diff --git a/chainsaw/step-templates/init.yaml b/chainsaw/step-templates/init.yaml
index 2ca7272554..be118b0ed7 100644
--- a/chainsaw/step-templates/init.yaml
+++ b/chainsaw/step-templates/init.yaml
@@ -35,9 +35,9 @@ spec:
               (length(@)): 1
           spec:
             endpoints:
-              - dnsName: (join('', ['localtargets-', $test.metadata.name, '.cloud.example.com']))
+              - dnsName: (join('', ['localtargets.', $test.metadata.name, '.cloud.example.com']))
                 recordType: A
-              - dnsName: (join('', [$test.metadata.name, '.cloud.example.com']))
+              - dnsName: (join('', ['localtargets.', $test.metadata.name, '.cloud.example.com']))
                 recordType: A
         timeout: 75s
 
@@ -46,7 +46,7 @@ spec:
           - name: DNSENDPOINT_NAME
             value: ($test.metadata.name)
           - name: EXPECTED_DNS_NAME
-            value: (join('', ['localtargets-', $test.metadata.name, '.cloud.example.com']))
+            value: (join('', ['localtargets.', $test.metadata.name, '.cloud.example.com']))
         content: |
           set -eu pipefail
 
diff --git a/controllers/providers/k8gbendpoint/applicationDNSEndpoint.go b/controllers/providers/k8gbendpoint/applicationDNSEndpoint.go
index 20f4a219b3..e772dea6a2 100644
--- a/controllers/providers/k8gbendpoint/applicationDNSEndpoint.go
+++ b/controllers/providers/k8gbendpoint/applicationDNSEndpoint.go
@@ -233,6 +233,18 @@ func (d *ApplicationDNSEndpoint) GetExternalTargets(host string) (targets Target
 				Msg("can't resolve FQDN using nameservers")
 			continue
 		}
+		// Fall back to legacy dash-prefix naming for backward compatibility during migration
+		if len(d.queryService.ExtractARecords(dnsResult.Msg)) == 0 {
+			lHostLegacy, err := getLocalTargetsHostLegacy(host)
+			if err != nil {
+				continue
+			}
+			dnsResultLegacy := d.queryService.Query(lHostLegacy, nameServersToUse)
+			if dnsResultLegacy.Err != nil {
+				continue
+			}
+			dnsResult = dnsResultLegacy
+		}
 		clusterTargets := d.queryService.ExtractARecords(dnsResult.Msg)
 		if len(clusterTargets) > 0 {
 			targets[authServer.GeoTag] = &Target{clusterTargets}
diff --git a/controllers/providers/k8gbendpoint/applicationDNSEndpoint_weight_test.go b/controllers/providers/k8gbendpoint/applicationDNSEndpoint_weight_test.go
index 598764ed01..a022665e64 100644
--- a/controllers/providers/k8gbendpoint/applicationDNSEndpoint_weight_test.go
+++ b/controllers/providers/k8gbendpoint/applicationDNSEndpoint_weight_test.go
@@ -340,12 +340,12 @@ func TestWeight(t *testing.T) {
 				ns := fmt.Sprintf("gslb-ns-%s-cloud.example.com", d.region)
 				nsIP := test.authServers[ns].IP
 				for _, v := range d.targets {
-					record := &dns.A{Hdr: dns.RR_Header{Name: dns.Fqdn("localtargets-app.gslb.cloud.example.com"), Rrtype: dns.TypeA, Class: dns.ClassINET, Ttl: 30},
+					record := &dns.A{Hdr: dns.RR_Header{Name: dns.Fqdn("localtargets.app.gslb.cloud.example.com"), Rrtype: dns.TypeA, Class: dns.ClassINET, Ttl: 30},
 						A: net.ParseIP(v)}
 					ips = append(ips, record)
 				}
 				qs.EXPECT().
-					Query("localtargets-app.gslb.cloud.example.com", utils.DNSList{utils.DNSServer{Host: nsIP, Port: 53}}).
+					Query("localtargets.app.gslb.cloud.example.com", utils.DNSList{utils.DNSServer{Host: nsIP, Port: 53}}).
 					Return(utils.DNSQueryResult{Msg: &dns.Msg{Answer: ips}, Err: nil, Status: utils.DNSQueryStatusResolved}).
 					AnyTimes()
 			}
diff --git a/controllers/providers/k8gbendpoint/dns_validation.go b/controllers/providers/k8gbendpoint/dns_validation.go
index 24df23c017..84397bdf74 100644
--- a/controllers/providers/k8gbendpoint/dns_validation.go
+++ b/controllers/providers/k8gbendpoint/dns_validation.go
@@ -24,9 +24,10 @@ import (
 )
 
 const (
-	localTargetsPrefix = "localtargets-"
-	dnsNameMax         = 253
-	dnsLabelMax        = 63
+	localTargetsPrefix    = "localtargets."
+	localTargetsPrefixLegacy = "localtargets-"
+	dnsNameMax            = 253
+	dnsLabelMax           = 63
 )
 
 func getLocalTargetsHost(host string) (string, error) {
@@ -37,6 +38,16 @@ func getLocalTargetsHost(host string) (string, error) {
 	return localTargetsHost, nil
 }
 
