diff --git a/CHANGELOG.md b/CHANGELOG.md
index 498673cbf..824e3a176 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -2,6 +2,16 @@
 
 All notable changes to this project are documented in this file.
 
+## 0.12.1
+
+**Release date:** 2021-04-23
+
+This prerelease comes with a bug fix to source ignore handling.
+
+Fixes:
+* Configure ignore domain for GitRepository rules
+  [#351](https://github.com/fluxcd/source-controller/pull/351)
+
 ## 0.12.0
 
 **Release date:** 2021-04-21
diff --git a/config/manager/kustomization.yaml b/config/manager/kustomization.yaml
index 416f0900a..848a13ebf 100644
--- a/config/manager/kustomization.yaml
+++ b/config/manager/kustomization.yaml
@@ -6,4 +6,4 @@ resources:
 images:
 - name: fluxcd/source-controller
   newName: fluxcd/source-controller
-  newTag: v0.12.0
+  newTag: v0.12.1
diff --git a/go.mod b/go.mod
index 28d6eb752..e25ef6bbf 100644
--- a/go.mod
+++ b/go.mod
@@ -17,7 +17,7 @@ require (
 	github.com/fluxcd/pkg/ssh v0.0.5
 	github.com/fluxcd/pkg/untar v0.0.5
 	github.com/fluxcd/pkg/version v0.0.1
-	github.com/fluxcd/source-controller/api v0.12.0
+	github.com/fluxcd/source-controller/api v0.12.1
 	github.com/go-git/go-billy/v5 v5.1.0
 	github.com/go-git/go-git/v5 v5.3.0
 	github.com/go-logr/logr v0.4.0