diff --git a/src/Authentication/Authentication.Core/Microsoft.Graph.Authentication.Core.csproj b/src/Authentication/Authentication.Core/Microsoft.Graph.Authentication.Core.csproj
index 54f37452ac4..a1a4944e102 100644
--- a/src/Authentication/Authentication.Core/Microsoft.Graph.Authentication.Core.csproj
+++ b/src/Authentication/Authentication.Core/Microsoft.Graph.Authentication.Core.csproj
@@ -4,7 +4,7 @@
     <LangVersion>9.0</LangVersion>
     <TargetFrameworks>netstandard2.0;net6.0;net472</TargetFrameworks>
     <RootNamespace>Microsoft.Graph.PowerShell.Authentication.Core</RootNamespace>
-    <Version>2.35.1</Version>
+    <Version>2.38.0</Version>
     <!-- Suppress .NET Target Framework Moniker (TFM) Support Build Warnings -->
     <SuppressTfmSupportBuildWarnings>true</SuppressTfmSupportBuildWarnings>
   </PropertyGroup>
@@ -20,6 +20,8 @@
     <PackageReference Include="Azure.Identity.Broker" Version="1.4.0" />
     <!-- Explicitly reference Microsoft.Identity.Client to ensure form_post support -->
     <PackageReference Include="Microsoft.Identity.Client" Version="4.82.1" />
+    <!-- Explicitly reference MSAL Extensions to clear persisted token cache on disconnect -->
+    <PackageReference Include="Microsoft.Identity.Client.Extensions.Msal" Version="4.78.0" />
     <PackageReference Include="Microsoft.Bcl.AsyncInterfaces" Version="10.0.3" />
     <PackageReference Include="Microsoft.Graph.Core" Version="4.0.1" />
     <PackageReference Include="Newtonsoft.Json" Version="13.0.3" />
diff --git a/src/Authentication/Authentication.Core/Utilities/AuthenticationHelpers.cs b/src/Authentication/Authentication.Core/Utilities/AuthenticationHelpers.cs
index e4448663d72..7d581c0205e 100644
--- a/src/Authentication/Authentication.Core/Utilities/AuthenticationHelpers.cs
+++ b/src/Authentication/Authentication.Core/Utilities/AuthenticationHelpers.cs
@@ -430,6 +430,18 @@ public static async Task<IAuthContext> LogoutAsync()
         {
             var authContext = GraphSession.Instance.AuthContext;
             GraphSession.Instance.InMemoryTokenCache?.ClearCache();
+            if (authContext?.ContextScope == ContextScope.CurrentUser)
+            {
+                try
+                {
+                    await TokenCacheUtilities.ClearPersistedTokenCacheAsync(Constants.CacheName).ConfigureAwait(false);
+                }
+                catch (Exception)
+                {
+                    // Non-fatal: persisted cache clearing may fail on some platforms.
+                    // The auth record and in-memory state are still cleared below.
+                }
+            }
             GraphSession.Instance.AuthContext = null;
             GraphSession.Instance.GraphHttpClient = null;
             await DeleteAuthRecordAsync().ConfigureAwait(false);
diff --git a/src/Authentication/Authentication.Core/Utilities/TokenCacheUtilities.cs b/src/Authentication/Authentication.Core/Utilities/TokenCacheUtilities.cs
new file mode 100644
index 00000000000..8f6fcc3f023
--- /dev/null
+++ b/src/Authentication/Authentication.Core/Utilities/TokenCacheUtilities.cs
@@ -0,0 +1,67 @@
+// ------------------------------------------------------------------------------
+//  Copyright (c) Microsoft Corporation.  All Rights Reserved.  Licensed under the MIT License.  See License in the project root for license information.
+// ------------------------------------------------------------------------------
+
+using Microsoft.Identity.Client.Extensions.Msal;
+using System;
+using System.Collections.Generic;
+using System.IO;
+using System.Threading.Tasks;
+
+namespace Microsoft.Graph.PowerShell.Authentication.Core.Utilities
+{
+    /// <summary>
+    /// Utilities for managing the MSAL token cache persisted to disk by Azure.Identity.
+    /// </summary>
+    internal static class TokenCacheUtilities
+    {
+        // Azure.Identity internal constants for cache storage configuration.
