diff --git a/managed/src/main/java/com/yugabyte/yw/models/Users.java b/managed/src/main/java/com/yugabyte/yw/models/Users.java
index f2d4db6f2a8f..94e7f0045632 100644
--- a/managed/src/main/java/com/yugabyte/yw/models/Users.java
+++ b/managed/src/main/java/com/yugabyte/yw/models/Users.java
@@ -406,6 +406,7 @@ public String upsertApiToken() {
   }
 
   public String upsertApiToken(Long version) {
+    String apiTokenFormatVersion = "2";
     UUID uuidToLock = uuid != null ? uuid : NULL_UUID;
     usersLock.acquireLock(uuidToLock);
     try {
@@ -420,7 +421,9 @@ public String upsertApiToken(Long version) {
 
       apiTokenVersion = apiTokenVersion == null ? 1L : apiTokenVersion + 1;
       save();
-      return apiTokenUnhashed;
+      // new format of api token = apiTokenFormatVersion$userUUID$apiTokenUnhashed
+      return apiTokenFormatVersion + "$" + uuid + "$" + apiTokenUnhashed;
+
     } finally {
       usersLock.releaseLock(uuidToLock);
     }
@@ -472,12 +475,41 @@ public static Users authWithApiToken(String apiToken) {
       return null;
     }
 
+    // Supporting the 2 formats of api token
+    // 1. apiTokenFormatVersion$userUUID$apiToken (newer format)
+    // 2. apiToken (older format)
+
+    // The second format would lead to performance degradation in the case of more than 10 users
+    // Recommended to reissue the token (which will follow the first format)
+
     try {
-      List<Users> usersList = find.query().where().isNotNull("apiToken").findList();
-      for (Users user : usersList) {
-        if (Users.hasher.isValid(apiToken, user.getApiToken())) {
-          return user;
+      if (apiToken.contains("$")) {
+        // to authenticate new format of api token = apiTokenFormatVersion$userUUID$apiTokenUnhashed
+        String[] parts = apiToken.split("\\$");
+        UUID userUUID = UUID.fromString(parts[1]);
+        String apiTokenUnhashed = parts[2];
+        Users userWithToken = find.query().where().eq("uuid", userUUID).findOne();
+        if (userWithToken != null) {
+          if (Users.hasher.isValid(apiTokenUnhashed, userWithToken.getApiToken())) {
+            return userWithToken;
+          }
+        }
+      } else {
+        // to authenticate old format of api token
+        LOG.warn("Using older API token format. Renew to improve performance.");
+        List<Users> usersList = find.query().where().isNotNull("apiToken").findList();
+        long startTime = System.currentTimeMillis();
+        for (Users user : usersList) {
+          if (Users.hasher.isValid(apiToken, user.getApiToken())) {
+            LOG.info(
+                "Authentication using API token. Completed time: {} ms",
+                System.currentTimeMillis() - startTime);
+            return user;
+          }
         }
+        LOG.info(
+            "Authentication using API token. Completed time: {} ms",
+            System.currentTimeMillis() - startTime);
       }
       return null;
     } catch (Exception e) {