diff --git a/internal/lang/eval.go b/internal/lang/eval.go
index b1481a3641..1ca8fe7829 100644
--- a/internal/lang/eval.go
+++ b/internal/lang/eval.go
@@ -75,7 +75,7 @@ func (s *Scope) EvalBlock(body hcl.Body, schema *configschema.Block) (cty.Value,
 	body = blocktoattr.FixUpBlockAttrs(body, schema)
 
 	val, evalDiags := hcldec.Decode(body, spec, ctx)
-	diags = diags.Append(checkForUnknownFunctionDiags(evalDiags))
+	diags = diags.Append(checkForUnknownFunctionDiags(evalDiags, s.IgnoreUnknownProviderFunctions))
 
 	return val, diags
 }
@@ -153,7 +153,7 @@ func (s *Scope) EvalSelfBlock(body hcl.Body, self cty.Value, schema *configschem
 	}
 
 	val, decDiags := hcldec.Decode(body, schema.DecoderSpec(), ctx)
-	diags = diags.Append(checkForUnknownFunctionDiags(decDiags))
+	diags = diags.Append(checkForUnknownFunctionDiags(decDiags, s.IgnoreUnknownProviderFunctions))
 	return val, diags
 }
 
@@ -179,7 +179,7 @@ func (s *Scope) EvalExpr(expr hcl.Expression, wantType cty.Type) (cty.Value, tfd
 	}
 
 	val, evalDiags := expr.Value(ctx)
-	diags = diags.Append(checkForUnknownFunctionDiags(evalDiags))
+	diags = diags.Append(checkForUnknownFunctionDiags(evalDiags, s.IgnoreUnknownProviderFunctions))
 
 	if wantType != cty.DynamicPseudoType {
 		var convErr error
@@ -524,16 +524,22 @@ func normalizeRefValue(val cty.Value, diags tfdiags.Diagnostics) (cty.Value, tfd
 // namespace. The generic unknown function diagnostic from hcl does not direct
 // the user on how to remedy the situation in Terraform, and we can give more
 // useful information in a few Terraform specific cases here.
-func checkForUnknownFunctionDiags(diags hcl.Diagnostics) hcl.Diagnostics {
+func checkForUnknownFunctionDiags(diags hcl.Diagnostics, ignoreUnknownProviderFunctions bool) hcl.Diagnostics {
+	var filteredDiags hcl.Diagnostics
 	for _, d := range diags {
 		extra, ok := hcl.DiagnosticExtra[hclsyntax.FunctionCallUnknownDiagExtra](d)
 		if !ok {
+			filteredDiags = filteredDiags.Append(d) // we always want to include unrelated diags
 			continue
 		}
+
 		name := extra.CalledFunctionName()
 		namespace := extra.CalledFunctionNamespace()
 		namespaceParts := strings.Split(namespace, "::")
 		if len(namespaceParts) < 2 {
+			// we always include diags for unknown regular function calls
+			filteredDiags = filteredDiags.Append(d)
+
 			// no namespace (namespace includes ::, so will have at least 2
 			// parts), but check if there is a matching name in a provider
 			// namspace.
@@ -550,6 +556,17 @@ func checkForUnknownFunctionDiags(diags hcl.Diagnostics) hcl.Diagnostics {
 			continue
 		}
 
+		// We might run into provider-defined functions during init. We can't filter out all
+		// places where they might be used, so we'll just filter out the diagnostics for the
+		// unknown function calls if we're configured to ignore them. This means that the user will
+		// just get an unknown value result for any provider function calls, which is fine because
+		// we won't have any provider functions available at this point anyway.
+		if ignoreUnknownProviderFunctions {
+			continue
+		} else {
+			filteredDiags = filteredDiags.Append(d)
+		}
+
 		// the diagnostic isn't really shared with anything, and copying would
 		// still retain the internal pointers, so we're going to modify the
 		// diagnostic in-place if we want to change the output. Log the original
@@ -598,5 +615,5 @@ func checkForUnknownFunctionDiags(diags hcl.Diagnostics) hcl.Diagnostics {
 		d.Detail = fmt.Sprintf(`There is no function named "%s%s". Ensure that provider name %q is declared in this module's required_providers block, and that this provider offers a function named %q.`, namespace, name, namespaceParts[1], name)
 	}
 
-	return diags
+	return filteredDiags
 }
diff --git a/internal/lang/scope.go b/internal/lang/scope.go
index 4416e65f02..41334a51f3 100644
--- a/internal/lang/scope.go
+++ b/internal/lang/scope.go
@@ -84,6 +84,12 @@ type Scope struct {
 	// marked as ephemeral.
 	// FIXME: plan to officially deprecate this workaround.
 	ForProvider bool
+
+	// IgnoreUnknownProviderFunctions can be set to true to request that any unknown
+	// functions produce unknown value results rather than an error. This is
+	// important during a plan phase to avoid generating errors for functions that
+	// are only available in provider versions that have not yet been selected.
+	IgnoreUnknownProviderFunctions bool
 }
 
 // SetActiveExperiments allows a caller to declare that a set of experiments
diff --git a/internal/terraform/evaluate.go b/internal/terraform/evaluate.go
index ee1374427a..5e4b90c255 100644
--- a/internal/terraform/evaluate.go
+++ b/internal/terraform/evaluate.go
@@ -93,15 +93,16 @@ type Evaluator struct {
 // address.
 func (e *Evaluator) Scope(data lang.Data, self addrs.Referenceable, source addrs.Referenceable, extFuncs lang.ExternalFuncs) *lang.Scope {
 	return &lang.Scope{
-		Data:            data,
-		ParseRef:        addrs.ParseRef,
-		SelfAddr:        self,
-		SourceAddr:      source,
-		PureOnly:        e.Operation != walkApply && e.Operation != walkDestroy && e.Operation != walkEval,
-		BaseDir:         ".", // Always current working directory for now.
-		PlanTimestamp:   e.PlanTimestamp,
-		ExternalFuncs:   extFuncs,
-		FunctionResults: e.FunctionResults,
+		Data:                           data,
+		ParseRef:                       addrs.ParseRef,
+		SelfAddr:                       self,
+		SourceAddr:                     source,
+		PureOnly:                       e.Operation != walkApply && e.Operation != walkDestroy && e.Operation != walkEval,
+		BaseDir:                        ".", // Always current working directory for now.
+		PlanTimestamp:                  e.PlanTimestamp,
+		ExternalFuncs:                  extFuncs,
+		FunctionResults:                e.FunctionResults,
+		IgnoreUnknownProviderFunctions: e.Operation == walkInit,
 	}
 }