diff --git a/frontend/src/component/changeRequest/ChangeRequestOverview/ChangeRequestTimeline/ChangeRequestTimeline.test.tsx b/frontend/src/component/changeRequest/ChangeRequestOverview/ChangeRequestTimeline/ChangeRequestTimeline.test.tsx
new file mode 100644
index 000000000000..0871b4351e75
--- /dev/null
+++ b/frontend/src/component/changeRequest/ChangeRequestOverview/ChangeRequestTimeline/ChangeRequestTimeline.test.tsx
@@ -0,0 +1,93 @@
+import React from 'react';
+import { screen } from '@testing-library/react';
+import { render } from 'utils/testRenderer';
+import { ChangeRequestTimeline, determineColor } from './ChangeRequestTimeline';
+import { ChangeRequestState } from '../../changeRequest.types';
+
+test('cancelled timeline shows all states', () => {
+    render(<ChangeRequestTimeline state={'Cancelled'} />);
+
+    expect(screen.getByText('Draft')).toBeInTheDocument();
+    expect(screen.getByText('In review')).toBeInTheDocument();
+    expect(screen.getByText('Approved')).toBeInTheDocument();
+    expect(screen.getByText('Applied')).toBeInTheDocument();
+});
+
+test('approved timeline shows all states', () => {
+    render(<ChangeRequestTimeline state={'Approved'} />);
+
+    expect(screen.getByText('Draft')).toBeInTheDocument();
+    expect(screen.getByText('In review')).toBeInTheDocument();
+    expect(screen.getByText('Approved')).toBeInTheDocument();
+    expect(screen.getByText('Applied')).toBeInTheDocument();
+});
+
+test('applied timeline shows all states', () => {
+    render(<ChangeRequestTimeline state={'Applied'} />);
+
+    expect(screen.getByText('Draft')).toBeInTheDocument();
+    expect(screen.getByText('In review')).toBeInTheDocument();
+    expect(screen.getByText('Approved')).toBeInTheDocument();
+    expect(screen.getByText('Applied')).toBeInTheDocument();
+});
+
+test('rejected timeline shows all states', () => {
+    render(<ChangeRequestTimeline state={'Rejected'} />);
+
+    expect(screen.getByText('Draft')).toBeInTheDocument();
+    expect(screen.getByText('In review')).toBeInTheDocument();
+    expect(screen.getByText('Rejected')).toBeInTheDocument();
+    expect(screen.queryByText('Approved')).not.toBeInTheDocument();
+    expect(screen.queryByText('Applied')).not.toBeInTheDocument();
+});
+
+const irrelevantIndex = -99; // Using a number that's unlikely to be a valid index
+
+test('returns grey for Cancelled state regardless of displayed stage', () => {
+    const stages: ChangeRequestState[] = [
+        'Draft',
+        'In review',
+        'Approved',
+        'Applied',
+        'Rejected',
+    ];
+    stages.forEach(stage => {
+        expect(
+            determineColor('Cancelled', irrelevantIndex, stage, irrelevantIndex)
+        ).toBe('grey');
+    });
+});
+
+test('returns error for Rejected stage in Rejected state', () => {
+    expect(
+        determineColor('Rejected', irrelevantIndex, 'Rejected', irrelevantIndex)
+    ).toBe('error');
+});
+
+test('returns success for stages other than Rejected in Rejected state', () => {
+    expect(
+        determineColor('Rejected', irrelevantIndex, 'Draft', irrelevantIndex)
+    ).toBe('success');
+    expect(
+        determineColor(
+            'Rejected',
+            irrelevantIndex,
+            'In review',
+            irrelevantIndex
+        )
+    ).toBe('success');
+});
+
+test('returns success for stages at or before activeIndex', () => {
+    expect(determineColor('In review', 1, 'Draft', 0)).toBe('success');
+    expect(determineColor('In review', 1, 'In review', 1)).toBe('success');
+});
+
+test('returns primary for stages right after activeIndex', () => {
+    expect(determineColor('In review', 1, 'Approved', 2)).toBe('primary');
+});
+
+test('returns grey for stages two or more steps after activeIndex', () => {
+    expect(determineColor('Draft', 0, 'Approved', 2)).toBe('grey');
+    expect(determineColor('Draft', 0, 'Applied', 3)).toBe('grey');
+});
diff --git a/frontend/src/component/changeRequest/ChangeRequestOverview/ChangeRequestTimeline/ChangeRequestTimeline.tsx b/frontend/src/component/changeRequest/ChangeRequestOverview/ChangeRequestTimeline/ChangeRequestTimeline.tsx
index df4655a2d8f1..c90e6265133c 100644
--- a/frontend/src/component/changeRequest/ChangeRequestOverview/ChangeRequestTimeline/ChangeRequestTimeline.tsx
+++ b/frontend/src/component/changeRequest/ChangeRequestOverview/ChangeRequestTimeline/ChangeRequestTimeline.tsx
@@ -1,21 +1,16 @@
 import { FC } from 'react';
-import { styled } from '@mui/material';
-import { Box, Paper } from '@mui/material';
+import { Box, Paper, styled } from '@mui/material';
 import Timeline from '@mui/lab/Timeline';
 import TimelineItem, { timelineItemClasses } from '@mui/lab/TimelineItem';
 import TimelineSeparator from '@mui/lab/TimelineSeparator';
 import TimelineDot from '@mui/lab/TimelineDot';
 import TimelineConnector from '@mui/lab/TimelineConnector';
 import TimelineContent from '@mui/lab/TimelineContent';
-import { ConditionallyRender } from 'component/common/ConditionallyRender/ConditionallyRender';
 import { ChangeRequestState } from '../../changeRequest.types';
+
 interface ISuggestChangeTimelineProps {
     state: ChangeRequestState;
 }
-interface ITimelineData {
-    title: string;
-    active: boolean;
-}
 
 const StyledPaper = styled(Paper)(({ theme }) => ({
     marginTop: theme.spacing(2),
@@ -34,96 +29,83 @@ const StyledTimeline = styled(Timeline)(() => ({
     },
 }));
 
