diff --git a/.vscode/cspell.global.yaml b/.vscode/cspell.global.yaml
index 3d7c79ce959..94ec7df49b0 100644
--- a/.vscode/cspell.global.yaml
+++ b/.vscode/cspell.global.yaml
@@ -74,6 +74,7 @@ ignoreWords:
     - fdfp
     - fics
     - Frontdoor
+    - funcignore
     - gitcli
     - golobby
     - graphsdk
@@ -162,6 +163,7 @@ ignoreWords:
     - vwan
     - wafrg
     - westus
+    - webappignore
     - Wans
     - apim
     - Retryable
diff --git a/cli/azd/pkg/dotignore/dotignore.go b/cli/azd/pkg/dotignore/dotignore.go
index 39080f7e123..b0296862815 100644
--- a/cli/azd/pkg/dotignore/dotignore.go
+++ b/cli/azd/pkg/dotignore/dotignore.go
@@ -4,123 +4,38 @@ import (
 	"fmt"
 	"os"
 	"path/filepath"
-	"strings"
 
 	"github.com/denormal/go-gitignore"
 )
 
-// ReadIgnoreFiles reads all ignore files (default to ".zipignore") in the directory hierarchy,
-// from the projectDir upwards, and returns a slice of gitignore.GitIgnore structures.
-func ReadIgnoreFiles(projectDir string, ignoreFileName ...string) ([]gitignore.GitIgnore, error) {
-	var ignoreMatchers []gitignore.GitIgnore
-
-	// Set default ignore file name to ".zipignore" if none is provided
-	fileName := ".zipignore"
-	if len(ignoreFileName) > 0 && ignoreFileName[0] != "" {
-		fileName = ignoreFileName[0]
+// ReadDotIgnoreFile reads the ignore file located at the root of the project directory.
+// If the ignoreFileName is blank or the file is not found, it returns nil, nil.
+func ReadDotIgnoreFile(projectDir string, ignoreFileName string) (gitignore.GitIgnore, error) {
+	// Return nil if the ignoreFileName is empty
+	if ignoreFileName == "" {
+		return nil, nil
 	}
 
-	// Traverse upwards from the projectDir to the root directory
-	currentDir := projectDir
-	for {
-		ignoreFilePath := filepath.Join(currentDir, fileName)
-		if _, err := os.Stat(ignoreFilePath); !os.IsNotExist(err) {
-			ignoreMatcher, err := gitignore.NewFromFile(ignoreFilePath)
-			if err != nil {
-				return nil, fmt.Errorf("error reading %s file at %s: %w", fileName, ignoreFilePath, err)
-			}
-			ignoreMatchers = append([]gitignore.GitIgnore{ignoreMatcher}, ignoreMatchers...)
-		}
+	ignoreFilePath := filepath.Join(projectDir, ignoreFileName)
+	if _, err := os.Stat(ignoreFilePath); os.IsNotExist(err) {
+		// Return nil if the ignore file does not exist
+		return nil, nil
+	}
 
-		// Stop if we've reached the root directory
-		parentDir := filepath.Dir(currentDir)
-		if parentDir == currentDir {
-			break
-		}
-		currentDir = parentDir
+	ignoreMatcher, err := gitignore.NewFromFile(ignoreFilePath)
+	if err != nil {
+		return nil, fmt.Errorf("error reading %s file at %s: %w", ignoreFileName, ignoreFilePath, err)
 	}
 
