diff --git a/src/main/java/org/folio/dcb/listener/kafka/CirculationEventListener.java b/src/main/java/org/folio/dcb/listener/kafka/CirculationEventListener.java
index 49069a2a..839f0dc6 100644
--- a/src/main/java/org/folio/dcb/listener/kafka/CirculationEventListener.java
+++ b/src/main/java/org/folio/dcb/listener/kafka/CirculationEventListener.java
@@ -17,6 +17,7 @@
 import static org.folio.dcb.domain.dto.DcbTransaction.RoleEnum.BORROWING_PICKUP;
 import static org.folio.dcb.domain.dto.DcbTransaction.RoleEnum.LENDER;
 import static org.folio.dcb.domain.dto.DcbTransaction.RoleEnum.PICKUP;
+import static org.folio.dcb.utils.DCBConstants.ITEM_UNAVAILABLE_CANCELLATION_MSG;
 import static org.folio.dcb.utils.TransactionHelper.getHeaderValue;
 import static org.folio.dcb.utils.TransactionHelper.parseLoanEvent;
 import static org.folio.dcb.utils.TransactionHelper.parseRequestEvent;
@@ -78,14 +79,15 @@ public void handleRequestEvent(String data, MessageHeaders messageHeaders) {
           systemUserScopedExecutionService.executeAsyncSystemUserScoped(tenantId, () ->
             transactionRepository.findTransactionByRequestIdAndStatusNotInClosed(UUID.fromString(requestId))
               .ifPresent(transactionEntity -> {
-                if (eventData.getType() == EventData.EventType.CANCEL) {
+                if (eventData.getType() == EventData.EventType.CANCEL &&
+                  !ITEM_UNAVAILABLE_CANCELLATION_MSG.equals(eventData.getCancellationAdditionalInformation())) {
                   baseLibraryService.cancelTransactionEntity(transactionEntity);
                 } else if (eventData.getType() == EventData.EventType.IN_TRANSIT && transactionEntity.getRole() == LENDER) {
                   baseLibraryService.updateTransactionEntity(transactionEntity, TransactionStatus.StatusEnum.OPEN);
                 } else if (eventData.getType() == EventData.EventType.AWAITING_PICKUP && (transactionEntity.getRole() == BORROWING_PICKUP || transactionEntity.getRole() == PICKUP)) {
                   baseLibraryService.updateTransactionEntity(transactionEntity, TransactionStatus.StatusEnum.AWAITING_PICKUP);
                 } else {
-                  log.info("handleRequestEvent:: status for event {} can not be updated", eventData.getType());
+                  log.info("handleRequestEvent:: status for event {} can not be updated", eventData);
                 }
               })
           );
diff --git a/src/main/java/org/folio/dcb/listener/kafka/EventData.java b/src/main/java/org/folio/dcb/listener/kafka/EventData.java
index 0b786a2b..579f16e0 100644
--- a/src/main/java/org/folio/dcb/listener/kafka/EventData.java
+++ b/src/main/java/org/folio/dcb/listener/kafka/EventData.java
@@ -8,6 +8,7 @@ public class EventData {
   private String itemId;
   private String requestId;
   private boolean isDcb;
+  private String cancellationAdditionalInformation;
 
   public enum EventType {
     CHECK_IN, CHECK_OUT, IN_TRANSIT, AWAITING_PICKUP, CANCEL
diff --git a/src/main/java/org/folio/dcb/service/CirculationService.java b/src/main/java/org/folio/dcb/service/CirculationService.java
index 319c7e20..e8641865 100644
--- a/src/main/java/org/folio/dcb/service/CirculationService.java
+++ b/src/main/java/org/folio/dcb/service/CirculationService.java
@@ -17,5 +17,18 @@ public interface CirculationService {
    */
   void checkOutByBarcode(TransactionEntity dcbTransaction);
 
-  void cancelRequest(TransactionEntity dcbTransaction);
+  /**
+   * Cancels a transaction request based on the provided transaction details.
+   * <p>
+   * If {@code isItemUnavailableCancellation} is {@code true}, the cancellation reason
+   * will be updated to indicate item unavailability, and the notification for this
+   * cancellation will be suppressed by setting the {@code suppressNotification} flag
+   * to {@code true}.
+   * </p>
+   *
+   * @param dcbTransaction the transaction entity representing the request to be canceled
+   * @param isItemUnavailableCancellation a flag indicating whether the cancellation is due to item unavailability
+   *                                       (true if the item is unavailable, false otherwise)
+   */
+  void cancelRequest(TransactionEntity dcbTransaction, boolean isItemUnavailableCancellation);
 }
diff --git a/src/main/java/org/folio/dcb/service/impl/BaseLibraryService.java b/src/main/java/org/folio/dcb/service/impl/BaseLibraryService.java
index 812aaf1c..e1f6345c 100644
--- a/src/main/java/org/folio/dcb/service/impl/BaseLibraryService.java
+++ b/src/main/java/org/folio/dcb/service/impl/BaseLibraryService.java
@@ -110,7 +110,7 @@ public void updateTransactionStatus(TransactionEntity dcbTransaction, Transactio
 
