diff --git a/src/registrar/admin.py b/src/registrar/admin.py
index 7a3647582..64839da31 100644
--- a/src/registrar/admin.py
+++ b/src/registrar/admin.py
@@ -265,6 +265,8 @@ class DomainApplicationAdmin(ListHeaderAdmin):
                     original_obj.submit(updated_domain_application=obj)
                 elif obj.status == models.DomainApplication.INVESTIGATING:
                     original_obj.in_review(updated_domain_application=obj)
+                elif obj.status == models.DomainApplication.ACTION_NEEDED:
+                    original_obj.action_needed(updated_domain_application=obj)
                 elif obj.status == models.DomainApplication.APPROVED:
                     original_obj.approve(updated_domain_application=obj)
                 elif obj.status == models.DomainApplication.WITHDRAWN:
diff --git a/src/registrar/models/domain_application.py b/src/registrar/models/domain_application.py
index a50cb34b8..76e227447 100644
--- a/src/registrar/models/domain_application.py
+++ b/src/registrar/models/domain_application.py
@@ -18,16 +18,18 @@ class DomainApplication(TimeStampedModel):
 
     """A registrant's application for a new domain."""
 
-    # #### Contants for choice fields ####
+    # #### Constants for choice fields ####
     STARTED = "started"
     SUBMITTED = "submitted"
     INVESTIGATING = "investigating"
+    ACTION_NEEDED = "action needed"
     APPROVED = "approved"
     WITHDRAWN = "withdrawn"
     STATUS_CHOICES = [
         (STARTED, STARTED),
         (SUBMITTED, SUBMITTED),
         (INVESTIGATING, INVESTIGATING),
+        (ACTION_NEEDED, ACTION_NEEDED),
         (APPROVED, APPROVED),
         (WITHDRAWN, WITHDRAWN),
     ]
@@ -497,7 +499,7 @@ class DomainApplication(TimeStampedModel):
         except EmailSendingError:
             logger.warning("Failed to send confirmation email", exc_info=True)
 
-    @transition(field="status", source=[STARTED, WITHDRAWN], target=SUBMITTED)
+    @transition(field="status", source=[STARTED, ACTION_NEEDED, WITHDRAWN], target=SUBMITTED)
     def submit(self, updated_domain_application=None):
         """Submit an application that is started.
 
@@ -554,6 +556,18 @@ class DomainApplication(TimeStampedModel):
             "emails/status_change_in_review.txt",
             "emails/status_change_in_review_subject.txt",
         )
+        
+    @transition(field="status", source=[INVESTIGATING], target=ACTION_NEEDED)
+    def action_needed(self, updated_domain_application):
+        """Send back an application that is under investigation or rejected.
+
+        As a side effect, an email notification is sent, similar to in_review"""
+
+        updated_domain_application._send_status_update_email(
+            "action needed",
+            "emails/status_change_action_needed.txt",
+            "emails/status_change_action_needed_subject.txt",
+        )
 