-	return ignoreMatchers, nil
+	return ignoreMatcher, nil
 }
 
-// ShouldIgnore checks if a file or directory should be ignored based on a slice of gitignore.GitIgnore structures.
-func ShouldIgnore(path string, isDir bool, ignoreMatchers []gitignore.GitIgnore) bool {
-	for _, matcher := range ignoreMatchers {
-		match := matcher.Relative(path, isDir)
-		if match != nil && match.Ignore() {
+// ShouldIgnore determines whether a file or directory should be ignored based on the provided ignore matcher.
+func ShouldIgnore(relativePath string, isDir bool, ignoreMatcher gitignore.GitIgnore) bool {
+	if ignoreMatcher != nil {
+		if match := ignoreMatcher.Relative(relativePath, isDir); match != nil && match.Ignore() {
 			return true
 		}
 	}
 	return false
 }
-
-// RemoveIgnoredFiles removes files and directories based on ignore rules using a pre-collected list of paths.
-func RemoveIgnoredFiles(staging string, ignoreMatchers []gitignore.GitIgnore) error {
-	if len(ignoreMatchers) == 0 {
-		return nil // No ignore files, no files to ignore
-	}
-
-	// Collect all file and directory paths
-	paths, err := CollectFilePaths(staging)
-	if err != nil {
-		return fmt.Errorf("collecting file paths: %w", err)
-	}
-
-	// Map to store directories that should be ignored, preventing their children from being processed
-	ignoredDirs := make(map[string]struct{})
-
-	// Iterate through collected paths and determine which to remove
-	for _, path := range paths {
-		relativePath, err := filepath.Rel(staging, path)
-		if err != nil {
-			return err
-		}
-
-		// Skip processing if the path is within an ignored directory
-		skip := false
-		for ignoredDir := range ignoredDirs {
-			if strings.HasPrefix(relativePath, ignoredDir) {
-				skip = true
-				break
-			}
-		}
-		if skip {
-			continue
-		}
-
-		isDir := false
-		info, err := os.Lstat(path)
-		if err == nil {
-			isDir = info.IsDir()
-		}
-
-		// Check if the file should be ignored
-		if ShouldIgnore(relativePath, isDir, ignoreMatchers) {
-			if isDir {
-				ignoredDirs[relativePath] = struct{}{}
-				if err := os.RemoveAll(path); err != nil {
-					return fmt.Errorf("removing directory %s: %w", path, err)
-				}
-			} else {
-				if err := os.Remove(path); err != nil {
-					return fmt.Errorf("removing file %s: %w", path, err)
-				}
-			}
-		}
-	}
-
-	return nil
-}
-
-// CollectFilePaths collects all file and directory paths under the given root directory.
-func CollectFilePaths(root string) ([]string, error) {
-	var paths []string
-	err := filepath.Walk(root, func(path string, info os.FileInfo, err error) error {
-		if err != nil {
-			return err
-		}
-		paths = append(paths, path)
-		return nil
-	})
-	return paths, err
-}
diff --git a/cli/azd/pkg/project/framework_service_npm.go b/cli/azd/pkg/project/framework_service_npm.go
index 31731b05583..ff97c8c95a4 100644
--- a/cli/azd/pkg/project/framework_service_npm.go
+++ b/cli/azd/pkg/project/framework_service_npm.go
@@ -131,10 +131,10 @@ func (np *npmProject) Package(
 		packageSource,
 		packageDest,
 		buildForZipOptions{
-			excludeCallback: func(src string) ([]excludeDirEntryCondition, error) {
-				return []excludeDirEntryCondition{excludeNodeModules}, nil
-			},
-		}); err != nil {
+			excludeConditions: []excludeDirEntryCondition{excludeNodeModules},
+		},
+		serviceConfig,
+	); err != nil {
 		return nil, fmt.Errorf("packaging for %s: %w", serviceConfig.Name, err)
 	}
 
diff --git a/cli/azd/pkg/project/framework_service_python.go b/cli/azd/pkg/project/framework_service_python.go
index e6bee2de71f..de2d478a576 100644
--- a/cli/azd/pkg/project/framework_service_python.go
+++ b/cli/azd/pkg/project/framework_service_python.go
@@ -131,10 +131,10 @@ func (pp *pythonProject) Package(
 		packageSource,
 		packageDest,
 		buildForZipOptions{
-			excludeCallback: func(src string) ([]excludeDirEntryCondition, error) {
-				return []excludeDirEntryCondition{excludeVirtualEnv, excludePyCache}, nil
-			},
-		}); err != nil {
+			excludeConditions: []excludeDirEntryCondition{excludeVirtualEnv, excludePyCache},
+		},
+		serviceConfig,
+	); err != nil {
 
 		return nil, fmt.Errorf("packaging for %s: %w", serviceConfig.Name, err)
 	}
diff --git a/cli/azd/pkg/project/project_utils.go b/cli/azd/pkg/project/project_utils.go
index 79b2c04a4c6..acaa8fa2e18 100644
--- a/cli/azd/pkg/project/project_utils.go
+++ b/cli/azd/pkg/project/project_utils.go
@@ -14,38 +14,30 @@ import (
 	"github.com/otiai10/copy"
 )
 
-// CreateDeployableZip creates a zip file of a folder, recursively.
-// Returns the path to the created zip file or an error if it fails.
+// createDeployableZip creates a zip file of a folder.
 func createDeployableZip(projectName string, appName string, path string) (string, error) {
-	// TODO: should probably avoid picking up files that weren't meant to be deployed (ie, local .env files, etc..)
+	// Create the output zip file path
 	filePath := filepath.Join(os.TempDir(), fmt.Sprintf("%s-%s-azddeploy-%d.zip", projectName, appName, time.Now().Unix()))
 	zipFile, err := os.Create(filePath)
 	if err != nil {
-		return "", fmt.Errorf("failed when creating zip package to deploy %s: %w", appName, err)
+		return "", fmt.Errorf("failed to create zip file: %w", err)
 	}
 
-	// Read and honor the .dotignore files
-	ignoreMatchers, err := dotignore.ReadIgnoreFiles(path)
-	if err != nil && !os.IsNotExist(err) {
-		return "", fmt.Errorf("reading .dotignore files: %w", err)
-	}
-
-	// Create the zip file, excluding files that match the .dotignore rules
-	err = rzip.CreateFromDirectoryWithIgnore(path, zipFile, ignoreMatchers)
+	// Zip the directory without any exclusions (they've already been handled in buildForZip)
+	err = rzip.CreateFromDirectory(path, zipFile)
 	if err != nil {
-		// If we fail here, just do our best to close things out and cleanup
 		zipFile.Close()
 		os.Remove(zipFile.Name())
 		return "", err
 	}
 
