diff --git a/src/app/api/auth/login/route.ts b/src/app/api/auth/login/route.ts
index 720587a2d2..a0c1504560 100644
--- a/src/app/api/auth/login/route.ts
+++ b/src/app/api/auth/login/route.ts
@@ -1,5 +1,6 @@
 import { NextResponse } from "next/server";
 import { getAuditRequestContext, logAuditEvent } from "@/lib/compliance/index";
+import { classifyIpScope } from "@/lib/ipUtils";
 import { getCachedSettings } from "@/lib/localDb";
 import { SignJWT } from "jose";
 import { cookies } from "next/headers";
@@ -168,6 +169,11 @@ export async function POST(request) {
 
     const failureDecision = recordLoginFailure(clientIp, { enabled: bruteForceEnabled });
 
+    // #8336: tag the origin scope so the audit view can distinguish a mistyped
+    // password from the host itself / the LAN (loopback / private) from a
+    // genuinely external attempt, instead of every failure reading as intrusion.
+    const sourceScope = classifyIpScope(auditContext.ipAddress);
+
     logAuditEvent({
       action: "auth.login.failed",
       actor: "anonymous",
@@ -176,7 +182,12 @@ export async function POST(request) {
       status: "failed",
       ipAddress: auditContext.ipAddress || undefined,
       requestId: auditContext.requestId,
-      metadata: { reason: "invalid_password", lockedOut: failureDecision.allowed === false },
+      metadata: {
+        reason: "invalid_password",
+        lockedOut: failureDecision.allowed === false,
+        sourceScope,
+        internalOrigin: sourceScope === "loopback" || sourceScope === "private",
+      },
     });
 
     if (!failureDecision.allowed) {
diff --git a/src/lib/ipUtils.ts b/src/lib/ipUtils.ts
index 3bf92d3127..66e016555e 100644
--- a/src/lib/ipUtils.ts
+++ b/src/lib/ipUtils.ts
@@ -52,6 +52,60 @@ function isLoopbackPeer(addr: string | undefined): boolean {
   return ip.startsWith("127.");
 }
 
