diff --git a/dongle-smartcontract/src/featured_registry.rs b/dongle-smartcontract/src/featured_registry.rs
new file mode 100644
index 0000000..a6035ee
--- /dev/null
+++ b/dongle-smartcontract/src/featured_registry.rs
@@ -0,0 +1,91 @@
+//! Featured projects registry – admin-only curation of highlighted projects.
+
+use crate::auth::require_admin_auth;
+use crate::errors::ContractError;
+use crate::events::publish_featured_project_event;
+use crate::storage_keys::StorageKey;
+use crate::types::Project;
+use soroban_sdk::{Address, Env, Vec};
+
+pub struct FeaturedRegistry;
+
+impl FeaturedRegistry {
+    /// Mark or unmark a project as featured. Admin-only.
+    pub fn set_featured(
+        env: &Env,
+        admin: Address,
+        project_id: u64,
+        featured: bool,
+    ) -> Result<(), ContractError> {
+        require_admin_auth(env, &admin)?;
+
+        // Ensure the project exists.
+        if !env
+            .storage()
+            .persistent()
+            .has(&StorageKey::Project(project_id))
+        {
+            return Err(ContractError::ProjectNotFound);
+        }
+
+        let mut ids: Vec<u64> = env
+            .storage()
+            .persistent()
+            .get(&StorageKey::FeaturedProjects)
+            .unwrap_or(Vec::new(env));
+
+        let already_featured = ids.iter().any(|id| id == project_id);
+
+        if featured && !already_featured {
+            ids.push_back(project_id);
+            env.storage()
+                .persistent()
+                .set(&StorageKey::FeaturedProjects, &ids);
+        } else if !featured && already_featured {
+            let mut updated = Vec::new(env);
+            for id in ids.iter() {
+                if id != project_id {
+                    updated.push_back(id);
+                }
+            }
+            env.storage()
+                .persistent()
+                .set(&StorageKey::FeaturedProjects, &updated);
+        }
+
+        publish_featured_project_event(env, project_id, featured, admin);
+        Ok(())
+    }
+
+    /// List featured projects with pagination.
+    pub fn list_featured_projects(env: &Env, start: u32, limit: u32) -> Vec<Project> {
+        let ids: Vec<u64> = env
+            .storage()
+            .persistent()
+            .get(&StorageKey::FeaturedProjects)
+            .unwrap_or(Vec::new(env));
+
+        let limit = limit.min(100);
+        let mut result = Vec::new(env);
+        let mut count = 0u32;
+
+        for (i, project_id) in ids.iter().enumerate() {
+            if (i as u32) < start {
+                continue;
+            }
+            if count >= limit {
+                break;
+            }
+            if let Some(project) = env
+                .storage()
+                .persistent()
+                .get(&StorageKey::Project(project_id))
+            {
+                result.push_back(project);
+                count += 1;
+            }
+        }
+
+        result
+    }
+}
diff --git a/dongle-smartcontract/src/lib.rs b/dongle-smartcontract/src/lib.rs
index 64635ff..3356f4e 100644
--- a/dongle-smartcontract/src/lib.rs
+++ b/dongle-smartcontract/src/lib.rs
@@ -6,6 +6,7 @@ pub mod constants;
 pub mod errors;
 pub mod events;
 mod fee_manager;
+mod featured_registry;
 mod project_registry;
 pub mod rating_calculator;
 mod report_registry;
@@ -22,6 +23,7 @@ mod tests;
 use crate::admin_manager::AdminManager;
 use crate::errors::ContractError;
 use crate::fee_manager::FeeManager;
+use crate::featured_registry::FeaturedRegistry;
 use crate::project_registry::ProjectRegistry;
 use crate::report_registry::ReportRegistry;
 use crate::review_registry::ReviewRegistry;
@@ -168,6 +170,21 @@ impl DongleContract {
         ProjectRegistry::reactivate_project(&env, project_id, caller)
     }
 
+    // --- Featured Registry ---
+
+    pub fn set_featured(
+        env: Env,
+        admin: Address,
+        project_id: u64,
+        featured: bool,
+    ) -> Result<(), ContractError> {
+        FeaturedRegistry::set_featured(&env, admin, project_id, featured)
+    }
+
+    pub fn list_featured_projects(env: Env, start: u32, limit: u32) -> Vec<Project> {
+        FeaturedRegistry::list_featured_projects(&env, start, limit)
+    }
+
     // --- Review Registry ---
 