+	// Close the zip file and return the path
 	if err := zipFile.Close(); err != nil {
-		// May fail, but again, we'll do our best to cleanup here.
 		os.Remove(zipFile.Name())
 		return "", err
 	}
 
-	return zipFile.Name(), nil
+	return filePath, nil
 }
 
 // excludeDirEntryCondition resolves when a file or directory should be considered or not as part of build, when build is a
@@ -55,60 +47,45 @@ type excludeDirEntryCondition func(path string, file os.FileInfo) bool
 // buildForZipOptions provides a set of options for doing build for zip
 type buildForZipOptions struct {
 	excludeConditions []excludeDirEntryCondition
-	excludeCallback   func(src string) ([]excludeDirEntryCondition, error)
 }
 
-// buildForZip is used by projects whose build strategy is to only copy the source code into a folder, which is later
-// zipped for packaging. buildForZipOptions provides the specific details for each language regarding which files should
-// not be copied.
-func buildForZip(src, dst string, options buildForZipOptions) error {
-	// Add a global exclude condition for the .zipignore file
-	ignoreMatchers, err := dotignore.ReadIgnoreFiles(src, ".zipignore")
+// buildForZip is used by projects to prepare a directory for
+// zipping, excluding files based on the ignore file and other conditions.
+func buildForZip(src, dst string, options buildForZipOptions, serviceConfig *ServiceConfig) error {
+	// Lookup the appropriate ignore file name based on the service kind (Host)
+	ignoreFileName := GetIgnoreFileNameByKind(serviceConfig.Host)
+
+	// Read and honor the specified ignore file if it exists
+	ignoreMatcher, err := dotignore.ReadDotIgnoreFile(src, ignoreFileName)
 	if err != nil && !os.IsNotExist(err) {
-		return fmt.Errorf("reading .zipignore files: %w", err)
+		return fmt.Errorf("reading %s file: %w", ignoreFileName, err)
 	}
 
-	// Determine if the .zipignore file exists at the root of the service
-	zipIgnoreExists := len(ignoreMatchers) > 0
-
-	// Conditionally exclude virtual environments, __pycache__, and node_modules only if .zipignore doesn't exist
-	if !zipIgnoreExists {
-		if options.excludeCallback != nil {
-			callbackExcludes, err := options.excludeCallback(src)
-			if err != nil {
-				return fmt.Errorf("applying exclude callback: %w", err)
-			}
-			options.excludeConditions = append(options.excludeConditions, callbackExcludes...)
-		}
-	}
+	// Temporary array to build exclude conditions dynamically
+	tempExcludeConditions := []excludeDirEntryCondition{}
 
-	options.excludeConditions = append(options.excludeConditions, func(path string, file os.FileInfo) bool {
-		// Check if the relative path should be ignored based on .zipignore rules
-		if len(ignoreMatchers) > 0 {
+	// If there's no .ignore file, add the provided excludeConditions
+	if ignoreMatcher == nil {
+		tempExcludeConditions = append(tempExcludeConditions, options.excludeConditions...)
+	} else {
+		// If there's a .ignore file, apply ignoreMatcher only
+		tempExcludeConditions = append(tempExcludeConditions, func(path string, file os.FileInfo) bool {
 			relativePath, err := filepath.Rel(src, path)
-			if err != nil {
-				return false
-			}
-			isDir := file.IsDir()
-			if dotignore.ShouldIgnore(relativePath, isDir, ignoreMatchers) {
+			if err == nil && dotignore.ShouldIgnore(relativePath, file.IsDir(), ignoreMatcher) {
 				return true
 			}
-		}
-
-		// Always exclude .zipignore files
-		if filepath.Base(path) == ".zipignore" {
-			return true
-		}
-
-		return false
-	})
+			return false
+		})
+	}
 
-	// These exclude conditions apply to all projects
-	options.excludeConditions = append(options.excludeConditions, globalExcludeAzdFolder)
+	// Always append the global exclusions (e.g., .azure folder)
+	tempExcludeConditions = append(tempExcludeConditions, globalExcludeAzdFolder)
 
+	// Copy the source directory to the destination, applying the final exclude conditions
 	return copy.Copy(src, dst, copy.Options{
 		Skip: func(srcInfo os.FileInfo, src, dest string) (bool, error) {
-			for _, checkExclude := range options.excludeConditions {
+			// Apply exclude conditions (either the default or the ignoreMatcher)
+			for _, checkExclude := range tempExcludeConditions {
 				if checkExclude(src, srcInfo) {
 					return true, nil
 				}
diff --git a/cli/azd/pkg/project/service_target.go b/cli/azd/pkg/project/service_target.go
index fea7b41e0e2..a21c799b833 100644
--- a/cli/azd/pkg/project/service_target.go
+++ b/cli/azd/pkg/project/service_target.go
@@ -94,6 +94,19 @@ type ServiceTarget interface {
 	) ([]string, error)
 }
 
