diff --git a/cli/azd/grpc/proto/ai_model.proto b/cli/azd/grpc/proto/ai_model.proto
index 263e88a1799..16624708d4f 100644
--- a/cli/azd/grpc/proto/ai_model.proto
+++ b/cli/azd/grpc/proto/ai_model.proto
@@ -194,7 +194,10 @@ message ListLocationsWithQuotaResponse {
 message ModelLocationQuota {
   // Location where model quota was evaluated.
   Location location = 1;
-  double max_remaining_quota = 2;                // max remaining quota across model SKUs
+  // Maximum remaining quota across model SKUs.
+  // A value of -1 indicates that usage data was unavailable (e.g. free-tier
+  // subscriptions) and the actual remaining quota is unknown.
+  double max_remaining_quota = 2;
 }
 
 message ListModelLocationsWithQuotaRequest {
diff --git a/cli/azd/grpc/proto/prompt.proto b/cli/azd/grpc/proto/prompt.proto
index 78bda810ac5..a0b5e6697b3 100644
--- a/cli/azd/grpc/proto/prompt.proto
+++ b/cli/azd/grpc/proto/prompt.proto
@@ -301,5 +301,7 @@ message PromptAiModelLocationWithQuotaResponse {
   // Selected location.
   Location location = 1;
   // Maximum remaining quota at the selected location across model SKUs.
+  // A value of -1 indicates that usage data was unavailable (e.g. free-tier
+  // subscriptions) and the actual remaining quota is unknown.
   double max_remaining_quota = 2;
 }
diff --git a/cli/azd/internal/grpcserver/prompt_service.go b/cli/azd/internal/grpcserver/prompt_service.go
index e9134425277..c4a9cb76ff0 100644
--- a/cli/azd/internal/grpcserver/prompt_service.go
+++ b/cli/azd/internal/grpcserver/prompt_service.go
@@ -1197,8 +1197,15 @@ func (s *promptService) PromptAiModelLocationWithQuota(
 		EnableFiltering: new(true),
 	}
 	for i, loc := range locations {
-		quotaLabel := output.WithGrayFormat("[up to %.0f quota available]", loc.MaxRemainingQuota)
-		label := fmt.Sprintf("%s %s", loc.Location, quotaLabel)
+		var label string
+		if loc.MaxRemainingQuota == ai.QuotaRemainingUnknown {
+			label = loc.Location
+		} else {
+			quotaLabel := output.WithGrayFormat(
+				"[up to %.0f quota available]",
+				loc.MaxRemainingQuota)
+			label = fmt.Sprintf("%s %s", loc.Location, quotaLabel)
+		}
 		selectOpts.Choices[i] = &ux.SelectChoice{
 			Value: loc.Location,
 			Label: label,
diff --git a/cli/azd/pkg/ai/model_helpers_test.go b/cli/azd/pkg/ai/model_helpers_test.go
index c64b824b19d..eaceaf91c12 100644
--- a/cli/azd/pkg/ai/model_helpers_test.go
+++ b/cli/azd/pkg/ai/model_helpers_test.go
@@ -305,10 +305,10 @@ func TestModelHasQuota(t *testing.T) {
 			expected:     true,
 		},
 		{
-			name:         "no usage entries for model",
+			name:         "no usage entries for model assumes available",
 			usageMap:     map[string]AiModelUsage{},
 			minRemaining: 1,
-			expected:     false,
+			expected:     true,
 		},
 		{
 			name: "remaining exactly equals min",
diff --git a/cli/azd/pkg/ai/model_service.go b/cli/azd/pkg/ai/model_service.go
index 8f4d944e068..91221a8ea62 100644
--- a/cli/azd/pkg/ai/model_service.go
+++ b/cli/azd/pkg/ai/model_service.go
@@ -250,6 +250,16 @@ func (s *AiModelService) ListLocationsWithQuota(
 
