diff --git a/eng/common/tools.ps1 b/eng/common/tools.ps1
index a06513a5940..d89aa48781b 100644
--- a/eng/common/tools.ps1
+++ b/eng/common/tools.ps1
@@ -727,7 +727,7 @@ function InitializeToolset() {
 
   '<Project Sdk="Microsoft.DotNet.Arcade.Sdk"/>' | Set-Content $proj
 
-  MSBuild-Core $proj $bl /t:__WriteToolsetLocation /clp:ErrorsOnly`;NoSummary /p:__ToolsetLocationOutputFile=$toolsetLocationFile
+  MSBuild-Core $proj $bl /t:__WriteToolsetLocation /clp:ErrorsOnly`;NoSummary /p:__ToolsetLocationOutputFile=$toolsetLocationFile /p:RestoreIgnoreFailedSources=true
 
   $path = Get-Content $toolsetLocationFile -Encoding UTF8 -TotalCount 1
   if (!(Test-Path $path)) {
diff --git a/eng/common/tools.sh b/eng/common/tools.sh
index 01b09b65796..c412703d1ba 100755
--- a/eng/common/tools.sh
+++ b/eng/common/tools.sh
@@ -410,7 +410,7 @@ function InitializeToolset {
   fi
 
   echo '<Project Sdk="Microsoft.DotNet.Arcade.Sdk"/>' > "$proj"
-  MSBuild-Core "$proj" $bl /t:__WriteToolsetLocation /clp:ErrorsOnly\;NoSummary /p:__ToolsetLocationOutputFile="$toolset_location_file"
+  MSBuild-Core "$proj" $bl /t:__WriteToolsetLocation /clp:ErrorsOnly\;NoSummary /p:__ToolsetLocationOutputFile="$toolset_location_file" /p:RestoreIgnoreFailedSources=true
 
   local toolset_build_proj=`cat "$toolset_location_file"`
 
diff --git a/src/Microsoft.DotNet.Arcade.Sdk/tools/ProjectDefaults.props b/src/Microsoft.DotNet.Arcade.Sdk/tools/ProjectDefaults.props
index 08937abd374..b4dc5b5006c 100644
--- a/src/Microsoft.DotNet.Arcade.Sdk/tools/ProjectDefaults.props
+++ b/src/Microsoft.DotNet.Arcade.Sdk/tools/ProjectDefaults.props
@@ -52,6 +52,14 @@
       {TargetFrameworkDirectory};
       {RawFileName};
     </AssemblySearchPaths>
+
+    <!--
+      Tolerate package sources that are unavailable (e.g. transport feeds that have been
+      decommissioned after a release). Restore falls back to the remaining sources instead
+      of failing outright. Can be overridden by setting RestoreIgnoreFailedSources explicitly.
+      See https://github.com/dotnet/runtime/issues/129694.
+    -->
+    <RestoreIgnoreFailedSources Condition="'$(RestoreIgnoreFailedSources)' == ''">true</RestoreIgnoreFailedSources>
   </PropertyGroup>
 
   <PropertyGroup>