   public void cancelTransactionRequest(TransactionEntity transactionEntity){
     try {
-      circulationService.cancelRequest(transactionEntity);
+      circulationService.cancelRequest(transactionEntity, false);
     } catch (CirculationRequestException e) {
       updateTransactionEntity(transactionEntity, TransactionStatus.StatusEnum.ERROR);
     }
@@ -145,7 +145,7 @@ public void updateTransactionDetails(TransactionEntity transactionEntity, DcbTra
     CirculationItem item = circulationItemService.checkIfItemExistsAndCreate(dcbItem, transactionEntity.getServicePointId());
     dcbItem.setId(item.getId());
     checkOpenTransactionExistsAndThrow(item.getId());
-    cancelTransactionRequest(transactionEntity);
+    circulationService.cancelRequest(transactionEntity, true);
     CirculationRequest holdRequest = requestService.createHoldItemRequest(userService.fetchUser(dcbPatron), dcbItem,
       transactionEntity.getServicePointId());
     updateItemDetailsAndSaveEntity(transactionEntity, item, dcbItem.getMaterialType(), holdRequest.getId());
diff --git a/src/main/java/org/folio/dcb/service/impl/CirculationServiceImpl.java b/src/main/java/org/folio/dcb/service/impl/CirculationServiceImpl.java
index 9934385f..bf6496af 100644
--- a/src/main/java/org/folio/dcb/service/impl/CirculationServiceImpl.java
+++ b/src/main/java/org/folio/dcb/service/impl/CirculationServiceImpl.java
@@ -14,6 +14,8 @@
 import org.springframework.stereotype.Service;
 import java.time.OffsetDateTime;
 
+import static org.folio.dcb.utils.DCBConstants.ITEM_UNAVAILABLE_CANCELLATION_MSG;
+
 @Service
 @Log4j2
 @RequiredArgsConstructor
@@ -41,11 +43,15 @@ public void checkOutByBarcode(TransactionEntity dcbTransaction) {
   }
 
   @Override
-  public void cancelRequest(TransactionEntity dcbTransaction) {
+  public void cancelRequest(TransactionEntity dcbTransaction, boolean isItemUnavailableCancellation) {
     log.debug("cancelRequest:: cancelling request using request id {} ", dcbTransaction.getRequestId());
     CirculationRequest request = circulationStorageService.getCancellationRequestIfOpenOrNull(dcbTransaction.getRequestId().toString());
     if (request != null){
       try {
+        if (isItemUnavailableCancellation) {
+          request.setCancellationAdditionalInformation(ITEM_UNAVAILABLE_CANCELLATION_MSG);
+          request.setIsSuppressNotification(true);
+        }
         circulationClient.updateRequest(request.getId(), request);
       } catch (FeignException e) {
         log.warn("cancelRequest:: error cancelling request using request id {} ", dcbTransaction.getRequestId(), e);
diff --git a/src/main/java/org/folio/dcb/utils/DCBConstants.java b/src/main/java/org/folio/dcb/utils/DCBConstants.java
index 12bca85e..e650dcb8 100644
--- a/src/main/java/org/folio/dcb/utils/DCBConstants.java
+++ b/src/main/java/org/folio/dcb/utils/DCBConstants.java
@@ -26,4 +26,5 @@ private DCBConstants() {}
   public static final String SHADOW_TYPE = "shadow";
   public static final String HOLDING_SOURCE = "folio";
   public static final String DCB_CALENDAR_NAME = "DCB Calendar";
+  public static final String ITEM_UNAVAILABLE_CANCELLATION_MSG = "Request cancelled due to item unavailability";
 }
diff --git a/src/main/java/org/folio/dcb/utils/TransactionHelper.java b/src/main/java/org/folio/dcb/utils/TransactionHelper.java
index 6468ad25..5613bcc4 100644
--- a/src/main/java/org/folio/dcb/utils/TransactionHelper.java
+++ b/src/main/java/org/folio/dcb/utils/TransactionHelper.java
@@ -22,6 +22,7 @@ public class TransactionHelper {
   public static final String LASTNAME = "lastName";
   public static final String DCB_INSTANCE_TITLE = "DCB_INSTANCE";
   public static final String DCB_REQUESTER_LASTNAME = "DcbSystem";
+  public static final String CANCELLATION_ADDITIONAL_INFORMATION = "cancellationAdditionalInformation";
 
