diff --git a/helm-chart/kuberay-operator/crds/ray.io_rayclusters.yaml b/helm-chart/kuberay-operator/crds/ray.io_rayclusters.yaml
index 2266bbe27f..ce2e7fce39 100644
--- a/helm-chart/kuberay-operator/crds/ray.io_rayclusters.yaml
+++ b/helm-chart/kuberay-operator/crds/ray.io_rayclusters.yaml
@@ -11277,6 +11277,11 @@ spec:
                   each node group.
                 format: int32
                 type: integer
+              observedGeneration:
+                description: observedGeneration is the most recent generation observed
+                  for this RayCluster.
+                format: int64
+                type: integer
               reason:
                 description: Reason provides more information about current State
                 type: string
diff --git a/helm-chart/kuberay-operator/crds/ray.io_rayjobs.yaml b/helm-chart/kuberay-operator/crds/ray.io_rayjobs.yaml
index 27306a9b7c..88d724463a 100644
--- a/helm-chart/kuberay-operator/crds/ray.io_rayjobs.yaml
+++ b/helm-chart/kuberay-operator/crds/ray.io_rayjobs.yaml
@@ -11772,6 +11772,11 @@ spec:
                 type: string
               message:
                 type: string
+              observedGeneration:
+                description: observedGeneration is the most recent generation observed
+                  for this RayJob.
+                format: int64
+                type: integer
               rayClusterName:
                 type: string
               rayClusterStatus:
@@ -11816,6 +11821,11 @@ spec:
                       of each node group.
                     format: int32
                     type: integer
+                  observedGeneration:
+                    description: observedGeneration is the most recent generation
+                      observed for this RayCluster.
+                    format: int64
+                    type: integer
                   reason:
                     description: Reason provides more information about current State
                     type: string
diff --git a/helm-chart/kuberay-operator/crds/ray.io_rayservices.yaml b/helm-chart/kuberay-operator/crds/ray.io_rayservices.yaml
index 5feae3f23d..5756e547d2 100644
--- a/helm-chart/kuberay-operator/crds/ray.io_rayservices.yaml
+++ b/helm-chart/kuberay-operator/crds/ray.io_rayservices.yaml
@@ -11872,6 +11872,11 @@ spec:
                           of each node group.
                         format: int32
                         type: integer
+                      observedGeneration:
+                        description: observedGeneration is the most recent generation
+                          observed for this RayCluster.
+                        format: int64
+                        type: integer
                       reason:
                         description: Reason provides more information about current
                           State
@@ -11905,6 +11910,11 @@ spec:
                       type: object
                     type: array
                 type: object
+              observedGeneration:
+                description: observedGeneration is the most recent generation observed
+                  for this RayService.
+                format: int64
+                type: integer
               pendingServiceStatus:
                 description: Pending Service Status indicates a RayCluster will be
                   created or is being created.
@@ -11983,6 +11993,11 @@ spec:
                           of each node group.
                         format: int32
                         type: integer
+                      observedGeneration:
+                        description: observedGeneration is the most recent generation
+                          observed for this RayCluster.
+                        format: int64
+                        type: integer
                       reason:
                         description: Reason provides more information about current
                           State
diff --git a/ray-operator/apis/ray/v1alpha1/raycluster_types.go b/ray-operator/apis/ray/v1alpha1/raycluster_types.go
index ee05c02e90..a3c96c6df1 100644
--- a/ray-operator/apis/ray/v1alpha1/raycluster_types.go
+++ b/ray-operator/apis/ray/v1alpha1/raycluster_types.go
@@ -126,6 +126,10 @@ type RayClusterStatus struct {
 	Head HeadInfo `json:"head,omitempty"`
 	// Reason provides more information about current State
 	Reason string `json:"reason,omitempty"`
+	// observedGeneration is the most recent generation observed for this RayCluster. It corresponds to the
+	// RayCluster's generation, which is updated on mutation by the API Server.
+	// +optional
+	ObservedGeneration int64 `json:"observedGeneration,omitempty"`
 }
 