 	var results []string
 	sharedResults.Range(func(loc string, usages []*armcognitiveservices.Usage) bool {
+		// When the /usages API returns an empty list (e.g. free-tier subscriptions
+		// that have not yet provisioned Cognitive Services resources), treat the
+		// location as having full quota available.  The AI Services account SKU
+		// (AIServices/S0) was already confirmed available in this region; empty
+		// usages means no consumption data exists, not that quota is zero.
+		if len(usages) == 0 {
+			results = append(results, loc)
+			return true
+		}
+
 		for _, req := range requirements {
 			minCap := req.MinCapacity
 			if minCap <= 0 {
@@ -332,8 +342,15 @@ func (s *AiModelService) ListModelLocationsWithQuota(
 			usageMap[usage.Name] = usage
 		}
 
-		maxRemainingAtLocation, found := maxModelRemainingQuota(*targetModel, usageMap)
-		if found && maxRemainingAtLocation >= minRemaining {
+		maxRemainingAtLocation, found := maxModelRemainingQuota(
+			*targetModel, usageMap)
+		// Include the location when the model has at least one
+		// deployable SKU and either: (a) usage data confirms
+		// sufficient remaining quota, or (b) usage data is
+		// unavailable (e.g. free-tier subscriptions).
+		if found &&
+			(maxRemainingAtLocation == QuotaRemainingUnknown ||
+				maxRemainingAtLocation >= minRemaining) {
 			results = append(results, ModelLocationQuota{
 				Location:          loc,
 				MaxRemainingQuota: maxRemainingAtLocation,
@@ -469,9 +486,10 @@ func (s *AiModelService) resolveDeployments(
 				continue
 			}
 
-			// Quota check
+			// Quota check — skip when usage data is empty (e.g. free-tier
+			// subscriptions where the /usages API returns no entries).
 			capacity := ResolveCapacity(sku, options.Capacity)
-			if quotaOpts != nil && usageMap != nil {
+			if quotaOpts != nil && usageMap != nil && len(usageMap) > 0 {
 				usage, ok := usageMap[sku.UsageName]
 				if !ok {
 					continue
@@ -953,6 +971,17 @@ func ModelHasDefaultVersion(model AiModel) bool {
 }
 
 func modelHasQuota(model AiModel, usageMap map[string]AiModelUsage, minRemaining float64) bool {
+	// When usage data is empty (e.g. free-tier subscriptions), assume the
+	// model is eligible as long as it has at least one deployable SKU.
+	if len(usageMap) == 0 {
+		for _, version := range model.Versions {
+			if len(version.Skus) > 0 {
+				return true
+			}
+		}
+		return false
+	}
+
 	for _, version := range model.Versions {
 		for _, sku := range version.Skus {
 			usage, ok := usageMap[sku.UsageName]
@@ -971,6 +1000,19 @@ func modelHasQuota(model AiModel, usageMap map[string]AiModelUsage, minRemaining
 }
 
 func maxModelRemainingQuota(model AiModel, usageMap map[string]AiModelUsage) (float64, bool) {
+	// When usage data is empty (e.g. free-tier subscriptions), treat the
+	// model as available if it has at least one SKU.  Return
+	// QuotaRemainingUnknown to signal that the actual remaining quota
+	// is unknown.
+	if len(usageMap) == 0 {
+		for _, version := range model.Versions {
+			if len(version.Skus) > 0 {
+				return QuotaRemainingUnknown, true
+			}
+		}
+		return 0, false
+	}
+
 	var maxRemaining float64
 	found := false
 	for _, version := range model.Versions {
@@ -1019,8 +1061,20 @@ func filterModelsByAnyLocationQuota(
 ) []AiModel {
 	eligible := map[string]struct{}{}
 
