diff --git a/.changes/backported/BUG FIXES-20250205-36435.yaml b/.changes/backported/BUG FIXES-20250205-36435.yaml
new file mode 100644
index 000000000000..a3db320dbfde
--- /dev/null
+++ b/.changes/backported/BUG FIXES-20250205-36435.yaml	
@@ -0,0 +1,5 @@
+kind: BUG FIXES
+body: Attempting to override a variable during `apply` via `TF_VAR_` environment variable will now yield warning instead of misleading error.
+time: 2025-02-05T12:53:26.000+00:00
+custom:
+    Issue: "36435"
diff --git a/internal/backend/local/backend_apply.go b/internal/backend/local/backend_apply.go
index cb8bd0268180..413f92afc693 100644
--- a/internal/backend/local/backend_apply.go
+++ b/internal/backend/local/backend_apply.go
@@ -340,16 +340,49 @@ func (b *Local) opApply(
 					})
 				} else {
 					// The user can't override the planned variables, so we
-					// error when possible to avoid confusion. If the parsed
-					// variables comes from an auto-file however, it's not input
-					// directly by the user so we have to ignore it.
-					if parsedVar.Value.Equals(plannedVar).False() && parsedVar.SourceType != terraform.ValueFromAutoFile {
-						diags = diags.Append(&hcl.Diagnostic{
-							Severity: hcl.DiagError,
-							Summary:  "Can't change variable when applying a saved plan",
-							Detail:   fmt.Sprintf("The variable %s cannot be set using the -var and -var-file options when applying a saved plan file, because a saved plan includes the variable values that were set when it was created. The saved plan specifies %s as the value whereas during apply the value %s was %s. To declare an ephemeral variable which is not saved in the plan file, use ephemeral = true.", varName, tfdiags.CompactValueStr(parsedVar.Value), tfdiags.CompactValueStr(plannedVar), parsedVar.SourceType.DiagnosticLabel()),
-							Subject:  rng,
-						})
+					// error when possible to avoid confusion.
+					if parsedVar.Value.Equals(plannedVar).False() {
+						switch parsedVar.SourceType {
+						case terraform.ValueFromAutoFile:
+							// If the parsed variables comes from an auto-file,
+							// it's not input directly by the user so we have to ignore it.
+							continue
+						case terraform.ValueFromEnvVar:
+							diags = diags.Append(&hcl.Diagnostic{
+								Severity: hcl.DiagWarning,
+								Summary:  "Ignoring variable when applying a saved plan",
+								Detail: fmt.Sprintf("The variable %s cannot be overriden when applying a saved plan file, "+
+									"because a saved plan includes the variable values that were set when it was created. "+
+									"The saved plan specifies %s as the value whereas during apply the value %s was %s. "+
+									"To declare an ephemeral variable which is not saved in the plan file, use ephemeral = true.",
+									varName, tfdiags.CompactValueStr(plannedVar), tfdiags.CompactValueStr(parsedVar.Value),
+									parsedVar.SourceType.DiagnosticLabel()),
+								Subject: rng,
+							})
+						case terraform.ValueFromCLIArg, terraform.ValueFromNamedFile:
+							diags = diags.Append(&hcl.Diagnostic{
+								Severity: hcl.DiagError,
+								Summary:  "Can't change variable when applying a saved plan",
+								Detail: fmt.Sprintf("The variable %s cannot be set using the -var and -var-file options when "+
+									"applying a saved plan file, because a saved plan includes the variable values that were "+
+									"set when it was created. The saved plan specifies %s as the value whereas during apply "+
+									"the value %s was %s. To declare an ephemeral variable which is not saved in the plan "+
+									"file, use ephemeral = true.",
+									varName, tfdiags.CompactValueStr(plannedVar), tfdiags.CompactValueStr(parsedVar.Value),
+									parsedVar.SourceType.DiagnosticLabel()),
+								Subject: rng,
+							})
+						default:
+							// Other SourceTypes should never reach this point because
+							//  - ValueFromConfig - supplied plan already contains the original configuration
+							//  - ValueFromInput - we disable prompt when plan file is supplied
+							//  - ValueFromCaller - only used in tests
+							panic(fmt.Sprintf("Attempted to change variable %s when applying a saved plan. "+
+								"The saved plan specifies %s as the value whereas during apply the value %s was %s. "+
+								"This is a bug in Terraform, please report it.",
+								varName, tfdiags.CompactValueStr(plannedVar), tfdiags.CompactValueStr(parsedVar.Value),
+								parsedVar.SourceType.DiagnosticLabel()))
+						}
 					}
 				}
 			}
diff --git a/internal/command/apply_test.go b/internal/command/apply_test.go
index 2880c2e2dc99..19cdf4052c7c 100644
--- a/internal/command/apply_test.go
+++ b/internal/command/apply_test.go
@@ -994,6 +994,64 @@ func TestApply_planUndeclaredVars(t *testing.T) {
 	}
 }
 
+func TestApply_planWithEnvVars(t *testing.T) {
+	_, snap := testModuleWithSnapshot(t, "apply-output-only")
+	plan := testPlan(t)
+
+	addr, diags := addrs.ParseAbsOutputValueStr("output.shadow")
+	if diags.HasErrors() {
+		t.Fatal(diags.Err())
+	}
+
+	shadowVal := mustNewDynamicValue("noot", cty.DynamicPseudoType)
+	plan.VariableValues = map[string]plans.DynamicValue{
+		"shadow": shadowVal,
+	}
+	plan.Changes.Outputs = append(plan.Changes.Outputs, &plans.OutputChangeSrc{
+		Addr: addr,
+		ChangeSrc: plans.ChangeSrc{
+			Action: plans.Create,
+			After:  shadowVal,
+		},
+	})
+	planPath := testPlanFileMatchState(
+		t,
+		snap,
+		states.NewState(),
+		plan,
+		statemgr.SnapshotMeta{},
+	)
+
+	statePath := testTempFile(t)
+
+	p := applyFixtureProvider()
+	view, done := testView(t)
+	c := &ApplyCommand{
+		Meta: Meta{
+			testingOverrides: metaOverridesForProvider(p),
+			View:             view,
+		},
+	}
+
+	t.Setenv("TF_VAR_shadow", "env")
+
+	args := []string{
+		"-state", statePath,
+		"-no-color",
+		planPath,
+	}
+	code := c.Run(args)
+	output := done(t)
+	if code != 0 {
+		t.Fatal("unexpected failure: ", output.All())
+	}
+
+	expectedWarn := "Warning: Ignoring variable when applying a saved plan\n"
+	if !strings.Contains(output.Stdout(), expectedWarn) {
+		t.Fatalf("expected warning in output, given: %q", output.Stdout())
+	}
+}
+
 // A saved plan includes a list of "apply-time variables", i.e. ephemeral
 // input variables that were set during the plan, and must therefore be set
 // during apply. No other variables may be set during apply.
diff --git a/internal/command/testdata/apply-output-only/main.tf b/internal/command/testdata/apply-output-only/main.tf
new file mode 100644
index 000000000000..af93614d23c0
--- /dev/null
+++ b/internal/command/testdata/apply-output-only/main.tf
@@ -0,0 +1,7 @@
+variable "shadow" {
+  type = string
+}
+
+output "foo" {
+  value = var.shadow
+}