diff --git a/app/controllers/api/proxy.php b/app/controllers/api/proxy.php
index 1dfbc0ba0..29f39c55a 100644
--- a/app/controllers/api/proxy.php
+++ b/app/controllers/api/proxy.php
@@ -49,6 +49,12 @@ App::post('/v1/proxy/rules')
         if ($domain === $mainDomain) {
             throw new Exception(Exception::GENERAL_ARGUMENT_INVALID, 'You cannot assign your main domain to specific resource. Please use subdomain or a different domain.');
         }
+
+        $functionsDomain = System::getEnv('_APP_DOMAIN_FUNCTIONS', '');
+        if (str_ends_with($domain, $functionsDomain)) {
+            throw new Exception(Exception::GENERAL_ARGUMENT_INVALID, 'You cannot assign your functions domain or it\'s subdomain to specific resource. Please use different domain.');
+        }
+
         if ($domain === 'localhost' || $domain === APP_HOSTNAME_INTERNAL) {
             throw new Exception(Exception::GENERAL_ARGUMENT_INVALID, 'This domain name is not allowed. Please pick another one.');
         }
diff --git a/tests/e2e/Services/Projects/ProjectsCustomServerTest.php b/tests/e2e/Services/Projects/ProjectsCustomServerTest.php
index 436d1df61..bae0d8bda 100644
--- a/tests/e2e/Services/Projects/ProjectsCustomServerTest.php
+++ b/tests/e2e/Services/Projects/ProjectsCustomServerTest.php
@@ -2,17 +2,43 @@
 
 namespace Tests\E2E\Services\Projects;
 
+use Tests\E2E\Client;
 use Tests\E2E\Scopes\ProjectCustom;
 use Tests\E2E\Scopes\Scope;
 use Tests\E2E\Scopes\SideServer;
+use Utopia\System\System;
 
 class ProjectsCustomServerTest extends Scope
 {
     use ProjectCustom;
     use SideServer;
 
-    public function testMock()
+    // Domains
+
+    public function testCreateProjectRule()
     {
-        $this->assertEquals(true, true);
+        $headers = array_merge([
+            'content-type' => 'application/json',
+            'x-appwrite-project' => $this->getProject()['$id'],
+            'x-appwrite-mode' => 'admin',
+            'cookie' => 'a_session_console=' . $this->getRoot()['session'],
+        ]);
+
+        $response = $this->client->call(Client::METHOD_POST, '/proxy/rules', $headers, [
+            'resourceType' => 'api',
+            'domain' => 'api.appwrite.test',
+        ]);
+
+        $this->assertEquals(201, $response['headers']['status-code']);
+
+        // prevent functions domain
+        $functionsDomain = System::getEnv('_APP_DOMAIN_FUNCTIONS', '');
+
+        $response = $this->client->call(Client::METHOD_POST, '/proxy/rules', $headers, [
+            'resourceType' => 'api',
+            'domain' => $functionsDomain,
+        ]);
+
+        $this->assertEquals(400, $response['headers']['status-code']);
     }
 }