-	for _, usages := range usagesByLocation {
-		for _, model := range FilterModelsByQuota(models, usages, minRemaining) {
+	for loc, usages := range usagesByLocation {
+		// Only consider models that are actually available in this
+		// location.  Without this filter, empty usages from an
+		// unrelated location could mark a model as eligible even
+		// when its quota is exhausted in its actual location.
+		locModels := make([]AiModel, 0, len(models))
+		for _, m := range models {
+			if slices.Contains(m.Locations, loc) {
+				locModels = append(locModels, m)
+			}
+		}
+
+		for _, model := range FilterModelsByQuota(
+			locModels, usages, minRemaining) {
 			eligible[model.Name] = struct{}{}
 		}
 	}
diff --git a/cli/azd/pkg/ai/model_service_test.go b/cli/azd/pkg/ai/model_service_test.go
index 06f64fa9653..5fdf759504b 100644
--- a/cli/azd/pkg/ai/model_service_test.go
+++ b/cli/azd/pkg/ai/model_service_test.go
@@ -482,10 +482,10 @@ func TestFilterModelsByQuota(t *testing.T) {
 			expected:     []string{"gpt-4o"},
 		},
 		{
-			name:         "empty usages excludes all models",
+			name:         "empty usages includes models with SKUs",
 			usages:       []AiModelUsage{},
 			minRemaining: 1,
-			expected:     []string{},
+			expected:     []string{"gpt-4o", "gpt-4o-mini", "text-embedding-ada-002"},
 		},
 	}
 
@@ -775,6 +775,61 @@ func TestFilterModelsByAnyLocationQuota(t *testing.T) {
 	require.Equal(t, []string{"model-a", "model-b"}, filteredNames)
 }
 
+func TestFilterModelsByAnyLocationQuota_EmptyUsagesDoNotLeakAcrossLocations(t *testing.T) {
+	// Regression test: a model available only in location A with exhausted
+	// quota should NOT become eligible because location B returns empty
+	// usages (e.g. free-tier subscription).
+	models := []AiModel{
+		{
+			Name:      "model-a",
+			Locations: []string{"eastus"},
+			Versions: []AiModelVersion{
+				{
+					Version: "1",
+					Skus: []AiModelSku{
+						{Name: "Standard", UsageName: "a_usage"},
+					},
+				},
+			},
+		},
+		{
+			Name:      "model-b",
+			Locations: []string{"eastus", "westus"},
+			Versions: []AiModelVersion{
+				{
+					Version: "1",
+					Skus: []AiModelSku{
+						{Name: "Standard", UsageName: "b_usage"},
+					},
+				},
+			},
+		},
+	}
+
+	usagesByLocation := map[string][]AiModelUsage{
+		// eastus: model-a exhausted, model-b has quota
+		"eastus": {
+			{Name: "a_usage", CurrentValue: 10, Limit: 10},
+			{Name: "b_usage", CurrentValue: 0, Limit: 100},
+		},
+		// westus: empty usages (free-tier). model-a is NOT
+		// available here, so it must not become eligible.
+		"westus": {},
+	}
+
+	filtered := filterModelsByAnyLocationQuota(
+		models, usagesByLocation, 1)
+	names := make([]string, 0, len(filtered))
+	for _, m := range filtered {
+		names = append(names, m.Name)
+	}
+
+	// model-a should be excluded (exhausted in eastus,
+	// not available in westus).
+	// model-b should be included (has quota in eastus).
+	require.Equal(t, []string{"model-b"}, names)
+}
+
 func TestIsFinetuneUsageName(t *testing.T) {
 	tests := []struct {
 		usageName string
@@ -795,3 +850,54 @@ func TestIsFinetuneUsageName(t *testing.T) {
 		})
 	}
 }
+
+func TestModelHasQuota_EmptyUsages(t *testing.T) {
+	modelWithSkus := AiModel{
+		Name: "gpt-4o",
+		Versions: []AiModelVersion{
+			{
+				Version: "2024-05-13",
+				Skus:    []AiModelSku{{Name: "Standard", UsageName: "OpenAI.Standard.gpt-4o"}},
+			},
+		},
+	}
+	modelNoSkus := AiModel{
+		Name:     "empty-model",
+		Versions: []AiModelVersion{{Version: "1.0"}},
+	}
+
+	emptyUsages := map[string]AiModelUsage{}
+
+	// Model with SKUs should be considered eligible when usage data is empty
+	require.True(t, modelHasQuota(modelWithSkus, emptyUsages, 1))
+
+	// Model with no SKUs should not be considered eligible even with empty usage data
+	require.False(t, modelHasQuota(modelNoSkus, emptyUsages, 1))
+}
+
+func TestMaxModelRemainingQuota_EmptyUsages(t *testing.T) {
+	modelWithSkus := AiModel{
+		Name: "gpt-4o",
+		Versions: []AiModelVersion{
+			{
+				Version: "2024-05-13",
+				Skus:    []AiModelSku{{Name: "Standard", UsageName: "OpenAI.Standard.gpt-4o"}},
+			},
+		},
+	}
+	modelNoSkus := AiModel{
+		Name:     "empty-model",
+		Versions: []AiModelVersion{{Version: "1.0"}},
+	}
+
+	emptyUsages := map[string]AiModelUsage{}
+
+	// Model with SKUs: found=true, remaining=QuotaRemainingUnknown
+	remaining, found := maxModelRemainingQuota(modelWithSkus, emptyUsages)
+	require.True(t, found)
+	require.Equal(t, QuotaRemainingUnknown, remaining)
+
+	// Model with no SKUs: found=false
+	_, found = maxModelRemainingQuota(modelNoSkus, emptyUsages)
+	require.False(t, found)
+}
diff --git a/cli/azd/pkg/ai/types.go b/cli/azd/pkg/ai/types.go
index dbfb32301e0..37ade63ec98 100644
--- a/cli/azd/pkg/ai/types.go
+++ b/cli/azd/pkg/ai/types.go
@@ -104,9 +104,16 @@ type ModelLocationQuota struct {
 	// Location is the Azure location name.
 	Location string
 	// MaxRemainingQuota is the maximum remaining quota across model SKUs with usage entries.
+	// A value of QuotaRemainingUnknown (-1) indicates that usage data was unavailable
+	// (e.g. free-tier subscriptions) and the actual remaining quota is unknown.
 	MaxRemainingQuota float64
 }
 
