diff --git a/src/libs/API/parameters/RejectMoneyRequestParams.ts b/src/libs/API/parameters/RejectMoneyRequestParams.ts
index a49c17bac363e..193b78a479dba 100644
--- a/src/libs/API/parameters/RejectMoneyRequestParams.ts
+++ b/src/libs/API/parameters/RejectMoneyRequestParams.ts
@@ -3,8 +3,12 @@ type RejectMoneyRequestParams = {
     reportID: string;
     comment: string;
     rejectedToReportID?: string;
+    reportPreviewReportActionID?: string;
     rejectedActionReportActionID: string;
     rejectedCommentReportActionID: string;
+    createdIOUReportActionID?: string;
+    expenseMovedReportActionID?: string;
+    expenseCreatedReportActionID?: string;
 };
 
 export default RejectMoneyRequestParams;
diff --git a/src/libs/actions/IOU.ts b/src/libs/actions/IOU.ts
index 0f7c976896179..d75268e21633e 100644
--- a/src/libs/actions/IOU.ts
+++ b/src/libs/actions/IOU.ts
@@ -78,7 +78,7 @@ import Parser from '@libs/Parser';
 import {getCustomUnitID} from '@libs/PerDiemRequestUtils';
 import Performance from '@libs/Performance';
 import Permissions from '@libs/Permissions';
-import {getAccountIDsByLogins} from '@libs/PersonalDetailsUtils';
+import {getAccountIDsByLogins, getLoginByAccountID} from '@libs/PersonalDetailsUtils';
 import {addSMSDomainIfPhoneNumber} from '@libs/PhoneNumber';
 import {
     getCorrectedAutoReportingFrequency,
@@ -12741,6 +12741,7 @@ function rejectMoneyRequest(transactionID: string, reportID: string, comment: st
     const transaction = allTransactions[`${ONYXKEYS.COLLECTION.TRANSACTION}${transactionID}`];
     const transactionAmount = getAmount(transaction);
     const report = allReports?.[`${ONYXKEYS.COLLECTION.REPORT}${reportID}`];
+    const policyExpenseChat = allReports?.[`${ONYXKEYS.COLLECTION.REPORT}${report?.chatReportID}`];
     const policy = allPolicies?.[`${ONYXKEYS.COLLECTION.POLICY}${report?.policyID}`];
     const isPolicyDelayedSubmissionEnabled = policy ? isDelayedSubmissionEnabled(policy) : false;
     const isIOU = isIOUReport(report);
@@ -12755,10 +12756,15 @@ function rejectMoneyRequest(transactionID: string, reportID: string, comment: st
 
     const reportAction = getIOUActionForReportID(reportID, transactionID);
     const childReportID = reportAction?.childReportID;
+    const transactionThreadReport = allReports?.[`${ONYXKEYS.COLLECTION.REPORT}${childReportID}`];
 
     let movedToReport;
     let rejectedToReportID;
     let urlToNavigateBack;
+    let reportPreviewAction: OnyxTypes.ReportAction | undefined;
+    let createdIOUReportActionID;
+    let expenseMovedReportActionID;
+    let expenseCreatedReportActionID;
 
     const hasMultipleExpenses = getReportTransactions(reportID).length > 1;
 
@@ -12770,6 +12776,7 @@ function rejectMoneyRequest(transactionID: string, reportID: string, comment: st
     const baseTimestamp = DateUtils.getDBTime();
     const optimisticRejectReportAction = buildOptimisticRejectReportAction(baseTimestamp);
     const optimisticRejectReportActionComment = buildOptimisticRejectReportActionComment(comment, DateUtils.addMillisecondsFromDateTime(baseTimestamp, 1));
+    let movedTransactionAction;
 
