diff --git a/Distribution/Features/PurchaseReturn/IPurchaseReturnRepository.cs b/Distribution/Features/PurchaseReturn/IPurchaseReturnRepository.cs
new file mode 100644
index 0000000..3449ff2
--- /dev/null
+++ b/Distribution/Features/PurchaseReturn/IPurchaseReturnRepository.cs
@@ -0,0 +1,11 @@
+namespace Distribution.Features.PurchaseReturn;
+
+public interface IPurchaseReturnRepository
+{
+    Task<Models.PurchaseReturn?> GetByIdAsync(Guid id);
+    Task<List<Models.PurchaseReturn>> GetByPurchaseOrderIdAsync(Guid purchaseOrderId);
+    Task AddAsync(Models.PurchaseReturn entity);
+
+    /// <summary>Sum of Quantity per ItemId across all prior returns for a Po.</summary>
+    Task<Dictionary<Guid, int>> GetReturnedTotalsByItemAsync(Guid purchaseOrderId);
+}
diff --git a/Distribution/Features/PurchaseReturn/PurchaseReturnController.cs b/Distribution/Features/PurchaseReturn/PurchaseReturnController.cs
new file mode 100644
index 0000000..f125024
--- /dev/null
+++ b/Distribution/Features/PurchaseReturn/PurchaseReturnController.cs
@@ -0,0 +1,33 @@
+using Distribution.Infra.Authorization;
+using Microsoft.AspNetCore.Authorization;
+using Microsoft.AspNetCore.Mvc;
+
+namespace Distribution.Features.PurchaseReturn;
+
+[ApiController]
+[Authorize]
+public class PurchaseReturnController(PurchaseReturnService service, ICurrentUserService currentUser) : ControllerBase
+{
+    [HttpGet("api/purchase-returns/{id:guid}")]
+    public async Task<IActionResult> GetById(Guid id)
+    {
+        var result = await service.GetByIdAsync(id);
+        return result is null ? NotFound() : Ok(result);
+    }
+
+    [HttpGet("api/purchase-orders/{id:guid}/returns")]
+    public async Task<IActionResult> GetByPurchaseOrder(Guid id) =>
+        Ok(await service.GetByPurchaseOrderIdAsync(id));
+
+    [HttpPost("api/purchase-orders/{id:guid}/returns")]
+    public async Task<IActionResult> Create(Guid id, CreatePurchaseReturnRequest request, CancellationToken ct)
+    {
+        var userId = currentUser.UserId ?? throw new UnauthorizedAccessException();
+        try
+        {
+            var result = await service.CreateAsync(id, request, userId, ct);
+            return CreatedAtAction(nameof(GetById), new { id = result.Id }, result);
+        }
+        catch (InvalidOperationException ex) { return Conflict(new { error = ex.Message }); }
+    }
+}
diff --git a/Distribution/Features/PurchaseReturn/PurchaseReturnDTOs.cs b/Distribution/Features/PurchaseReturn/PurchaseReturnDTOs.cs
new file mode 100644
index 0000000..cc5ed88
--- /dev/null
+++ b/Distribution/Features/PurchaseReturn/PurchaseReturnDTOs.cs
@@ -0,0 +1,15 @@
+namespace Distribution.Features.PurchaseReturn;
+
+public record PurchaseReturnItemRequest(Guid ItemId, int Quantity);
+
+public record CreatePurchaseReturnRequest(string Reason, List<PurchaseReturnItemRequest> Items);
+
+public record PurchaseReturnItemResponse(Guid Id, Guid ItemId, string Sku, string ItemName, int Quantity);
+
+public record PurchaseReturnResponse(
+    Guid Id,
+    Guid PurchaseOrderId,
+    string Reason,
+    bool IsActive,
+    DateTime CreatedAt,
+    List<PurchaseReturnItemResponse> Items);
diff --git a/Distribution/Features/PurchaseReturn/PurchaseReturnRepository.cs b/Distribution/Features/PurchaseReturn/PurchaseReturnRepository.cs