+// GetIgnoreFileNameByKind returns the appropriate ignore file name (e.g., .funcignore, .webappignore)
+// based on the service target kind.
+func GetIgnoreFileNameByKind(kind ServiceTargetKind) string {
+	switch kind {
+	case AzureFunctionTarget:
+		return ".funcignore"
+	case AppServiceTarget:
+		return ".webappignore"
+	default:
+		return ""
+	}
+}
+
 // NewServiceDeployResult is a helper function to create a new ServiceDeployResult
 func NewServiceDeployResult(
 	relatedResourceId string,
diff --git a/cli/azd/pkg/rzip/rzip.go b/cli/azd/pkg/rzip/rzip.go
index 84bd8b74ac5..db7b0409421 100644
--- a/cli/azd/pkg/rzip/rzip.go
+++ b/cli/azd/pkg/rzip/rzip.go
@@ -10,8 +10,6 @@ import (
 	"os"
 	"path/filepath"
 	"strings"
-
-	"github.com/denormal/go-gitignore"
 )
 
 func CreateFromDirectory(source string, buf *os.File) error {
@@ -21,104 +19,55 @@ func CreateFromDirectory(source string, buf *os.File) error {
 			return err
 		}
 
-		if info.IsDir() {
-			return nil
-		}
-		fileInfo, err := info.Info()
-		if err != nil {
-			return err
-		}
-
-		header := &zip.FileHeader{
-			Name: strings.Replace(
-				strings.TrimPrefix(
-					strings.TrimPrefix(path, source),
-					string(filepath.Separator)), "\\", "/", -1),
-			Modified: fileInfo.ModTime(),
-			Method:   zip.Deflate,
-		}
-
-		f, err := w.CreateHeader(header)
-		if err != nil {
-			return err
-		}
-		in, err := os.Open(path)
-		if err != nil {
-			return err
-		}
-		_, err = io.Copy(f, in)
+		// Use os.Lstat to get file info without following symlinks
+		fileInfo, err := os.Lstat(path)
 		if err != nil {
 			return err
 		}
-		return nil
-	})
-	if err != nil {
-		return err
-	}
 
-	return w.Close()
-}
-
-// CreateFromDirectoryWithIgnore creates a zip archive from the contents of a directory, excluding files
-// that match any of the provided ignore rules.
-func CreateFromDirectoryWithIgnore(srcDir string, writer io.Writer, ignoreMatchers []gitignore.GitIgnore) error {
-	zipWriter := zip.NewWriter(writer)
-	defer zipWriter.Close()
-
-	err := filepath.Walk(srcDir, func(path string, info os.FileInfo, err error) error {
-		if err != nil {
-			return err
-		}
-
-		// Get the relative path of the file to ensure the root directory isn't included in the zip file
-		relativePath, err := filepath.Rel(srcDir, path)
-		if err != nil {
-			return err
-		}
-
-		// Skip the root directory itself
-		if relativePath == "." {
+		// Skip symbolic links
+		if fileInfo.Mode()&os.ModeSymlink != 0 {
 			return nil
 		}
 
-		// Check if the file should be ignored based on the ignore matchers
-		isDir := info.IsDir()
-		if shouldIgnore(relativePath, isDir, ignoreMatchers) {
-			if isDir {
-				// If a directory should be ignored, skip its contents as well
-				return filepath.SkipDir
-			}
-			// Otherwise, just skip the file
-			return nil
+		// Add directories to the zip archive
+		relativePath := strings.Replace(
+			strings.TrimPrefix(
+				strings.TrimPrefix(path, source),
+				string(filepath.Separator)), "\\", "/", -1)
+
+		if fileInfo.IsDir() {
+			// Add trailing slash for directories in zip
+			relativePath += "/"
 		}
 
-		// Add the file or directory to the zip archive
-		header, err := zip.FileInfoHeader(info)
+		// Create a zip header based on file info
+		header, err := zip.FileInfoHeader(fileInfo)
 		if err != nil {
 			return err
 		}
 		header.Name = relativePath
 
-		// Ensure directories are properly handled
-		if isDir {
-			header.Name += "/"
-		} else {
+		// Add files with compression
+		if !fileInfo.IsDir() {
 			header.Method = zip.Deflate
 		}
 
-		writer, err := zipWriter.CreateHeader(header)
+		// Create the header in the zip file
+		writer, err := w.CreateHeader(header)
 		if err != nil {
 			return err
 		}
 
-		if !isDir {
-			file, err := os.Open(path)
+		// Only copy contents for files (not directories)
+		if !fileInfo.IsDir() {
+			in, err := os.Open(path)
 			if err != nil {
 				return err
 			}
-			defer file.Close()
+			defer in.Close()
 
