overlays) {
+		slog.Debug("Component has an explicit Release overlay; skipping static release bump",
+			"component", component.GetName())
+
+		return nil
+	}
+
+	newRelease, err := BumpStaticRelease(releaseValue, commitCount)
+	if err != nil {
+		// The Release tag does not start with an integer (e.g. %{pkg_release})
+		// and the user did not provide an explicit overlay to set it.
+		return fmt.Errorf(
+			"component %#q has a non-standard Release tag value %#q that cannot be auto-bumped; "+
+				"add a \"spec-set-tag\" overlay for the Release tag in the component configuration",
+			component.GetName(), releaseValue)
+	}
+
+	slog.Info("Bumping static release",
+		"component", component.GetName(),
+		"oldRelease", releaseValue,
+		"newRelease", newRelease,
+		"commitCount", commitCount)
+
+	overlay := projectconfig.ComponentOverlay{
+		Type:  projectconfig.ComponentOverlayUpdateSpecTag,
+		Tag:   "Release",
+		Value: newRelease,
+	}
+
+	if err := ApplySpecOverlayToFileInPlace(p.fs, overlay, specPath); err != nil {
+		return fmt.Errorf("failed to apply release bump overlay for component %#q:\n%w",
+			component.GetName(), err)
+	}
+
+	return nil
+}
diff --git a/internal/app/azldev/core/sources/release_test.go b/internal/app/azldev/core/sources/release_test.go
new file mode 100644
index 0000000..2351689
--- /dev/null
+++ b/internal/app/azldev/core/sources/release_test.go
@@ -0,0 +1,131 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT License.
+
+package sources_test
+
+import (
+	"testing"
+
+	"github.com/microsoft/azure-linux-dev-tools/internal/app/azldev/core/sources"
+	"github.com/microsoft/azure-linux-dev-tools/internal/global/testctx"
+	"github.com/microsoft/azure-linux-dev-tools/internal/projectconfig"
+	"github.com/microsoft/azure-linux-dev-tools/internal/rpm/spec"
+	"github.com/microsoft/azure-linux-dev-tools/internal/utils/fileutils"
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+)
+
+func TestReleaseUsesAutorelease(t *testing.T) {
+	for _, testCase := range []struct {
+		value    string
+		expected bool
+	}{
+		{"%autorelease", true},
+		{"%{autorelease}", true},
+		{"1", false},
+		{"1%{?dist}", false},
+		{"3%{?dist}.1", false},
+		{"", false},
+	} {
+		t.Run(testCase.value, func(t *testing.T) {
+			assert.Equal(t, testCase.expected, sources.ReleaseUsesAutorelease(testCase.value))
+		})
+	}
+}
+
+func TestBumpStaticRelease(t *testing.T) {
+	for _, testCase := range []struct {
+		name, value string
+		commits     int
+		expected    string
+		wantErr     bool
+	}{
+		{"simple integer", "1", 3, "4", false},
+		{"with dist tag", "1%{?dist}", 2, "3%{?dist}", false},
+		{"larger base", "10%{?dist}", 5, "15%{?dist}", false},
+		{"single commit", "1%{?dist}", 1, "2%{?dist}", false},
+		{"no leading int", "%{?dist}", 1, "", true},
+		{"empty string", "", 1, "", true},
+	} {
+		t.Run(testCase.name, func(t *testing.T) {
+			result, err := sources.BumpStaticRelease(testCase.value, testCase.commits)
+			if testCase.wantErr {
+				require.Error(t, err)
+			} else {
+				require.NoError(t, err)
+				assert.Equal(t, testCase.expected, result)
+			}
+		})
+	}
+}
+
+func TestGetReleaseTagValue(t *testing.T) {
+	makeSpec := func(release string) string {
+		return "Name: test-package\nVersion: 1.0.0\nRelease: " + release + "\nSummary: Test\n"
+	}
+
+	for _, testCase := range []struct {
+		name, specContent, expected string
+		wantErr                     bool
+	}{
+		{"static with dist", makeSpec("1%{?dist}"), "1%{?dist}", false},
+		{"autorelease", makeSpec("%autorelease"), "%autorelease", false},
+		{"braced autorelease", makeSpec("%{autorelease}"), "%{autorelease}", false},
+		{"no release tag", "Name: test-package\nVersion: 1.0.0\nSummary: Test\n", "", true},
+	} {
+		t.Run(testCase.name, func(t *testing.T) {
+			ctx := testctx.NewCtx()
+			specPath := "/test.spec"
+
+			err := fileutils.WriteFile(ctx.FS(), specPath, []byte(testCase.specContent), 0o644)
+			require.NoError(t, err)
+
+			result, err := sources.GetReleaseTagValue(ctx.FS(), specPath)
+			if testCase.wantErr {
+				require.ErrorIs(t, err, spec.ErrNoSuchTag)
+			} else {
+				require.NoError(t, err)
+				assert.Equal(t, testCase.expected, result)
+			}
+		})
+	}
+}
+
+func TestGetReleaseTagValue_FileNotFound(t *testing.T) {
+	ctx := testctx.NewCtx()
+	_, err := sources.GetReleaseTagValue(ctx.FS(), "/nonexistent.spec")
+	require.Error(t, err)
+}
+
+func TestHasUserReleaseOverlay(t *testing.T) {
+	for _, testCase := range []struct {
+		name     string
+		overlays []projectconfig.ComponentOverlay
+		expected bool
+	}{
+		{"no overlays", nil, false},
+		{"unrelated tag", []projectconfig.ComponentOverlay{
+			{Type: projectconfig.ComponentOverlaySetSpecTag, Tag: "Version", Value: "1.0"},
+		}, false},
+		{"unsupported overlay type", []projectconfig.ComponentOverlay{
+			{Type: projectconfig.ComponentOverlayAddSpecTag, Tag: "Release", Value: "1%{?dist}"},
+		}, false},
+		{"spec-set-tag", []projectconfig.ComponentOverlay{
+			{Type: projectconfig.ComponentOverlaySetSpecTag, Tag: "Release", Value: "1%{?dist}"},
+		}, true},
+		{"spec-update-tag", []projectconfig.ComponentOverlay{
+			{Type: projectconfig.ComponentOverlayUpdateSpecTag, Tag: "Release", Value: "2%{?dist}"},
+		}, true},
+		{"case insensitive", []projectconfig.ComponentOverlay{
+			{Type: projectconfig.ComponentOverlaySetSpecTag, Tag: "release", Value: "1%{?dist}"},
+		}, true},
+		{"mixed overlays", []projectconfig.ComponentOverlay{
+			{Type: projectconfig.ComponentOverlaySetSpecTag, Tag: "BuildRequires", Value: "gcc"},
+			{Type: projectconfig.ComponentOverlaySetSpecTag, Tag: "Release", Value: "5%{?dist}"},
+		}, true},
+	} {
+		t.Run(testCase.name, func(t *testing.T) {
+			assert.Equal(t, testCase.expected, sources.HasUserReleaseOverlay(testCase.overlays))
+		})
+	}
+}
diff --git a/internal/app/azldev/core/sources/sourceprep.go b/internal/app/azldev/core/sources/sourceprep.go
index 79c99a7..91c78ae 100644
--- a/internal/app/azldev/core/sources/sourceprep.go
+++ b/internal/app/azldev/core/sources/sourceprep.go
@@ -152,13 +152,13 @@ func (p *sourcePreparerImpl) PrepareSources(
 		if err != nil {
 			return err
 		}
-	}
 
