diff --git a/src/services/transitive-extractor.ts b/src/services/transitive-extractor.ts
index 4717d95f..4f59fc56 100644
--- a/src/services/transitive-extractor.ts
+++ b/src/services/transitive-extractor.ts
@@ -4,6 +4,7 @@
 import type { IApimClient } from '../clients/iapim-client.js';
 import type { IArtifactStore } from '../clients/iartifact-store.js';
 import type { ApimServiceContext, ResourceDescriptor } from '../models/types.js';
+import { ResourceType } from '../models/resource-types.js';
 import { getResourceDescriptorKey } from '../lib/resource-path.js';
 import { buildResourceLabel } from '../lib/resource-uri.js';
 import { logger } from '../lib/logger.js';
@@ -23,6 +24,69 @@ export interface TransitiveExtractionResult {
   errorCount: number;
 }
 
+interface TransitiveTaskResult {
+  dep: ResourceDescriptor;
+  json?: Record<string, unknown>;
+  /** Resolved to a resource already extracted under its real name. */
+  skipped?: boolean;
+}
+
+/**
+ * Per-context (keyed by baseUrl) index of named value displayName → resource name.
+ * Stored as promises so concurrent tasks share a single LIST call.
+ */
+type NamedValueNameIndex = Map<string, Promise<Map<string, string>>>;
+
+async function loadNamedValueNames(
+  client: IApimClient,
+  context: ApimServiceContext
+): Promise<Map<string, string>> {
+  const byDisplayName = new Map<string, string>();
+  try {
+    for await (const json of client.listResources(context, ResourceType.NamedValue)) {
+      const name = json.name;
+      const displayName = (json.properties as Record<string, unknown> | undefined)?.displayName;
+      if (typeof name === 'string' && typeof displayName === 'string') {
+        byDisplayName.set(displayName, name);
+      }
+    }
+  } catch (error) {
+    const message = error instanceof Error ? error.message : String(error);
+    logger.warn(
+      `Failed to list named values for display name resolution; ` +
+      `falling back to resolving {{references}} as resource names: ${message}`
+    );
+  }
+  return byDisplayName;
+}
+
+/**
+ * Policies reference named values as {{displayName}}, but the ARM GET endpoint
+ * is keyed by resource name. Map the reference to the resource name when they
+ * differ; otherwise return the descriptor unchanged.
+ */
+async function resolveNamedValueDescriptor(
+  client: IApimClient,
+  context: ApimServiceContext,
+  dep: ResourceDescriptor,
+  index: NamedValueNameIndex
+): Promise<ResourceDescriptor> {
+  let names = index.get(context.baseUrl);
+  if (!names) {
+    names = loadNamedValueNames(client, context);
+    index.set(context.baseUrl, names);
+  }
+
+  const ref = dep.nameParts[0] ?? '';
+  const name = (await names).get(ref);
+  if (!name || name === ref) {
+    return dep;
+  }
+
+  logger.debug(`Resolved named value reference "{{${ref}}}" to resource name "${name}"`);
+  return { ...dep, nameParts: [name] };
+}
+
 export async function extractTransitiveDependencies(
   client: IApimClient,
   store: IArtifactStore,
@@ -36,7 +100,9 @@ export async function extractTransitiveDependencies(
   serviceContext?: ApimServiceContext
 ): Promise<TransitiveExtractionResult> {
   const attempted = new Set(alreadyExtracted.map(getResourceDescriptorKey));
+  const claimedNamedValues = new Set(alreadyExtracted.map(getResourceDescriptorKey));
   const extractedDescriptors: ResourceDescriptor[] = [];
+  const namedValueIndex: NamedValueNameIndex = new Map();
   let errorCount = 0;
   let foundDependencies = false;
 
@@ -61,17 +127,27 @@ export async function extractTransitiveDependencies(
       attempted.add(getResourceDescriptorKey(dep));
     }
 
-    const tasks = newDeps.map((dep) => async () => {
+    const tasks = newDeps.map((dep) => async (): Promise<TransitiveTaskResult> => {
       try {
         const dependencyContext =
           serviceContext && dep.workspace !== workspace ? serviceContext : context;
-        const json = await client.getResource(dependencyContext, dep);
+        let target = dep;
+        if (dep.type === ResourceType.NamedValue) {
+          target = await resolveNamedValueDescriptor(client, dependencyContext, dep, namedValueIndex);
