diff --git a/pkg/scheduler/preemption/preemption.go b/pkg/scheduler/preemption/preemption.go
index e5670de8b3..6cd9d3a0f7 100644
--- a/pkg/scheduler/preemption/preemption.go
+++ b/pkg/scheduler/preemption/preemption.go
@@ -80,6 +80,16 @@ func candidatesOnlyFromQueue(candidates []*workload.Info, clusterQueue string) [
 	return result
 }
 
+func candidatesFromCQOrUnderThreshold(candidates []*workload.Info, clusterQueue string, threshold int32) []*workload.Info {
+	result := make([]*workload.Info, 0, len(candidates))
+	for _, wi := range candidates {
+		if wi.ClusterQueue == clusterQueue || priority.Priority(wi.Obj) < threshold {
+			result = append(result, wi)
+		}
+	}
+	return result
+}
+
 // GetTargets returns the list of workloads that should be evicted in order to make room for wl.
 func (p *Preemptor) GetTargets(wl workload.Info, assignment flavorassigner.Assignment, snapshot *cache.Snapshot) []*workload.Info {
 	resPerFlv := resourcesRequiringPreemption(assignment)
@@ -115,6 +125,10 @@ func (p *Preemptor) GetTargets(wl workload.Info, assignment flavorassigner.Assig
 	// have lower priority, and so they will not preempt the preemptor when
 	// requeued.
 	if borrowWithinCohort {
+		if !queueUnderNominalInAllRequestedResources(wlReq, cq) {
+			// It can only preempt workloads from another CQ if they are strictly under allowBorrowingBelowPriority.
+			candidates = candidatesFromCQOrUnderThreshold(candidates, wl.ClusterQueue, *thresholdPrio)
+		}
 		return minimalPreemptions(wlReq, cq, snapshot, resPerFlv, candidates, true, thresholdPrio)
 	}
 
diff --git a/pkg/scheduler/preemption/preemption_test.go b/pkg/scheduler/preemption/preemption_test.go
index 9de6c3f08d..93db8b152b 100644
--- a/pkg/scheduler/preemption/preemption_test.go
+++ b/pkg/scheduler/preemption/preemption_test.go
@@ -174,8 +174,8 @@ func TestPreemption(t *testing.T) {
 					Obj(),
 			).
 			Preemption(kueue.ClusterQueuePreemption{
-				WithinClusterQueue:  kueue.PreemptionPolicyNever,
-				ReclaimWithinCohort: kueue.PreemptionPolicyLowerPriority,
+				WithinClusterQueue:  kueue.PreemptionPolicyLowerPriority,
+				ReclaimWithinCohort: kueue.PreemptionPolicyAny,
 				BorrowWithinCohort: &kueue.BorrowWithinCohort{
 					Policy:               kueue.BorrowWithinCohortPolicyLowerPriority,
 					MaxPriorityThreshold: ptr.To[int32](0),
@@ -1021,6 +1021,78 @@ func TestPreemption(t *testing.T) {
 				},
 			}),
 		},
+		"use BorrowWithinCohort; only preempt from CQ if no workloads below threshold and already above nominal": {
+			admitted: []kueue.Workload{
+				*utiltesting.MakeWorkload("a_standard_1", "").
+					Priority(1).
+					Request(corev1.ResourceCPU, "10").
+					ReserveQuota(utiltesting.MakeAdmission("a_standard").Assignment(corev1.ResourceCPU, "default", "10").Obj()).
+					Obj(),
+				*utiltesting.MakeWorkload("a_standard_2", "").
+					Priority(1).
+					Request(corev1.ResourceCPU, "1").
+					ReserveQuota(utiltesting.MakeAdmission("a_standard").Assignment(corev1.ResourceCPU, "default", "1").Obj()).
+					Obj(),
+				*utiltesting.MakeWorkload("b_standard_1", "").
+					Priority(1).
+					Request(corev1.ResourceCPU, "1").
+					ReserveQuota(utiltesting.MakeAdmission("b_standard").Assignment(corev1.ResourceCPU, "default", "1").Obj()).
+					Obj(),
+				*utiltesting.MakeWorkload("b_standard_2", "").
+					Priority(2).
+					Request(corev1.ResourceCPU, "1").
+					ReserveQuota(utiltesting.MakeAdmission("b_standard").Assignment(corev1.ResourceCPU, "default", "1").Obj()).
+					Obj(),
+			},
+			incoming: utiltesting.MakeWorkload("in", "").
+				Priority(3).
+				Request(corev1.ResourceCPU, "1").
+				Obj(),
+			targetCQ: "b_standard",
+			assignment: singlePodSetAssignment(flavorassigner.ResourceAssignment{
+				corev1.ResourceCPU: &flavorassigner.FlavorAssignment{
+					Name: "default",
+					Mode: flavorassigner.Preempt,
+				},
+			}),
+			wantPreempted: sets.New("/b_standard_1"),
+		},
+		"use BorrowWithinCohort; preempt from CQ and from other CQs with workloads below threshold": {
+			admitted: []kueue.Workload{
+				*utiltesting.MakeWorkload("b_standard_high", "").
+					Priority(2).
+					Request(corev1.ResourceCPU, "10").
+					ReserveQuota(utiltesting.MakeAdmission("b_standard").Assignment(corev1.ResourceCPU, "default", "10").Obj()).
+					Obj(),
+				*utiltesting.MakeWorkload("b_standard_mid", "").
+					Priority(1).
+					Request(corev1.ResourceCPU, "1").
+					ReserveQuota(utiltesting.MakeAdmission("b_standard").Assignment(corev1.ResourceCPU, "default", "1").Obj()).
+					Obj(),
+				*utiltesting.MakeWorkload("a_best_effort_low", "").
+					Priority(-1).
+					Request(corev1.ResourceCPU, "1").
+					ReserveQuota(utiltesting.MakeAdmission("a_best_effort").Assignment(corev1.ResourceCPU, "default", "1").Obj()).
+					Obj(),
+				*utiltesting.MakeWorkload("a_best_effort_lower", "").
+					Priority(-2).
+					Request(corev1.ResourceCPU, "1").
+					ReserveQuota(utiltesting.MakeAdmission("a_best_effort").Assignment(corev1.ResourceCPU, "default", "1").Obj()).
+					Obj(),
+			},
+			incoming: utiltesting.MakeWorkload("in", "").
+				Priority(2).
+				Request(corev1.ResourceCPU, "2").
+				Obj(),
+			targetCQ: "b_standard",
+			assignment: singlePodSetAssignment(flavorassigner.ResourceAssignment{
+				corev1.ResourceCPU: &flavorassigner.FlavorAssignment{
+					Name: "default",
+					Mode: flavorassigner.Preempt,
+				},
+			}),
+			wantPreempted: sets.New("/b_standard_mid", "/a_best_effort_lower"),
+		},
 		"reclaim quota from lender": {
 			admitted: []kueue.Workload{
 				*utiltesting.MakeWorkload("lend1-low", "").