diff --git a/pkg/resource/sensitive.go b/pkg/resource/sensitive.go
index 29cfb16..2a37f83 100644
--- a/pkg/resource/sensitive.go
+++ b/pkg/resource/sensitive.go
@@ -25,6 +25,7 @@ import (
 	v1 "github.com/crossplane/crossplane-runtime/apis/common/v1"
 	"github.com/crossplane/crossplane-runtime/pkg/fieldpath"
 	"github.com/crossplane/crossplane-runtime/pkg/reconciler/managed"
+	"github.com/crossplane/crossplane-runtime/pkg/resource"
 	"github.com/pkg/errors"
 	kerrors "k8s.io/apimachinery/pkg/api/errors"
 	"k8s.io/apimachinery/pkg/runtime"
@@ -212,9 +213,15 @@ func GetSensitiveParameters(ctx context.Context, client SecretClient, from runti
 					sensitives := make(map[string]interface{})
 					for key, value := range *sel {
 						sensitive, err = client.GetSecretValue(ctx, value)
-						if err != nil {
+						if resource.IgnoreNotFound(err) != nil {
 							return errors.Wrapf(err, errFmtCannotGetSecretValue, sel)
 						}
+
+						// If referenced k8s secret is deleted before the MR, we pass empty string for the sensitive
+						// field to be able to destroy the resource.
+						if kerrors.IsNotFound(err) {
+							sensitive = []byte("")
+						}
 						sensitives[key] = string(sensitive)
 					}
 					if err := setSensitiveParametersWithPaved(pavedTF, expandedJSONPath, tfPath, mapping, sensitives); err != nil {
@@ -226,7 +233,7 @@ func GetSensitiveParameters(ctx context.Context, client SecretClient, from runti
 						return errors.Wrapf(err, errFmtCannotGetSecretKeySelector, expandedJSONPath)
 					}
 					sensitive, err = client.GetSecretValue(ctx, *sel)
-					if err != nil {
+					if resource.IgnoreNotFound(err) != nil {
 						return errors.Wrapf(err, errFmtCannotGetSecretValue, sel)
 					}
 					if err := setSensitiveParametersWithPaved(pavedTF, expandedJSONPath, tfPath, mapping, string(sensitive)); err != nil {
@@ -241,9 +248,15 @@ func GetSensitiveParameters(ctx context.Context, client SecretClient, from runti
 				var sensitives []interface{}
 				for _, s := range *sel {
 					sensitive, err = client.GetSecretValue(ctx, s)
-					if err != nil {
+					if resource.IgnoreNotFound(err) != nil {
 						return errors.Wrapf(err, errFmtCannotGetSecretValue, sel)
 					}
+
+					// If referenced k8s secret is deleted before the MR, we pass empty string for the sensitive
+					// field to be able to destroy the resource.
+					if kerrors.IsNotFound(err) {
+						sensitive = []byte("")
+					}
 					sensitives = append(sensitives, string(sensitive))
 				}
 				if err := setSensitiveParametersWithPaved(pavedTF, expandedJSONPath, tfPath, mapping, sensitives); err != nil {
diff --git a/pkg/resource/sensitive_test.go b/pkg/resource/sensitive_test.go
index 866d17c..78204c5 100644
--- a/pkg/resource/sensitive_test.go
+++ b/pkg/resource/sensitive_test.go
@@ -26,6 +26,8 @@ import (
 	"github.com/golang/mock/gomock"
 	"github.com/google/go-cmp/cmp"
 	"github.com/pkg/errors"
+	v1 "k8s.io/api/core/v1"
+	kerrors "k8s.io/apimachinery/pkg/api/errors"
 	"k8s.io/apimachinery/pkg/apis/meta/v1/unstructured"
 	"k8s.io/apimachinery/pkg/runtime"
 
@@ -511,6 +513,44 @@ func TestGetSensitiveParameters(t *testing.T) {
 				},
 			},
 		},
+		"SingleNoWildcardWithNoSecret": {
+			args: args{
+				clientFn: func(client *mocks.MockSecretClient) {
+					client.EXPECT().GetSecretValue(gomock.Any(), gomock.Eq(xpv1.SecretKeySelector{
+						SecretReference: xpv1.SecretReference{
+							Name:      "admin-password",
+							Namespace: "crossplane-system",
+						},
+						Key: "pass",
+					})).Return([]byte(""), kerrors.NewNotFound(v1.Resource("secret"), "admin-password"))
+				},
+				from: &unstructured.Unstructured{
+					Object: map[string]interface{}{
+						"spec": map[string]interface{}{
+							"forProvider": map[string]interface{}{
+								"adminPasswordSecretRef": map[string]interface{}{
+									"key":       "pass",
+									"name":      "admin-password",
+									"namespace": "crossplane-system",
+								},
+							},
+						},
+					},
+				},
+				into: map[string]interface{}{
+					"some_other_key": "some_other_value",
+				},
+				mapping: map[string]string{
+					"admin_password": "spec.forProvider.adminPasswordSecretRef",
+				},
+			},
+			want: want{
+				out: map[string]interface{}{
+					"some_other_key": "some_other_value",
+					"admin_password": "",
+				},
+			},
+		},
 		"SingleNoWildcardWithSlice": {
 			args: args{
 				clientFn: func(client *mocks.MockSecretClient) {