+export type IpScope = "loopback" | "private" | "public" | "unknown";
+
+/**
+ * Whether an IPv4/IPv6 address falls inside a private (RFC 1918 / RFC 4193) or
+ * link-local range. Uses bounded string-prefix checks (no variable-length regex)
+ * to stay ReDoS-safe. Callers must pass an already-normalized, validated IP.
+ */
+function isPrivateIp(ip: string): boolean {
+  // IPv4 private / link-local ranges.
+  if (ip.startsWith("10.")) return true;
+  if (ip.startsWith("192.168.")) return true;
+  if (ip.startsWith("169.254.")) return true; // link-local (APIPA)
+  if (ip.startsWith("172.")) {
+    // 172.16.0.0 – 172.31.255.255 (the /12 block).
+    const secondOctet = Number.parseInt(ip.split(".")[1] ?? "", 10);
+    if (secondOctet >= 16 && secondOctet <= 31) return true;
+  }
+  // IPv6 unique-local (fc00::/7 → fc/fd) and link-local (fe80::/10).
+  const lower = ip.toLowerCase();
+  if (lower.startsWith("fc") || lower.startsWith("fd")) return true;
+  if (
+    lower.startsWith("fe8") ||
+    lower.startsWith("fe9") ||
+    lower.startsWith("fea") ||
+    lower.startsWith("feb")
+  ) {
+    return true;
+  }
+  return false;
+}
+
+/**
+ * Classify an address by network scope: `loopback` (the host itself),
+ * `private` (LAN / RFC 1918 / ULA / link-local), `public` (routable), or
+ * `unknown` (empty / non-IP string like "unknown").
+ *
+ * Used to distinguish audit events — notably failed dashboard logins
+ * (`auth.login.failed`) — that originate from the box itself or the local
+ * network from genuinely external ones, so an internal mistyped password or a
+ * browser-autofill replay does not read as an external intrusion attempt.
+ *
+ * Ref: issue #8336.
+ */
+export function classifyIpScope(addr: string | null | undefined): IpScope {
+  const ip = normalizePeer(addr ?? undefined);
+  if (!ip) return "unknown";
+  if (isLoopbackPeer(ip)) return "loopback";
+  // isIP returns 0 for non-IP strings ("unknown", hostnames); only classify
+  // real addresses beyond loopback so hostnames never resolve to private.
+  if (isIP(ip) === 0) return "unknown";
+  if (isPrivateIp(ip)) return "private";
+  return "public";
+}
+
 /**
  * Extract client IP from a Request or NextRequest object.
  *
diff --git a/tests/unit/8336-audit-loopback-login.test.ts b/tests/unit/8336-audit-loopback-login.test.ts
new file mode 100644
index 0000000000..2159bac0ba
--- /dev/null
+++ b/tests/unit/8336-audit-loopback-login.test.ts
@@ -0,0 +1,119 @@
+import test from "node:test";
+import assert from "node:assert/strict";
+import fs from "node:fs";
+import os from "node:os";
+import path from "node:path";
+
+/**
+ * Regression test for issue #8336 — failed dashboard logins originating from
+ * internal/loopback IPs read as external intrusion attempts in the Audit Log.
+ *
+ * The events themselves are real (a submitted, non-empty password that failed
+ * verification) and the recorded IP is accurate. What was missing was a way to
+ * DISTINGUISH a loopback/private-origin failure (someone browsing
+ * http://localhost and mistyping, a browser autofill replay) from a genuinely
+ * external one. This test pins the two-part fix:
+ *
+ *   1. `classifyIpScope()` in `@/lib/ipUtils` classifies an address by network
+ *      scope (loopback / private / public / unknown).
+ *   2. The `auth.login.failed` audit event carries `sourceScope` +
+ *      `internalOrigin` metadata so the audit view can label internal-origin
+ *      failures distinctly.
+ */
+
+const TEST_DATA_DIR = fs.mkdtempSync(path.join(os.tmpdir(), "omniroute-8336-"));
+process.env.DATA_DIR = TEST_DATA_DIR;
+process.env.JWT_SECRET = "test-jwt-secret-8336";
+
+const ORIGINAL_INITIAL_PASSWORD = process.env.INITIAL_PASSWORD;
+
+const ipUtils = await import("../../src/lib/ipUtils.ts");
+const core = await import("../../src/lib/db/core.ts");
+const compliance = await import("../../src/lib/compliance/index.ts");
+const loginRoute = await import("../../src/app/api/auth/login/route.ts");
+
+const originalGetCookieStore = loginRoute.authRouteInternals.getCookieStore;
+
+async function resetStorage() {
+  core.resetDbInstance();
+  fs.rmSync(TEST_DATA_DIR, { recursive: true, force: true });
+  fs.mkdirSync(TEST_DATA_DIR, { recursive: true });
