diff --git a/workspaces/azure-devops/.changeset/rich-comics-complain.md b/workspaces/azure-devops/.changeset/rich-comics-complain.md
new file mode 100644
index 00000000000..333fd49c87e
--- /dev/null
+++ b/workspaces/azure-devops/.changeset/rich-comics-complain.md
@@ -0,0 +1,5 @@
+---
+'@backstage-community/plugin-azure-devops-common': patch
+---
+
+Add auto-detection of README.md from backstage.io/source-location when dev.azure.com/readme-path annotation is absent
diff --git a/workspaces/azure-devops/.changeset/shy-bulldogs-grow.md b/workspaces/azure-devops/.changeset/shy-bulldogs-grow.md
new file mode 100644
index 00000000000..476546dda17
--- /dev/null
+++ b/workspaces/azure-devops/.changeset/shy-bulldogs-grow.md
@@ -0,0 +1,5 @@
+---
+'@backstage-community/plugin-azure-devops': patch
+---
+
+Add documentation for automatic README path detection from backstage.io/source-location
diff --git a/workspaces/azure-devops/plugins/azure-devops-common/src/utils/getAnnotationValuesFromEntity.test.ts b/workspaces/azure-devops/plugins/azure-devops-common/src/utils/getAnnotationValuesFromEntity.test.ts
index e196e9dfc77..0630ba66b1f 100644
--- a/workspaces/azure-devops/plugins/azure-devops-common/src/utils/getAnnotationValuesFromEntity.test.ts
+++ b/workspaces/azure-devops/plugins/azure-devops-common/src/utils/getAnnotationValuesFromEntity.test.ts
@@ -535,4 +535,124 @@ describe('getAnnotationValuesFromEntity', () => {
       });
     });
   });
+
+  describe('readme path auto-detection from source-location (#9188)', () => {
+    it('returns explicit readme-path annotation when both annotations are present', () => {
+      const entity = {
+        metadata: {
+          annotations: {
+            'dev.azure.com/project-repo': 'myproject/myrepo',
+            'dev.azure.com/readme-path': '/explicit/README.md',
+            'backstage.io/source-location':
+              'url:https://dev.azure.com/org/proj/_git/repo?path=%2Fsvc%2Fcatalog-info.yaml',
+          },
+        },
+      } as unknown as Entity;
+
+      const result = getAnnotationValuesFromEntity(entity);
+      expect(result.readmePath).toBe('/explicit/README.md');
+    });
+
+    it('derives readme path when source-location points to a catalog file', () => {
+      const entity = {
+        metadata: {
+          annotations: {
+            'dev.azure.com/project-repo': 'myproject/myrepo',
+            'backstage.io/source-location':
+              'url:https://dev.azure.com/org/proj/_git/repo?path=%2Fservices%2Fmy-svc%2Fcatalog-info.yaml',
+          },
+        },
+      } as unknown as Entity;
+
+      const result = getAnnotationValuesFromEntity(entity);
+      expect(result.readmePath).toBe('/services/my-svc/README.md');
+    });
+
+    it('derives readme path when source-location points to a directory (no filename)', () => {
+      const entity = {
+        metadata: {
+          annotations: {
+            'dev.azure.com/project-repo': 'myproject/myrepo',
+            'backstage.io/source-location':
+              'url:https://dev.azure.com/org/proj/_git/repo?path=%2Fservices%2Fmy-svc',
+          },
+        },
+      } as unknown as Entity;
+
+      const result = getAnnotationValuesFromEntity(entity);
+      expect(result.readmePath).toBe('/services/my-svc/README.md');
+    });
+
+    it('derives readme path when source-location path has a trailing slash', () => {
+      const entity = {
+        metadata: {
+          annotations: {
+            'dev.azure.com/project-repo': 'myproject/myrepo',
+            'backstage.io/source-location':
+              'url:https://dev.azure.com/org/proj/_git/repo?path=%2Fservices%2Fmy-svc%2F',
+          },
+        },
+      } as unknown as Entity;
+
+      const result = getAnnotationValuesFromEntity(entity);
+      expect(result.readmePath).toBe('/services/my-svc/README.md');
+    });
+
+    it('returns undefined when neither readme-path nor source-location annotation is present', () => {
+      const entity = {
+        metadata: {
+          annotations: {
+            'dev.azure.com/project-repo': 'myproject/myrepo',
+          },
+        },
+      } as unknown as Entity;
+
+      const result = getAnnotationValuesFromEntity(entity);
+      expect(result.readmePath).toBeUndefined();
+    });
+
+    it('returns undefined when source-location is a non-Azure DevOps URL', () => {
+      const entity = {
+        metadata: {
+          annotations: {
+            'dev.azure.com/project-repo': 'myproject/myrepo',
+            'backstage.io/source-location':
+              'url:https://github.com/org/repo/blob/main/catalog-info.yaml',
+          },
+        },
+      } as unknown as Entity;
+
+      const result = getAnnotationValuesFromEntity(entity);
+      expect(result.readmePath).toBeUndefined();
+    });
+
+    it('returns undefined when source-location Azure DevOps URL has no path query parameter', () => {
+      const entity = {
+        metadata: {
+          annotations: {
+            'dev.azure.com/project-repo': 'myproject/myrepo',
+            'backstage.io/source-location':
+              'url:https://dev.azure.com/org/proj/_git/repo',
+          },
+        },
+      } as unknown as Entity;
+
+      const result = getAnnotationValuesFromEntity(entity);
+      expect(result.readmePath).toBeUndefined();
+    });
+
+    it('returns undefined gracefully when source-location is a malformed URL', () => {
+      const entity = {
+        metadata: {
+          annotations: {
+            'dev.azure.com/project-repo': 'myproject/myrepo',
+            'backstage.io/source-location': 'not-a-valid-url',
+          },
+        },
+      } as unknown as Entity;
+
+      const result = getAnnotationValuesFromEntity(entity);
+      expect(result.readmePath).toBeUndefined();
+    });
+  });
 });
diff --git a/workspaces/azure-devops/plugins/azure-devops-common/src/utils/getAnnotationValuesFromEntity.ts b/workspaces/azure-devops/plugins/azure-devops-common/src/utils/getAnnotationValuesFromEntity.ts
index 836df2d9c85..f892c9ce994 100644
--- a/workspaces/azure-devops/plugins/azure-devops-common/src/utils/getAnnotationValuesFromEntity.ts
+++ b/workspaces/azure-devops/plugins/azure-devops-common/src/utils/getAnnotationValuesFromEntity.ts
@@ -14,7 +14,7 @@
  * limitations under the License.
  */
 