-			_, err = io.Copy(writer, file)
+			_, err = io.Copy(writer, in)
 			if err != nil {
 				return err
 			}
@@ -126,16 +75,9 @@ func CreateFromDirectoryWithIgnore(srcDir string, writer io.Writer, ignoreMatche
 
 		return nil
 	})
-
-	return err
-}
-
-// shouldIgnore determines whether a file or directory should be ignored based on the provided ignore matchers.
-func shouldIgnore(relativePath string, isDir bool, ignoreMatchers []gitignore.GitIgnore) bool {
-	for _, matcher := range ignoreMatchers {
-		if match := matcher.Relative(relativePath, isDir); match != nil && match.Ignore() {
-			return true
-		}
+	if err != nil {
+		return err
 	}
-	return false
+
+	return w.Close()
 }
diff --git a/cli/azd/test/functional/package_test.go b/cli/azd/test/functional/package_test.go
index 5b73e083e58..d217dded3f8 100644
--- a/cli/azd/test/functional/package_test.go
+++ b/cli/azd/test/functional/package_test.go
@@ -163,6 +163,46 @@ func Test_CLI_Package(t *testing.T) {
 	require.Contains(t, packageResult.Stdout, fmt.Sprintf("Package Output: %s", os.TempDir()))
 }
 
+/*
+Test_CLI_Package_ZipIgnore
+
+This test verifies that the packaging logic correctly handles the inclusion and exclusion of files
+based on the presence or absence of `.webappignore` and `.funcignore` files. The following scenarios are covered:
+
+1. Node_App_Service_With_Webappignore
+   - Verifies that `node_modules` is included when `.webappignore` is present,
+     and that specific files like `logs/log.txt` are excluded as per the rules defined in the `.webappignore` file.
+
+2. Python_App_Service_With_Webappignore
+   - Verifies that Python-specific files like `__pycache__` and `.venv` are included when `.webappignore` is present,
+     and files like `logs/log.txt` are excluded based on the rules in the `.webappignore`.
+
+3. Python_App_Service_With_Pycache_Excluded
+   - Verifies that `__pycache__` is excluded when a `.webappignore` file explicitly contains a rule to exclude it,
+     while other directories like `.venv` are included since there is no exclusion rule for them.
+
+4. Function_App_With_Funcignore
+   - Verifies that a Function App respects the `.funcignore` file, ensuring that `logs/log.txt` is excluded
+     as per the rules defined in `.funcignore`.
+
+5. Node_App_Service_Without_Webappignore
+   - Verifies that `node_modules` is excluded when no `.webappignore` is present,
+     and that files like `logs/log.txt` are included since no exclusion rules apply without the `.webappignore`.
+
+6. Python_App_Service_Without_Webappignore
+   - Verifies that Python-specific files like `__pycache__`
+     and `.venv` are excluded by default when no `.webappignore` is present,
+     and that files like `logs/log.txt` are included.
+
+7. Function_App_Without_Funcignore
+   - Verifies that when no `.funcignore` file is present, no exclusions are applied, and files such as `logs/log.txt`
+     are included in the package.
+
+For each scenario, the test simulates the presence or absence of the relevant
+	 `.ignore` files and checks the contents of the resulting
+     zip package to ensure the correct files are included or excluded as expected.
+*/
+
 func Test_CLI_Package_ZipIgnore(t *testing.T) {
 	t.Parallel()
 	ctx, cancel := newTestContext(t)
@@ -185,8 +225,10 @@ func Test_CLI_Package_ZipIgnore(t *testing.T) {
 
 	// Print directory contents for debugging if printDebug is true
 	if printDebug {
-		printDirContents(t, "service1", filepath.Join(dir, "src", "service1"))
-		printDirContents(t, "service2", filepath.Join(dir, "src", "service2"))
+		printDirContents(t, "service_node", filepath.Join(dir, "src", "service_node"))
+		printDirContents(t, "service_python", filepath.Join(dir, "src", "service_python"))
+		printDirContents(t, "service_python_pycache", filepath.Join(dir, "src", "service_python_pycache"))
+		printDirContents(t, "service_function", filepath.Join(dir, "src", "service_function"))
 	}
 
 	// Run the init command to initialize the project
@@ -202,119 +244,107 @@ func Test_CLI_Package_ZipIgnore(t *testing.T) {
 
