diff --git a/lib/tests/tests/issues/obe_10735_array_index_cap.vrl b/lib/tests/tests/issues/obe_10735_array_index_cap.vrl
new file mode 100644
index 000000000..3579b1e82
--- /dev/null
+++ b/lib/tests/tests/issues/obe_10735_array_index_cap.vrl
@@ -0,0 +1,14 @@
+# issue: OBE-10735
+# Assigning to a large array index pads the array with `Value::Null` up to that index. The padding
+# is observable semantics (`length` sees it), so the write genuinely commits `index + 1` elements —
+# an event-controlled index was enough to exhaust memory. Indices beyond +/-1048576 (2^20) are now
+# dropped. 2^20 bounds one indexed write to ~42 MB at today's 40-byte `Value`.
+# result: [0, 1048577]
+
+capped = []
+capped[2000000] = 1
+
+allowed = []
+allowed[1048576] = 1
+
+[length(capped), length(allowed)]
diff --git a/src/value/value/crud/insert.rs b/src/value/value/crud/insert.rs
index 23ff45113..518d707d4 100644
--- a/src/value/value/crud/insert.rs
+++ b/src/value/value/crud/insert.rs
@@ -26,13 +26,13 @@ pub fn insert<'a, T: ValueCollection>(
             if let Some(Value::Array(array)) = value.get_mut_value(key.borrow()) {
                 insert(array, index, path_iter, insert_value)
             } else {
-                const MAX_ARRAY_CAPACITY: usize = 32_769;
-                let capacity = if index >= 0 {
-                    ((index as usize) + 1).min(MAX_ARRAY_CAPACITY)
-                } else {
-                    ((-index) as usize).min(MAX_ARRAY_CAPACITY)
-                };
-                let mut array = Vec::with_capacity(capacity);
+                // No preallocation here: `insert_value` (for `Vec<Value>`) checks the index
+                // against `MAX_ARRAY_INDEX` before doing any allocation, so an out-of-range
+                // index is rejected with zero large allocation. For an in-range index it does
+                // its own correctly-sized allocation (a growth loop for positive indices, a
+                // `with_capacity` for negative ones) — preallocating here duplicated or wasted
+                // that work.
+                let mut array = Vec::new();
                 let prev_value = insert(&mut array, index, path_iter, insert_value);
                 value.insert_value(key, Value::Array(array));
                 prev_value
@@ -84,24 +84,59 @@ mod test {
     #[test]
     fn test_insert_beyond_max_array_index_is_rejected() {
         let mut value = Value::Null;
-        assert_eq!(value.insert("[40000]", 1), None);
+        assert_eq!(value.insert("[1048577]", 1), None);
         assert_eq!(value, Value::from(json!([])));
     }
 
     #[test]
     fn test_insert_beyond_max_negative_array_index_is_rejected() {
         let mut value = Value::Null;
-        assert_eq!(value.insert("[-40000]", 1), None);
+        assert_eq!(value.insert("[-1048577]", 1), None);
         assert_eq!(value, Value::from(json!([])));
     }
 
+    // OBE-10735: `insert` used to speculatively `Vec::with_capacity` the (clamped) index before
+    // `insert_value` had a chance to reject an out-of-range write, so a rejected huge index still
+    // committed a large (~42 MB) allocation. Assert the rejected array stays unallocated.
+    #[test]
+    fn test_insert_beyond_max_array_index_does_not_preallocate() {
+        let mut value = Value::Null;
+        assert_eq!(value.insert("[2000000]", 1), None);
+        let array = value.as_array_mut().expect("expected an array");
+        assert_eq!(array.capacity(), 0);
+    }
+
     #[test]
     fn test_insert_at_max_array_index_is_allowed() {
         let mut value = Value::Null;
-        assert_eq!(value.insert("[32768]", 1), None);
+        assert_eq!(value.insert("[1048576]", 1), None);
         let array = value.as_array().expect("expected an array");
-        assert_eq!(array.len(), 32769);
-        assert_eq!(array[32768], Value::Integer(1));
+        assert_eq!(array.len(), 1_048_577);
+        assert_eq!(array[1_048_576], Value::Integer(1));
+    }
+
+    // OBE-10735: the capacity calculation negated the index with `(-index) as usize`, which
+    // overflows on `isize::MIN` (there is no positive `isize` counterpart). `unsigned_abs` is
+    // the total operation.
+    #[test]
+    fn test_insert_at_isize_min_does_not_panic() {
+        let mut value = Value::Null;
+        let path = vec![BorrowedSegment::Index(isize::MIN)].into_iter();
+        assert_eq!(insert(&mut value, (), path, Value::Integer(1)), None);
+        assert_eq!(value, Value::from(json!([])));
+    }
+
+    // Drift detector, not a correctness assertion: the cap is justified in terms of the memory a
+    // single indexed write may commit (`MAX_ARRAY_INDEX + 1` elements of this size, ~42 MB today).
+    // If `Value` grows a variant, that budget changes and the cap deserves a fresh look.
+    #[test]
+    fn test_value_size_is_pinned() {
+        assert_eq!(
+            std::mem::size_of::<Value>(),
+            40,
+            "size_of::<Value>() changed; re-check the MAX_ARRAY_INDEX memory budget \
+             (cap x size = worst-case allocation for one indexed write)"
+        );
     }
 
     #[test]
diff --git a/src/value/value/crud/mod.rs b/src/value/value/crud/mod.rs
index 4d257c721..a9fda7160 100644
--- a/src/value/value/crud/mod.rs
+++ b/src/value/value/crud/mod.rs
@@ -1,9 +1,13 @@
 use crate::value::{KeyString, ObjectMap, Value};
 use std::borrow::Borrow;
 
-/// Largest array index `insert_value` will grow an array to, in either direction.
+/// Largest array index an indexed write will grow an array to, in either direction.
 /// Prevents an event-controlled index (e.g. `.foo[40000000] = 1`) from exhausting memory.
-const MAX_ARRAY_INDEX: usize = 32_768;
+///
+/// Assigning to index `N` materialises `N + 1` elements — the null padding is observable VRL
+/// semantics, not just a preallocation — so this cap is what bounds the memory a single write may
+/// commit: ~42 MB at today's 40-byte `Value` (see `test_value_size_is_pinned`).
+pub(super) const MAX_ARRAY_INDEX: usize = 1_048_576;
 
 mod get;
 mod get_mut;