diff --git a/packages/transaction-controller/CHANGELOG.md b/packages/transaction-controller/CHANGELOG.md
index c9596acab9e..e114df9c5c6 100644
--- a/packages/transaction-controller/CHANGELOG.md
+++ b/packages/transaction-controller/CHANGELOG.md
@@ -23,6 +23,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 ### Fixed
 
+- Set `isExternalSign` for sponsored transactions to skip nonce assignment ([#7659](https://github.com/MetaMask/core/pull/7659))
 - Ensure provided `batchId` is used in `addTransactionBatch` when going through the publish batch hook route ([#7705](https://github.com/MetaMask/core/pull/7705))
 
 ## [62.9.2]
diff --git a/packages/transaction-controller/src/TransactionController.ts b/packages/transaction-controller/src/TransactionController.ts
index 2f5f942d70e..d2a4b4b1694 100644
--- a/packages/transaction-controller/src/TransactionController.ts
+++ b/packages/transaction-controller/src/TransactionController.ts
@@ -1351,6 +1351,8 @@ export class TransactionController extends BaseController<
     const existingTransactionMeta = this.#getTransactionWithActionId(actionId);
 
     // If a request to add a transaction with the same actionId is submitted again, a new transaction will not be created for it.
+    // EIP-7702 batch transactions (with nestedTransactions) are signed externally via delegation
+    const isEIP7702Batch = Boolean(nestedTransactions?.length);
     let addedTransactionMeta: TransactionMeta = existingTransactionMeta
       ? cloneDeep(existingTransactionMeta)
       : {
@@ -1363,6 +1365,7 @@ export class TransactionController extends BaseController<
           deviceConfirmedOn,
           disableGasBuffer,
           id: random(),
+          isExternalSign: isEIP7702Batch,
           isGasFeeTokenIgnoredIfBalance: Boolean(gasFeeToken),
           isGasFeeIncluded,
           isGasFeeSponsored,
@@ -1457,6 +1460,8 @@ export class TransactionController extends BaseController<
 
       this.#addMetadata(addedTransactionMeta);
 
+      // Record delegationAddress for metrics, but do not use it to determine isExternalSign.
+      // Only EIP-7702 batch transactions (with nestedTransactions) should have isExternalSign = true.
       delegationAddressPromise
         .then((delegationAddress) => {
           this.#updateTransactionInternal(