new file mode 100644
index 0000000..f082aa6
--- /dev/null
+++ b/Distribution/Features/PurchaseReturn/PurchaseReturnRepository.cs
@@ -0,0 +1,30 @@
+using Distribution.Data;
+using Microsoft.EntityFrameworkCore;
+
+namespace Distribution.Features.PurchaseReturn;
+
+public class PurchaseReturnRepository(AppDBContext context) : IPurchaseReturnRepository
+{
+    public async Task<Models.PurchaseReturn?> GetByIdAsync(Guid id) =>
+        await context.PurchaseReturns
+            .Include(pr => pr.Items).ThenInclude(i => i.Item)
+            .FirstOrDefaultAsync(pr => pr.Id == id);
+
+    public async Task<List<Models.PurchaseReturn>> GetByPurchaseOrderIdAsync(Guid purchaseOrderId) =>
+        await context.PurchaseReturns
+            .Include(pr => pr.Items).ThenInclude(i => i.Item)
+            .Where(pr => pr.FK_PurchaseOrderId == purchaseOrderId && pr.IsActive)
+            .OrderByDescending(pr => pr.CreatedAt)
+            .ToListAsync();
+
+    public async Task AddAsync(Models.PurchaseReturn entity) =>
+        await context.PurchaseReturns.AddAsync(entity);
+
+    public async Task<Dictionary<Guid, int>> GetReturnedTotalsByItemAsync(Guid purchaseOrderId) =>
+        await context.PurchaseReturnItems
+            .Include(i => i.PurchaseReturn)
+            .Where(i => i.PurchaseReturn.FK_PurchaseOrderId == purchaseOrderId && i.IsActive)
+            .GroupBy(i => i.FK_ItemId)
+            .Select(g => new { ItemId = g.Key, Total = g.Sum(i => i.Quantity) })
+            .ToDictionaryAsync(x => x.ItemId, x => x.Total);
+}
diff --git a/Distribution/Features/PurchaseReturn/PurchaseReturnService.cs b/Distribution/Features/PurchaseReturn/PurchaseReturnService.cs
new file mode 100644
index 0000000..1e08795
--- /dev/null
+++ b/Distribution/Features/PurchaseReturn/PurchaseReturnService.cs
@@ -0,0 +1,122 @@
+using Distribution.Features.Grn;
+using Distribution.Features.Po;
+using Distribution.Features.Stock;
+using Distribution.Infra.UoW;
+using Distribution.Models;
+
+namespace Distribution.Features.PurchaseReturn;
+
+public class PurchaseReturnService(
+    IPurchaseReturnRepository repo,
+    IPoRepository poRepo,
+    IGrnRepository goodsReceiptRepo,
+    IStockRepository stockRepo,
+    IUnitOfWork uow)
+{
+    private static PurchaseReturnItemResponse MapItem(Models.PurchaseReturnItem i) =>
+        new(i.Id, i.FK_ItemId, i.Item.Sku, i.Item.Name, i.Quantity);
+
+    private static PurchaseReturnResponse Map(Models.PurchaseReturn pr) =>
+        new(pr.Id, pr.FK_PurchaseOrderId, pr.Reason, pr.IsActive, pr.CreatedAt,
+            pr.Items.Where(i => i.IsActive).Select(MapItem).ToList());
+
+    public async Task<PurchaseReturnResponse?> GetByIdAsync(Guid id)
+    {
+        var pr = await repo.GetByIdAsync(id);
+        if (pr is null || !pr.IsActive) return null;
+        return Map(pr);
+    }
+
+    public async Task<List<PurchaseReturnResponse>> GetByPurchaseOrderIdAsync(Guid purchaseOrderId) =>
+        (await repo.GetByPurchaseOrderIdAsync(purchaseOrderId)).Select(Map).ToList();
+
+    /// <summary>
+    /// Requires at least one prior GoodsReceipt against the Po; return quantities per item cannot
+    /// exceed the received-but-not-already-returned quantity for that item. Decrements StockBalance
+    /// and writes a StockMovement in the same unit of work.
