diff --git a/gobblin-data-management/src/main/java/org/apache/gobblin/data/management/copy/ManifestBasedDataset.java b/gobblin-data-management/src/main/java/org/apache/gobblin/data/management/copy/ManifestBasedDataset.java
index e25ac0b81f0..2126bf5e0d2 100644
--- a/gobblin-data-management/src/main/java/org/apache/gobblin/data/management/copy/ManifestBasedDataset.java
+++ b/gobblin-data-management/src/main/java/org/apache/gobblin/data/management/copy/ManifestBasedDataset.java
@@ -76,11 +76,13 @@ public class ManifestBasedDataset implements IterableCopyableDataset {
   // Parallelization configuration: when enabled, all manifest entries are loaded upfront and processed concurrently.
   // Any single file failure propagates immediately (fail-fast), aborting the entire operation.
   public static final String ENABLE_PARALLEL_PROCESSING = ManifestBasedDatasetFinder.CONFIG_PREFIX + ".enableParallelProcessing";
+  public static final String PARALLEL_BATCH_SIZE = ManifestBasedDatasetFinder.CONFIG_PREFIX + ".parallelBatchSize";
 
   private static final String DEFAULT_PERMISSION_CACHE_TTL_SECONDS = "30";
   private static final String DEFAULT_COMMON_FILES_PARENT = "/";
   private static final boolean DEFAULT_SKIP_PERMISSION_CHECK = false;
   private static final boolean DEFAULT_ENABLE_PARALLEL_PROCESSING = true;
+  private static final int DEFAULT_PARALLEL_BATCH_SIZE = 100;
 
   private final FileSystem srcFs;
   private final FileSystem manifestReadFs;
@@ -92,6 +94,7 @@ public class ManifestBasedDataset implements IterableCopyableDataset {
   private final boolean enableSetPermissionPostPublish;
   private final boolean skipPermissionCheck;
   private final boolean enableParallelProcessing;
+  private final int parallelBatchSize;
 
   public ManifestBasedDataset(final FileSystem srcFs, final FileSystem manifestReadFs, final Path manifestPath, final Properties properties) {
     this.srcFs = srcFs;
@@ -104,6 +107,7 @@ public ManifestBasedDataset(final FileSystem srcFs, final FileSystem manifestRea
     this.enableSetPermissionPostPublish = Boolean.parseBoolean(properties.getProperty(ENABLE_SET_PERMISSION_POST_PUBLISH, "true"));
     this.skipPermissionCheck = Boolean.parseBoolean(properties.getProperty(SKIP_PERMISSION_CHECK, String.valueOf(DEFAULT_SKIP_PERMISSION_CHECK)));
     this.enableParallelProcessing = Boolean.parseBoolean(properties.getProperty(ENABLE_PARALLEL_PROCESSING, String.valueOf(DEFAULT_ENABLE_PARALLEL_PROCESSING)));
+    this.parallelBatchSize = Integer.parseInt(properties.getProperty(PARALLEL_BATCH_SIZE, String.valueOf(DEFAULT_PARALLEL_BATCH_SIZE)));
   }
 
   @Override
@@ -226,8 +230,9 @@ private static boolean shouldCopy(FileSystem targetFs, FileStatus fileInSource,
   }
 
