diff --git a/docs/features/README.md b/docs/features/README.md
index 7faec0dc84f3..ad9de9ff8f36 100644
--- a/docs/features/README.md
+++ b/docs/features/README.md
@@ -52,7 +52,7 @@ th:not(:first-child) {
 | [mm](multimodal_inputs.md) | ✅ | ✅ | [🟠](https://github.com/vllm-project/vllm/pull/4194)<sup>^</sup> | ❔ | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ | ❔ | ✅ | | | |
 | best-of | ✅ | ✅ | ✅ | [❌](https://github.com/vllm-project/vllm/issues/6137) | ✅ | ❌ | ✅ | ✅ | ✅ | ❔ | [❌](https://github.com/vllm-project/vllm/issues/7968) | ✅ | ✅ | | |
 | beam-search | ✅ | ✅ | ✅ | [❌](https://github.com/vllm-project/vllm/issues/6137) | ✅ | ❌ | ✅ | ✅ | ✅ | ❔ | [❌](https://github.com/vllm-project/vllm/issues/7968) | ❔ | ✅ | ✅ | |
-| [prompt-embeds](prompt_embeds.md) | ✅ | [❌](https://github.com/vllm-project/vllm/issues/25096) | ✅ | ❌ | ✅ | ❌ | ❌ | ✅ | ❌ | ❔ | ❔ | ❌ | ❔ | ❔ | ✅ |
+| [prompt-embeds](prompt_embeds.md) | ✅ | ✅ | ✅ | ❌ | ✅ | ❌ | ❌ | ✅ | ❌ | ❔ | ❔ | ❌ | ❔ | ❔ | ✅ |
 
 \* Chunked prefill and prefix caching are only applicable to last-token pooling.  
 <sup>^</sup> LoRA is only applicable to the language backbone of multimodal models.
@@ -75,4 +75,4 @@ th:not(:first-child) {
 | multi-step                                                | ✅                  | ✅        | ✅        | ✅     | ✅        | [❌](https://github.com/vllm-project/vllm/issues/8477) | ✅     | ❌ | ✅        |
 | best-of                                                   | ✅                  | ✅        | ✅        | ✅     | ✅        | ✅                  | ✅     | ❌ | ✅        |
 | beam-search                                               | ✅                  | ✅        | ✅        | ✅     | ✅        | ✅                  | ✅     | ❌ | ✅        |
-| [prompt-embeds](prompt_embeds.md)                         | ✅                  | ✅        | ✅        | ✅     | ✅        | ✅                  | ?     | [❌](https://github.com/vllm-project/vllm/issues/25097) | ✅       |
+| [prompt-embeds](prompt_embeds.md)                         | ✅                  | ✅        | ✅        | ✅     | ✅        | ✅                  | ❔     | [❌](https://github.com/vllm-project/vllm/issues/25097) | ✅       |
diff --git a/tests/v1/core/test_kv_cache_utils.py b/tests/v1/core/test_kv_cache_utils.py
index d192c58a8c15..df6a5f109874 100644
--- a/tests/v1/core/test_kv_cache_utils.py
+++ b/tests/v1/core/test_kv_cache_utils.py
@@ -2,6 +2,7 @@
 # SPDX-FileCopyrightText: Copyright contributors to the vLLM project
 import importlib
 from collections.abc import Callable
+from typing import Any
 
 import pytest
 import torch
@@ -32,6 +33,7 @@
     init_none_hash,
     is_kv_cache_spec_uniform,
     make_block_hash_with_group_id,
+    tensor_data,
 )
 from vllm.v1.kv_cache_interface import (
     FullAttentionSpec,
@@ -61,12 +63,13 @@ def _auto_init_hash_fn(request):
 
 def make_request(
     request_id: str,
-    prompt_token_ids: list[int],
+    prompt_token_ids: list[int] | None,
     block_size: int = 3,
     hash_fn: Callable = hash,
     mm_positions: list[PlaceholderRange] | None = None,
     mm_hashes: list[str] | None = None,
     cache_salt: str | None = None,
+    prompt_embeds: torch.Tensor | None = None,
 ):
     mm_features = []
     if mm_positions is not None:
@@ -90,6 +93,7 @@ def make_request(
         lora_request=None,
         cache_salt=cache_salt,
         block_hasher=get_request_block_hasher(block_size, hash_fn),
+        prompt_embeds=prompt_embeds,
     )
 