+          const targetKey = getResourceDescriptorKey(target);
+          if (claimedNamedValues.has(targetKey)) {
+            return { dep: target, skipped: true };
+          }
+          claimedNamedValues.add(targetKey);
+        }
+        const json = await client.getResource(dependencyContext, target);
         if (json) {
-          const safeJson = redactSecrets(dep, json);
-          await store.writeResource(outputDir, dep, safeJson);
-          logger.info(`Extracted transitive dependency ${buildResourceLabel(dep)}`);
-          return { dep, json: safeJson };
+          const safeJson = redactSecrets(target, json);
+          await store.writeResource(outputDir, target, safeJson);
+          logger.info(`Extracted transitive dependency ${buildResourceLabel(target)}`);
+          return { dep: target, json: safeJson };
         }
+        logger.warn(`Transitive dependency ${buildResourceLabel(target)} was not found`);
       } catch (error) {
         const message = error instanceof Error ? error.message : String(error);
         logger.warn(
@@ -84,6 +160,9 @@ export async function extractTransitiveDependencies(
     const taskResults = await runParallel(tasks, DEFAULT_CONCURRENCY);
     for (const taskResult of taskResults) {
       const value = taskResult.status === 'fulfilled' ? taskResult.value : undefined;
+      if (value?.skipped) {
+        continue;
+      }
       if (!value?.json) {
         errorCount++;
         continue;
diff --git a/tests/unit/services/transitive-extractor.test.ts b/tests/unit/services/transitive-extractor.test.ts
new file mode 100644
index 00000000..31ead3d4
--- /dev/null
+++ b/tests/unit/services/transitive-extractor.test.ts
@@ -0,0 +1,247 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT license.
+/**
+ * Unit tests for transitive dependency extraction
+ */
+
+import { describe, it, expect, vi } from 'vitest';
+import { ResourceType } from '../../../src/models/resource-types.js';
+import { ApimServiceContext, ResourceDescriptor } from '../../../src/models/types.js';
+import { extractTransitiveDependencies } from '../../../src/services/transitive-extractor.js';
+
+const testContext: ApimServiceContext = {
+  subscriptionId: 'sub-1',
+  resourceGroup: 'rg-1',
+  serviceName: 'apim-1',
+  apiVersion: '2024-05-01',
+  baseUrl: 'https://management.azure.com/subscriptions/sub-1/resourceGroups/rg-1/providers/Microsoft.ApiManagement/service/apim-1',
+};
+
+function createMockClient() {
+  return {
+    listResources: vi.fn(async function* (_ctx: ApimServiceContext, _type: ResourceType): AsyncGenerator<Record<string, unknown>> {}),
+    getResource: vi.fn().mockResolvedValue(undefined),
+    putResource: vi.fn(),
+    patchResource: vi.fn(),
+    deleteResource: vi.fn(),
+    listApiRevisions: async function* () {},
+    getApiSpecification: vi.fn().mockResolvedValue(undefined),
+    validatePreFlight: vi.fn().mockResolvedValue(undefined),
+  };
+}
+
+function createMockStore() {
+  return {
+    writeResource: vi.fn().mockResolvedValue(undefined),
+    writeContent: vi.fn().mockResolvedValue(undefined),
+    writeAssociation: vi.fn().mockResolvedValue(undefined),
+    readResource: vi.fn().mockResolvedValue(undefined),
+    readContent: vi.fn().mockResolvedValue(undefined),
+    readAssociation: vi.fn().mockResolvedValue([]),
+    listResources: vi.fn().mockResolvedValue([]),
+    deleteResource: vi.fn().mockResolvedValue(undefined),
+  };
+}
+
+function policiesWith(...refs: string[]): Map<string, string> {
+  const xml = refs.map((ref) => `<set-variable name="v" value="{{${ref}}}" />`).join('');
+  return new Map([['api-1', `<policies><inbound>${xml}</inbound></policies>`]]);
+}
+
+function namedValueList(...entries: Array<{ name: string; displayName: string }>) {
+  return vi.fn(async function* (_ctx: ApimServiceContext, type: ResourceType) {
+    if (type === ResourceType.NamedValue) {
+      for (const entry of entries) {
+        yield { name: entry.name, properties: { displayName: entry.displayName } };
+      }
+    }
+  });
+}
+