 // HeadInfo gives info about head
diff --git a/ray-operator/apis/ray/v1alpha1/rayjob_types.go b/ray-operator/apis/ray/v1alpha1/rayjob_types.go
index d03bdf8d77..fe6c9cef01 100644
--- a/ray-operator/apis/ray/v1alpha1/rayjob_types.go
+++ b/ray-operator/apis/ray/v1alpha1/rayjob_types.go
@@ -80,6 +80,10 @@ type RayJobStatus struct {
 	// Represents time when the job was ended.
 	EndTime          *metav1.Time     `json:"endTime,omitempty"`
 	RayClusterStatus RayClusterStatus `json:"rayClusterStatus,omitempty"`
+	// observedGeneration is the most recent generation observed for this RayJob. It corresponds to the
+	// RayJob's generation, which is updated on mutation by the API Server.
+	// +optional
+	ObservedGeneration int64 `json:"observedGeneration,omitempty"`
 }
 
 //+kubebuilder:object:root=true
diff --git a/ray-operator/apis/ray/v1alpha1/rayservice_types.go b/ray-operator/apis/ray/v1alpha1/rayservice_types.go
index 7477b0b917..4d4f03a8c9 100644
--- a/ray-operator/apis/ray/v1alpha1/rayservice_types.go
+++ b/ray-operator/apis/ray/v1alpha1/rayservice_types.go
@@ -95,6 +95,10 @@ type RayServiceStatuses struct {
 	PendingServiceStatus RayServiceStatus `json:"pendingServiceStatus,omitempty"`
 	// ServiceStatus indicates the current RayService status.
 	ServiceStatus ServiceStatus `json:"serviceStatus,omitempty"`
+	// observedGeneration is the most recent generation observed for this RayService. It corresponds to the
+	// RayService's generation, which is updated on mutation by the API Server.
+	// +optional
+	ObservedGeneration int64 `json:"observedGeneration,omitempty"`
 }
 
 type RayServiceStatus struct {
diff --git a/ray-operator/config/crd/bases/ray.io_rayclusters.yaml b/ray-operator/config/crd/bases/ray.io_rayclusters.yaml
index 2266bbe27f..ce2e7fce39 100644
--- a/ray-operator/config/crd/bases/ray.io_rayclusters.yaml
+++ b/ray-operator/config/crd/bases/ray.io_rayclusters.yaml
@@ -11277,6 +11277,11 @@ spec:
                   each node group.
                 format: int32
                 type: integer
+              observedGeneration:
+                description: observedGeneration is the most recent generation observed
+                  for this RayCluster.
+                format: int64
+                type: integer
               reason:
                 description: Reason provides more information about current State
                 type: string
diff --git a/ray-operator/config/crd/bases/ray.io_rayjobs.yaml b/ray-operator/config/crd/bases/ray.io_rayjobs.yaml
index 27306a9b7c..88d724463a 100644
--- a/ray-operator/config/crd/bases/ray.io_rayjobs.yaml
+++ b/ray-operator/config/crd/bases/ray.io_rayjobs.yaml
@@ -11772,6 +11772,11 @@ spec:
                 type: string
               message:
                 type: string
+              observedGeneration:
+                description: observedGeneration is the most recent generation observed
+                  for this RayJob.
+                format: int64
+                type: integer
               rayClusterName:
                 type: string
               rayClusterStatus:
@@ -11816,6 +11821,11 @@ spec:
                       of each node group.
                     format: int32
                     type: integer
+                  observedGeneration:
+                    description: observedGeneration is the most recent generation
+                      observed for this RayCluster.
+                    format: int64
+                    type: integer
                   reason:
                     description: Reason provides more information about current State
                     type: string
diff --git a/ray-operator/config/crd/bases/ray.io_rayservices.yaml b/ray-operator/config/crd/bases/ray.io_rayservices.yaml
index 5feae3f23d..5756e547d2 100644
--- a/ray-operator/config/crd/bases/ray.io_rayservices.yaml
+++ b/ray-operator/config/crd/bases/ray.io_rayservices.yaml
@@ -11872,6 +11872,11 @@ spec:
                           of each node group.
                         format: int32
                         type: integer
+                      observedGeneration:
+                        description: observedGeneration is the most recent generation
+                          observed for this RayCluster.
+                        format: int64
+                        type: integer
                       reason:
                         description: Reason provides more information about current
                           State
@@ -11905,6 +11910,11 @@ spec:
                       type: object
                     type: array
                 type: object
+              observedGeneration:
+                description: observedGeneration is the most recent generation observed
+                  for this RayService.
+                format: int64
+                type: integer
               pendingServiceStatus:
                 description: Pending Service Status indicates a RayCluster will be
                   created or is being created.
@@ -11983,6 +11993,11 @@ spec:
                           of each node group.
                         format: int32
                         type: integer
+                      observedGeneration:
+                        description: observedGeneration is the most recent generation
+                          observed for this RayCluster.
+                        format: int64
+                        type: integer
                       reason:
                         description: Reason provides more information about current
                           State
diff --git a/ray-operator/controllers/ray/raycluster_controller.go b/ray-operator/controllers/ray/raycluster_controller.go
index e3fe1d1721..f74c3607eb 100644
--- a/ray-operator/controllers/ray/raycluster_controller.go
+++ b/ray-operator/controllers/ray/raycluster_controller.go
@@ -8,8 +8,6 @@ import (
 	"strings"
 	"time"
 
