diff --git a/src/Cli/dotnet/Commands/Tool/Install/ToolInstallCommandParser.cs b/src/Cli/dotnet/Commands/Tool/Install/ToolInstallCommandParser.cs
index 8ce76001466e..ca9f1e17f80d 100644
--- a/src/Cli/dotnet/Commands/Tool/Install/ToolInstallCommandParser.cs
+++ b/src/Cli/dotnet/Commands/Tool/Install/ToolInstallCommandParser.cs
@@ -49,7 +49,8 @@ internal static class ToolInstallCommandParser
     public static readonly Option<bool> CreateManifestIfNeededOption = new("--create-manifest-if-needed")
     {
         Description = CliCommandStrings.CreateManifestIfNeededOptionDescription,
-        Arity = ArgumentArity.Zero
+        Arity = ArgumentArity.ZeroOrOne,
+        DefaultValueFactory = _ => true,
     };
 
     public static readonly Option<bool> AllowPackageDowngradeOption = new("--allow-downgrade")
diff --git a/test/dotnet.Tests/CommandTests/Tool/Install/ToolInstallLocalCommandTests.cs b/test/dotnet.Tests/CommandTests/Tool/Install/ToolInstallLocalCommandTests.cs
index e1871f2ca072..b1d51d58f0ec 100644
--- a/test/dotnet.Tests/CommandTests/Tool/Install/ToolInstallLocalCommandTests.cs
+++ b/test/dotnet.Tests/CommandTests/Tool/Install/ToolInstallLocalCommandTests.cs
@@ -128,22 +128,41 @@ public void WhenRunWithPackageIdItShouldSaveToCacheAndAddToManifestFile()
         }
 
         [Fact]
-        public void GivenNoManifestFileItShouldThrow()
+        public void GivenCreateManifestIfNeededWithoutArgumentTheDefaultIsTrueForLegacyBehavior()
         {
             _fileSystem.File.Delete(_manifestFilePath);
-            var toolInstallLocalCommand = GetDefaultTestToolInstallLocalCommand();
+            ParseResult parseResult =
+            Parser.Instance.Parse(
+               $"dotnet tool install {_packageIdA.ToString()} --create-manifest-if-needed");
 
-            Action a = () => toolInstallLocalCommand.Execute();
-            a.Should().Throw<GracefulException>()
-                .And.Message.Should()
-                .Contain(CliStrings.CannotFindAManifestFile);
+            var toolInstallLocalCommand = new ToolInstallLocalCommand(
+                parseResult,
+                _packageIdA,
+                _toolPackageDownloaderMock,
+                _toolManifestFinder,
+                _toolManifestEditor,
+                _localToolsResolverCache,
+                _reporter);
+
+            toolInstallLocalCommand.Execute().Should().Be(0);
         }
 
         [Fact]
         public void GivenNoManifestFileItShouldThrowAndContainNoManifestGuide()
         {
             _fileSystem.File.Delete(_manifestFilePath);
-            var toolInstallLocalCommand = GetDefaultTestToolInstallLocalCommand();
+            ParseResult parseResult =
+            Parser.Instance.Parse(
+               $"dotnet tool install {_packageIdA.ToString()} --create-manifest-if-needed false");
+
+            var toolInstallLocalCommand = new ToolInstallLocalCommand(
+                parseResult,
+                _packageIdA,
+                _toolPackageDownloaderMock,
+                _toolManifestFinder,
+                _toolManifestEditor,
+                _localToolsResolverCache,
+                _reporter);
 
             Action a = () => toolInstallLocalCommand.Execute();
             a.Should().Throw<GracefulException>()
@@ -408,6 +427,28 @@ public void GivenNoManifestFileAndCreateManifestIfNeededFlagItShouldCreateManife
             _fileSystem.File.Exists(Path.Combine(_temporaryDirectory, ".config", "dotnet-tools.json")).Should().BeTrue();
         }
 