     // Build successData and failureData to prevent duplication
     const successData: OnyxUpdate[] = [];
@@ -12938,33 +12945,234 @@ function rejectMoneyRequest(transactionID: string, reportID: string, comment: st
         if (existingOpenReport) {
             movedToReport = existingOpenReport;
             rejectedToReportID = existingOpenReport.reportID;
-            optimisticData.push({
-                onyxMethod: Onyx.METHOD.MERGE,
-                key: `${ONYXKEYS.COLLECTION.REPORT}${movedToReport?.reportID}`,
-                value: {
-                    ...movedToReport,
-                    total: (movedToReport?.total ?? 0) - transactionAmount,
-                },
+
+            const [, , iouAction, ,] = buildOptimisticMoneyRequestEntities({
+                iouReport: movedToReport,
+                type: CONST.IOU.REPORT_ACTION_TYPE.CREATE,
+                amount: transactionAmount,
+                currency: getCurrency(transaction),
+                comment,
+                payeeEmail: getLoginByAccountID(report.ownerAccountID ?? CONST.DEFAULT_NUMBER_ID) ?? '',
+                participants: [{accountID: report?.ownerAccountID}],
+                transactionID: transaction.transactionID,
+                existingTransactionThreadReportID: childReportID,
+                shouldGenerateTransactionThreadReport: false,
             });
 
+            optimisticData.push(
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${movedToReport?.reportID}`,
+                    value: {
+                        ...movedToReport,
+                        total: (movedToReport?.total ?? 0) - transactionAmount,
+                    },
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${rejectedToReportID}`,
+                    value: {[iouAction.reportActionID]: iouAction},
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${childReportID}`,
+                    value: {
+                        parentReportActionID: iouAction.reportActionID,
+                        parentReportID: rejectedToReportID,
+                    },
+                },
+            );
+
             // Add success data for existing report update
-            successData.push({
-                onyxMethod: Onyx.METHOD.MERGE,
-                key: `${ONYXKEYS.COLLECTION.REPORT}${movedToReport?.reportID}`,
-                value: {pendingFields: {total: null}},
-            });
+            successData.push(
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${movedToReport?.reportID}`,
+                    value: {pendingFields: {total: null}},
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${rejectedToReportID}`,
+                    value: {[iouAction.reportActionID]: {pendingAction: null}},
+                },
+            );
 