     pub fn add_review(
diff --git a/dongle-smartcontract/src/storage_keys.rs b/dongle-smartcontract/src/storage_keys.rs
index e9df22a..681e0ff 100644
--- a/dongle-smartcontract/src/storage_keys.rs
+++ b/dongle-smartcontract/src/storage_keys.rs
@@ -68,4 +68,6 @@ pub enum StorageKey {
     VerificationRenewalHistory(u64, u32),
     /// Renewal count for a project (tracks number of renewals)
     VerificationRenewalCount(u64),
+    /// List of featured project IDs.
+    FeaturedProjects,
 }
diff --git a/dongle-smartcontract/src/tests/featured.rs b/dongle-smartcontract/src/tests/featured.rs
new file mode 100644
index 0000000..82ce6ca
--- /dev/null
+++ b/dongle-smartcontract/src/tests/featured.rs
@@ -0,0 +1,120 @@
+//! Tests for the featured projects admin flow (issue #126).
+
+use crate::errors::ContractError;
+use crate::tests::fixtures::{create_test_project, setup_contract};
+use soroban_sdk::{testutils::Address as _, Address, Env};
+
+#[test]
+fn test_set_featured_admin_only() {
+    let env = Env::default();
+    let (client, _admin) = setup_contract(&env);
+    let non_admin = Address::generate(&env);
+    let owner = Address::generate(&env);
+    let project_id = create_test_project(&client, &owner, "Alpha");
+
+    let result = client
+        .mock_all_auths()
+        .try_set_featured(&non_admin, &project_id, &true);
+
+    assert_eq!(result, Err(Ok(ContractError::AdminOnly)));
+}
+
+#[test]
+fn test_set_featured_project_not_found() {
+    let env = Env::default();
+    let (client, admin) = setup_contract(&env);
+
+    let result = client
+        .mock_all_auths()
+        .try_set_featured(&admin, &999u64, &true);
+
+    assert_eq!(result, Err(Ok(ContractError::ProjectNotFound)));
+}
+
+#[test]
+fn test_set_featured_and_list() {
+    let env = Env::default();
+    let (client, admin) = setup_contract(&env);
+    let owner = Address::generate(&env);
+
+    let id1 = create_test_project(&client, &owner, "Alpha");
+    let id2 = create_test_project(&client, &owner, "Beta");
+    let id3 = create_test_project(&client, &owner, "Gamma");
+
+    client.mock_all_auths().set_featured(&admin, &id1, &true);
+    client.mock_all_auths().set_featured(&admin, &id3, &true);
+
+    let featured = client.list_featured_projects(&0, &10);
+    assert_eq!(featured.len(), 2);
+    assert_eq!(featured.get(0).unwrap().id, id1);
+    assert_eq!(featured.get(1).unwrap().id, id3);
+
+    // id2 was never featured
+    let _ = id2; // suppress unused warning
+}
+
+#[test]
+fn test_unfeature_project() {
+    let env = Env::default();
+    let (client, admin) = setup_contract(&env);
+    let owner = Address::generate(&env);
+
+    let id1 = create_test_project(&client, &owner, "Alpha");
+    let id2 = create_test_project(&client, &owner, "Beta");
+
+    client.mock_all_auths().set_featured(&admin, &id1, &true);
+    client.mock_all_auths().set_featured(&admin, &id2, &true);
+    client.mock_all_auths().set_featured(&admin, &id1, &false);
+
+    let featured = client.list_featured_projects(&0, &10);
+    assert_eq!(featured.len(), 1);
+    assert_eq!(featured.get(0).unwrap().id, id2);
+}
+
+#[test]
+fn test_set_featured_idempotent() {
+    let env = Env::default();
+    let (client, admin) = setup_contract(&env);
+    let owner = Address::generate(&env);
+    let id = create_test_project(&client, &owner, "Alpha");
+
+    client.mock_all_auths().set_featured(&admin, &id, &true);
+    client.mock_all_auths().set_featured(&admin, &id, &true); // duplicate – no-op
+
+    let featured = client.list_featured_projects(&0, &10);
+    assert_eq!(featured.len(), 1);
+}
+
+#[test]
+fn test_list_featured_pagination() {
+    let env = Env::default();
+    let (client, admin) = setup_contract(&env);
+    let owner = Address::generate(&env);
+
+    for i in 0..5u32 {
+        let name = match i {
+            0 => "Alpha",
+            1 => "Beta",
+            2 => "Gamma",
+            3 => "Delta",
+            _ => "Epsilon",
+        };
+        let id = create_test_project(&client, &owner, name);
+        client.mock_all_auths().set_featured(&admin, &id, &true);
+    }
+
+    let page1 = client.list_featured_projects(&0, &3);
+    let page2 = client.list_featured_projects(&3, &3);
+
+    assert_eq!(page1.len(), 3);
+    assert_eq!(page2.len(), 2);
+}
+
+#[test]
+fn test_list_featured_empty() {
+    let env = Env::default();
+    let (client, _admin) = setup_contract(&env);
+
+    let featured = client.list_featured_projects(&0, &10);
+    assert_eq!(featured.len(), 0);
+}
diff --git a/dongle-smartcontract/src/tests/mod.rs b/dongle-smartcontract/src/tests/mod.rs
index 9691ecd..ba7f502 100644
--- a/dongle-smartcontract/src/tests/mod.rs
+++ b/dongle-smartcontract/src/tests/mod.rs
@@ -5,6 +5,7 @@ mod admin;
 mod archival;
 mod error_handling_tests;
 mod fee;
+mod featured;
 mod indexer;
 mod review;
 
diff --git a/dongle-smartcontract/src/types.rs b/dongle-smartcontract/src/types.rs
index 5e99e52..8f1e1ed 100644
--- a/dongle-smartcontract/src/types.rs
+++ b/dongle-smartcontract/src/types.rs
@@ -183,3 +183,13 @@ pub struct ProjectAggregate {
     pub total_rating: u64,
     pub review_count: u64,
 }
+
+/// Emitted when a project's featured status changes.
+#[contracttype]
+#[derive(Clone, Debug, Eq, PartialEq)]
+pub struct FeaturedProjectEvent {
+    pub project_id: u64,
+    pub featured: bool,
+    pub admin: Address,
+    pub timestamp: u64,
+}