 	// Define the scenarios to test
 	scenarios := []struct {
-		name              string
-		description       string
-		enabled           bool
-		rootZipIgnore     string
-		service1ZipIgnore string
-		expectedFiles     map[string]map[string]bool
+		name                   string
+		description            string
+		serviceName            string // This is the actual service name used in the directory
+		expectedFiles          map[string]bool
+		shouldDeleteIgnoreFile bool // Flag to simulate the absence of .webappignore or .funcignore
 	}{
 		{
-			name: "No zipignore",
-			description: "Tests the default behavior when no .zipignore files are present. " +
-				"Verifies that common directories like __pycache__, .venv, and node_modules are excluded.",
-			enabled: true,
-			expectedFiles: map[string]map[string]bool{
-				"service1": {
-					"testfile.py":               true,
-					"__pycache__/testcache.txt": false,
-					".venv/pyvenv.cfg":          false,
-					"logs/log.txt":              true,
-				},
-				"service2": {
-					"testfile.js":                            true,
-					"node_modules/some_package/package.json": false,
-					"logs/log.txt":                           true,
-				},
+			name: "Node_App_Service_With_Webappignore",
+			description: "Verifies that node_modules are included when " +
+				".webappignore is present, and logs/log.txt is excluded.",
+			serviceName:            "service_node",
+			shouldDeleteIgnoreFile: false,
+			expectedFiles: map[string]bool{
+				"testfile.js":                        true,
+				"node_modules/some_package/index.js": true,  // Included because .webappignore is present
+				"logs/log.txt":                       false, // Excluded by .webappignore
 			},
 		},
 		{
-			name: "Root zipignore excluding pycache",
-			description: "Tests the behavior when a root .zipignore excludes __pycache__.  " +
-				"Verifies that __pycache__ is excluded in both services, but other directories are included.",
-			enabled:       true,
-			rootZipIgnore: "__pycache__\n",
-			expectedFiles: map[string]map[string]bool{
-				"service1": {
-					"testfile.py":               true,
-					"__pycache__/testcache.txt": false,
-					".venv/pyvenv.cfg":          true,
-					"logs/log.txt":              true,
-				},
-				"service2": {
-					"testfile.js":                            true,
-					"node_modules/some_package/package.json": true,
-					"logs/log.txt":                           true,
-				},
+			name: "Python_App_Service_With_Webappignore",
+			description: "Verifies that __pycache__ and .venv are included when " +
+				" .webappignore is present, and logs/log.txt is excluded.",
+			serviceName:            "service_python",
+			shouldDeleteIgnoreFile: false,
+			expectedFiles: map[string]bool{
+				"testfile.py":               true,
+				"__pycache__/testcache.txt": true,  // Included because .webappignore is present
+				".venv/pyvenv.cfg":          true,  // Included because .webappignore is present
+				"logs/log.txt":              false, // Excluded by .webappignore
 			},
 		},
 		{
-			name: "Root and Service1 zipignore",
-			description: "Tests the behavior when both the root and Service1 have .zipignore files.  " +
-				"Verifies that the root .zipignore affects both services, but Service1's .zipignore " +
-				"takes precedence for its own files.",
-			enabled:           true,
-			rootZipIgnore:     "logs/\n",
-			service1ZipIgnore: "__pycache__\n",
-			expectedFiles: map[string]map[string]bool{
-				"service1": {
-					"testfile.py":               true,
-					"__pycache__/testcache.txt": false,
-					".venv/pyvenv.cfg":          true,
-					"logs/log.txt":              false,
-				},
-				"service2": {
-					"testfile.js":                            true,
-					"node_modules/some_package/package.json": true,
-					"logs/log.txt":                           false,
-				},
+			name:                   "Python_App_Service_With_Pycache_Excluded",
+			description:            "Verifies that __pycache__ is excluded when .webappignore has a rule to exclude it.",
+			serviceName:            "service_python_pycache",
+			shouldDeleteIgnoreFile: false,
+			expectedFiles: map[string]bool{
+				"testfile.py":               true,
+				"__pycache__/testcache.txt": false, // Excluded by .webappignore rule
+				".venv/pyvenv.cfg":          true,  // Included because no exclusion rule
+				"logs/log.txt":              false, // Excluded by .webappignore
 			},
 		},
 		{
-			name: "Service1 zipignore only",
-			description: "Tests the behavior when only Service1 has a .zipignore file. " +
-				"Verifies that Service1 follows its .zipignore, while Service2 uses the default behavior.",
-			enabled:           true,
-			service1ZipIgnore: "__pycache__\n",
-			expectedFiles: map[string]map[string]bool{
-				"service1": {
-					"testfile.py":               true,
-					"__pycache__/testcache.txt": false,
-					".venv/pyvenv.cfg":          true,
-					"logs/log.txt":              true,
-				},
-				"service2": {
-					"testfile.js":                            true,
-					"node_modules/some_package/package.json": false,
-					"logs/log.txt":                           true,
-				},
+			name:                   "Function_App_With_Funcignore",
+			description:            "Verifies that logs/log.txt is excluded when .funcignore is present.",
+			serviceName:            "service_function",
+			shouldDeleteIgnoreFile: false,
+			expectedFiles: map[string]bool{
+				"testfile.py":               true,
+				"__pycache__/testcache.txt": true,
+				".venv/pyvenv.cfg":          true,
+				"logs/log.txt":              false, // Excluded by .funcignore
+			},
+		},
+		{
+			name:                   "Node_App_Service_Without_Webappignore",
+			description:            "Verifies that node_modules is excluded when .webappignore is not present.",
+			serviceName:            "service_node",
+			shouldDeleteIgnoreFile: true,
+			expectedFiles: map[string]bool{
+				"testfile.js":                        true,
+				"node_modules/some_package/index.js": false, // Excluded because no .webappignore
+				"logs/log.txt":                       true,  // Included because no .webappignore
+			},
+		},
+		{
+			name:                   "Python_App_Service_Without_Webappignore",
+			description:            "Verifies that __pycache__ and .venv are excluded when .webappignore is not present.",
+			serviceName:            "service_python",
+			shouldDeleteIgnoreFile: true,
+			expectedFiles: map[string]bool{
+				"testfile.py":               true,
+				"__pycache__/testcache.txt": false, // Excluded because no .webappignore
+				".venv/pyvenv.cfg":          false, // Excluded because no .webappignore
+				"logs/log.txt":              true,  // Included because no .webappignore
+			},
+		},
+		{
+			name:                   "Function_App_Without_Funcignore",
+			description:            "Verifies that logs/log.txt is included when .funcignore is not present.",
+			serviceName:            "service_function",
+			shouldDeleteIgnoreFile: true,
+			expectedFiles: map[string]bool{
+				"testfile.py":               true,
+				"__pycache__/testcache.txt": false,
+				".venv/pyvenv.cfg":          false,
+				"logs/log.txt":              true, // Included because no .funcignore
 			},
 		},
 	}
 
