diff --git a/localstack-core/localstack/dns/server.py b/localstack-core/localstack/dns/server.py
index 6cf61ec0b0937..f32d81292c75e 100644
--- a/localstack-core/localstack/dns/server.py
+++ b/localstack-core/localstack/dns/server.py
@@ -258,8 +258,31 @@ def handle(self, *args, **kwargs):
             pass
 
 
+# List of unique non-subdomain prefixes (e.g., data-) from endpoint.hostPrefix in the botocore specs.
+# Subdomain-prefixes (e.g., api.) work properly unless DNS rebind protection blocks DNS resolution, but
+# these `-` dash-prefixes require special consideration.
+# IMPORTANT: Adding a new host prefix here requires deploying a public DNS entry to ensure proper DNS resolution for
+# such non-dot prefixed domains (e.g., data-localhost.localstack.cloud)
+# LIMITATION: As of 2025-05-26, only used prefixes are deployed to our public DNS, including `sync-` and `data-`
+HOST_PREFIXES_NO_SUBDOMAIN = [
+    "analytics-",
+    "control-storage-",
+    "data-",
+    "query-",
+    "runtime-",
+    "storage-",
+    "streaming-",
+    "sync-",
+    "tags-",
+    "workflows-",
+]
+HOST_PREFIX_NAME_PATTERNS = [
+    f"{host_prefix}{LOCALHOST_HOSTNAME}" for host_prefix in HOST_PREFIXES_NO_SUBDOMAIN
+]
+
 NAME_PATTERNS_POINTING_TO_LOCALSTACK = [
     f".*{LOCALHOST_HOSTNAME}",
+    *HOST_PREFIX_NAME_PATTERNS,
 ]
 
 
diff --git a/tests/aws/services/lambda_/functions/host_prefix_operation.py b/tests/aws/services/lambda_/functions/host_prefix_operation.py
new file mode 100644
index 0000000000000..ccc49da725a62
--- /dev/null
+++ b/tests/aws/services/lambda_/functions/host_prefix_operation.py
@@ -0,0 +1,71 @@
+import json
+import os
+from urllib.parse import urlparse
+
+import boto3
+from botocore.config import Config
+
+region = os.environ["AWS_REGION"]
+account = boto3.client("sts").get_caller_identity()["Account"]
+state_machine_arn_doesnotexist = (
+    f"arn:aws:states:{region}:{account}:stateMachine:doesNotExistStateMachine"
+)
+
+
+def do_test(test_case):
+    sfn_client = test_case["client"]
+    try:
+        sfn_client.start_sync_execution(
+            stateMachineArn=state_machine_arn_doesnotexist,
+            input=json.dumps({}),
+            name="SyncExecution",
+        )
+        return {"status": "failure"}
+    except sfn_client.exceptions.StateMachineDoesNotExist:
+        # We are testing the error case here, so we expect this exception to be raised.
+        # Testing the error case simplifies the test case because we don't need to set up a StepFunction.
+        return {"status": "success"}
+    except Exception as e:
+        return {"status": "exception", "exception": str(e)}
+
+
+def handler(event, context):
+    # The environment variable AWS_ENDPOINT_URL is only available in LocalStack
+    aws_endpoint_url = os.environ.get("AWS_ENDPOINT_URL")
+
+    host_prefix_client = boto3.client(
+        "stepfunctions",
+        endpoint_url=os.environ.get("AWS_ENDPOINT_URL"),
+    )
+    localstack_adjusted_domain = None
+    # The localstack domain only works in LocalStack, None is ignored
+    if aws_endpoint_url:
+        port = urlparse(aws_endpoint_url).port
+        localstack_adjusted_domain = f"http://localhost.localstack.cloud:{port}"
+    host_prefix_client_localstack_domain = boto3.client(
+        "stepfunctions",
+        endpoint_url=localstack_adjusted_domain,
+    )
+    no_host_prefix_client = boto3.client(
+        "stepfunctions",
+        endpoint_url=os.environ.get("AWS_ENDPOINT_URL"),
+        config=Config(inject_host_prefix=False),
+    )
+
+    test_cases = [
+        {"name": "host_prefix", "client": host_prefix_client},
+        {"name": "host_prefix_localstack_domain", "client": host_prefix_client_localstack_domain},
+        # Omitting the host prefix can only work in LocalStack
+        {
+            "name": "no_host_prefix",
+            "client": no_host_prefix_client if aws_endpoint_url else host_prefix_client,
+        },
+    ]
+
+    test_results = {}
+    for test_case in test_cases:
+        test_name = test_case["name"]
+        test_result = do_test(test_case)
+        test_results[test_name] = test_result
+
+    return test_results
diff --git a/tests/aws/services/lambda_/test_lambda.py b/tests/aws/services/lambda_/test_lambda.py
index 7da990f63c716..08d8d77f0e4f2 100644
--- a/tests/aws/services/lambda_/test_lambda.py
+++ b/tests/aws/services/lambda_/test_lambda.py
@@ -129,6 +129,7 @@
 TEST_LAMBDA_NOTIFIER = os.path.join(THIS_FOLDER, "functions/lambda_notifier.py")
 TEST_LAMBDA_CLOUDWATCH_LOGS = os.path.join(THIS_FOLDER, "functions/lambda_cloudwatch_logs.py")
 TEST_LAMBDA_XRAY_TRACEID = os.path.join(THIS_FOLDER, "functions/xray_tracing_traceid.py")
+TEST_LAMBDA_HOST_PREFIX_OPERATION = os.path.join(THIS_FOLDER, "functions/host_prefix_operation.py")
 
