diff --git a/airbyte_cdk/sources/declarative/declarative_component_schema.yaml b/airbyte_cdk/sources/declarative/declarative_component_schema.yaml
index 7068105cb..a77bc34ea 100644
--- a/airbyte_cdk/sources/declarative/declarative_component_schema.yaml
+++ b/airbyte_cdk/sources/declarative/declarative_component_schema.yaml
@@ -391,6 +391,7 @@ definitions:
           anyOf:
             - "$ref": "#/definitions/CompositeErrorHandler"
             - "$ref": "#/definitions/DefaultErrorHandler"
+            - "$ref": "#/definitions/CustomErrorHandler"
       $parameters:
         type: object
         additionalProperties: true
diff --git a/airbyte_cdk/sources/declarative/models/declarative_component_schema.py b/airbyte_cdk/sources/declarative/models/declarative_component_schema.py
index 49b48a232..915f942d0 100644
--- a/airbyte_cdk/sources/declarative/models/declarative_component_schema.py
+++ b/airbyte_cdk/sources/declarative/models/declarative_component_schema.py
@@ -2149,10 +2149,12 @@ class ConfigAddFields(BaseModel):
 
 class CompositeErrorHandler(BaseModel):
     type: Literal["CompositeErrorHandler"]
-    error_handlers: List[Union[CompositeErrorHandler, DefaultErrorHandler]] = Field(
-        ...,
-        description="List of error handlers to iterate on to determine how to handle a failed response.",
-        title="Error Handlers",
+    error_handlers: List[Union[CompositeErrorHandler, DefaultErrorHandler, CustomErrorHandler]] = (
+        Field(
+            ...,
+            description="List of error handlers to iterate on to determine how to handle a failed response.",
+            title="Error Handlers",
+        )
     )
     parameters: Optional[Dict[str, Any]] = Field(None, alias="$parameters")
 
diff --git a/unit_tests/sources/declarative/parsers/test_model_to_component_factory.py b/unit_tests/sources/declarative/parsers/test_model_to_component_factory.py
index 5c4d2c8d5..903eeb14c 100644
--- a/unit_tests/sources/declarative/parsers/test_model_to_component_factory.py
+++ b/unit_tests/sources/declarative/parsers/test_model_to_component_factory.py
@@ -2027,6 +2027,44 @@ def test_create_composite_error_handler():
     assert error_handler_1.response_filters[0].action == ResponseAction.RETRY
 
 
+def test_create_composite_error_handler_with_custom_error_handler():
+    content = """
+        error_handler:
+          type: "CompositeErrorHandler"
+          error_handlers:
+            - type: "CustomErrorHandler"
+              class_name: "unit_tests.sources.declarative.parsers.testing_components.TestingCustomErrorHandler"
+            - response_filters:
+                - http_codes: [ 429 ]
+                  action: RETRY
+    """
+    parsed_manifest = YamlDeclarativeSource._parse(content)
+    resolved_manifest = resolver.preprocess_manifest(parsed_manifest)
+    error_handler_manifest = transformer.propagate_types_and_parameters(
+        "", resolved_manifest["error_handler"], {}
+    )
+
+    error_handler = factory.create_component(
+        model_type=CompositeErrorHandlerModel,
+        component_definition=error_handler_manifest,
+        config=input_config,
+    )
+
+    assert isinstance(error_handler, CompositeErrorHandler)
+    assert len(error_handler.error_handlers) == 2
+
+    # First error handler should be a custom error handler
+    error_handler_0 = error_handler.error_handlers[0]
+    assert error_handler_0.__class__.__name__ == "TestingCustomErrorHandler"
+
+    # Second error handler should be a default error handler
+    error_handler_1 = error_handler.error_handlers[1]
+    assert isinstance(error_handler_1, DefaultErrorHandler)
+    assert isinstance(error_handler_1.response_filters[0], HttpResponseFilter)
+    assert error_handler_1.response_filters[0].http_codes == {429}
+    assert error_handler_1.response_filters[0].action == ResponseAction.RETRY
+
+
 # This might be a better test for the manifest transformer but also worth testing end-to-end here as well
 def test_config_with_defaults():
     content = """
diff --git a/unit_tests/sources/declarative/parsers/testing_components.py b/unit_tests/sources/declarative/parsers/testing_components.py
index 88316b521..6269acb8e 100644
--- a/unit_tests/sources/declarative/parsers/testing_components.py
+++ b/unit_tests/sources/declarative/parsers/testing_components.py
@@ -90,6 +90,15 @@ def migrate(self, stream_state: Mapping[str, Any]) -> Mapping[str, Any]:
         return stream_state
 
 
+@dataclass
+class TestingCustomErrorHandler(DefaultErrorHandler):
+    """
+    A test class based on DefaultErrorHandler used for testing manifests that use custom error handlers.
+    """
+
+    __test__: ClassVar[bool] = False  # Tell Pytest this is not a Pytest class, despite its name
+
+
 @dataclass
 class TestingRequester(HttpRequester):
     request_parameters: Optional[RequestInput] = None