 	for _, scenario := range scenarios {
-		if !scenario.enabled {
-			continue
-		}
-
 		t.Run(scenario.name, func(t *testing.T) {
 			// Print the scenario description
 			t.Logf("Scenario: %s - %s", scenario.name, scenario.description)
 
-			// Set up .zipignore files based on the scenario
-			if scenario.rootZipIgnore != "" {
-				err := os.WriteFile(filepath.Join(dir, ".zipignore"), []byte(scenario.rootZipIgnore), 0600)
-				require.NoError(t, err)
-			}
-			if scenario.service1ZipIgnore != "" {
-				err := os.WriteFile(filepath.Join(dir, "src", "service1", ".zipignore"),
-					[]byte(scenario.service1ZipIgnore), 0600)
-				require.NoError(t, err)
-			}
-
-			// Print directory contents after writing .zipignore if printDebug is true
-			if printDebug {
-				printDirContents(t, "service1", filepath.Join(dir, "src", "service1"))
+			// If we're simulating the absence of the ignore file, delete it
+			if scenario.shouldDeleteIgnoreFile {
+				os.Remove(filepath.Join(dir, "src", scenario.serviceName, ".webappignore"))
+				os.Remove(filepath.Join(dir, "src", scenario.serviceName, ".funcignore"))
 			}
 
 			// Run the package command and specify an output path
@@ -325,26 +355,11 @@ func Test_CLI_Package_ZipIgnore(t *testing.T) {
 			_, err = cli.RunCommand(ctx, "package", "--output-path", outputDir)
 			require.NoError(t, err)
 
-			// Print directory contents of the output directory if printDebug is true
-			if printDebug {
-				printDirContents(t, scenario.name+" output", outputDir)
-			}
-
-			// Verify that the package was created and the output directory exists
-			files, err := os.ReadDir(outputDir)
-			require.NoError(t, err)
-			require.Len(t, files, 2)
-
-			// Check contents of Service1 package
-			checkServicePackage(t, outputDir, "service1", scenario.expectedFiles["service1"], printDebug)
-
-			// Check contents of Service2 package
-			checkServicePackage(t, outputDir, "service2", scenario.expectedFiles["service2"], printDebug)
+			// Check contents of Service package
+			checkServicePackage(t, outputDir, scenario.serviceName, scenario.expectedFiles, printDebug)
 
-			// Clean up .zipignore files and generated zip files
+			// Clean up generated zip files and ignore files
 			os.RemoveAll(outputDir)
-			os.Remove(filepath.Join(dir, ".zipignore"))
-			os.Remove(filepath.Join(dir, "src", "service1", ".zipignore"))
 		})
 	}
 }
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/azure.yaml b/cli/azd/test/functional/testdata/samples/dotignore/azure.yaml
index 0f9109900fa..4461b426be1 100644
--- a/cli/azd/test/functional/testdata/samples/dotignore/azure.yaml
+++ b/cli/azd/test/functional/testdata/samples/dotignore/azure.yaml
@@ -2,11 +2,19 @@
 
