diff --git a/docs/user-guide/kustomize.md b/docs/user-guide/kustomize.md
index f524e0a4e9..a22984a2cb 100644
--- a/docs/user-guide/kustomize.md
+++ b/docs/user-guide/kustomize.md
@@ -133,7 +133,7 @@ spec:
 
 ## Components
 Kustomize [components](https://github.com/kubernetes-sigs/kustomize/blob/master/examples/components.md) encapsulate both resources and patches together. They provide a powerful way to modularize and reuse configuration in Kubernetes applications. 
-If Kustomize is passed a non-existing component directory, it will error out. Missing component directories can be ignored (meaning, not passed to Kustomize) using `ignoreMissingComponents`. This can be particularly helpful to implement a [default/override pattern].
+If Kustomize is passed a non-existing component directory, it will error out. Missing or invalid (missing a Kustomization file) component directories can be ignored (meaning, not passed to Kustomize) using `ignoreMissingComponents`. This can be particularly helpful to implement a [default/override pattern].
 
 Outside of Argo CD, to utilize components, you must add the following to the `kustomization.yaml` that the Application references. For example:
 ```yaml
diff --git a/util/kustomize/kustomize.go b/util/kustomize/kustomize.go
index 922c3d145a..159c3af55c 100644
--- a/util/kustomize/kustomize.go
+++ b/util/kustomize/kustomize.go
@@ -351,17 +351,24 @@ func (k *kustomize) Build(opts *v1alpha1.ApplicationSourceKustomize, kustomizeOp
 					return nil, nil, nil, fmt.Errorf("failed to open the repo folder: %w", err)
 				}
 
+				kustomizationFileValidNames := []string{"kustomization.yaml", "kustomization.yml", "Kustomization"}
+			component:
 				for _, c := range opts.Components {
-					resolvedPath, err := filepath.Rel(k.repoRoot, filepath.Join(k.path, c))
+					componentDir, err := filepath.Rel(k.repoRoot, filepath.Join(k.path, c))
 					if err != nil {
 						return nil, nil, nil, fmt.Errorf("kustomize components path failed: %w", err)
 					}
-					_, err = root.Stat(resolvedPath)
-					if err != nil {
-						log.Debugf("%s component directory does not exist", resolvedPath)
-						continue
+					for _, kustomizationFile := range kustomizationFileValidNames {
+						kustomization, err := root.Stat(filepath.Join(componentDir, kustomizationFile))
+						if err == nil && kustomization.Mode().IsRegular() {
+							foundComponents = append(foundComponents, c)
+							log.Infof("Adding component '%s' to kustomization.yaml", c)
+							break component
+						}
 					}
-					foundComponents = append(foundComponents, c)
+					log.Infof("Ignoring component '%s': directory does not exist or unable to find one of %s",
+						componentDir,
+						strings.Join(kustomizationFileValidNames, ", "))
 				}
 			}
 
diff --git a/util/kustomize/kustomize_test.go b/util/kustomize/kustomize_test.go
index 7e517c8541..ff804b76cb 100644
--- a/util/kustomize/kustomize_test.go
+++ b/util/kustomize/kustomize_test.go
@@ -495,13 +495,29 @@ func TestKustomizeBuildComponents(t *testing.T) {
 	}
 	_, _, _, err = kustomize.Build(&kustomizeSource, nil, nil, nil)
 	require.Error(t, err)
+	kustomizeSource = v1alpha1.ApplicationSourceKustomize{
+		Components:              []string{"./components", "./components_no_kustomization"},
+		IgnoreMissingComponents: false,
+	}
+	_, _, _, err = kustomize.Build(&kustomizeSource, nil, nil, nil)
+	require.Error(t, err)
+
+	// `kustomize edit add component` works if the directory exists even if there is no kustomization.yaml inside,
+	// but then `kustomize build` fails
+	// Reset the kustomize app so we don't let components_no_kustomization in the kustomization.yaml
+	appPath, err = testDataDir(t, kustomization6)
+	require.NoError(t, err)
+	kustomize = NewKustomizeApp(appPath, appPath, git.NopCreds{}, "", "", "", "")
 
 	kustomizeSource = v1alpha1.ApplicationSourceKustomize{
-		Components:              []string{"./components", "./missing-components"},
+		Components:              []string{"./components", "./missing-components", "./components_no_kustomization"},
 		IgnoreMissingComponents: true,
 	}
 	objs, _, _, err := kustomize.Build(&kustomizeSource, nil, nil, nil)
 	require.NoError(t, err)
+	for _, o := range objs {
+		assert.NotEqual(t, "notproduced", o.GetName())
+	}
 	obj := objs[0]
 	assert.Equal(t, "nginx-deployment", obj.GetName())
 	assert.Equal(t, map[string]string{
diff --git a/util/kustomize/testdata/kustomization_yaml_components/components_no_kustomization/configmap.yaml b/util/kustomize/testdata/kustomization_yaml_components/components_no_kustomization/configmap.yaml
new file mode 100644
index 0000000000..e2f54a8349
--- /dev/null
+++ b/util/kustomize/testdata/kustomization_yaml_components/components_no_kustomization/configmap.yaml
@@ -0,0 +1,6 @@
+kind: ConfigMap
+apiVersion: v1
+metadata:
+  name: notproduced
+data:
+  somekey: somevalue