diff --git a/cli/azd/cmd/auto_install.go b/cli/azd/cmd/auto_install.go
index 5984e59e16e..19c0eba16d9 100644
--- a/cli/azd/cmd/auto_install.go
+++ b/cli/azd/cmd/auto_install.go
@@ -24,6 +24,7 @@ import (
 	"github.com/azure/azure-dev/cli/azd/pkg/extensions"
 	"github.com/azure/azure-dev/cli/azd/pkg/input"
 	"github.com/azure/azure-dev/cli/azd/pkg/ioc"
+	"github.com/azure/azure-dev/cli/azd/pkg/output"
 	"github.com/azure/azure-dev/cli/azd/pkg/output/ux"
 	"github.com/azure/azure-dev/cli/azd/pkg/project"
 	"github.com/azure/azure-dev/cli/azd/pkg/update"
@@ -460,7 +461,9 @@ func ExecuteWithAutoInstall(ctx context.Context, rootContainer *ioc.NestedContai
 	// This also enables the global options to be set in the container for support during extension framework callbacks.
 	globalOpts := &internal.GlobalCommandOptions{}
 	if err := ParseGlobalFlags(os.Args[1:], globalOpts); err != nil {
-		result.Err = fmt.Errorf("Warning: failed to parse global flags: %w", err)
+		// main.go only exits on result.Err — print here so users see pre-cobra parse failures.
+		fmt.Fprintln(os.Stderr, output.WithErrorFormat("ERROR: %s", err.Error()))
+		result.Err = err
 		return result
 	}
 
@@ -762,6 +765,13 @@ func ParseGlobalFlags(args []string, opts *internal.GlobalCommandOptions) error
 	// command parser after the extension is loaded.
 	globalFlagSet.ParseErrorsAllowlist = pflag.ParseErrorsAllowlist{UnknownFlags: true}
 
+	// Register --output/-o on the pre-parse set only (not in CreateGlobalFlagSet, which
+	// would shadow per-command output.AddOutputParam and cause GetCommandFormatter to reject
+	// the empty default). Without this, pflag's UnknownFlags allowlist walks attached short
+	// values like "-o<value>" char-by-char and trips on "-e" (a known string flag), failing
+	// with `flag needs an argument: 'e' in -e`.
+	globalFlagSet.StringP("output", "o", "", "The output format (json, table, none).")
+
 	// Parse the arguments - unknown flags will be silently ignored
 	err := globalFlagSet.Parse(args)
 
diff --git a/cli/azd/cmd/auto_install_test.go b/cli/azd/cmd/auto_install_test.go
index 5875e005ada..11f5ebb6451 100644
--- a/cli/azd/cmd/auto_install_test.go
+++ b/cli/azd/cmd/auto_install_test.go
@@ -754,3 +754,36 @@ func TestParseGlobalFlags_ExtensionCompatibility(t *testing.T) {
 		})
 	}
 }
+
+// TestParseGlobalFlags_OutputAttachedShortForm verifies that all common -o / --output
+// attachment forms are accepted without error. Before the fix, pflag's UnknownFlags
+// allowlist walked "-otable" char-by-char and tripped on the known string flag "-e",
+// returning `flag needs an argument: 'e' in -e`.
+func TestParseGlobalFlags_OutputAttachedShortForm(t *testing.T) {
+	t.Parallel()
+
+	cases := []struct {
+		name string
+		args []string
+	}{
+		{"attached", []string{"-otable"}},
+		{"attached-json", []string{"-ojson"}},
+		{"space-separated", []string{"-o", "table"}},
+		{"equals", []string{"-o=table"}},
+		{"long-space", []string{"--output", "table"}},
+		{"long-equals", []string{"--output=table"}},
+	}
+
+	for _, tc := range cases {
+		t.Run(tc.name, func(t *testing.T) {
+			t.Parallel()
+			opts := &internal.GlobalCommandOptions{}
+			err := ParseGlobalFlags(tc.args, opts)
+			// We only assert no error here. The -o/--output flag is registered on the
+			// pre-parse FlagSet solely to prevent pflag from walking attached short
+			// values char-by-char and failing on "-e"; the parsed value is intentionally
+			// not captured into GlobalCommandOptions (Cobra handles --output per command).
+			require.NoError(t, err, "ParseGlobalFlags must not error for args: %v", tc.args)
+		})
+	}
+}