   private TransactionHelper(){}
 
@@ -65,6 +66,8 @@ public static EventData parseRequestEvent(String eventPayload){
           default -> log.info("parseRequestEvent:: Request status {} is not supported", requestStatus);
         }
         eventData.setDcb(checkDcbRequest(kafkaEvent));
+        eventData.setCancellationAdditionalInformation(kafkaEvent.getNewNode().has(CANCELLATION_ADDITIONAL_INFORMATION) ?
+          kafkaEvent.getNewNode().get(CANCELLATION_ADDITIONAL_INFORMATION).asText() : null);
         return eventData;
       }
     return null;
diff --git a/src/main/resources/swagger.api/schemas/CirculationRequest.yaml b/src/main/resources/swagger.api/schemas/CirculationRequest.yaml
index a8fb0c56..71e61615 100644
--- a/src/main/resources/swagger.api/schemas/CirculationRequest.yaml
+++ b/src/main/resources/swagger.api/schemas/CirculationRequest.yaml
@@ -77,6 +77,9 @@ CirculationRequest:
     pickupServicePointId:
       description: The ID of the Service Point where this request can be picked up
       type: string
+    isSuppressNotification:
+      description: Flag to suppress sending cancellation notifications. If true, no notification will be sent when cancelling the request
+      type: boolean
     item:
       $ref: CirculationRequest.yaml#/item
     requester:
diff --git a/src/test/java/org/folio/dcb/service/BaseLibraryServiceTest.java b/src/test/java/org/folio/dcb/service/BaseLibraryServiceTest.java
index 8185d8d4..32241206 100644
--- a/src/test/java/org/folio/dcb/service/BaseLibraryServiceTest.java
+++ b/src/test/java/org/folio/dcb/service/BaseLibraryServiceTest.java
@@ -39,6 +39,7 @@
 import static org.junit.jupiter.api.Assertions.assertThrows;
 import static org.mockito.ArgumentMatchers.any;
 import static org.mockito.ArgumentMatchers.anyString;
+import static org.mockito.ArgumentMatchers.eq;
 import static org.mockito.Mockito.doNothing;
 import static org.mockito.Mockito.when;
 import static org.mockito.Mockito.times;
@@ -188,7 +189,7 @@ void testTransactionCancelTest(){
     transactionEntity.setStatus(OPEN);
     TransactionStatus transactionStatus = TransactionStatus.builder().status(CANCELLED).build();
     baseLibraryService.updateTransactionStatus(transactionEntity, transactionStatus);
-    verify(circulationService).cancelRequest(any());
+    verify(circulationService).cancelRequest(any(), eq(false));
   }
 
   @Test
diff --git a/src/test/java/org/folio/dcb/service/CirculationServiceTest.java b/src/test/java/org/folio/dcb/service/CirculationServiceTest.java
index eb461539..77f62ec3 100644
--- a/src/test/java/org/folio/dcb/service/CirculationServiceTest.java
+++ b/src/test/java/org/folio/dcb/service/CirculationServiceTest.java
@@ -47,7 +47,7 @@ void checkInByBarcodeWithServicePointTest(){
   @Test
   void cancelRequestTest() {
     when(circulationRequestService.getCancellationRequestIfOpenOrNull(anyString())).thenReturn(createCirculationRequest());
-    circulationService.cancelRequest(createTransactionEntity());
+    circulationService.cancelRequest(createTransactionEntity(), false);
     verify(circulationClient).updateRequest(anyString(), any());
   }
 
@@ -55,7 +55,7 @@ void cancelRequestTest() {
   void shouldThrowExceptionWhenRequestIsNotUpdated() {
     when(circulationRequestService.getCancellationRequestIfOpenOrNull(anyString())).thenReturn(createCirculationRequest());
     when(circulationClient.updateRequest(anyString(), any())).thenThrow(FeignException.BadRequest.class);
-    assertThrows(CirculationRequestException.class, () -> circulationService.cancelRequest(createTransactionEntity()));
+    assertThrows(CirculationRequestException.class, () -> circulationService.cancelRequest(createTransactionEntity(), false));
   }
 
 }