 name: dotignoretest
 services:
-  service1:
-    project: src/service1
+  service_python:
+    project: src/service_python
     language: python
     host: appservice
-  service2:
-    project: src/service2
+  service_node:
+    project: src/service_node
     language: js
+    host: appservice
+  service_function:
+    project: src/service_function
+    language: python
+    host: function
+  service_python_pycache:
+    project: src/service_python_pycache
+    language: python
     host: appservice
\ No newline at end of file
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_function/.funcignore b/cli/azd/test/functional/testdata/samples/dotignore/src/service_function/.funcignore
new file mode 100644
index 00000000000..6d2b2ed9cc7
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_function/.funcignore
@@ -0,0 +1 @@
+logs/log.txt
\ No newline at end of file
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service1/.venv/pyvenv.cfg b/cli/azd/test/functional/testdata/samples/dotignore/src/service_function/.venv/pyvenv.cfg
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service1/.venv/pyvenv.cfg
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_function/.venv/pyvenv.cfg
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service1/__pycache__/testcache.txt b/cli/azd/test/functional/testdata/samples/dotignore/src/service_function/__pycache__/testcache.txt
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service1/__pycache__/testcache.txt
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_function/__pycache__/testcache.txt
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service1/logs/log.txt b/cli/azd/test/functional/testdata/samples/dotignore/src/service_function/logs/log.txt
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service1/logs/log.txt
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_function/logs/log.txt
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service1/testfile.py b/cli/azd/test/functional/testdata/samples/dotignore/src/service_function/testfile.py
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service1/testfile.py
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_function/testfile.py
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_node/.webappignore b/cli/azd/test/functional/testdata/samples/dotignore/src/service_node/.webappignore
new file mode 100644
index 00000000000..6d2b2ed9cc7
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_node/.webappignore
@@ -0,0 +1 @@
+logs/log.txt
\ No newline at end of file
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service2/logs/log.txt b/cli/azd/test/functional/testdata/samples/dotignore/src/service_node/logs/log.txt
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service2/logs/log.txt
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_node/logs/log.txt
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service2/node_modules/.package-lock.json b/cli/azd/test/functional/testdata/samples/dotignore/src/service_node/node_modules/.package-lock.json
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service2/node_modules/.package-lock.json
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_node/node_modules/.package-lock.json
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service2/node_modules/some_package/index.js b/cli/azd/test/functional/testdata/samples/dotignore/src/service_node/node_modules/some_package/index.js
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service2/node_modules/some_package/index.js
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_node/node_modules/some_package/index.js
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service2/node_modules/some_package/package.json b/cli/azd/test/functional/testdata/samples/dotignore/src/service_node/node_modules/some_package/package.json
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service2/node_modules/some_package/package.json
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_node/node_modules/some_package/package.json
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service2/package-lock.json b/cli/azd/test/functional/testdata/samples/dotignore/src/service_node/package-lock.json
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service2/package-lock.json
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_node/package-lock.json
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service2/package.json b/cli/azd/test/functional/testdata/samples/dotignore/src/service_node/package.json
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service2/package.json
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_node/package.json
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service2/testfile.js b/cli/azd/test/functional/testdata/samples/dotignore/src/service_node/testfile.js
similarity index 100%
rename from cli/azd/test/functional/testdata/samples/dotignore/src/service2/testfile.js
rename to cli/azd/test/functional/testdata/samples/dotignore/src/service_node/testfile.js
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/.venv/lib64/python3.10/site-packages/_yaml/__init__.py b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/.venv/lib64/python3.10/site-packages/_yaml/__init__.py
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/.venv/pyvenv.cfg b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/.venv/pyvenv.cfg
new file mode 100644
index 00000000000..2bc7ab42877
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/.venv/pyvenv.cfg
@@ -0,0 +1 @@
+home = /usr/local/bin/python
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/.webappignore b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/.webappignore
new file mode 100644
index 00000000000..6d2b2ed9cc7
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/.webappignore
@@ -0,0 +1 @@
+logs/log.txt
\ No newline at end of file
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/__pycache__/testcache.txt b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/__pycache__/testcache.txt
new file mode 100644
index 00000000000..d24b1df1aca
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/__pycache__/testcache.txt
@@ -0,0 +1 @@
+binary data
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/logs/log.txt b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/logs/log.txt
new file mode 100644
index 00000000000..c3463ec70c8
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/logs/log.txt
@@ -0,0 +1 @@
+Log data...
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/testfile.py b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/testfile.py
new file mode 100644
index 00000000000..7df869a15e7
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python/testfile.py
@@ -0,0 +1 @@
+print("Hello, World!")
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/.venv/pyvenv.cfg b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/.venv/pyvenv.cfg
new file mode 100644
index 00000000000..2bc7ab42877
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/.venv/pyvenv.cfg
@@ -0,0 +1 @@
+home = /usr/local/bin/python
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/.webappignore b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/.webappignore
new file mode 100644
index 00000000000..bb379adcb0b
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/.webappignore
@@ -0,0 +1,2 @@
+__pycache__/
+logs/log.txt
\ No newline at end of file
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/__pycache__/testcache.txt b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/__pycache__/testcache.txt
new file mode 100644
index 00000000000..d24b1df1aca
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/__pycache__/testcache.txt
@@ -0,0 +1 @@
+binary data
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/logs/log.txt b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/logs/log.txt
new file mode 100644
index 00000000000..c3463ec70c8
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/logs/log.txt
@@ -0,0 +1 @@
+Log data...
diff --git a/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/testfile.py b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/testfile.py
new file mode 100644
index 00000000000..7df869a15e7
--- /dev/null
+++ b/cli/azd/test/functional/testdata/samples/dotignore/src/service_python_pycache/testfile.py
@@ -0,0 +1 @@
+print("Hello, World!")