diff --git a/src/Cli/dotnet/Commands/Tool/Common/ToolManifestFinderExtensions.cs b/src/Cli/dotnet/Commands/Tool/Common/ToolManifestFinderExtensions.cs
index 1f381118301b..a55d83af3924 100644
--- a/src/Cli/dotnet/Commands/Tool/Common/ToolManifestFinderExtensions.cs
+++ b/src/Cli/dotnet/Commands/Tool/Common/ToolManifestFinderExtensions.cs
@@ -1,8 +1,6 @@
 // Licensed to the .NET Foundation under one or more agreements.
 // The .NET Foundation licenses this file to you under the MIT license.
 
-#nullable disable
-
 using Microsoft.DotNet.Cli.ToolManifest;
 using Microsoft.DotNet.Cli.ToolPackage;
 using Microsoft.DotNet.Cli.Utils;
@@ -12,10 +10,11 @@ namespace Microsoft.DotNet.Cli.Commands.Tool;
 
 internal static class ToolManifestFinderExtensions
 {
-    public static (FilePath? filePath, string warningMessage) ExplicitManifestOrFindManifestContainPackageId(
+    public static (FilePath? filePath, string? warningMessage) ExplicitManifestOrFindManifestContainPackageId(
         this IToolManifestFinder toolManifestFinder,
-        string explicitManifestFile,
-        PackageId packageId)
+        string? explicitManifestFile,
+        PackageId packageId,
+        bool throwIfNoManifestFound = true)
     {
         if (!string.IsNullOrWhiteSpace(explicitManifestFile))
         {
@@ -29,12 +28,16 @@ public static (FilePath? filePath, string warningMessage) ExplicitManifestOrFind
         }
         catch (ToolManifestCannotBeFoundException e)
         {
-            throw new GracefulException([e.Message, CliCommandStrings.ToolCommonNoManifestGuide], verboseMessages: [e.VerboseMessage], isUserError: false);
+            if (throwIfNoManifestFound)
+            {
+                throw new GracefulException([e.Message, CliCommandStrings.ToolCommonNoManifestGuide], verboseMessages: [e.VerboseMessage], isUserError: false);
+            }
+            return (null, null);
         }
 
         if (manifestFilesContainPackageId.Any())
         {
-            string warning = null;
+            string? warning = null;
             if (manifestFilesContainPackageId.Count > 1)
             {
                 warning =
diff --git a/src/Cli/dotnet/Commands/Tool/Install/ToolInstallLocalCommand.cs b/src/Cli/dotnet/Commands/Tool/Install/ToolInstallLocalCommand.cs
index 5ee05b4fa10d..1214c75fdafc 100644
--- a/src/Cli/dotnet/Commands/Tool/Install/ToolInstallLocalCommand.cs
+++ b/src/Cli/dotnet/Commands/Tool/Install/ToolInstallLocalCommand.cs
@@ -102,17 +102,15 @@ public override int Execute()
 
     private int ExecuteInstallCommand(PackageId packageId, VersionRange? versionRange)
     {
-        FilePath manifestFile = GetManifestFilePath();
-
-        (FilePath? manifestFileOptional, string warningMessage) =
-            _toolManifestFinder.ExplicitManifestOrFindManifestContainPackageId(_explicitManifestFile, packageId);
+        (FilePath? manifestFileOptional, string? warningMessage) =
+            _toolManifestFinder.ExplicitManifestOrFindManifestContainPackageId(_explicitManifestFile, packageId, throwIfNoManifestFound: false);
 
         if (warningMessage != null)
         {
             _reporter.WriteLine(warningMessage.Yellow());
         }
 
-        manifestFile = manifestFileOptional ?? GetManifestFilePath();
+        FilePath manifestFile = manifestFileOptional ?? GetManifestFilePath();
         var existingPackageWithPackageId = _toolManifestFinder.Find(manifestFile).Where(p => p.PackageId.Equals(packageId));
 
         if (!existingPackageWithPackageId.Any())
diff --git a/test/dotnet.Tests/CommandTests/Tool/Install/ToolInstallLocalCommandTests.cs b/test/dotnet.Tests/CommandTests/Tool/Install/ToolInstallLocalCommandTests.cs
index 7c5cbd177e8e..2a6fe44ce74e 100644
--- a/test/dotnet.Tests/CommandTests/Tool/Install/ToolInstallLocalCommandTests.cs
+++ b/test/dotnet.Tests/CommandTests/Tool/Install/ToolInstallLocalCommandTests.cs
@@ -504,6 +504,36 @@ public void GivenNoManifestFileAndCreateManifestIfNeededFlagItShouldCreateManife
             _fileSystem.File.Exists(Path.Combine(_temporaryDirectory, "dotnet-tools.json")).Should().BeTrue();
         }
 
+        [Fact]
+        public void GivenExistingEmptyManifestItShouldInstallToolSuccessfully()
+        {
+            // Regression test for https://github.com/dotnet/sdk/issues/[issue-number]
+            // This test verifies that installing a tool into an existing empty manifest
+            // (like one created by 'dotnet new tool-manifest') works correctly.
+            // The bug was that ExplicitManifestOrFindManifestContainPackageId would throw
+            // when no manifest contained the package, even though a manifest existed.
+            
+            // The test setup already creates an empty manifest in _jsonContent,
+            // so we just need to verify installation works
+            ParseResult parseResult = Parser.Parse($"dotnet tool install {_packageIdA.ToString()}");
+
+            var installLocalCommand = new ToolInstallLocalCommand(
+                parseResult,
+                _toolPackageDownloaderMock,
+                _toolManifestFinder,
+                _toolManifestEditor,
+                _localToolsResolverCache,
+                _reporter);
+
+            // This should succeed without throwing NullReferenceException
+            installLocalCommand.Execute().Should().Be(0);
+            
+            // Verify the tool was actually installed to the manifest
+            var manifestPackages = _toolManifestFinder.Find();
+            manifestPackages.Should().HaveCount(1);
+            manifestPackages.Single().PackageId.Should().Be(_packageIdA);
+        }
+
         private IToolPackageDownloader GetToolToolPackageInstallerWithPreviewInFeed()
         {
             List<MockFeed> feeds = new()