   /**
-   * Processes all files concurrently using a parallel stream. Any single file failure propagates immediately
-   * (fail-fast), causing the entire operation to abort with an exception.
+   * Processes all files concurrently in batches using a parallel stream. Files are divided into batches of
+   * {@code parallelBatchSize} and each batch is processed fully before the next begins. Any single file failure
+   * propagates immediately (fail-fast), aborting the entire operation.
    */
   private void processFilesInParallel(List<CopyManifest.CopyableUnit> allFiles, FileSystem targetFs,
       CopyConfiguration configuration, Cache<String, OwnerAndPermission> permissionMap,
@@ -235,15 +240,22 @@ private void processFilesInParallel(List<CopyManifest.CopyableUnit> allFiles, Fi
       Map<String, List<OwnerAndPermission>> ancestorOwnerAndPermissions,
       Map<String, List<OwnerAndPermission>> ancestorOwnerAndPermissionsForSetPermissionStep,
       Map<String, OwnerAndPermission> existingDirectoryPermissionsForSetPermissionStep) {
-    allFiles.parallelStream().forEach(file -> {
-      try {
-        processFile(file, targetFs, configuration, permissionMap, copyEntities, toDelete,
-            ancestorOwnerAndPermissions, ancestorOwnerAndPermissionsForSetPermissionStep,
-            existingDirectoryPermissionsForSetPermissionStep);
-      } catch (Exception e) {
-        throw new RuntimeException("Failed to process file: " + file.fileName, e);
-      }
-    });
+    List<List<CopyManifest.CopyableUnit>> batches = Lists.partition(allFiles, parallelBatchSize);
+    log.info("Processing {} files in {} batches of up to {} files each", allFiles.size(), batches.size(), parallelBatchSize);
+    int batchNum = 0;
+    for (List<CopyManifest.CopyableUnit> batch : batches) {
+      batchNum++;
+      log.info("Processing batch {}/{} ({} files)", batchNum, batches.size(), batch.size());
+      batch.parallelStream().forEach(file -> {
+        try {
+          processFile(file, targetFs, configuration, permissionMap, copyEntities, toDelete,
+              ancestorOwnerAndPermissions, ancestorOwnerAndPermissionsForSetPermissionStep,
+              existingDirectoryPermissionsForSetPermissionStep);
+        } catch (Exception e) {
+          throw new RuntimeException("Failed to process file: " + file.fileName, e);
+        }
+      });
+    }
   }
 
   private void processFile(CopyManifest.CopyableUnit file, FileSystem targetFs,
diff --git a/gobblin-data-management/src/test/java/org/apache/gobblin/data/management/dataset/ManifestBasedDatasetFinderTest.java b/gobblin-data-management/src/test/java/org/apache/gobblin/data/management/dataset/ManifestBasedDatasetFinderTest.java
index dfe0595c705..6b0777acd19 100644
--- a/gobblin-data-management/src/test/java/org/apache/gobblin/data/management/dataset/ManifestBasedDatasetFinderTest.java
+++ b/gobblin-data-management/src/test/java/org/apache/gobblin/data/management/dataset/ManifestBasedDatasetFinderTest.java
@@ -594,6 +594,34 @@ public void testParallelProcessingProducesSameResults() throws Exception {
     }
   }
 
+  /**
+   * Verifies that parallel processing with a batch size smaller than the file count (forcing multiple batches)
+   * still produces the same results as a single batch.
+   */
+  @Test
+  public void testParallelProcessingWithSmallBatchSize() throws Exception {
+    Path manifestPath = new Path(getClass().getClassLoader().getResource("manifestBasedDistcpTest/sampleManifest.json").getPath());
+    Properties props = new Properties();
+    props.setProperty(ConfigurationKeys.DATA_PUBLISHER_FINAL_DIR, "/");
+    props.setProperty(ManifestBasedDataset.ENABLE_PARALLEL_PROCESSING, "true");
+    props.setProperty(ManifestBasedDataset.PARALLEL_BATCH_SIZE, "1"); // 2 files, batch size 1 => 2 batches
+
+    try (FileSystem sourceFs = Mockito.mock(FileSystem.class);
+        FileSystem manifestReadFs = Mockito.mock(FileSystem.class);
+        FileSystem destFs = Mockito.mock(FileSystem.class)) {
+      setSourceAndDestFsMocks(sourceFs, destFs, manifestPath, manifestReadFs, true);
+
+      Iterator<FileSet<CopyEntity>> fileSets =
+          new ManifestBasedDataset(sourceFs, manifestReadFs, manifestPath, props).getFileSetIterator(destFs,
+              CopyConfiguration.builder(destFs, props).build());
+      Assert.assertTrue(fileSets.hasNext());
+      FileSet<CopyEntity> fileSet = fileSets.next();
+      Assert.assertEquals(fileSet.getFiles().size(), 4); // 2 files to copy + 1 pre publish step + 1 post publish step
+      Assert.assertTrue(((PrePublishStep) fileSet.getFiles().get(2)).getStep() instanceof CreateDirectoryWithPermissionsCommitStep);
+      Assert.assertTrue(((PostPublishStep) fileSet.getFiles().get(3)).getStep() instanceof SetPermissionCommitStep);
+    }
+  }
+
   /**
    * Verifies that sequential processing (parallel disabled) produces the same copy entities.
    */