diff --git a/packages/workspace/src/generators/new/generate-workspace-files.spec.ts b/packages/workspace/src/generators/new/generate-workspace-files.spec.ts
index 98911f9f18883..ffd3c0f034439 100644
--- a/packages/workspace/src/generators/new/generate-workspace-files.spec.ts
+++ b/packages/workspace/src/generators/new/generate-workspace-files.spec.ts
@@ -384,13 +384,43 @@ describe('@nx/workspace:generateWorkspaceFiles', () => {
       workspaceGlobs: ['apps/*', 'packages/*'],
     });
 
-    const packageJson = tree.read('/proj/pnpm-workspace.yaml', 'utf-8');
-    expect(packageJson).toMatchInlineSnapshot(`
+    const pnpmWorkspace = tree.read('/proj/pnpm-workspace.yaml', 'utf-8');
+    expect(pnpmWorkspace).toMatchInlineSnapshot(`
+      "packages:
+        - "apps/*"
+        - "packages/*"
+
+      autoInstallPeers: true
+      onlyBuiltDependencies:
+        - nx
+      "
+    `);
+    expect(tree.exists('proj/.npmrc')).toBeFalsy();
+  });
+
+  it('should configure the pnpm settings in pnpm-workspace.yaml with allowBuilds for pnpm 11+', async () => {
+    tree.write('proj/package.json', JSON.stringify({}));
+    jest.spyOn(devkit, 'getPackageManagerVersion').mockReturnValue('11.0.0');
+
+    await generateWorkspaceFiles(tree, {
+      name: 'proj',
+      directory: 'proj',
+      preset: Preset.NPM,
+      defaultBase: 'main',
+      packageManager: 'pnpm',
+      isCustomPreset: false,
+      workspaceGlobs: ['apps/*', 'packages/*'],
+    });
+
+    const pnpmWorkspace = tree.read('/proj/pnpm-workspace.yaml', 'utf-8');
+    expect(pnpmWorkspace).toMatchInlineSnapshot(`
       "packages:
         - "apps/*"
         - "packages/*"
 
       autoInstallPeers: true
+      allowBuilds:
+        nx: true
       "
     `);
     expect(tree.exists('proj/.npmrc')).toBeFalsy();
diff --git a/packages/workspace/src/generators/new/generate-workspace-files.ts b/packages/workspace/src/generators/new/generate-workspace-files.ts
index fa43c348c91d8..cc1551ef5bb34 100644
--- a/packages/workspace/src/generators/new/generate-workspace-files.ts
+++ b/packages/workspace/src/generators/new/generate-workspace-files.ts
@@ -198,7 +198,7 @@ export async function generateWorkspaceFiles(
   const [packageMajor] = packageManagerVersion.split('.');
   if (options.packageManager === 'pnpm' && +packageMajor >= 7) {
     if (gte(packageManagerVersion, '10.6.0')) {
-      addPnpmSettings(tree, options);
+      addPnpmSettings(tree, options, packageManagerVersion);
     } else {
       createNpmrc(tree, options);
     }
@@ -335,13 +335,18 @@ async function createReadme(
   });
 }
 
-// ensure that pnpm install add all the missing peer deps
+function addPnpmSettings(
+  tree: Tree,
+  options: NormalizedSchema,
+  packageManagerVersion: string
+) {
+  const buildAllowlist = gte(packageManagerVersion, '11.0.0')
+    ? `allowBuilds:\n  nx: true`
+    : `onlyBuiltDependencies:\n  - nx`;
 
-function addPnpmSettings(tree: Tree, options: NormalizedSchema) {
   tree.write(
     join(options.directory, 'pnpm-workspace.yaml'),
-    `autoInstallPeers: true
-`
+    `autoInstallPeers: true\n${buildAllowlist}\n`
   );
 }