diff --git a/internal/command/cliconfig/provider_installation.go b/internal/command/cliconfig/provider_installation.go
index 40a407d1ec..fb3d2dec27 100644
--- a/internal/command/cliconfig/provider_installation.go
+++ b/internal/command/cliconfig/provider_installation.go
@@ -254,15 +254,19 @@ func decodeProviderInstallationFromConfig(hclFile *hclast.File) ([]*ProviderInst
 						))
 						continue
 					}
+					unsetEnvVars := make(map[string]bool)
 					interpolatedPath := os.Expand(rawPath, func(envVarName string) string {
 						if value, ok := os.LookupEnv(envVarName); ok {
 							return value
 						} else {
-							diags = diags.Append(tfdiags.Sourceless(
-								tfdiags.Error,
-								"Interpolated environment variable not set",
-								fmt.Sprintf("The environment variable %s is not set or empty and can result in undesired behavior", envVarName),
-							))
+							if _, reported := unsetEnvVars[envVarName]; !reported {
+								diags = diags.Append(tfdiags.Sourceless(
+									tfdiags.Error,
+									"Interpolated environment variable not set",
+									fmt.Sprintf("The environment variable %s is not set or empty and can result in undesired behavior", envVarName),
+								))
+								unsetEnvVars[envVarName] = true
+							}
 							return ""
 						}
 					})