+const steps: ChangeRequestState[] = [
+    'Draft',
+    'In review',
+    'Approved',
+    'Applied',
+];
+const rejectedSteps: ChangeRequestState[] = ['Draft', 'In review', 'Rejected'];
+
+export const determineColor = (
+    changeRequestState: ChangeRequestState,
+    changeRequestStateIndex: number,
+    displayStage: ChangeRequestState,
+    displayStageIndex: number
+) => {
+    if (changeRequestState === 'Cancelled') return 'grey';
+    if (changeRequestState === 'Rejected')
+        return displayStage === 'Rejected' ? 'error' : 'success';
+    if (
+        changeRequestStateIndex !== -1 &&
+        changeRequestStateIndex >= displayStageIndex
+    )
+        return 'success';
+    if (changeRequestStateIndex + 1 === displayStageIndex) return 'primary';
+    return 'grey';
+};
+
 export const ChangeRequestTimeline: FC<ISuggestChangeTimelineProps> = ({
     state,
 }) => {
-    const createTimeLineData = (state: ChangeRequestState): ITimelineData[] => {
-        const steps: ChangeRequestState[] = [
-            'Draft',
-            'In review',
-            'Approved',
-            'Applied',
-        ];
-
-        return steps.map(step => ({
-            title: step,
-            active: step === state,
-        }));
-    };
-
-    const renderTimeline = () => {
-        const data = createTimeLineData(state);
-        const index = data.findIndex(item => item.active);
-        const activeIndex: number | null = index !== -1 ? index : null;
-
-        if (state === 'Cancelled') {
-            return createCancelledTimeline(data);
-        }
-
-        return createTimeline(data, activeIndex);
-    };
+    const data = state === 'Rejected' ? rejectedSteps : steps;
+    const activeIndex = data.findIndex(item => item === state);
 
     return (
         <StyledPaper elevation={0}>
             <StyledBox>
-                <StyledTimeline>{renderTimeline()}</StyledTimeline>
+                <StyledTimeline>
+                    {data.map((title, index) => {
+                        const color = determineColor(
+                            state,
+                            activeIndex,
+                            title,
+                            index
+                        );
+                        let timelineDotProps = {};
+
+                        // Only add the outlined variant if it's the next step after the active one, but not for 'Draft' in 'Cancelled' state
+                        if (
+                            activeIndex + 1 === index &&
+                            !(state === 'Cancelled' && title === 'Draft')
+                        ) {
+                            timelineDotProps = { variant: 'outlined' };
+                        }
+
+                        return createTimelineItem(
+                            color,
+                            title,
+                            index < data.length - 1,
+                            timelineDotProps
+                        );
+                    })}
+                </StyledTimeline>
             </StyledBox>
         </StyledPaper>
     );
 };
 
-const createTimeline = (data: ITimelineData[], activeIndex: number | null) => {
-    return data.map(({ title }, index) => {
-        const shouldConnectToNextItem = index < data.length - 1;
-
-        const connector = (
-            <ConditionallyRender
-                condition={shouldConnectToNextItem}
-                show={<TimelineConnector />}
-            />
-        );
-
-        if (activeIndex !== null && activeIndex >= index) {
-            return createTimelineItem('success', title, connector);
-        }
-
-        if (activeIndex !== null && activeIndex + 1 === index) {
-            return createTimelineItem('primary', title, connector, {
-                variant: 'outlined',
-            });
-        }
-
-        return createTimelineItem('grey', title, connector);
-    });
-};
-
-const createCancelledTimeline = (data: ITimelineData[]) => {
-    return data.map(({ title }, index) => {
-        const shouldConnectToNextItem = index < data.length - 1;
-
-        const connector = (
-            <ConditionallyRender
-                condition={shouldConnectToNextItem}
-                show={<TimelineConnector />}
-            />
-        );
-        return createTimelineItem('grey', title, connector);
-    });
-};
-
 const createTimelineItem = (
-    color: 'primary' | 'success' | 'grey',
+    color: 'primary' | 'success' | 'grey' | 'error',
     title: string,
-    connector: JSX.Element,
-    timelineDotProps: { [key: string]: string } = {}
-) => {
-    return (
-        <TimelineItem key={title}>
-            <TimelineSeparator>
-                <TimelineDot color={color} {...timelineDotProps} />
-                {connector}
-            </TimelineSeparator>
-            <TimelineContent>{title}</TimelineContent>
-        </TimelineItem>
-    );
-};
+    shouldConnectToNextItem: boolean,
+    timelineDotProps: { [key: string]: string | undefined } = {}
+) => (
+    <TimelineItem key={title}>
+        <TimelineSeparator>
+            <TimelineDot color={color} {...timelineDotProps} />
+            {shouldConnectToNextItem && <TimelineConnector />}
+        </TimelineSeparator>
+        <TimelineContent>{title}</TimelineContent>
+    </TimelineItem>
+);