 
@@ -450,6 +454,52 @@ def test_generate_block_hash_extra_keys_cache_salt():
     assert next_mm_idx == 1
 
 
+def test_generate_block_hash_extra_keys_prompt_embeds():
+    prompt_embeds = torch.randn(10, 3)
+    request = make_request(
+        request_id="0",
+        prompt_token_ids=None,
+        mm_positions=None,
+        mm_hashes=None,
+        prompt_embeds=prompt_embeds,
+    )
+
+    # Test with prompt embeds for the first block
+    extra_keys, _ = generate_block_hash_extra_keys(request, 0, 5, 0)
+    expected_embeds = prompt_embeds[0:5]
+    expected_bytes = kv_cache_utils.tensor_data(expected_embeds).tobytes()
+    assert extra_keys == (expected_bytes,)
+
+    # Test with prompt embeds for the second block
+    extra_keys, _ = generate_block_hash_extra_keys(request, 5, 10, 0)
+    expected_embeds = prompt_embeds[5:10]
+    expected_bytes = kv_cache_utils.tensor_data(expected_embeds).tobytes()
+    assert extra_keys == (expected_bytes,)
+
+
+def test_generate_block_hash_extra_keys_different_prompt_embeds():
+    prompt_embeds1 = torch.randn(10, 3)
+    prompt_embeds2 = torch.randn(10, 3)
+    request1 = make_request(
+        request_id="0",
+        prompt_token_ids=None,
+        mm_positions=None,
+        mm_hashes=None,
+        prompt_embeds=prompt_embeds1,
+    )
+    request2 = make_request(
+        request_id="1",
+        prompt_token_ids=None,
+        mm_positions=None,
+        mm_hashes=None,
+        prompt_embeds=prompt_embeds2,
+    )
+
+    extra_keys1, _ = generate_block_hash_extra_keys(request1, 0, 5, 0)
+    extra_keys2, _ = generate_block_hash_extra_keys(request2, 0, 5, 0)
+    assert extra_keys1 != extra_keys2
+
+
 def test_generate_block_hash_extra_keys_lora():
     request = make_request(
         request_id="0",
@@ -1556,3 +1606,88 @@ def test_merge_mla_spec():
     ]
     with pytest.raises(AssertionError):
         kv_cache_specs[0].merge(kv_cache_specs)
+
+
+@pytest.mark.parametrize("hash_fn", [sha256, sha256_cbor])
+def test_request_block_hasher_with_prompt_embeds(hash_fn: Callable[[Any], bytes]):
+    block_size = 3
+    num_tokens = 2 * block_size
+    prompt_token_ids = [_ for _ in range(num_tokens)]
+    hidden_size = 5
+    prompt_embeds = torch.randn((num_tokens, hidden_size))
+
+    request = make_request(
+        request_id="0",
+        prompt_token_ids=prompt_token_ids,
+        block_size=block_size,
+        hash_fn=hash_fn,
+        prompt_embeds=prompt_embeds,
+    )
+
+    block_hashes = request.block_hashes
+    assert len(block_hashes) == 2
+
+    block1_embeds_bytes = tensor_data(prompt_embeds[:block_size]).tobytes()
+    expected_hash1 = hash_fn(
+        (
+            kv_cache_utils.NONE_HASH,
+            tuple(prompt_token_ids[:block_size]),
+            (block1_embeds_bytes,),
+        )
+    )
+    assert block_hashes[0] == expected_hash1
+
+    block2_embeds_bytes = tensor_data(prompt_embeds[block_size:num_tokens]).tobytes()
+    expected_hash2 = hash_fn(
+        (
+            block_hashes[0],
+            tuple(prompt_token_ids[block_size:num_tokens]),
+            (block2_embeds_bytes,),
+        )
+    )
+    assert block_hashes[1] == expected_hash2
+
+
+@pytest.mark.parametrize("hash_fn", [sha256, sha256_cbor])
+def test_request_with_prompt_embeds_and_mm_inputs(hash_fn: Callable[[Any], bytes]):
+    block_size = 3
+    num_tokens = 2 * block_size
+    prompt_token_ids = [_ for _ in range(num_tokens)]
+    hidden_size = 5
+    prompt_embeds = torch.randn((num_tokens, hidden_size))
+
+    request = make_request(
+        request_id="0",
+        prompt_token_ids=prompt_token_ids,
+        block_size=block_size,
+        hash_fn=hash_fn,
+        mm_positions=[
+            PlaceholderRange(offset=0, length=3),
+            PlaceholderRange(offset=3, length=3),
+        ],
+        mm_hashes=["hash1", "hash2"],
+        prompt_embeds=prompt_embeds,
+    )
+
+    block_hashes = request.block_hashes
+    assert len(block_hashes) == 2
+
+    block1_embeds_bytes = tensor_data(prompt_embeds[:block_size]).tobytes()
+    expected_hash1 = hash_fn(
+        (
+            kv_cache_utils.NONE_HASH,
+            tuple(prompt_token_ids[:block_size]),
+            ("hash1", block1_embeds_bytes),
+        )
+    )
+    assert block_hashes[0] == expected_hash1
+
+    block2_embeds_bytes = tensor_data(prompt_embeds[block_size:num_tokens]).tobytes()
+    expected_hash2 = hash_fn(
+        (
+            block_hashes[0],
+            tuple(prompt_token_ids[block_size:num_tokens]),
+            ("hash2", block2_embeds_bytes),
+        )
+    )
+    assert block_hashes[1] == expected_hash2
diff --git a/vllm/engine/arg_utils.py b/vllm/engine/arg_utils.py
index ce41c377e457..3fdc0befecef 100644
--- a/vllm/engine/arg_utils.py
+++ b/vllm/engine/arg_utils.py
@@ -1743,16 +1743,6 @@ def _set_default_args(
         if model_config.runner_type != "pooling":
             self.enable_chunked_prefill = True
 
