diff --git a/src/components/ParticipantPicker.tsx b/src/components/ParticipantPicker.tsx
index 658880bf6459..da31af063b09 100644
--- a/src/components/ParticipantPicker.tsx
+++ b/src/components/ParticipantPicker.tsx
@@ -59,6 +59,7 @@ function ParticipantPicker({
             action={action}
             isPerDiemRequest={isPerDiemRequest}
             isTimeRequest={isTimeRequest}
+            onRestrictedParticipantSelected={onClose}
         />
     );
 
diff --git a/src/pages/iou/request/MoneyRequestParticipantsSelector.tsx b/src/pages/iou/request/MoneyRequestParticipantsSelector.tsx
index 07a41ac1e0e5..f89892612609 100644
--- a/src/pages/iou/request/MoneyRequestParticipantsSelector.tsx
+++ b/src/pages/iou/request/MoneyRequestParticipantsSelector.tsx
@@ -41,6 +41,9 @@ type MoneyRequestParticipantsSelectorProps = {
     /** Whether to find the participant matching initiallySelectedReportID and move it to the top of the list */
     shouldMoveSelectedToTop?: boolean;
 
+    /** Callback to handle restricted participant selection */
+    onRestrictedParticipantSelected?: () => void;
+
     /** Reference to the outer element */
     ref?: Ref<InputFocusRef>;
 };
@@ -62,6 +65,7 @@ function MoneyRequestParticipantsSelector({
     isCorporateCardTransaction = false,
     initiallySelectedReportID,
     shouldMoveSelectedToTop = false,
+    onRestrictedParticipantSelected,
     ref,
 }: MoneyRequestParticipantsSelectorProps) {
     const platform = getPlatform();
@@ -95,6 +99,7 @@ function MoneyRequestParticipantsSelector({
             onFinish={onFinish}
             initiallySelectedReportID={initiallySelectedReportID}
             shouldMoveSelectedToTop={shouldMoveSelectedToTop}
+            onRestrictedParticipantSelected={onRestrictedParticipantSelected}
         />
     );
 }
diff --git a/src/pages/iou/request/ParticipantSearchResults.tsx b/src/pages/iou/request/ParticipantSearchResults.tsx
index b2b6f6e473bb..b203c273fff0 100644
--- a/src/pages/iou/request/ParticipantSearchResults.tsx
+++ b/src/pages/iou/request/ParticipantSearchResults.tsx
@@ -100,6 +100,9 @@ type ParticipantSearchResultsProps = {
 
     /** Whether to find the participant matching initiallySelectedReportID and move it to the top of the list */
     shouldMoveSelectedToTop?: boolean;
+
+    /** Callback to handle restricted participant selection */
+    onRestrictedParticipantSelected?: () => void;
 };
 
 function ParticipantSearchResults({
@@ -118,6 +121,7 @@ function ParticipantSearchResults({
     onFinish,
     initiallySelectedReportID,
     shouldMoveSelectedToTop = false,
+    onRestrictedParticipantSelected,
 }: ParticipantSearchResultsProps) {
     const getParticipantOptionKey = (option: Partial<Participant>) => option.reportID ?? option.accountID?.toString() ?? option.login ?? option.phoneNumber ?? '';
     const isIOUSplit = iouType === CONST.IOU.TYPE.SPLIT;
@@ -453,6 +457,7 @@ function ParticipantSearchResults({
             optionPolicy &&
             shouldRestrictUserBillableActions(optionPolicy, ownerBillingGracePeriodEnd, userBillingGracePeriodEnds, amountOwed, currentUserAccountID)
         ) {
+            onRestrictedParticipantSelected?.();
             Navigation.navigate(ROUTES.RESTRICTED_ACTION.getRoute(option.policyID));
             return;
         }