+    /// </summary>
+    public async Task<PurchaseReturnResponse> CreateAsync(Guid purchaseOrderId, CreatePurchaseReturnRequest request, Guid createdByUserId, CancellationToken ct = default)
+    {
+        var po = await poRepo.GetByIdAsync(purchaseOrderId);
+        if (po is null || !po.IsActive)
+            throw new InvalidOperationException("Purchase order not found.");
+
+        if (!await goodsReceiptRepo.HasAnyForPurchaseOrderAsync(purchaseOrderId))
+            throw new InvalidOperationException("Cannot return items for a purchase order with no goods receipt against it.");
+
+        if (request.Items is null || request.Items.Count == 0)
+            throw new InvalidOperationException("A purchase return must have at least one line item.");
+
+        var receivedTotals = await goodsReceiptRepo.GetAcceptedTotalsByItemAsync(purchaseOrderId);
+        var returnedTotals = await repo.GetReturnedTotalsByItemAsync(purchaseOrderId);
+
+        // The receipt(s) for this Po share a single receiving warehouse per the current model
+        // (each GoodsReceipt carries FK_WarehouseId); use the most recent receipt's warehouse
+        // as the stock-decrement location for the return.
+        var receipts = await goodsReceiptRepo.GetByPurchaseOrderIdAsync(purchaseOrderId);
+        var warehouseId = receipts.First().FK_WarehouseId;
+
+        var purchaseReturn = new Models.PurchaseReturn
+        {
+            FK_PurchaseOrderId = purchaseOrderId,
+            Reason = request.Reason
+        };
+
+        foreach (var line in request.Items)
+        {
+            if (line.Quantity <= 0)
+                throw new InvalidOperationException("Return quantity must be greater than zero.");
+
+            receivedTotals.TryGetValue(line.ItemId, out var received);
+            returnedTotals.TryGetValue(line.ItemId, out var alreadyReturned);
+            var available = received - alreadyReturned;
+
+            if (line.Quantity > available)
+                throw new InvalidOperationException(
+                    $"Return quantity for item {line.ItemId} ({line.Quantity}) exceeds the received-but-not-already-returned quantity ({available}).");
+
+            purchaseReturn.Items.Add(new Models.PurchaseReturnItem
+            {
+                FK_ItemId = line.ItemId,
+                Quantity = line.Quantity
+            });
+        }
+
+        await uow.BeginAsync(ct);
+        try
+        {
+            await repo.AddAsync(purchaseReturn);
+
+            foreach (var line in purchaseReturn.Items)
+            {
+                var balance = await stockRepo.GetBalanceAsync(line.FK_ItemId, warehouseId)
+                    ?? throw new InvalidOperationException($"No stock balance found for item {line.FK_ItemId} at the receiving warehouse.");
+
+                if (balance.Quantity < line.Quantity)
+                    throw new InvalidOperationException($"Insufficient warehouse stock for item {line.FK_ItemId} to return.");
+
+                balance.Quantity -= line.Quantity;
+                balance.UpdatedAt = DateTime.Now;
+                stockRepo.UpdateBalance(balance);
+
+                await stockRepo.AddMovementAsync(new StockMovement
+                {
+                    FK_ItemId = line.FK_ItemId,
+                    FromLocationId = warehouseId,
+                    FromLocationType = LocationType.Warehouse,
+                    Quantity = line.Quantity,
+                    Type = MovementType.PurchaseReturn,
+                    ReasonCode = request.Reason,
+                    ReferenceId = purchaseReturn.Id,
+                    CreatedBy = createdByUserId
+                });
+            }
+
+            await uow.CommitAsync(ct);
+        }
+        catch { await uow.RollbackAsync(ct); throw; }
+
+        var saved = await repo.GetByIdAsync(purchaseReturn.Id);
+        return Map(saved!);
+    }
+}