+        // See: Azure/azure-sdk-for-net - sdk/core/Azure.Core/src/Identity/Constants.cs
+        private const string DefaultCacheKeychainService = "Microsoft.Developer.IdentityService";
+        private const string DefaultCacheKeyringSchema = "msal.cache";
+        private const string DefaultCacheKeyringCollection = "default";
+        private static readonly KeyValuePair<string, string> DefaultCacheKeyringAttribute1 =
+            new KeyValuePair<string, string>("MsalClientID", "Microsoft.Developer.IdentityService");
+        private static readonly KeyValuePair<string, string> DefaultCacheKeyringAttribute2 =
+            new KeyValuePair<string, string>("Microsoft.Developer.IdentityService", "1.0.0.0");
+
+        // Azure.Identity appends CAE suffixes to the cache name internally.
+        private const string CaeEnabledSuffix = ".cae";
+        private const string CaeDisabledSuffix = ".nocae";
+
+        private static readonly string DefaultCacheDirectory =
+            Path.Combine(
+                Environment.GetFolderPath(Environment.SpecialFolder.LocalApplicationData),
+                ".IdentityService");
+
+        /// <summary>
+        /// Clears the persisted MSAL token cache files created by Azure.Identity
+        /// for the given cache name. Clears both CAE-enabled and CAE-disabled variants.
+        /// </summary>
+        /// <param name="cacheName">The cache name (e.g., "mg.msal.cache").</param>
+        public static async Task ClearPersistedTokenCacheAsync(string cacheName)
+        {
+            // Azure.Identity creates separate caches for CAE-enabled and CAE-disabled tokens.
+            await ClearCacheAsync(cacheName + CaeEnabledSuffix).ConfigureAwait(false);
+            await ClearCacheAsync(cacheName + CaeDisabledSuffix).ConfigureAwait(false);
+        }
+
+        private static async Task ClearCacheAsync(string cacheFileName)
+        {
+            var storageProperties = new StorageCreationPropertiesBuilder(cacheFileName, DefaultCacheDirectory)
+                .WithMacKeyChain(DefaultCacheKeychainService, cacheFileName)
+                .WithLinuxKeyring(
+                    DefaultCacheKeyringSchema,
+                    DefaultCacheKeyringCollection,
+                    cacheFileName,
+                    DefaultCacheKeyringAttribute1,
+                    DefaultCacheKeyringAttribute2)
+                .Build();
+
+            var cacheHelper = await MsalCacheHelper.CreateAsync(storageProperties).ConfigureAwait(false);
+#pragma warning disable CS0618 // MsalCacheHelper.Clear is obsolete but is the correct approach for full cache wipe on disconnect
+            cacheHelper.Clear();
+#pragma warning restore CS0618
+        }
+    }
+}
diff --git a/src/Authentication/Authentication.Test/TokenCache/TokenCacheUtilitiesTests.cs b/src/Authentication/Authentication.Test/TokenCache/TokenCacheUtilitiesTests.cs
new file mode 100644
index 00000000000..a1cb20bc303
--- /dev/null
+++ b/src/Authentication/Authentication.Test/TokenCache/TokenCacheUtilitiesTests.cs
@@ -0,0 +1,80 @@
+using Microsoft.Graph.PowerShell.Authentication;
+using Microsoft.Graph.PowerShell.Authentication.Core.TokenCache;
+using Microsoft.Graph.PowerShell.Authentication.Core.Utilities;
+using System;
+using System.IO;
+using System.Text;
+using System.Threading.Tasks;
+using Xunit;
+
+namespace Microsoft.Graph.Authentication.Test.TokenCache
+{
+    public class TokenCacheUtilitiesTests : IDisposable
+    {
+        public TokenCacheUtilitiesTests()
+        {
+            GraphSession.Initialize(() => new GraphSession());
+            GraphSession.Instance.InMemoryTokenCache = new InMemoryTokenCache();
+        }
+
+        public void Dispose()
+        {
+            GraphSession.Reset();
+        }
+
+        [Fact]
+        public async Task LogoutAsyncShouldClearInMemoryCacheForProcessScope()
+        {
+            // Arrange
+            GraphSession.Instance.InMemoryTokenCache = new InMemoryTokenCache(
