diff --git a/lib/tests/tests/issues/obe_10735_array_index_cap.vrl b/lib/tests/tests/issues/obe_10735_array_index_cap.vrl
new file mode 100644
index 0000000000..c36b87b5d8
--- /dev/null
+++ b/lib/tests/tests/issues/obe_10735_array_index_cap.vrl
@@ -0,0 +1,15 @@
+# issue: OBE-10735
+# Assigning to a large array index padded the array with `Value::Null` up to that index with no
+# cap, so an event-controlled index could exhaust memory. Indices beyond ±1048576 (2^20) are now
+# ignored. The limit was raised from the original ±32768 after review feedback that the smaller
+# cap could reject legitimate large-array use cases; 2^20 still bounds a single indexed write's
+# preallocation to ~42MB (Value is 40 bytes) instead of being unbounded.
+# result: [0, 1048577]
+
+capped = []
+capped[2000000] = 1
+
+allowed = []
+allowed[1048576] = 1
+
+[length(capped), length(allowed)]
diff --git a/src/value/value/crud/insert.rs b/src/value/value/crud/insert.rs
index 499905081b..34dce4f874 100644
--- a/src/value/value/crud/insert.rs
+++ b/src/value/value/crud/insert.rs
@@ -1,4 +1,4 @@
-use super::ValueCollection;
+use super::{ValueCollection, MAX_ARRAY_INDEX};
 use crate::path::BorrowedSegment;
 use crate::value::Value;
 use std::borrow::Borrow;
@@ -26,10 +26,11 @@ pub fn insert<'a, T: ValueCollection>(
             if let Some(Value::Array(array)) = value.get_mut_value(key.borrow()) {
                 insert(array, index, path_iter, insert_value)
             } else {
+                let max_capacity = MAX_ARRAY_INDEX + 1;
                 let capacity = if index >= 0 {
-                    (index as usize) + 1
+                    ((index as usize) + 1).min(max_capacity)
                 } else {
-                    (-index) as usize
+                    index.unsigned_abs().min(max_capacity)
                 };
                 let mut array = Vec::with_capacity(capacity);
                 let prev_value = insert(&mut array, index, path_iter, insert_value);
@@ -77,6 +78,42 @@ mod test {
         assert_eq!(value, expected);
     }
 
+    // OBE-10735: `insert_value` padded the array with `Value::Null` up to an arbitrary index,
+    // and `Vec::with_capacity(index + 1)` allocated for it up front — an event-controlled path
+    // index was enough to exhaust memory.
+    #[test]
+    fn test_insert_beyond_max_array_index_is_rejected() {
+        let mut value = Value::Null;
+        assert_eq!(value.insert("[2000000]", 1), None);
+        assert_eq!(value, Value::from(json!([])));
+    }
+
+    #[test]
+    fn test_insert_beyond_max_negative_array_index_is_rejected() {
+        let mut value = Value::Null;
+        assert_eq!(value.insert("[-2000000]", 1), None);
+        assert_eq!(value, Value::from(json!([])));
+    }
+
+    // `-index` on `isize::MIN` overflows; `unsigned_abs()` must be used instead so this doesn't
+    // panic on the exact class of input the array-index cap is meant to guard against.
+    #[test]
+    fn test_insert_at_isize_min_index_does_not_panic() {
+        let mut value = Value::Null;
+        let path = vec![BorrowedSegment::Index(isize::MIN)].into_iter();
+        assert_eq!(insert(&mut value, (), path, Value::Integer(1)), None);
+        assert_eq!(value, Value::from(json!([])));
+    }
+
+    #[test]
+    fn test_insert_at_max_array_index_is_allowed() {
+        let mut value = Value::Null;
+        assert_eq!(value.insert("[1048576]", 1), None);
+        let array = value.as_array().expect("expected an array");
+        assert_eq!(array.len(), 1_048_577);
+        assert_eq!(array[1_048_576], Value::Integer(1));
+    }
+
     #[test]
     fn test_insert_negative_index() {
         let mut value = Value::Null;
diff --git a/src/value/value/crud/mod.rs b/src/value/value/crud/mod.rs
index 9883adc515..9cc7dc82f0 100644
--- a/src/value/value/crud/mod.rs
+++ b/src/value/value/crud/mod.rs
@@ -1,6 +1,12 @@
 use crate::value::{KeyString, ObjectMap, Value};
 use std::borrow::Borrow;
 
+/// Largest array index `insert_value` will grow an array to, in either direction.
+/// Prevents an event-controlled index (e.g. `.foo[40000000] = 1`) from exhausting memory.
+/// `Value` is 40 bytes, so this bounds a single indexed write's preallocation to ~42MB
+/// (1_048_576 * 40 bytes) instead of being unbounded. See OBE-10735.
+const MAX_ARRAY_INDEX: usize = 1_048_576; // 2^20
+
 mod get;
 mod get_mut;
 mod insert;
@@ -104,6 +110,19 @@ impl ValueCollection for Vec<Value> {
     }
 
     fn insert_value(&mut self, key: isize, value: Value) -> Option<Value> {
+        let max_index = MAX_ARRAY_INDEX as isize;
+        if !(-max_index..=max_index).contains(&key) {
+            // TODO: VRL-side array-index assignment is currently infallible (see
+            // compiler::expression::assignment::Target::insert), so we can't surface this as a
+            // proper VRL runtime error without a larger change. Log it so it's at least
+            // observable instead of a silent no-op.
+            tracing::warn!(
+                index = key,
+                max_index = MAX_ARRAY_INDEX,
+                "array index assignment out of range, write dropped"
+            );
+            return None;
+        }
         if key >= 0 {
             if self.len() <= (key as usize) {
                 while self.len() <= (key as usize) {