+        [Fact]
+        public void GivenNoManifestFileItUsesCreateManifestIfNeededByDefault()
+        {
+            _fileSystem.File.Delete(_manifestFilePath);
+
+            ParseResult parseResult =
+                Parser.Instance.Parse(
+                    $"dotnet tool install {_packageIdA.ToString()}");
+
+            var installLocalCommand = new ToolInstallLocalCommand(
+                parseResult,
+                _packageIdA,
+                _toolPackageDownloaderMock,
+                _toolManifestFinder,
+                _toolManifestEditor,
+                _localToolsResolverCache,
+                _reporter);
+
+            installLocalCommand.Execute().Should().Be(0);
+            _fileSystem.File.Exists(Path.Combine(_temporaryDirectory, ".config", "dotnet-tools.json")).Should().BeTrue();
+        }
+
         [Fact]
         public void GivenNoManifestFileAndCreateManifestIfNeededFlagItShouldCreateManifestInSln()
         {
diff --git a/test/dotnet.Tests/CompletionTests/snapshots/bash/DotnetCliSnapshotTests.VerifyCompletions.verified.sh b/test/dotnet.Tests/CompletionTests/snapshots/bash/DotnetCliSnapshotTests.VerifyCompletions.verified.sh
index 6e76bbce5854..6a7eeb7f841d 100644
--- a/test/dotnet.Tests/CompletionTests/snapshots/bash/DotnetCliSnapshotTests.VerifyCompletions.verified.sh
+++ b/test/dotnet.Tests/CompletionTests/snapshots/bash/DotnetCliSnapshotTests.VerifyCompletions.verified.sh
@@ -1647,6 +1647,10 @@ _testhost_tool_install() {
             COMPREPLY=( $(compgen -W "d detailed diag diagnostic m minimal n normal q quiet" -- "$cur") )
             return
         ;;
+        --create-manifest-if-needed)
+            COMPREPLY=( $(compgen -W "False True" -- "$cur") )
+            return
+        ;;
     esac
     
     COMPREPLY=( $(compgen -W "$opts" -- "$cur") )
diff --git a/test/dotnet.Tests/CompletionTests/snapshots/nushell/DotnetCliSnapshotTests.VerifyCompletions.verified.nu b/test/dotnet.Tests/CompletionTests/snapshots/nushell/DotnetCliSnapshotTests.VerifyCompletions.verified.nu
index bd3568c9fe1e..4024e6b4d046 100644
--- a/test/dotnet.Tests/CompletionTests/snapshots/nushell/DotnetCliSnapshotTests.VerifyCompletions.verified.nu
+++ b/test/dotnet.Tests/CompletionTests/snapshots/nushell/DotnetCliSnapshotTests.VerifyCompletions.verified.nu
@@ -22,4 +22,4 @@ let-env config = {
             completer: $external_completer # add it here
         }
     }
-}
+}
\ No newline at end of file
diff --git a/test/dotnet.Tests/CompletionTests/snapshots/zsh/DotnetCliSnapshotTests.VerifyCompletions.verified.zsh b/test/dotnet.Tests/CompletionTests/snapshots/zsh/DotnetCliSnapshotTests.VerifyCompletions.verified.zsh
index 109551b4e1a4..d9b0a60082e8 100644
--- a/test/dotnet.Tests/CompletionTests/snapshots/zsh/DotnetCliSnapshotTests.VerifyCompletions.verified.zsh
+++ b/test/dotnet.Tests/CompletionTests/snapshots/zsh/DotnetCliSnapshotTests.VerifyCompletions.verified.zsh
@@ -1044,7 +1044,7 @@ _testhost() {
                                             '-v=[Set the MSBuild verbosity level. Allowed values are q\[uiet\], m\[inimal\], n\[ormal\], d\[etailed\], and diag\[nostic\].]:LEVEL:((d\:"d" detailed\:"detailed" diag\:"diag" diagnostic\:"diagnostic" m\:"m" minimal\:"minimal" n\:"n" normal\:"normal" q\:"q" quiet\:"quiet" ))' \
                                             '--arch=[The target architecture.]: : ' \
                                             '-a=[The target architecture.]: : ' \
-                                            '--create-manifest-if-needed[Create a tool manifest if one isn'\''t found during tool installation. For information on how manifests are located, see https\://aka.ms/dotnet/tools/create-manifest-if-needed]' \
+                                            '--create-manifest-if-needed=[Create a tool manifest if one isn'\''t found during tool installation. For information on how manifests are located, see https\://aka.ms/dotnet/tools/create-manifest-if-needed]: :((False\:"False" True\:"True" ))' \
                                             '--allow-downgrade[Allow package downgrade when installing a .NET tool package.]' \
                                             '--allow-roll-forward[Allow a .NET tool to roll forward to newer versions of the .NET runtime if the runtime it targets isn'\''t installed.]' \
                                             '--help[Show command line help.]' \