-	metav1 "k8s.io/apimachinery/pkg/apis/meta/v1"
-
 	"github.com/ray-project/kuberay/ray-operator/controllers/ray/batchscheduler"
 	"github.com/ray-project/kuberay/ray-operator/controllers/ray/common"
 	"github.com/ray-project/kuberay/ray-operator/controllers/ray/utils"
@@ -25,6 +23,7 @@ import (
 	corev1 "k8s.io/api/core/v1"
 	networkingv1 "k8s.io/api/networking/v1"
 	"k8s.io/apimachinery/pkg/api/errors"
+	metav1 "k8s.io/apimachinery/pkg/apis/meta/v1"
 	"k8s.io/apimachinery/pkg/runtime"
 	"k8s.io/apimachinery/pkg/types"
 	ctrl "sigs.k8s.io/controller-runtime"
@@ -828,31 +827,19 @@ func (r *RayClusterReconciler) SetupWithManager(mgr ctrl.Manager, reconcileConcu
 }
 
 func (r *RayClusterReconciler) updateStatus(instance *rayiov1alpha1.RayCluster) error {
+	// TODO (kevin85421): ObservedGeneration should be used to determine whether to update this CR or not.
+	instance.Status.ObservedGeneration = instance.ObjectMeta.Generation
+
 	runtimePods := corev1.PodList{}
 	filterLabels := client.MatchingLabels{common.RayClusterLabelKey: instance.Name}
 	if err := r.List(context.TODO(), &runtimePods, client.InNamespace(instance.Namespace), filterLabels); err != nil {
 		return err
 	}
 
-	count := utils.CalculateAvailableReplicas(runtimePods)
-	if instance.Status.AvailableWorkerReplicas != count {
-		instance.Status.AvailableWorkerReplicas = count
-	}
-
-	count = utils.CalculateDesiredReplicas(instance)
-	if instance.Status.DesiredWorkerReplicas != count {
-		instance.Status.DesiredWorkerReplicas = count
-	}
-
-	count = utils.CalculateMinReplicas(instance)
-	if instance.Status.MinWorkerReplicas != count {
-		instance.Status.MinWorkerReplicas = count
-	}
-
-	count = utils.CalculateMaxReplicas(instance)
-	if instance.Status.MaxWorkerReplicas != count {
-		instance.Status.MaxWorkerReplicas = count
-	}
+	instance.Status.AvailableWorkerReplicas = utils.CalculateAvailableReplicas(runtimePods)
+	instance.Status.DesiredWorkerReplicas = utils.CalculateDesiredReplicas(instance)
+	instance.Status.MinWorkerReplicas = utils.CalculateMinReplicas(instance)
+	instance.Status.MaxWorkerReplicas = utils.CalculateMaxReplicas(instance)
 