-            // Add failure data to revert existing report total
-            failureData.push({
-                onyxMethod: Onyx.METHOD.MERGE,
-                key: `${ONYXKEYS.COLLECTION.REPORT}${movedToReport?.reportID}`,
-                value: {
-                    total: movedToReport?.total ?? 0,
-                    pendingFields: {total: null},
+            failureData.push(
+                // Add failure data to revert existing report total
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${movedToReport?.reportID}`,
+                    value: {
+                        total: movedToReport?.total ?? 0,
+                        pendingFields: {total: null},
+                    },
                 },
-            });
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${childReportID}`,
+                    value: {
+                        parentReportActionID: transactionThreadReport?.parentReportActionID,
+                        parentReportID: transactionThreadReport?.parentReportID,
+                    },
+                },
+            );
         } else {
+            // Create optimistic report for the rejected transaction
             rejectedToReportID = generateReportID();
+            const newExpenseReport = buildOptimisticExpenseReport(
+                report.chatReportID,
+                report?.policyID,
+                report?.ownerAccountID ?? CONST.DEFAULT_NUMBER_ID,
+                transactionAmount,
+                getCurrency(transaction),
+                transactionAmount,
+                undefined,
+                rejectedToReportID,
+            );
+            const [, createdActionForExpenseReport, iouAction, ,] = buildOptimisticMoneyRequestEntities({
+                iouReport: newExpenseReport,
+                type: CONST.IOU.REPORT_ACTION_TYPE.CREATE,
+                amount: transactionAmount,
+                currency: getCurrency(transaction),
+                comment,
+                payeeEmail: currentUserEmail,
+                participants: [{accountID: report?.ownerAccountID}],
+                transactionID: transaction.transactionID,
+                existingTransactionThreadReportID: childReportID,
+                shouldGenerateTransactionThreadReport: false,
+            });
+
+            reportPreviewAction = buildOptimisticReportPreview(policyExpenseChat, newExpenseReport, undefined, transaction, undefined);
+            movedTransactionAction = buildOptimisticMovedTransactionAction(childReportID, newExpenseReport.reportID);
+            createdIOUReportActionID = iouAction.reportActionID;
+            expenseMovedReportActionID = movedTransactionAction.reportActionID;
+            expenseCreatedReportActionID = createdActionForExpenseReport.reportActionID;
+            newExpenseReport.parentReportActionID = reportPreviewAction.reportActionID;
+            optimisticData.push(
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${policyExpenseChat?.reportID}`,
+                    value: {
+                        lastVisibleActionCreated: reportPreviewAction.created,
+                    },
+                },
+                {
+                    onyxMethod: Onyx.METHOD.SET,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${rejectedToReportID}`,
+                    value: {
+                        ...newExpenseReport,
+                        pendingFields: {createReport: CONST.RED_BRICK_ROAD_PENDING_ACTION.ADD},
+                    },
+                },
+                {
+                    onyxMethod: Onyx.METHOD.SET,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_METADATA}${rejectedToReportID}`,
+                    value: {
+                        isOptimisticReport: true,
+                        hasOnceLoadedReportActions: true,
+                    },
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${rejectedToReportID}`,
+                    value: {[createdActionForExpenseReport.reportActionID]: createdActionForExpenseReport, [iouAction.reportActionID]: iouAction},
+                },
+                {
+                    onyxMethod: Onyx.METHOD.SET,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_NAME_VALUE_PAIRS}${rejectedToReportID}`,
+                    value: {
+                        parentReportID: report?.chatReportID,
+                    },
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${policyExpenseChat?.reportID}`,
+                    value: {
+                        [reportPreviewAction.reportActionID]: reportPreviewAction,
+                    },
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${childReportID}`,
+                    value: {
+                        parentReportActionID: iouAction.reportActionID,
+                        parentReportID: rejectedToReportID,
+                    },
+                },
+            );
+            successData.push(
+                {
+                    onyxMethod: Onyx.METHOD.SET,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${rejectedToReportID}`,
+                    value: {
+                        pendingFields: null,
+                    },
+                },
+                {
+                    onyxMethod: Onyx.METHOD.SET,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_METADATA}${rejectedToReportID}`,
+                    value: {
+                        isOptimisticReport: null,
+                    },
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${rejectedToReportID}`,
+                    value: {[createdActionForExpenseReport.reportActionID]: {pendingAction: null}, [iouAction.reportActionID]: {pendingAction: null}},
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${policyExpenseChat?.reportID}`,
+                    value: {
+                        [reportPreviewAction.reportActionID]: {pendingAction: null},
+                    },
+                },
+            );
+
+            failureData.push(
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${policyExpenseChat?.reportID}`,
+                    value: {
+                        lastVisibleActionCreated: policyExpenseChat?.lastVisibleActionCreated,
+                    },
+                },
+                {
+                    onyxMethod: Onyx.METHOD.SET,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${rejectedToReportID}`,
+                    value: null,
+                },
+                {
+                    onyxMethod: Onyx.METHOD.SET,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_METADATA}${rejectedToReportID}`,
+                    value: null,
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${rejectedToReportID}`,
+                    value: null,
+                },
+                {
+                    onyxMethod: Onyx.METHOD.SET,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_NAME_VALUE_PAIRS}${rejectedToReportID}`,
+                    value: null,
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${policyExpenseChat?.reportID}`,
+                    value: {
+                        [reportPreviewAction.reportActionID]: null,
+                    },
+                },
+                {
+                    onyxMethod: Onyx.METHOD.MERGE,
+                    key: `${ONYXKEYS.COLLECTION.REPORT}${childReportID}`,
+                    value: {
+                        parentReportActionID: transactionThreadReport?.parentReportActionID,
+                        parentReportID: transactionThreadReport?.parentReportID,
+                    },
+                },
+            );
         }
         optimisticData.push(
             {
@@ -13069,6 +13277,7 @@ function rejectMoneyRequest(transactionID: string, reportID: string, comment: st
         value: {
             [optimisticRejectReportAction.reportActionID]: optimisticRejectReportAction,
             [optimisticRejectReportActionComment.reportActionID]: optimisticRejectReportActionComment,
+            ...(movedTransactionAction ? {[movedTransactionAction.reportActionID]: movedTransactionAction} : {}),
         },
     });
 
@@ -13187,8 +13396,12 @@ function rejectMoneyRequest(transactionID: string, reportID: string, comment: st
         reportID,
         comment,
         rejectedToReportID,
+        reportPreviewReportActionID: reportPreviewAction?.reportActionID,
         rejectedActionReportActionID: optimisticRejectReportAction.reportActionID,
         rejectedCommentReportActionID: optimisticRejectReportActionComment.reportActionID,
+        createdIOUReportActionID,
+        expenseMovedReportActionID,
+        expenseCreatedReportActionID,
     };
 
     // Make API call