+  process.env.INITIAL_PASSWORD = "correct-secret-8336";
+}
+
+test.beforeEach(async () => {
+  await resetStorage();
+  loginRoute.authRouteInternals.getCookieStore = async () => ({ set() {} });
+});
+
+test.afterEach(() => {
+  loginRoute.authRouteInternals.getCookieStore = originalGetCookieStore;
+});
+
+test.after(() => {
+  core.resetDbInstance();
+  fs.rmSync(TEST_DATA_DIR, { recursive: true, force: true });
+  if (ORIGINAL_INITIAL_PASSWORD === undefined) {
+    delete process.env.INITIAL_PASSWORD;
+  } else {
+    process.env.INITIAL_PASSWORD = ORIGINAL_INITIAL_PASSWORD;
+  }
+});
+
+test("classifyIpScope distinguishes loopback / private / public / unknown", () => {
+  assert.equal(ipUtils.classifyIpScope("127.0.0.1"), "loopback");
+  assert.equal(ipUtils.classifyIpScope("::1"), "loopback");
+  assert.equal(ipUtils.classifyIpScope("::ffff:127.0.0.1"), "loopback");
+  assert.equal(ipUtils.classifyIpScope("10.1.2.3"), "private");
+  assert.equal(ipUtils.classifyIpScope("192.168.0.5"), "private");
+  assert.equal(ipUtils.classifyIpScope("172.16.4.4"), "private");
+  assert.equal(ipUtils.classifyIpScope("172.31.255.1"), "private");
+  assert.equal(ipUtils.classifyIpScope("fd00::1"), "private");
+  assert.equal(ipUtils.classifyIpScope("203.0.113.50"), "public");
+  assert.equal(ipUtils.classifyIpScope("8.8.8.8"), "public");
+  // 172.32 is outside the private /12 block
+  assert.equal(ipUtils.classifyIpScope("172.32.0.1"), "public");
+  assert.equal(ipUtils.classifyIpScope("unknown"), "unknown");
+  assert.equal(ipUtils.classifyIpScope(""), "unknown");
+  assert.equal(ipUtils.classifyIpScope(null), "unknown");
+});
+
+async function postWrongPassword(forwardedFor: string) {
+  return loginRoute.POST(
+    new Request("http://localhost/api/auth/login", {
+      method: "POST",
+      headers: {
+        "content-type": "application/json",
+        // No socket peer in this fetch-style path → forwarding headers are
+        // trusted, so this stands in for the recorded client IP.
+        "x-forwarded-for": forwardedFor,
+      },
+      body: JSON.stringify({ password: "wrong-password" }),
+    })
+  );
+}
+
+test("auth.login.failed from a loopback IP is flagged internalOrigin", async () => {
+  const response = await postWrongPassword("127.0.0.1");
+  assert.equal(response.status, 401);
+
+  const [entry] = compliance.getAuditLog({ action: "auth.login.failed", limit: 1 });
+  assert.ok(entry, "expected an auth.login.failed audit entry");
+  assert.equal(entry.ip_address, "127.0.0.1");
+  const metadata = entry.metadata as Record<string, unknown>;
+  assert.equal(metadata.reason, "invalid_password");
+  assert.equal(metadata.sourceScope, "loopback");
+  assert.equal(metadata.internalOrigin, true);
+});
+
+test("auth.login.failed from a public IP is NOT flagged internalOrigin", async () => {
+  const response = await postWrongPassword("203.0.113.77");
+  assert.equal(response.status, 401);
+
+  const [entry] = compliance.getAuditLog({ action: "auth.login.failed", limit: 1 });
+  assert.ok(entry, "expected an auth.login.failed audit entry");
+  assert.equal(entry.ip_address, "203.0.113.77");
+  const metadata = entry.metadata as Record<string, unknown>;
+  assert.equal(metadata.sourceScope, "public");
+  assert.equal(metadata.internalOrigin, false);
+});
diff --git a/tests/unit/admin-audit-events.test.ts b/tests/unit/admin-audit-events.test.ts
index cf8169fba0..b8aa06710b 100644
--- a/tests/unit/admin-audit-events.test.ts
+++ b/tests/unit/admin-audit-events.test.ts
@@ -121,7 +121,14 @@ test("auth login route records failed password attempts", async () => {
   assert.equal(event.actor, "anonymous");
   assert.equal(event.status, "failed");
   assert.equal(event.requestId, "req-auth-failed");
-  assert.deepEqual(event.metadata, { reason: "invalid_password", lockedOut: false });
+  // The request above carries a public x-forwarded-for (198.51.100.22), so the
+  // origin tagging added here must classify it as public / non-internal.
+  assert.deepEqual(event.metadata, {
+    reason: "invalid_password",
+    lockedOut: false,
+    sourceScope: "public",
+    internalOrigin: false,
+  });
 });
 
 test("provider create/update/delete routes emit sanitized credential audit events", async () => {