diff --git a/pkg/cnab/config-adapter/adapter.go b/pkg/cnab/config-adapter/adapter.go
index 8db63509a..29a2088cb 100644
--- a/pkg/cnab/config-adapter/adapter.go
+++ b/pkg/cnab/config-adapter/adapter.go
@@ -141,6 +141,9 @@ func (c *ManifestConverter) generateBundleParameters(defs *definition.Definition
 	params := make(map[string]bundle.Parameter, len(c.Manifest.Parameters))
 
 	addParam := func(param manifest.ParameterDefinition) {
+		// Update ApplyTo per parameter definition and manifest
+		param.UpdateApplyTo(c.Manifest)
+
 		p := bundle.Parameter{
 			Definition:  param.Name,
 			ApplyTo:     param.ApplyTo,
diff --git a/pkg/manifest/manifest.go b/pkg/manifest/manifest.go
index 195c59811..2f229473a 100644
--- a/pkg/manifest/manifest.go
+++ b/pkg/manifest/manifest.go
@@ -13,6 +13,7 @@ import (
 	"github.com/Masterminds/semver"
 	"github.com/cbroglie/mustache"
 	"github.com/cnabio/cnab-go/bundle/definition"
+	"github.com/cnabio/cnab-go/claim"
 	"github.com/docker/distribution/reference"
 	"github.com/hashicorp/go-multierror"
 	"github.com/pkg/errors"
@@ -305,6 +306,33 @@ func (pd *ParameterDefinition) AppliesTo(action string) bool {
 	return false
 }
 
+// exemptFromInstall returns true if a parameter definition:
+//   - has an output source (which will not exist prior to install)
+//   - doesn't already have applyTo specified
+//   - doesn't have a default value
+func (pd *ParameterDefinition) exemptFromInstall() bool {
+	return pd.Source.Output != "" && pd.ApplyTo == nil && pd.Default == nil
+}
+
+// UpdateApplyTo updates a parameter definition's applyTo section
+// based on the provided manifest
+func (pd *ParameterDefinition) UpdateApplyTo(m *Manifest) {
+	if pd.exemptFromInstall() {
+		applyTo := []string{claim.ActionUninstall}
+		// The core action "Upgrade" is technically still optional
+		// so only add it if it is declared in the manifest
+		if m.Upgrade != nil {
+			applyTo = append(applyTo, claim.ActionUpgrade)
+		}
+		// Add all custom actions
+		for action := range m.CustomActions {
+			applyTo = append(applyTo, action)
+		}
+		sort.Strings(applyTo)
+		pd.ApplyTo = applyTo
+	}
+}
+
 type ParameterSource struct {
 	Dependency string `yaml:"dependency,omitempty"`
 	Output     string `yaml:"output"`
diff --git a/pkg/manifest/manifest_test.go b/pkg/manifest/manifest_test.go
index 5da960fb1..45c02e64d 100644
--- a/pkg/manifest/manifest_test.go
+++ b/pkg/manifest/manifest_test.go
@@ -448,3 +448,45 @@ func TestParamToEnvVar(t *testing.T) {
 		})
 	}
 }
+
+func TestParameterDefinition_UpdateApplyTo(t *testing.T) {
+	cxt := context.NewTestContext(t)
+
+	cxt.AddTestFile("testdata/simple.porter.yaml", config.Name)
+
+	m, err := LoadManifestFrom(cxt.Context, config.Name)
+	require.NoError(t, err, "could not load manifest")
+
+	testcases := []struct {
+		name         string
+		defaultValue string
+		applyTo      []string
+		source       ParameterSource
+		wantApplyTo  []string
+	}{
+		{"no source", "", nil, ParameterSource{}, nil},
+		{"has default", "myparam", nil, ParameterSource{Output: "myoutput"}, nil},
+		{"has applyTo", "", []string{"status"}, ParameterSource{Output: "myoutput"}, []string{"status"}},
+		{"no default, no applyTo", "", nil, ParameterSource{Output: "myoutput"}, []string{"status", "uninstall"}},
+	}
+
+	for _, tc := range testcases {
+		t.Run(tc.name, func(t *testing.T) {
+			pd := ParameterDefinition{
+				Name: "myparam",
+				Schema: definition.Schema{
+					Type: "file",
+				},
+				Source:  tc.source,
+				ApplyTo: tc.applyTo,
+			}
+
+			if tc.defaultValue != "" {
+				pd.Schema.Default = tc.defaultValue
+			}
+
+			pd.UpdateApplyTo(m)
+			require.Equal(t, tc.wantApplyTo, pd.ApplyTo)
+		})
+	}
+}
diff --git a/pkg/runtime/runtime-manifest.go b/pkg/runtime/runtime-manifest.go
index 27492069d..6d0588203 100644
--- a/pkg/runtime/runtime-manifest.go
+++ b/pkg/runtime/runtime-manifest.go
@@ -405,6 +405,9 @@ func (m *RuntimeManifest) Prepare() error {
 	// For parameters of type "file", we may need to decode files on the filesystem
 	// before execution of the step/action
 	for _, param := range m.Parameters {
+		// Update ApplyTo per parameter definition and manifest
+		param.UpdateApplyTo(m.Manifest)
+
 		if !param.AppliesTo(string(m.Action)) {
 			continue
 		}