-            # TODO: When prefix caching supports prompt embeds inputs, this
-            # check can be removed.
-            if self.enable_prompt_embeds and self.enable_prefix_caching is not False:
-                logger.warning(
-                    "--enable-prompt-embeds and --enable-prefix-caching "
-                    "are not supported together in V1. Prefix caching has "
-                    "been disabled."
-                )
-                self.enable_prefix_caching = False
-
             if self.enable_prefix_caching is None:
                 # Disable prefix caching default for hybrid models
                 # since the feature is still experimental.
diff --git a/vllm/v1/core/kv_cache_utils.py b/vllm/v1/core/kv_cache_utils.py
index 3b2ce8f54229..334c6393a8c9 100644
--- a/vllm/v1/core/kv_cache_utils.py
+++ b/vllm/v1/core/kv_cache_utils.py
@@ -26,6 +26,7 @@
     UniformTypeKVCacheSpecs,
 )
 from vllm.v1.request import Request
+from vllm.v1.utils import tensor_data
 
 # BlockHash represents the hash of a single KV-cache block used for
 # prefix caching.  Treating it as a distinct type from `bytes` helps
@@ -461,11 +462,33 @@ def _gen_lora_extra_hash_keys(request: Request) -> list[str]:
     return [request.lora_request.lora_name]
 
