diff --git a/.pipelines/ci.yml b/.pipelines/ci.yml
index 654181adcc4..5d6cacd572f 100644
--- a/.pipelines/ci.yml
+++ b/.pipelines/ci.yml
@@ -27,10 +27,6 @@ variables:
     value: arosvcdev.azurecr.io/e2e
   - name: VERSION
     value: $(TAG)
-  - name: MASTER_TAG
-    value: $[ format('master-{0}', variables['Build.SourceVersion']) ]
-  - name: TAG
-    value: ''
   - name: ARO_IMAGE
     value: arosvcdev.azurecr.io/aro:$(TAG)
   - name: ARO_SELENIUM_HOSTNAME
@@ -39,37 +35,39 @@ variables:
     value: "!smoke&&!regressiontest"
 
 stages:
-  - stage: SetVariables
-    displayName: Set TAG and PR_TAG Dynamically
+  - stage: Calculate_Tag
+    displayName: Calculate and Sanitize Tag for Build
     jobs:
-      - job: SetVariablesJob
+      - job: CalculateTag
+        displayName: Generate and Sanitize TAG Variable
         pool:
           vmImage: 'ubuntu-latest'
         steps:
-          # Dynamically set PR_TAG if this is a PR build
+          # Calculate and sanitize TAG
           - script: |
-              if [ -n "$SYSTEM_PULLREQUEST_PULLREQUESTID" ]; then
-                echo "##vso[task.setvariable variable=PR_TAG;isOutput=true]pr-$SYSTEM_PULLREQUEST_PULLREQUESTID-$SYSTEM_PULLREQUEST_SOURCECOMMITID"
+              # Check if this is a PR build or master build
+              if [ -n "$(System.PullRequest.PullRequestId)" ] && [ "$(System.PullRequest.PullRequestId)" != "null" ]; then
+                  RAW_TAG="pr-$(System.PullRequest.PullRequestId)-$(System.PullRequest.SourceCommitId)"
               else
-                echo "##vso[task.setvariable variable=PR_TAG;isOutput=true]''"
+                  RAW_TAG="master-$(Build.SourceVersion)"
               fi
-            displayName: Set PR_TAG for Pull Request Builds
 
-          # Set TAG dynamically based on PR_TAG or MASTER_TAG
-          - script: |
-              if [ -n "$(PR_TAG)" ]; then
-                echo "##vso[task.setvariable variable=TAG;isOutput=true]$(PR_TAG)"
-              else
-                echo "##vso[task.setvariable variable=TAG;isOutput=true]$(MASTER_TAG)"
-              fi
-            displayName: Set TAG Based on PR_TAG or MASTER_TAG
+              # Sanitize TAG by replacing invalid characters and truncating
+              TAG=$(echo "$RAW_TAG" | sed 's/[^a-zA-Z0-9._-]/-/g' | cut -c1-63)
 
-    variables:
-      PR_TAG: $[ dependencies.SetVariables.outputs['SetVariablesJob.PR_TAG'] ]
-      TAG: $[ dependencies.SetVariables.outputs['SetVariablesJob.TAG'] ]
+              # Set TAG as a pipeline variable
+              echo "##vso[task.setvariable variable=TAG]$TAG"
+
+              echo "Computed and Sanitized TAG: $TAG"
+            displayName: Calculate and Sanitize TAG Variable
+
+          # Debug TAG to ensure correctness
+          - script: |
+              echo "Debugging TAG value..."
+              echo "TAG: $(TAG)"
+            displayName: Debug TAG Variable
 
   - stage: Containerized_CI
-    dependsOn: SetVariables
     jobs:
       - job: Build_Test_And_Push_Az_ARO_Extension
         pool: