diff --git a/public/app/features/stars/StarToolbarButton.test.tsx b/public/app/features/stars/StarToolbarButton.test.tsx
index 2c3e2e7468d..d4fde427014 100644
--- a/public/app/features/stars/StarToolbarButton.test.tsx
+++ b/public/app/features/stars/StarToolbarButton.test.tsx
@@ -1,6 +1,7 @@
-import { render, screen, testWithFeatureToggles } from 'test/test-utils';
+import { render, screen, testWithFeatureToggles, waitFor } from 'test/test-utils';
 
 import { GrafanaConfig, locationUtil } from '@grafana/data';
+import { selectors } from '@grafana/e2e-selectors';
 import { config, setBackendSrv } from '@grafana/runtime';
 import { setupMockServer } from '@grafana/test-utils/server';
 import { getFolderFixtures } from '@grafana/test-utils/unstable';
@@ -110,5 +111,43 @@ describe('StarToolbarButton', () => {
 
       expect(screen.queryByTestId(expectedTestId)).not.toBeInTheDocument();
     });
+
+    it('shows spinner initially and transitions to empty star when loading completes with no starred items', async () => {
+      setup(itemToStar);
+      const button = screen.getByTestId(selectors.components.NavToolbar.markAsFavorite);
+
+      // Initially, button should be disabled (loading state)
+      expect(button).toBeDisabled();
+
+      // Wait for loading to complete
+      await waitFor(
+        () => {
+          expect(button).not.toBeDisabled();
+        },
+        { timeout: 3000 }
+      );
+
+      // After loading, should show "Mark as favorite" (empty star state)
+      expect(await findStarButton(itemToStar.title, false)).toBeInTheDocument();
+    });
+
+    it('shows spinner initially and transitions to filled star when loading completes with starred item', async () => {
+      setup(existingStarredItem);
+      const button = screen.getByTestId(selectors.components.NavToolbar.markAsFavorite);
+
+      // Initially, button should be disabled (loading state)
+      expect(button).toBeDisabled();
+
+      // Wait for loading to complete
+      await waitFor(
+        () => {
+          expect(button).not.toBeDisabled();
+        },
+        { timeout: 3000 }
+      );
+
+      // After loading, should show "Unmark as favorite" (filled star state)
+      expect(await findStarButton(existingStarredItem.title, true)).toBeInTheDocument();
+    });
   });
 });
diff --git a/public/app/features/stars/StarToolbarButton.tsx b/public/app/features/stars/StarToolbarButton.tsx
index b6af50ce36c..9843f5904d2 100644
--- a/public/app/features/stars/StarToolbarButton.tsx
+++ b/public/app/features/stars/StarToolbarButton.tsx
@@ -39,7 +39,7 @@ export function StarToolbarButton({ title, group, kind, id, onStarChange }: Prop
     onStarChange?.(id, !isStarred);
   };
 
-  const iconProps = (() => {
+  const iconProps = useMemo(() => {
     if (isLoading) {
       return { name: 'spinner', type: 'default' } as const;
     }
@@ -47,7 +47,7 @@ export function StarToolbarButton({ title, group, kind, id, onStarChange }: Prop
       return { name: 'favorite', type: 'mono' } as const;
     }
     return { name: 'star', type: 'default' } as const;
-  })();
+  }, [isLoading, isStarred]);
 
   const tooltipAndLabel = (() => {
     return isStarred
@@ -55,7 +55,7 @@ export function StarToolbarButton({ title, group, kind, id, onStarChange }: Prop
       : { tooltip: tooltips.star, label: isLoading ? undefined : tooltips.starWithTitle };
   })();
 
-  const icon = <Icon {...iconProps} size="lg" />;
+  const icon = <Icon {...iconProps} size="lg" key={`${isLoading}-${isStarred}`} />;
   return (
     <ToolbarButton
       disabled={isLoading}
diff --git a/public/app/features/stars/hooks.ts b/public/app/features/stars/hooks.ts
index d7768c1c53c..0a06612373c 100644
--- a/public/app/features/stars/hooks.ts
+++ b/public/app/features/stars/hooks.ts
@@ -61,26 +61,45 @@ export const useStarredItems = (group: string, kind: string) => {
   const name = `user-${contextSrv.user.uid}`;
   const appPlatform = config.featureToggles.starsFromAPIServer;
   const legacyResponse = useLegacyGetStarsQuery(appPlatform ? skipToken : undefined);
-  const appPlatformResponse = useListStarsQuery(!appPlatform ? skipToken : { fieldSelector: `metadata.name=${name}` });
+  const queryArgs = !appPlatform ? skipToken : { fieldSelector: `metadata.name=${name}` };
+  const appPlatformResponse = useListStarsQuery(queryArgs);
 
   const appPlatformStarredItems = useMemo(() => {
-    const { data } = appPlatformResponse;
-    if (data) {
-      const starredItems = appPlatformResponse.data?.items || [];
-      if (!starredItems.length) {
-        return [];
-      }
-      return starredItems[0]?.spec.resource.find((info) => info.group === group && info.kind === kind)?.names || [];
+    const { data, isLoading, isUninitialized } = appPlatformResponse;
+
+    // If query hasn't been initiated yet or is still loading, return undefined to show loading state
+    if (isUninitialized || isLoading) {
+      return undefined;
     }
-    return undefined;
+
+    // If query completed but no data, return empty array
+    if (!data) {
+      return [];
+    }
+
+    const starredItems = appPlatformResponse.data?.items || [];
+    if (!starredItems.length) {
+      return [];
+    }
+
+    return starredItems[0]?.spec.resource.find((info) => info.group === group && info.kind === kind)?.names || [];
   }, [appPlatformResponse, group, kind]);
 
-  return appPlatform
-    ? {
-        ...appPlatformResponse,
-        data: appPlatformStarredItems,
-      }
-    : legacyResponse;
+  if (appPlatform) {
+    return {
+      ...appPlatformResponse,
+      data: appPlatformStarredItems,
+      // Ensure isLoading is true when data is undefined (still loading or uninitialized)
+      isLoading: appPlatformStarredItems === undefined ? true : appPlatformResponse.isLoading,
+    };
+  }
+
+  // For legacy response, ensure isLoading is true when query is uninitialized
+  // RTK Query sets isLoading: false when uninitialized, but we need it to be true
+  return {
+    ...legacyResponse,
+    isLoading: legacyResponse.isUninitialized || legacyResponse.isLoading,
+  };
 };
 
 /**