     @transition(field="status", source=[SUBMITTED, INVESTIGATING], target=APPROVED)
     def approve(self, updated_domain_application=None):
diff --git a/src/registrar/templates/application_status.html b/src/registrar/templates/application_status.html
index 3d0f44a9f..c0904373f 100644
--- a/src/registrar/templates/application_status.html
+++ b/src/registrar/templates/application_status.html
@@ -21,6 +21,7 @@
           </span>
           {% if domainapplication.status == 'approved' %} Approved 
           {% elif domainapplication.status == 'investigating' %} In Review 
+          {% elif domainapplication.status == 'action needed' %} Action Needed 
           {% elif domainapplication.status == 'submitted' %} Received
           {% else %}ERROR Please contact technical support/dev
           {% endif %}
diff --git a/src/registrar/templates/emails/status_change_action_needed.txt b/src/registrar/templates/emails/status_change_action_needed.txt
new file mode 100644
index 000000000..10bbc0087
--- /dev/null
+++ b/src/registrar/templates/emails/status_change_action_needed.txt
@@ -0,0 +1,43 @@
+{% autoescape off %}{# In a text file, we don't want to have HTML entities escaped #}
+Hi {{ application.submitter.first_name }}.
+
+ACTION NEEDED: Your .gov domain request requires your attention. A CISA analyst will get in touch with you shortly with more details.
+
+DOMAIN REQUESTED: {{ application.requested_domain.name }}
+REQUEST RECEIVED ON: {{ application.updated_at|date }}
+REQUEST #: {{ application.id }}
+STATUS: Action needed
+
+
+NEED TO MAKE CHANGES?
+
+If you need to change your request you have to first withdraw it. Once you
+withdraw the request you can edit it and submit it again. Changing your request
+might add to the wait time. Learn more about withdrawing your request.
+<https://get.gov/help/domain-requests/#withdraw-your-domain-request>.
+
+
+NEXT STEPS
+
+- We’re reviewing your request. This usually takes 20 business days. 
+
+- You can check the status of your request at any time. 
+  <https://registrar.get.gov/application/{{ application.id }}>
+
+- We’ll email you with questions or when we complete our review.
+
+
+THANK YOU
+
+.Gov helps the public identify official, trusted information. Thank you for
+requesting a .gov domain.
+
+----------------------------------------------------------------
+
+{% include 'emails/includes/application_summary.txt' %}
+----------------------------------------------------------------
+
+The .gov team
+Contact us: <https://get.gov/contact/>
+Visit <https://get.gov>
+{% endautoescape %}
diff --git a/src/registrar/templates/emails/status_change_action_needed_subject.txt b/src/registrar/templates/emails/status_change_action_needed_subject.txt
new file mode 100644
index 000000000..f505dd45e
--- /dev/null
+++ b/src/registrar/templates/emails/status_change_action_needed_subject.txt
@@ -0,0 +1 @@
+ACTION NEEDED: Your .gov domain request requires your attention
\ No newline at end of file
diff --git a/src/registrar/templates/home.html b/src/registrar/templates/home.html
index aa2034a27..6163a1ce0 100644
--- a/src/registrar/templates/home.html
+++ b/src/registrar/templates/home.html
@@ -88,7 +88,7 @@
           <td data-sort-value="{{ application.created_at|date:"U" }}" data-label="Date created">{{ application.created_at|date }}</td>
           <td data-label="Status">{{ application.status|title }}</td>
           <td>
-             {% if application.status == "started" or application.status == "withdrawn"  %}
+             {% if application.status == "started" or application.status == "action needed" or application.status == "withdrawn"  %}
               <a href="{% url 'edit-application' application.pk %}">
               <svg class="usa-icon" aria-hidden="true" focusable="false" role="img" width="24">
                 <use xlink:href="{%static 'img/sprite.svg'%}#edit"></use>
diff --git a/src/registrar/tests/test_models.py b/src/registrar/tests/test_models.py
index ba02fa971..59a1d9ff7 100644
--- a/src/registrar/tests/test_models.py
+++ b/src/registrar/tests/test_models.py
@@ -197,6 +197,51 @@ class TestDomainApplication(TestCase):
 
         with self.assertRaises(TransitionNotAllowed):
             application.in_review()
+            
+    def test_transition_not_allowed_started_action_needed(self):
+        """Create an application with status started and call action_needed
+        against transition rules"""
+
+        application = completed_application(status=DomainApplication.STARTED)
+
+        with self.assertRaises(TransitionNotAllowed):
+            application.action_needed()
+            
+    def test_transition_not_allowed_submitted_action_needed(self):
+        """Create an application with status submitted and call action_needed
+        against transition rules"""
+
+        application = completed_application(status=DomainApplication.SUBMITTED)
+
+        with self.assertRaises(TransitionNotAllowed):
+            application.action_needed()
+            
+    def test_transition_not_allowed_action_needed_action_needed(self):
+        """Create an application with status action needed and call action_needed
+        against transition rules"""
+
+        application = completed_application(status=DomainApplication.ACTION_NEEDED)
+
+        with self.assertRaises(TransitionNotAllowed):
+            application.action_needed()
+            
+    def test_transition_not_allowed_approved_action_needed(self):
+        """Create an application with status approved and call action_needed
+        against transition rules"""
+
+        application = completed_application(status=DomainApplication.APPROVED)
+
+        with self.assertRaises(TransitionNotAllowed):
+            application.action_needed()
+            
+    def test_transition_not_allowed_withdrawn_action_needed(self):
+        """Create an application with status withdrawn and call action_needed
+        against transition rules"""
+
+        application = completed_application(status=DomainApplication.WITHDRAWN)
+
+        with self.assertRaises(TransitionNotAllowed):
+            application.action_needed()
 
     def test_transition_not_allowed_started_approved(self):
         """Create an application with status started and call approve