 	// validation for the RayStartParam for the state.
 	isValid, err := common.ValidateHeadRayStartParams(instance.Spec.HeadGroupSpec)
diff --git a/ray-operator/controllers/ray/raycluster_controller_fake_test.go b/ray-operator/controllers/ray/raycluster_controller_fake_test.go
index da61bf09b8..208c23cdb9 100644
--- a/ray-operator/controllers/ray/raycluster_controller_fake_test.go
+++ b/ray-operator/controllers/ray/raycluster_controller_fake_test.go
@@ -966,3 +966,58 @@ func TestGetHeadServiceIP(t *testing.T) {
 		})
 	}
 }
+
+func TestUpdateStatusObservedGeneration(t *testing.T) {
+	setupTest(t)
+	defer tearDown(t)
+
+	// Create a new scheme with CRDs, Pod, Service schemes.
+	newScheme := runtime.NewScheme()
+	_ = rayiov1alpha1.AddToScheme(newScheme)
+	_ = corev1.AddToScheme(newScheme)
+
+	// To update the status of RayCluster with `r.Status().Update()`,
+	// initialize the runtimeObjects with appropriate context. In KubeRay, the `ClusterIP`
+	// and `TargetPort` fields are typically set by the cluster's control plane.
+	headService, err := common.BuildServiceForHeadPod(*testRayCluster, nil, nil)
+	assert.Nil(t, err, "Failed to build head service.")
+	headService.Spec.ClusterIP = headNodeIP
+	for i, port := range headService.Spec.Ports {
+		headService.Spec.Ports[i].TargetPort = intstr.IntOrString{IntVal: port.Port}
+	}
+	runtimeObjects := append(testPods, headService, testRayCluster)
+
+	// To facilitate testing, we set an impossible value for ObservedGeneration.
+	// Note that ObjectMeta's `Generation` and `ResourceVersion` don't behave properly in the fake client.
+	// [Ref] https://pkg.go.dev/sigs.k8s.io/controller-runtime@v0.14.5/pkg/client/fake
+	testRayCluster.Status.ObservedGeneration = -1
+
+	// Initialize a fake client with newScheme and runtimeObjects.
+	fakeClient := clientFake.NewClientBuilder().WithScheme(newScheme).WithRuntimeObjects(runtimeObjects...).Build()
+
+	// Verify the initial values of `Generation` and `ObservedGeneration`.
+	namespacedName := types.NamespacedName{
+		Name:      instanceName,
+		Namespace: namespaceStr,
+	}
+	cluster := rayiov1alpha1.RayCluster{}
+	err = fakeClient.Get(context.Background(), namespacedName, &cluster)
+	assert.Nil(t, err, "Fail to get RayCluster")
+	assert.Equal(t, int64(-1), cluster.Status.ObservedGeneration)
+	assert.Equal(t, int64(0), cluster.ObjectMeta.Generation)
+
+	// Initialize RayCluster reconciler.
+	testRayClusterReconciler := &RayClusterReconciler{
+		Client:   fakeClient,
+		Recorder: &record.FakeRecorder{},
+		Scheme:   scheme.Scheme,
+		Log:      ctrl.Log.WithName("controllers").WithName("RayCluster"),
+	}
+
+	// Compare the values of `Generation` and `ObservedGeneration` to check if they match.
+	err = testRayClusterReconciler.updateStatus(testRayCluster)
+	assert.Nil(t, err)
+	err = fakeClient.Get(context.Background(), namespacedName, &cluster)
+	assert.Nil(t, err)
+	assert.Equal(t, cluster.ObjectMeta.Generation, cluster.Status.ObservedGeneration)
+}
diff --git a/ray-operator/controllers/ray/rayjob_controller.go b/ray-operator/controllers/ray/rayjob_controller.go
index b51d8e77a8..a6f1cbc863 100644
--- a/ray-operator/controllers/ray/rayjob_controller.go
+++ b/ray-operator/controllers/ray/rayjob_controller.go
@@ -346,6 +346,9 @@ func (r *RayJobReconciler) updateState(ctx context.Context, rayJob *rayv1alpha1.
 		rayJob.Status.EndTime = utils.ConvertUnixTimeToMetav1Time(jobInfo.EndTime)
 	}
 
+	// TODO (kevin85421): ObservedGeneration should be used to determine whether update this CR or not.
+	rayJob.Status.ObservedGeneration = rayJob.ObjectMeta.Generation
+
 	if errStatus := r.Status().Update(ctx, rayJob); errStatus != nil {
 		return fmtErrors.Errorf("combined error: %v %v", err, errStatus)
 	}
diff --git a/ray-operator/controllers/ray/rayjob_controller_test.go b/ray-operator/controllers/ray/rayjob_controller_test.go
index b73dd40f23..2ec24a9161 100644
--- a/ray-operator/controllers/ray/rayjob_controller_test.go
+++ b/ray-operator/controllers/ray/rayjob_controller_test.go
@@ -39,8 +39,6 @@ import (
 
 var _ = Context("Inside the default namespace", func() {
 	ctx := context.TODO()
-	var workerPods corev1.PodList
-
 	myRayJob := &rayiov1alpha1.RayJob{
 		ObjectMeta: metav1.ObjectMeta{
 			Name:      "rayjob-test",
@@ -176,19 +174,6 @@ var _ = Context("Inside the default namespace", func() {
 		},
 	}
 
