diff --git a/src/errors.ts b/src/errors.ts
index 7f8192a..0c8bcf9 100644
--- a/src/errors.ts
+++ b/src/errors.ts
@@ -1,6 +1,8 @@
 // Copyright (c) .NET Foundation. All rights reserved.
 // Licensed under the MIT License.
 
+import { sanitizeErrorString, stringifySanitizedErrorObject } from './utils/credentialSanitizer';
+
 export interface AzFuncError {
     /**
      * System errors can be tracked in our telemetry
@@ -42,11 +44,11 @@ export function ensureErrorType(err: unknown): ValidatedError {
         if (err === undefined || err === null) {
             message = 'Unknown error';
         } else if (typeof err === 'string') {
-            message = err;
+            message = sanitizeErrorString(err);
         } else if (typeof err === 'object') {
-            message = JSON.stringify(err);
+            message = stringifySanitizedErrorObject(err);
         } else {
-            message = String(err);
+            message = sanitizeErrorString(String(err));
         }
         return new Error(message);
     }
@@ -54,7 +56,7 @@ export function ensureErrorType(err: unknown): ValidatedError {
 
 export function trySetErrorMessage(err: Error, message: string): void {
     try {
-        err.message = message;
+        err.message = sanitizeErrorString(message);
     } catch {
         // If we can't set the message, we'll keep the error as is
     }
diff --git a/src/http/httpProxy.ts b/src/http/httpProxy.ts
index b1c683b..744b12a 100644
--- a/src/http/httpProxy.ts
+++ b/src/http/httpProxy.ts
@@ -6,6 +6,7 @@ import { EventEmitter } from 'events';
 import * as http from 'http';
 import * as net from 'net';
 import { AzFuncSystemError, ensureErrorType } from '../errors';
+import { sanitizeErrorString } from '../utils/credentialSanitizer';
 import { nonNullProp } from '../utils/nonNull';
 import { workerSystemLog } from '../utils/workerSystemLog';
 import { HttpResponse } from './HttpResponse';
@@ -103,7 +104,7 @@ export async function setupHttpProxy(): Promise<string> {
 
         server.on('error', (err) => {
             err = ensureErrorType(err);
-            workerSystemLog('error', `Http proxy error: ${err.stack || err.message}`);
+            workerSystemLog('error', `Http proxy error: ${sanitizeErrorString(err.stack || err.message)}`);
         });
 
         server.listen(() => {
diff --git a/src/utils/credentialSanitizer.ts b/src/utils/credentialSanitizer.ts
new file mode 100644
index 0000000..1423f3f
--- /dev/null
+++ b/src/utils/credentialSanitizer.ts
@@ -0,0 +1,93 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the MIT License.
+
+const hiddenCredential = '[Hidden Credential]';
+const circularReference = '[Circular]';
+const credentialNameFragments = ['password', 'pwd', 'key', 'secret', 'token', 'sas'];
+const credentialTokens = [
+    'Token=',
+    'DefaultEndpointsProtocol=http',
+    'AccountKey=',
+    'Data Source=',
+    'Server=',
+    'Password=',
+    'pwd=',
+    '&amp;sig=',
+    '&sig=',
+    '?sig=',
+    'SharedAccessKey=',
+    '&amp;code=',
+    '&code=',
+    '?code=',
+    '/code=',
+    'key=',
+];
+const urlCredentialPattern = /\b([a-zA-Z]+):\/\/([^:/\s]+):([^@/\s]+)@([^:/\s]+):([0-9]+)\b/g;
+
+export function sanitizeErrorString(input: string): string {
+    if (!input) {
+        return input;
+    }
+
+    let sanitized = input;
+    for (const token of credentialTokens) {
+        sanitized = replaceCredentialToken(sanitized, token);
+    }
+
+    return sanitized.replace(urlCredentialPattern, hiddenCredential);
+}
+
+export function stringifySanitizedErrorObject(value: object): string {
+    const seen = new WeakSet<object>();
+    return JSON.stringify(value, (key, val: unknown) => {
+        if (isCredentialName(key)) {
+            return hiddenCredential;
+        }
+
+        if (typeof val === 'string') {
+            return sanitizeErrorString(val);
+        }
+
+        if (typeof val === 'bigint') {
+            return val.toString();
+        }
+
+        if (typeof val === 'object' && val !== null) {
+            if (seen.has(val)) {
+                return circularReference;
+            }
+            seen.add(val);
+        }
+
+        return val;
+    });
+}
+
+function replaceCredentialToken(input: string, token: string): string {
+    const lowerInput = input.toLowerCase();
+    const lowerToken = token.toLowerCase();
+    let startIndex = lowerInput.indexOf(lowerToken);
+    if (startIndex === -1) {
+        return input;
+    }
+
+    let sanitized = '';
+    let searchOffset = 0;
+    while (startIndex !== -1) {
+        const credentialEnd = findCredentialEnd(input, startIndex);
+        sanitized += input.substring(searchOffset, startIndex) + hiddenCredential;
+        searchOffset = credentialEnd;
+        startIndex = lowerInput.indexOf(lowerToken, searchOffset);
+    }
+
+    return sanitized + input.substring(searchOffset);
+}
+
+function findCredentialEnd(input: string, startIndex: number): number {
+    const terminatorIndex = input.substring(startIndex).search(/[<"'\r\n]/);
+    return terminatorIndex === -1 ? input.length : startIndex + terminatorIndex;
+}
+
+function isCredentialName(name: string): boolean {
+    return credentialNameFragments.some((fragment) => name.toLowerCase().includes(fragment));
+}
diff --git a/test/errors.test.ts b/test/errors.test.ts
index eb65e23..f2333f1 100644
--- a/test/errors.test.ts
+++ b/test/errors.test.ts
@@ -4,6 +4,7 @@
 import 'mocha';
 import { expect } from 'chai';
 import { ensureErrorType, trySetErrorMessage } from '../src/errors';
+import { sanitizeErrorString } from '../src/utils/credentialSanitizer';
 