-import { Entity } from '@backstage/catalog-model';
+import { Entity, ANNOTATION_SOURCE_LOCATION } from '@backstage/catalog-model';
 import {
   AZURE_DEVOPS_PROJECT_ANNOTATION,
   AZURE_DEVOPS_BUILD_DEFINITION_ANNOTATION,
@@ -38,8 +38,49 @@ export function getAnnotationValuesFromEntity(entity: Entity): {
     entity.metadata.annotations?.[AZURE_DEVOPS_PROJECT_ANNOTATION];
   const definition =
     entity.metadata.annotations?.[AZURE_DEVOPS_BUILD_DEFINITION_ANNOTATION];
-  const readmePath =
-    entity.metadata.annotations?.[AZURE_DEVOPS_README_ANNOTATION];
+  const readmePath = (() => {
+    const explicit =
+      entity.metadata.annotations?.[AZURE_DEVOPS_README_ANNOTATION];
+    if (explicit) return explicit;
+
+    // Auto-detect README.md from backstage.io/source-location (#9188)
+    const sourceLocation =
+      entity.metadata.annotations?.[ANNOTATION_SOURCE_LOCATION];
+    if (!sourceLocation) return undefined;
+
+    try {
+      // source-location values are prefixed with "url:" per Backstage convention
+      const rawUrl = sourceLocation.startsWith('url:')
+        ? sourceLocation.slice(4)
+        : sourceLocation;
+
+      const parsed = new URL(rawUrl);
+
+      // Only derive paths for Azure DevOps URLs
+      if (parsed.hostname !== 'dev.azure.com') return undefined;
+
+      // "path" query param holds the repo-relative path (URL-decoded by the URL API)
+      const pathParam = parsed.searchParams.get('path');
+      if (!pathParam) return undefined;
+
+      // Strip trailing slash, then get the directory of the catalog file
+      const cleanPath = pathParam.replace(/\/$/, '');
+      const lastSlash = cleanPath.lastIndexOf('/');
+      const lastSegment = cleanPath.slice(lastSlash + 1);
+
+      // If the last segment looks like a file (has a dot), use its parent dir
+      const dir = lastSegment.includes('.')
+        ? lastSlash >= 0
+          ? cleanPath.slice(0, lastSlash)
+          : ''
+        : cleanPath;
+
+      return `${dir}/README.md`;
+    } catch {
+      // Malformed URL — fail gracefully
+      return undefined;
+    }
+  })();
 
   if (definition) {
     if (project) {
diff --git a/workspaces/azure-devops/plugins/azure-devops/README.md b/workspaces/azure-devops/plugins/azure-devops/README.md
index b75d42bb08c..f365b03395a 100644
--- a/workspaces/azure-devops/plugins/azure-devops/README.md
+++ b/workspaces/azure-devops/plugins/azure-devops/README.md
@@ -121,6 +121,18 @@ dev.azure.com/readme-path: /<path-to>/<my-readme-file>.md
 
 > Note: this annotation does not support relative paths as the API we use from Azure DevOps to power this feature does not support relative paths. If you use something like this `dev.azure.com/readme-path: ./docs/index.md` the frontend will throw an error with details about why.
 
+If the `dev.azure.com/readme-path` annotation is not set, the plugin will automatically try to detect the README using the `backstage.io/source-location` annotation. When this annotation points to an Azure DevOps URL, the plugin resolves `README.md` in the same directory as the `catalog-info.yaml` file, so no extra configuration is needed.
+
+This is especially handy in monorepo setups. For example, if your entity has:
+
+```yaml
+metadata:
+  annotations:
+    backstage.io/source-location: url:https://dev.azure.com/org/project/_git/repo?path=%2Fservices%2Fmy-service%2Fcatalog-info.yaml
+```
+
+The plugin will automatically render `/services/my-service/README.md`.
+
 #### Pipeline in different project to repo
 
 If your pipeline is in a different project to the source code, you will need to specify this in the project annotation.