+                Encoding.UTF8.GetBytes("mockTokenData"));
+            GraphSession.Instance.AuthContext = new AuthContext
+            {
+                AuthType = AuthenticationType.UserProvidedAccessToken,
+                ContextScope = ContextScope.Process
+            };
+
+            // Act
+            var result = await AuthenticationHelpers.LogoutAsync();
+
+            // Assert
+            Assert.NotNull(result);
+            Assert.Equal(AuthenticationType.UserProvidedAccessToken, result.AuthType);
+            Assert.Null(GraphSession.Instance.AuthContext);
+            Assert.Null(GraphSession.Instance.GraphHttpClient);
+            Assert.Empty(GraphSession.Instance.InMemoryTokenCache.ReadTokenData());
+        }
+
+        [Fact]
+        public async Task LogoutAsyncShouldNotThrowWhenAuthContextIsNull()
+        {
+            // Arrange
+            GraphSession.Instance.AuthContext = null;
+
+            // Act - should not throw even though there's no auth context
+            var result = await AuthenticationHelpers.LogoutAsync();
+
+            // Assert
+            Assert.Null(result);
+        }
+
+        [Fact]
+        public async Task LogoutAsyncShouldAttemptCacheClearForCurrentUserScope()
+        {
+            // Arrange
+            GraphSession.Instance.AuthContext = new AuthContext
+            {
+                AuthType = AuthenticationType.UserProvidedAccessToken,
+                ContextScope = ContextScope.CurrentUser
+            };
+
+            // Act - should not throw even if no persisted cache exists on disk
+            var result = await AuthenticationHelpers.LogoutAsync();
+
+            // Assert
+            Assert.NotNull(result);
+            Assert.Equal(ContextScope.CurrentUser, result.ContextScope);
+            Assert.Null(GraphSession.Instance.AuthContext);
+        }
+    }
+}
diff --git a/src/Authentication/descriptions/Disconnect-MgGraph.md b/src/Authentication/descriptions/Disconnect-MgGraph.md
index bf3a8afface..5964655e8fe 100644
--- a/src/Authentication/descriptions/Disconnect-MgGraph.md
+++ b/src/Authentication/descriptions/Disconnect-MgGraph.md
@@ -1 +1 @@
-Use Disconnect-MgGraph to sign out.
\ No newline at end of file
+Use Disconnect-MgGraph to sign out. This clears the persisted MSAL token cache from disk when using CurrentUser context scope, as well as removing the in-memory token cache and authentication record.
\ No newline at end of file
diff --git a/src/Authentication/docs/Disconnect-MgGraph.md b/src/Authentication/docs/Disconnect-MgGraph.md
index 0414a17ed25..81acd8cb713 100644
--- a/src/Authentication/docs/Disconnect-MgGraph.md
+++ b/src/Authentication/docs/Disconnect-MgGraph.md
@@ -13,11 +13,11 @@ Once you're signed in, you'll remain signed in until you invoke Disconnect-MgGra
 ## SYNTAX
 
 ```
-Disconnect-MgGraph [<CommonParameters>]
+Disconnect-MgGraph [-ProgressAction <ActionPreference>] [<CommonParameters>]
 ```
 
 ## DESCRIPTION
-Use Disconnect-MgGraph to sign out.
+Use Disconnect-MgGraph to sign out. This clears the persisted MSAL token cache from disk when using CurrentUser context scope, as well as removing the in-memory token cache and authentication record.
 
 ## EXAMPLES
 
@@ -30,6 +30,21 @@ Use Disconnect-MgGraph to sign out.
 
 ## PARAMETERS
 
+### -ProgressAction
+{{ Fill ProgressAction Description }}
+
+```yaml
+Type: ActionPreference
+Parameter Sets: (All)
+Aliases: proga
+
+Required: False
+Position: Named
+Default value: None
+Accept pipeline input: False
+Accept wildcard characters: False
+```
+
 ### CommonParameters
 This cmdlet supports the common parameters: -Debug, -ErrorAction, -ErrorVariable, -InformationAction, -InformationVariable, -OutVariable, -OutBuffer, -PipelineVariable, -Verbose, -WarningAction, and -WarningVariable. For more information, see [about_CommonParameters](http://go.microsoft.com/fwlink/?LinkID=113216).