+describe('transitive-extractor', () => {
+  describe('named value displayName resolution (#291)', () => {
+    it('should resolve {{displayName}} to the resource name and extract under that name', async () => {
+      const client = createMockClient();
+      client.listResources = namedValueList({ name: 'nv-resource', displayName: 'nv_display' });
+      client.getResource.mockImplementation(async (_ctx, descriptor: ResourceDescriptor) => {
+        if (descriptor.type === ResourceType.NamedValue && descriptor.nameParts[0] === 'nv-resource') {
+          return { name: 'nv-resource', properties: { displayName: 'nv_display', secret: false, value: 'x' } };
+        }
+        return undefined;
+      });
+      const store = createMockStore();
+
+      const result = await extractTransitiveDependencies(
+        client, store, testContext, '/output', policiesWith('nv_display'), new Map(), [], []
+      );
+
+      expect(result.errorCount).toBe(0);
+      expect(result.extractedDescriptors).toEqual([
+        expect.objectContaining({ type: ResourceType.NamedValue, nameParts: ['nv-resource'] }),
+      ]);
+      expect(client.getResource).not.toHaveBeenCalledWith(
+        testContext,
+        expect.objectContaining({ nameParts: ['nv_display'] })
+      );
+      expect(store.writeResource).toHaveBeenCalledWith(
+        '/output',
+        expect.objectContaining({ type: ResourceType.NamedValue, nameParts: ['nv-resource'] }),
+        expect.objectContaining({ name: 'nv-resource' })
+      );
+    });
+
+    it('should fall back to the reference as resource name when no displayName matches', async () => {
+      const client = createMockClient();
+      client.listResources = namedValueList({ name: 'other', displayName: 'other' });
+      client.getResource.mockImplementation(async (_ctx, descriptor: ResourceDescriptor) => {
+        if (descriptor.type === ResourceType.NamedValue && descriptor.nameParts[0] === 'plain-ref') {
+          return { name: 'plain-ref', properties: { displayName: 'plain-ref' } };
+        }
+        return undefined;
+      });
+      const store = createMockStore();
+
+      const result = await extractTransitiveDependencies(
+        client, store, testContext, '/output', policiesWith('plain-ref'), new Map(), [], []
+      );
+
+      expect(result.errorCount).toBe(0);
+      expect(result.extractedDescriptors).toEqual([
+        expect.objectContaining({ type: ResourceType.NamedValue, nameParts: ['plain-ref'] }),
+      ]);
+    });
+
+    it('should list named values once per context across multiple references', async () => {
+      const client = createMockClient();
+      client.listResources = namedValueList(
+        { name: 'nv-a', displayName: 'A' },
+        { name: 'nv-b', displayName: 'B' },
+        { name: 'nv-c', displayName: 'C' },
+      );
+      client.getResource.mockImplementation(async (_ctx, descriptor: ResourceDescriptor) => ({
+        name: descriptor.nameParts[0],
+        properties: {},
+      }));
+      const store = createMockStore();
+
+      const result = await extractTransitiveDependencies(
+        client, store, testContext, '/output', policiesWith('A', 'B', 'C'), new Map(), [], []
+      );
+
+      expect(result.errorCount).toBe(0);
+      expect(result.extractedDescriptors.map((d) => d.nameParts[0]).sort()).toEqual(['nv-a', 'nv-b', 'nv-c']);
+      const namedValueLists = client.listResources.mock.calls.filter(
+        ([, type]) => type === ResourceType.NamedValue
+      );
+      expect(namedValueLists).toHaveLength(1);
+    });
+
+    it('should extract each resolved resource when a resource name is also another display name', async () => {
+      const client = createMockClient();
+      client.listResources = namedValueList(
+        { name: 'one', displayName: 'two' },
+        { name: 'two', displayName: 'three' },
+      );
+      client.getResource.mockImplementation(async (_ctx, descriptor: ResourceDescriptor) => ({
+        name: descriptor.nameParts[0],
+        properties: {},
+      }));
+      const store = createMockStore();
+