-	// Record the changes as synthetic git history when dist-git creation is enabled.
-	if p.withGitRepo {
-		if err := p.trySyntheticHistory(component, outputDir); err != nil {
-			return fmt.Errorf("failed to generate synthetic history for component %#q:\n%w",
-				component.GetName(), err)
+		// Record the changes as synthetic git history when dist-git creation is enabled.
+		if p.withGitRepo {
+			if err := p.trySyntheticHistory(component, outputDir); err != nil {
+				return fmt.Errorf("failed to generate synthetic history for component %#q:\n%w",
+					component.GetName(), err)
+			}
 		}
 	}
 
@@ -310,10 +310,13 @@ func (p *sourcePreparerImpl) trySyntheticHistory(
 		return nil
 	}
 
-	// Check for an existing git repository in the sources directory.
-	// Use os.Stat rather than p.fs because go-git's PlainInit/PlainOpen always
-	// operate on the real OS filesystem — the check must use the same source of
-	// truth to avoid disagreement when p.fs is an in-memory FS (e.g. unit tests).
+	// Adjust the Release tag before staging changes. See [tryBumpStaticRelease]
+	// for the handling of %autorelease, static integers, and non-standard values.
+	if err := p.tryBumpStaticRelease(component, sourcesDirPath, len(commits)); err != nil {
+		return fmt.Errorf("failed to apply release bump:\n%w", err)
+	}
+
+	// Use os.Stat (not p.fs) because go-git always operates on the real filesystem.
 	gitDirPath := filepath.Join(sourcesDirPath, ".git")
 
 	_, statErr := os.Stat(gitDirPath)
diff --git a/internal/app/azldev/core/sources/synthistory.go b/internal/app/azldev/core/sources/synthistory.go
index 0c41f2e..b9c4922 100644
--- a/internal/app/azldev/core/sources/synthistory.go
+++ b/internal/app/azldev/core/sources/synthistory.go
@@ -150,10 +150,6 @@ func buildSyntheticCommits(
 		return nil, fmt.Errorf("failed to find Affects commits for component %#q:\n%w", componentName, err)
 	}
 
-	slog.Info("Found commits affecting component",
-		"component", componentName,
-		"commitCount", len(affectsCommits))
-
 	if len(affectsCommits) == 0 {
 		slog.Info("No commits with Affects marker found; "+
 			"creating default commit",
@@ -162,6 +158,10 @@ func buildSyntheticCommits(
 		return []CommitMetadata{
 			defaultOverlayCommit(projectRepo, componentName),
 		}, nil
+	} else {
+		slog.Info("Found commits affecting component",
+			"component", componentName,
+			"commitCount", len(affectsCommits))
 	}
 
 	return affectsCommits, nil