+// getLocalTargetsHostLegacy returns the legacy dash-separated localtargets name
+// for backward compatibility during migration from localtargets-<host> to localtargets.<host>.
+func getLocalTargetsHostLegacy(host string) (string, error) {
+	localTargetsHost := fmt.Sprintf("%s%s", localTargetsPrefixLegacy, host)
+	if err := validateDNSName(localTargetsHost); err != nil {
+		return "", fmt.Errorf("legacy derived localtargets name %q is invalid: %w", localTargetsHost, err)
+	}
+	return localTargetsHost, nil
+}
+
 func validateDNSName(name string) error {
 	if len(name) > dnsNameMax {
 		return fmt.Errorf("name exceeds %d characters", dnsNameMax)
diff --git a/controllers/providers/k8gbendpoint/dns_validation_test.go b/controllers/providers/k8gbendpoint/dns_validation_test.go
index b704c330c0..6de4245ad8 100644
--- a/controllers/providers/k8gbendpoint/dns_validation_test.go
+++ b/controllers/providers/k8gbendpoint/dns_validation_test.go
@@ -35,11 +35,13 @@ import (
 )
 
 func TestGetLocalTargetsHostRejectsTooLongFirstLabel(t *testing.T) {
-	host := strings.Repeat("a", 51) + ".cloud.example.com"
-	expectedErr := `derived localtargets name "localtargets-` +
-		strings.Repeat("a", 51) +
-		`.cloud.example.com" is invalid: label "localtargets-` +
-		strings.Repeat("a", 51) +
+	// With the dot prefix the host is split into labels, so the over-long
+	// label must live in the host portion: 64 'a's exceed the 63-char limit.
+	host := strings.Repeat("a", 64) + ".cloud.example.com"
+	expectedErr := `derived localtargets name "localtargets.` +
+		strings.Repeat("a", 64) +
+		`.cloud.example.com" is invalid: label "` +
+		strings.Repeat("a", 64) +
 		`" exceeds 63 characters`
 
 	_, err := getLocalTargetsHost(host)
@@ -50,7 +52,7 @@ func TestGetLocalTargetsHostRejectsTooLongFirstLabel(t *testing.T) {
 func TestGetDNSEndpointRejectsInvalidLocalTargetsHost(t *testing.T) {
 	logger := zerolog.New(io.Discard).With().Timestamp().Logger()
 	metrics := func(*k8gbv1beta1io.Gslb, bool, k8gbv1beta1io.HealthStatus, []string) {}
-	host := strings.Repeat("a", 51) + ".cloud.example.com"
+	host := strings.Repeat("a", 64) + ".cloud.example.com"
 
 	ctrl := gomock.NewController(t)
 	defer ctrl.Finish()
diff --git a/controllers/utils/fakedns_test.go b/controllers/utils/fakedns_test.go
index 86df1290ec..c38ba7c031 100644
--- a/controllers/utils/fakedns_test.go
+++ b/controllers/utils/fakedns_test.go
@@ -109,15 +109,15 @@ func TestFakeDNSBasic(t *testing.T) {
 func TestFakeDNSStress(t *testing.T) {
 	for i := 1; i < 10; i++ {
 		NewFakeDNS(testSettings).
-			AddARecord("localtargets-roundrobin.cloud.example.com.", net.IPv4(10, 1, 0, 3)).
-			AddARecord("localtargets-roundrobin.cloud.example.com.", net.IPv4(10, 1, 0, 2)).
-			AddARecord("localtargets-roundrobin.cloud.example.com.", net.IPv4(10, 1, 0, 1)).
-			AddTXTRecord("localtargets-heartbeat-us.cloud.example.com.", "5m").
+			AddARecord("localtargets.roundrobin.cloud.example.com.", net.IPv4(10, 1, 0, 3)).
+			AddARecord("localtargets.roundrobin.cloud.example.com.", net.IPv4(10, 1, 0, 2)).
+			AddARecord("localtargets.roundrobin.cloud.example.com.", net.IPv4(10, 1, 0, 1)).
+			AddTXTRecord("localtargets.heartbeat-us.cloud.example.com.", "5m").
 			Start().
 			RunTestFunc(func() {
 				t.Log("FakeDNS test: ", i)
 				g := new(dns.Msg)
-				g.SetQuestion("localtargets-roundrobin.cloud.example.com.", dns.TypeA)
+				g.SetQuestion("localtargets.roundrobin.cloud.example.com.", dns.TypeA)
 				// put server under load....
 				for i := 0; i <= 100; i++ {
 					a, err := dns.Exchange(g, fmt.Sprintf("%s:%v", server, port))
diff --git a/terratest/utils/extensions.go b/terratest/utils/extensions.go
index ef0f6154c0..35294e3779 100644
--- a/terratest/utils/extensions.go
+++ b/terratest/utils/extensions.go
@@ -541,7 +541,7 @@ func (i *Instance) waitForApp(predicate func(instances int) bool, stop bool) (er
 	// second conditions
 	endpointReady := false
 	for n := 0; n < maxRetries/2; n++ {
-		ep, err := i.Resources().GetExternalDNSEndpointByName(i.w.state.gslb.name, i.w.namespace).GetEndpointByName(fmt.Sprintf("localtargets-%s", i.w.state.gslb.host))
+		ep, err := i.Resources().GetExternalDNSEndpointByName(i.w.state.gslb.name, i.w.namespace).GetEndpointByName(fmt.Sprintf("localtargets.%s", i.w.state.gslb.host))
 		if err != nil {
 			if err.Error() == notFoundError {
 				// During startup the local DNSEndpoint can lag behind the app becoming ready,
@@ -607,7 +607,7 @@ func (i *Instance) Dig() []string {
 
 // GetLocalTargets returns instance local targets
 func (i *Instance) GetLocalTargets() []string {
-	dnsName := fmt.Sprintf("localtargets-%s", i.w.state.gslb.host)
+	dnsName := fmt.Sprintf("localtargets.%s", i.w.state.gslb.host)
 	dig, err := dns.Dig("localhost:"+strconv.Itoa(i.w.state.gslb.port), dnsName, i.w.settings.digUsingUDP)
 	i.logIfError(err, "GetLocalTargets(), dig: %s", err)
 	return dig