 describe('ensureErrorType', () => {
     it('null', () => {
@@ -29,10 +30,51 @@ describe('ensureErrorType', () => {
         validateError(ensureErrorType(''), '');
     });
 
+    it('string with credential token', () => {
+        validateError(ensureErrorType('AccountKey=abc123;EndpointSuffix=core.windows.net'), '[Hidden Credential]');
+    });
+
+    it('sanitizes url credentials', () => {
+        expect(sanitizeErrorString('failed to connect to https://user:pass@example.com:443')).to.equal(
+            'failed to connect to [Hidden Credential]'
+        );
+    });
+
+    it('preserves stack text after credential tokens', () => {
+        expect(sanitizeErrorString('failed AccountKey=abc123\n    at invokeFunction')).to.equal(
+            'failed [Hidden Credential]\n    at invokeFunction'
+        );
+    });
+
     it('object', () => {
         validateError(ensureErrorType({ test: '2' }), '{"test":"2"}');
     });
 
+    it('object with credential properties', () => {
+        validateError(
+            ensureErrorType({
+                message: 'Auth failed',
+                secretKey: 'secret-value',
+                nested: { password: 'password-value', visible: 'safe' },
+            }),
+            '{"message":"Auth failed","secretKey":"[Hidden Credential]","nested":{"password":"[Hidden Credential]","visible":"safe"}}'
+        );
+    });
+
+    it('object with credential tokens in string values', () => {
+        validateError(
+            ensureErrorType({ connectionString: 'AccountKey=abc123;EndpointSuffix=core.windows.net' }),
+            '{"connectionString":"[Hidden Credential]"}'
+        );
+    });
+
+    it('object with circular reference', () => {
+        const err: Record<string, unknown> = { message: 'failed' };
+        err.self = err;
+
+        validateError(ensureErrorType(err), '{"message":"failed","self":"[Circular]"}');
+    });
+
     it('array', () => {
         validateError(ensureErrorType([1, 2]), '[1,2]');
     });
@@ -49,6 +91,13 @@ describe('ensureErrorType', () => {
         expect(actualError.message).to.equal('modified message');
     });
 
+    it('sanitizes modified error message', () => {
+        const actualError = new Error('test2');
+        trySetErrorMessage(actualError, 'AccountKey=abc123');
+
+        expect(actualError.message).to.equal('[Hidden Credential]');
+    });
+
     it('readonly error', () => {
         class ReadOnlyError extends Error {
             get message(): string {