 PYTHON_TEST_RUNTIMES = RUNTIMES_AGGREGATED["python"]
 NODE_TEST_RUNTIMES = RUNTIMES_AGGREGATED["nodejs"]
@@ -830,6 +831,36 @@ def test_lambda_init_environment(
         result = aws_client.lambda_.invoke(FunctionName=func_name, Payload=json.dumps({"pid": 1}))
         snapshot.match("lambda-init-inspection", result)
 
+    @markers.aws.validated
+    @pytest.mark.skipif(
+        not config.use_custom_dns(),
+        reason="Host prefix cannot be resolved if DNS server is disabled",
+    )
+    @markers.snapshot.skip_snapshot_verify(
+        paths=[
+            # TODO: Fix hostPrefix operations failing by default within Lambda
+            #  Idea: Support prefixed and non-prefixed operations by default and botocore should drop the prefix for
+            #  non-supported hostnames such as IPv4 (e.g., `sync-192.168.65.254`)
+            "$..Payload.host_prefix.*",
+        ],
+    )
+    def test_lambda_host_prefix_api_operation(self, create_lambda_function, aws_client, snapshot):
+        """Ensure that API operations with a hostPrefix are forwarded to the LocalStack instance. Examples:
+        * StartSyncExecution: https://docs.aws.amazon.com/step-functions/latest/apireference/API_StartSyncExecution.html
+        * DiscoverInstances: https://docs.aws.amazon.com/cloud-map/latest/api/API_DiscoverInstances.html
+        hostPrefix background test_host_prefix_no_subdomain
+        StepFunction example for the hostPrefix `sync-` based on test_start_sync_execution
+        """
+        func_name = f"test_lambda_{short_uid()}"
+        create_lambda_function(
+            func_name=func_name,
+            handler_file=TEST_LAMBDA_HOST_PREFIX_OPERATION,
+            runtime=Runtime.python3_12,
+        )
+        invoke_result = aws_client.lambda_.invoke(FunctionName=func_name)
+        assert "FunctionError" not in invoke_result
+        snapshot.match("invoke-result", invoke_result)
+
 
 URL_HANDLER_CODE = """
 def handler(event, ctx):
diff --git a/tests/aws/services/lambda_/test_lambda.snapshot.json b/tests/aws/services/lambda_/test_lambda.snapshot.json
index 5c50c87363539..121d9b01ef397 100644
--- a/tests/aws/services/lambda_/test_lambda.snapshot.json
+++ b/tests/aws/services/lambda_/test_lambda.snapshot.json
@@ -4580,5 +4580,29 @@
         }
       }
     }
+  },
+  "tests/aws/services/lambda_/test_lambda.py::TestLambdaBehavior::test_lambda_host_prefix_api_operation": {
+    "recorded-date": "26-05-2025, 16:38:54",
+    "recorded-content": {
+      "invoke-result": {
+        "ExecutedVersion": "$LATEST",
+        "Payload": {
+          "host_prefix": {
+            "status": "success"
+          },
+          "host_prefix_localstack_domain": {
+            "status": "success"
+          },
+          "no_host_prefix": {
+            "status": "success"
+          }
+        },
+        "StatusCode": 200,
+        "ResponseMetadata": {
+          "HTTPHeaders": {},
+          "HTTPStatusCode": 200
+        }
+      }
+    }
   }
 }
diff --git a/tests/aws/services/lambda_/test_lambda.validation.json b/tests/aws/services/lambda_/test_lambda.validation.json
index c456b8486fcc0..9b5d816f5ac1e 100644
--- a/tests/aws/services/lambda_/test_lambda.validation.json
+++ b/tests/aws/services/lambda_/test_lambda.validation.json
@@ -32,6 +32,9 @@
   "tests/aws/services/lambda_/test_lambda.py::TestLambdaBehavior::test_lambda_cache_local[python]": {
     "last_validated_date": "2024-04-08T16:55:59+00:00"
   },
+  "tests/aws/services/lambda_/test_lambda.py::TestLambdaBehavior::test_lambda_host_prefix_api_operation": {
+    "last_validated_date": "2025-05-26T16:38:53+00:00"
+  },
   "tests/aws/services/lambda_/test_lambda.py::TestLambdaBehavior::test_lambda_init_environment": {
     "last_validated_date": "2024-04-08T16:56:25+00:00"
   },
diff --git a/tests/bootstrap/test_dns_server.py b/tests/bootstrap/test_dns_server.py
index 32839b5a2944e..fbb31df4f3a83 100644
--- a/tests/bootstrap/test_dns_server.py
+++ b/tests/bootstrap/test_dns_server.py
@@ -149,14 +149,26 @@ def test_resolve_localstack_host(
 
