diff --git a/.changeset/pretty-mice-camp.md b/.changeset/pretty-mice-camp.md
new file mode 100644
index 0000000000..6e8ed9c039
--- /dev/null
+++ b/.changeset/pretty-mice-camp.md
@@ -0,0 +1,5 @@
+---
+'@aws-amplify/sandbox': patch
+---
+
+fix: handling \!pattern in gitignore to avoid excluding everything from watching in sandbox
diff --git a/packages/sandbox/src/file_watching_sandbox.test.ts b/packages/sandbox/src/file_watching_sandbox.test.ts
index ec02915b2d..8212dd67ac 100644
--- a/packages/sandbox/src/file_watching_sandbox.test.ts
+++ b/packages/sandbox/src/file_watching_sandbox.test.ts
@@ -713,6 +713,47 @@ void describe('Sandbox using local project name resolver', () => {
     assert.strictEqual(backendDeployerDeployMock.mock.callCount(), 1);
   });
 
+  void it('handles !files in .gitignore and filter them out', async (contextual) => {
+    contextual.mock.method(fs, 'existsSync', () => true);
+    contextual.mock.method(parseGitIgnore, 'parse', () => {
+      return {
+        patterns: [
+          '/patternWithLeadingSlash',
+          'patternWithoutLeadingSlash',
+          'someFile.js',
+          '!patternThatShouldNotBeIncluded',
+          'overlap/',
+          'overlap/file',
+        ],
+      };
+    });
+    ({ sandboxInstance, fileChangeEventCallback } = await setupAndStartSandbox({
+      executor: sandboxExecutor,
+      cfnClient: cfnClientMock,
+      exclude: ['customer_exclude1', 'customer_exclude2'],
+    }));
+    await fileChangeEventCallback(null, [
+      { type: 'update', path: 'foo/test1.ts' },
+    ]);
+
+    // File watcher should be called with right excludes and not include patternThatShouldNotBeIncluded
+    assert.deepStrictEqual(subscribeMock.mock.calls[0].arguments[2], {
+      ignore: [
+        '.amplify',
+        'patternWithLeadingSlash',
+        'patternWithoutLeadingSlash',
+        'someFile.js',
+        'overlap/',
+        'overlap/file',
+        'customer_exclude1',
+        'customer_exclude2',
+      ],
+    });
+
+    // BackendDeployer should also be called once
+    assert.strictEqual(backendDeployerDeployMock.mock.callCount(), 1);
+  });
+
   void it('emits the successfulDeployment event after deployment', async () => {
     const mockListener = mock.fn();
     ({ sandboxInstance, fileChangeEventCallback } = await setupAndStartSandbox({
diff --git a/packages/sandbox/src/file_watching_sandbox.ts b/packages/sandbox/src/file_watching_sandbox.ts
index 72586b9144..b98752c3e5 100644
--- a/packages/sandbox/src/file_watching_sandbox.ts
+++ b/packages/sandbox/src/file_watching_sandbox.ts
@@ -251,7 +251,18 @@ export class FileWatchingSandbox extends EventEmitter implements Sandbox {
         .parse(gitIgnoreFilePath)
         .patterns.map((pattern: string) =>
           pattern.startsWith('/') ? pattern.substring(1) : pattern
-        );
+        )
+        .filter((pattern: string) => {
+          if (pattern.startsWith('!')) {
+            console.log(
+              `[Sandbox] Pattern ${pattern} found in .gitignore. "${pattern.substring(
+                1
+              )}" will not be watched if other patterns in .gitignore are excluding it.`
+            );
+            return false;
+          }
+          return true;
+        });
     }
     return [];
   };