-	myRayCluster := &rayiov1alpha1.RayCluster{}
-
-	myRayJobWithClusterSelector := &rayiov1alpha1.RayJob{
-		ObjectMeta: metav1.ObjectMeta{
-			Name:      "rayjob-test-2",
-			Namespace: "default",
-		},
-		Spec: rayiov1alpha1.RayJobSpec{
-			Entrypoint:      "sleep 999",
-			ClusterSelector: map[string]string{},
-		},
-	}
-
 	Describe("When creating a rayjob", func() {
 		It("should create a rayjob object", func() {
 			err := k8sClient.Create(ctx, myRayJob)
@@ -205,7 +190,7 @@ var _ = Context("Inside the default namespace", func() {
 			Eventually(
 				getRayClusterNameForRayJob(ctx, myRayJob),
 				time.Second*15, time.Millisecond*500).Should(Not(BeEmpty()), "My RayCluster name  = %v", myRayJob.Status.RayClusterName)
-
+			myRayCluster := &rayiov1alpha1.RayCluster{}
 			Eventually(
 				getResourceFunc(ctx, client.ObjectKey{Name: myRayJob.Status.RayClusterName, Namespace: "default"}, myRayCluster),
 				time.Second*3, time.Millisecond*500).Should(BeNil(), "My myRayCluster  = %v", myRayCluster.Name)
@@ -213,6 +198,7 @@ var _ = Context("Inside the default namespace", func() {
 
 		It("should create more than 1 worker", func() {
 			filterLabels := client.MatchingLabels{common.RayClusterLabelKey: myRayJob.Status.RayClusterName, common.RayNodeGroupLabelKey: "small-group"}
+			workerPods := corev1.PodList{}
 			Eventually(
 				listResourceFunc(ctx, &workerPods, filterLabels, &client.ListOptions{Namespace: "default"}),
 				time.Second*15, time.Millisecond*500).Should(Equal(3), fmt.Sprintf("workerGroup %v", workerPods.Items))
@@ -231,7 +217,16 @@ var _ = Context("Inside the default namespace", func() {
 			Eventually(
 				getRayClusterNameForRayJob(ctx, myRayJob),
 				time.Second*15, time.Millisecond*500).Should(Not(BeEmpty()), "My RayCluster name  = %v", myRayJob.Status.RayClusterName)
-
+			myRayJobWithClusterSelector := &rayiov1alpha1.RayJob{
+				ObjectMeta: metav1.ObjectMeta{
+					Name:      "rayjob-test-2",
+					Namespace: "default",
+				},
+				Spec: rayiov1alpha1.RayJobSpec{
+					Entrypoint:      "sleep 999",
+					ClusterSelector: map[string]string{},
+				},
+			}
 			myRayJobWithClusterSelector.Spec.ClusterSelector[RayJobDefaultClusterSelectorKey] = myRayJob.Status.RayClusterName
 
 			err := k8sClient.Create(ctx, myRayJobWithClusterSelector)
diff --git a/ray-operator/controllers/ray/rayservice_controller.go b/ray-operator/controllers/ray/rayservice_controller.go
index 5214027ac3..6133549625 100644
--- a/ray-operator/controllers/ray/rayservice_controller.go
+++ b/ray-operator/controllers/ray/rayservice_controller.go
@@ -109,6 +109,9 @@ func (r *RayServiceReconciler) Reconcile(ctx context.Context, request ctrl.Reque
 	}
 	r.cleanUpServeConfigCache(rayServiceInstance)
 
+	// TODO (kevin85421): ObservedGeneration should be used to determine whether to update this CR or not.
+	rayServiceInstance.Status.ObservedGeneration = rayServiceInstance.ObjectMeta.Generation
+
 	logger.Info("Reconciling the cluster component.")
 	// Find active and pending ray cluster objects given current service name.
 	var activeRayClusterInstance *rayv1alpha1.RayCluster
diff --git a/ray-operator/controllers/ray/rayservice_controller_test.go b/ray-operator/controllers/ray/rayservice_controller_test.go
index f5a8debfac..f328cc0d5b 100644
--- a/ray-operator/controllers/ray/rayservice_controller_test.go
+++ b/ray-operator/controllers/ray/rayservice_controller_test.go
@@ -45,10 +45,8 @@ var _ = Context("Inside the default namespace", func() {
 	ctx := context.TODO()
 	var workerPods corev1.PodList
 
-	var numReplicas int32
-	var numCpus float64
-	numReplicas = 1
-	numCpus = 0.1
+	var numReplicas int32 = 1
+	var numCpus float64 = 0.1
 
 	myRayService := &rayiov1alpha1.RayService{
 		ObjectMeta: metav1.ObjectMeta{