     container_ip = running_container.ip_address()
 
+    # domain
     stdout, _ = dns_query_from_container(name=LOCALHOST_HOSTNAME, ip_address=container_ip)
     assert container_ip in stdout.decode().splitlines()
 
+    # domain with known hostPrefix (see test_host_prefix_no_subdomain)
+    stdout, _ = dns_query_from_container(name=f"data-{LOCALHOST_HOSTNAME}", ip_address=container_ip)
+    assert container_ip in stdout.decode().splitlines()
+
+    # subdomain
     stdout, _ = dns_query_from_container(name=f"foo.{LOCALHOST_HOSTNAME}", ip_address=container_ip)
     assert container_ip in stdout.decode().splitlines()
 
+    # domain
     stdout, _ = dns_query_from_container(name=localstack_host, ip_address=container_ip)
     assert container_ip in stdout.decode().splitlines()
 
+    # domain with known hostPrefix (see test_host_prefix_no_subdomain)
+    stdout, _ = dns_query_from_container(name=f"data-{localstack_host}", ip_address=container_ip)
+    assert container_ip in stdout.decode().splitlines()
+
+    # subdomain
     stdout, _ = dns_query_from_container(name=f"foo.{localstack_host}", ip_address=container_ip)
     assert container_ip in stdout.decode().splitlines()
diff --git a/tests/unit/test_dns_server.py b/tests/unit/test_dns_server.py
index 4e72b979c7389..96ffd172b1f7a 100644
--- a/tests/unit/test_dns_server.py
+++ b/tests/unit/test_dns_server.py
@@ -5,8 +5,16 @@
 import pytest
 
 from localstack import config
+from localstack.aws.spec import iterate_service_operations
+from localstack.constants import LOCALHOST_HOSTNAME
 from localstack.dns.models import AliasTarget, RecordType, SOARecord, TargetRecord
-from localstack.dns.server import DnsServer, add_resolv_entry, get_fallback_dns_server
+from localstack.dns.server import (
+    HOST_PREFIXES_NO_SUBDOMAIN,
+    NAME_PATTERNS_POINTING_TO_LOCALSTACK,
+    DnsServer,
+    add_resolv_entry,
+    get_fallback_dns_server,
+)
 from localstack.utils.net import get_free_udp_port
 from localstack.utils.sync import retry
 
@@ -460,3 +468,24 @@ def test_no_resolv_conf_overwriting_on_host(self, tmp_path: Path, monkeypatch):
 
         assert "nameserver 127.0.0.1" not in new_contents.splitlines()
         assert "nameserver 127.0.0.11" in new_contents.splitlines()
+
+    def test_host_prefix_no_subdomain(
+        self,
+    ):
+        """This tests help to detect any potential future new host prefix domains added to the botocore specs.
+        If this test fails:
+        1) Add the new entry to `HOST_PREFIXES_NO_SUBDOMAIN` to reflect any changes
+        2) IMPORTANT: Add a public DNS entry for the given host prefix!
+        """
+        unique_prefixes = set()
+        for service_model, operation in iterate_service_operations():
+            if operation.endpoint and operation.endpoint.get("hostPrefix"):
+                unique_prefixes.add(operation.endpoint["hostPrefix"])
+
+        non_dot_unique_prefixes = [prefix for prefix in unique_prefixes if not prefix.endswith(".")]
+        # Intermediary validation to easily summarize all differences
+        assert set(HOST_PREFIXES_NO_SUBDOMAIN) == set(non_dot_unique_prefixes)
+
+        # Real validation of NAME_PATTERNS_POINTING_TO_LOCALSTACK
+        for host_prefix in non_dot_unique_prefixes:
+            assert f"{host_prefix}{LOCALHOST_HOSTNAME}" in NAME_PATTERNS_POINTING_TO_LOCALSTACK