+      const result = await extractTransitiveDependencies(
+        client, store, testContext, '/output', policiesWith('two', 'three'), new Map(), [], []
+      );
+
+      expect(result.errorCount).toBe(0);
+      expect(result.extractedDescriptors.map((descriptor) => descriptor.nameParts[0]).sort()).toEqual([
+        'one',
+        'two',
+      ]);
+      expect(client.getResource).toHaveBeenCalledTimes(2);
+    });
+
+    it('should not re-extract or count an error when the resolved name was already extracted', async () => {
+      const client = createMockClient();
+      client.listResources = namedValueList({ name: 'nv-resource', displayName: 'nv_display' });
+      const store = createMockStore();
+      const alreadyExtracted: ResourceDescriptor[] = [
+        { type: ResourceType.NamedValue, nameParts: ['nv-resource'] },
+      ];
+
+      const result = await extractTransitiveDependencies(
+        client, store, testContext, '/output', policiesWith('nv_display'), new Map(), [], alreadyExtracted
+      );
+
+      expect(result.errorCount).toBe(0);
+      expect(result.extractedDescriptors).toEqual([]);
+      expect(client.getResource).not.toHaveBeenCalled();
+      expect(store.writeResource).not.toHaveBeenCalled();
+    });
+
+    it('should fall back to the reference when listing named values fails', async () => {
+      const client = createMockClient();
+      // eslint-disable-next-line require-yield
+      client.listResources = vi.fn(async function* (): AsyncGenerator<Record<string, unknown>> {
+        throw new Error('403 Forbidden');
+      });
+      client.getResource.mockImplementation(async (_ctx, descriptor: ResourceDescriptor) => {
+        if (descriptor.nameParts[0] === 'nv_display') {
+          return { name: 'nv_display', properties: {} };
+        }
+        return undefined;
+      });
+      const store = createMockStore();
+
+      const result = await extractTransitiveDependencies(
+        client, store, testContext, '/output', policiesWith('nv_display'), new Map(), [], []
+      );
+
+      expect(result.errorCount).toBe(0);
+      expect(result.extractedDescriptors).toEqual([
+        expect.objectContaining({ type: ResourceType.NamedValue, nameParts: ['nv_display'] }),
+      ]);
+    });
+
+    it('should resolve workspace-scoped references against the workspace context', async () => {
+      const wsContext: ApimServiceContext = {
+        ...testContext,
+        baseUrl: `${testContext.baseUrl}/workspaces/team-a`,
+      };
+      const client = createMockClient();
+      client.listResources = vi.fn(async function* (ctx: ApimServiceContext, type: ResourceType) {
+        if (type === ResourceType.NamedValue && ctx.baseUrl === wsContext.baseUrl) {
+          yield { name: 'ws-nv', properties: { displayName: 'ws_display' } };
+        }
+      });
+      client.getResource.mockImplementation(async (ctx: ApimServiceContext, descriptor: ResourceDescriptor) => {
+        if (ctx.baseUrl === wsContext.baseUrl && descriptor.nameParts[0] === 'ws-nv') {
+          return { name: 'ws-nv', properties: {} };
+        }
+        return undefined;
+      });
+      const store = createMockStore();
+
+      const result = await extractTransitiveDependencies(
+        client, store, wsContext, '/output', policiesWith('ws_display'), new Map(), [], [], 'team-a', testContext
+      );
+
+      expect(result.errorCount).toBe(0);
+      expect(result.extractedDescriptors).toEqual([
+        expect.objectContaining({ type: ResourceType.NamedValue, nameParts: ['ws-nv'], workspace: 'team-a' }),
+      ]);
+      expect(client.listResources).not.toHaveBeenCalledWith(testContext, ResourceType.NamedValue);
+    });
+
+    it('should count a missing dependency as an error', async () => {
+      const client = createMockClient();
+      const store = createMockStore();
+
+      const result = await extractTransitiveDependencies(
+        client, store, testContext, '/output', policiesWith('missing'), new Map(), [], []
+      );
+
+      expect(result.errorCount).toBe(1);
+      expect(result.extractedDescriptors).toEqual([]);
+    });
+  });
+});