 
+def _gen_prompt_embeds_extra_hash_keys(
+    request: Request, start_token_idx: int, end_token_idx: int
+) -> list[bytes]:
+    """Generate extra keys related to prompt embeds for block hash computation.
+
+    Args:
+        request: The request object.
+        start_token_idx: The start token index of the block.
+        end_token_idx: The end token index of the block.
+
+    Returns:
+        Return prompt embeddings data of the request if it has prompt embeds.
+        Return empty list otherwise.
+    """
+    if request.prompt_embeds is None:
+        return []
+    block_prompt_embeds = request.prompt_embeds[start_token_idx:end_token_idx]
+    embeds_bytes = tensor_data(block_prompt_embeds).tobytes()
+    return [embeds_bytes]
+
+
 def generate_block_hash_extra_keys(
     request: Request, start_token_idx: int, end_token_idx: int, start_mm_idx: int
 ) -> tuple[tuple[Any, ...] | None, int]:
     """Generate extra keys for the block hash. The extra keys can come from
-    the multi-modal inputs and request specific metadata (e.g., LoRA name).
+    the multi-modal inputs, request specific metadata (e.g., LoRA names), and
+    data from prompt embeddings.
 
     Args:
         request: The request object.
@@ -484,8 +507,13 @@ def generate_block_hash_extra_keys(
     cache_salt_keys: list[str] = (
         [request.cache_salt] if (start_token_idx == 0 and request.cache_salt) else []
     )
+    prompt_embeds_keys = _gen_prompt_embeds_extra_hash_keys(
+        request, start_token_idx, end_token_idx
+    )
 
-    extra_keys: list[Any] = lora_extra_keys + mm_extra_keys + cache_salt_keys
+    extra_keys: list[Any] = (
+        lora_extra_keys + mm_extra_keys + cache_salt_keys + prompt_embeds_keys
+    )
 
     if not extra_keys:
         return None, new_start_mm_idx
diff --git a/vllm/v1/serial_utils.py b/vllm/v1/serial_utils.py
index 528c9671dbfd..39147a67d6cf 100644
--- a/vllm/v1/serial_utils.py
+++ b/vllm/v1/serial_utils.py
@@ -31,6 +31,7 @@
     NestedTensors,
 )
 from vllm.v1.engine import UtilityResult
+from vllm.v1.utils import tensor_data
 
 logger = init_logger(__name__)
 
@@ -218,14 +219,14 @@ def _encode_tensor(
     ) -> tuple[str, tuple[int, ...], int | memoryview]:
         assert self.aux_buffers is not None
         # view the tensor as a contiguous 1D array of bytes
-        arr = obj.flatten().contiguous().view(torch.uint8).numpy()
+        arr_data = tensor_data(obj)
         if obj.nbytes < self.size_threshold:
             # Smaller tensors are encoded inline, just like ndarrays.
-            data = msgpack.Ext(CUSTOM_TYPE_RAW_VIEW, arr.data)
+            data = msgpack.Ext(CUSTOM_TYPE_RAW_VIEW, arr_data)
         else:
             # Otherwise encode index of backing buffer to avoid copy.
             data = len(self.aux_buffers)
-            self.aux_buffers.append(arr.data)
+            self.aux_buffers.append(arr_data)
         dtype = str(obj.dtype).removeprefix("torch.")
         return dtype, obj.shape, data
 
diff --git a/vllm/v1/utils.py b/vllm/v1/utils.py
index e8fa81266469..789a74cc6c4a 100644
--- a/vllm/v1/utils.py
+++ b/vllm/v1/utils.py
@@ -396,3 +396,16 @@ def record_function_or_nullcontext(name: str) -> AbstractContextManager:
 
     _PROFILER_FUNC = func
     return func(name)
+
+
+def tensor_data(tensor: torch.Tensor) -> memoryview:
+    """Get the raw data of a tensor as a uint8 memoryview, useful for
+    serializing and hashing.
+
+    Args:
+        tensor: The input tensor.
+
+    Returns:
+        A memoryview of the tensor data as uint8.
+    """
+    return tensor.flatten().contiguous().view(torch.uint8).numpy().data