+// QuotaRemainingUnknown is a sentinel value for MaxRemainingQuota indicating that
+// the /usages API returned no data (e.g. free-tier subscriptions that have not yet
+// provisioned Cognitive Services resources) and the actual remaining quota is unknown.
+const QuotaRemainingUnknown float64 = -1
+
 // QuotaRequirement specifies a single quota check: the usage name to check
 // and the minimum remaining capacity needed.
 type QuotaRequirement struct {
diff --git a/cli/azd/pkg/infra/provisioning/bicep/bicep_provider.go b/cli/azd/pkg/infra/provisioning/bicep/bicep_provider.go
index ab64165977f..5d34f6cd413 100644
--- a/cli/azd/pkg/infra/provisioning/bicep/bicep_provider.go
+++ b/cli/azd/pkg/infra/provisioning/bicep/bicep_provider.go
@@ -2996,6 +2996,16 @@ func (p *BicepProvider) checkAiModelQuota(
 		}
 
 		// Check aggregated capacity against remaining quota.
+		// Skip when the /usages API returned an empty list (e.g. free-tier
+		// subscriptions that have not yet provisioned Cognitive Services
+		// resources).  Empty usages means no consumption data is
+		// available — not that quota is zero.  The model-catalog
+		// validation above still runs so that ai_model_not_found
+		// warnings are surfaced regardless.
+		if len(usages) == 0 {
+			continue
+		}
+
 		reportedUsage := map[string]bool{}
 		for _, r := range resolved {
 			if reportedUsage[r.usageName] {