diff --git a/.changeset/remove-allowUnknownExtensionConfig-app-api.md b/.changeset/remove-allowUnknownExtensionConfig-app-api.md
new file mode 100644
index 0000000000..a105eece46
--- /dev/null
+++ b/.changeset/remove-allowUnknownExtensionConfig-app-api.md
@@ -0,0 +1,5 @@
+---
+'@backstage/frontend-app-api': minor
+---
+
+**BREAKING**: Removed the `allowUnknownExtensionConfig` option from `createSpecializedApp`. Unknown extension configuration is now always reported as an `INVALID_EXTENSION_CONFIG_KEY` error in the returned `errors` array instead.
diff --git a/.changeset/remove-allowUnknownExtensionConfig-defaults.md b/.changeset/remove-allowUnknownExtensionConfig-defaults.md
new file mode 100644
index 0000000000..c76b955828
--- /dev/null
+++ b/.changeset/remove-allowUnknownExtensionConfig-defaults.md
@@ -0,0 +1,5 @@
+---
+'@backstage/frontend-defaults': minor
+---
+
+**BREAKING**: Removed the `allowUnknownExtensionConfig` option from `createApp`. Unknown extension configuration now always produces a console warning instead.
diff --git a/packages/frontend-app-api/report.api.md b/packages/frontend-app-api/report.api.md
index e8fc019007..47677b8916 100644
--- a/packages/frontend-app-api/report.api.md
+++ b/packages/frontend-app-api/report.api.md
@@ -169,7 +169,6 @@ export type CreateSpecializedAppOptions = {
   bindRoutes?(context: { bind: CreateAppRouteBinder }): void;
   advanced?: {
     apis?: ApiHolder;
-    allowUnknownExtensionConfig?: boolean;
     extensionFactoryMiddleware?:
       | ExtensionFactoryMiddleware
       | ExtensionFactoryMiddleware[];
diff --git a/packages/frontend-app-api/src/wiring/createSpecializedApp.tsx b/packages/frontend-app-api/src/wiring/createSpecializedApp.tsx
index d56a609bb9..a5195d853c 100644
--- a/packages/frontend-app-api/src/wiring/createSpecializedApp.tsx
+++ b/packages/frontend-app-api/src/wiring/createSpecializedApp.tsx
@@ -255,17 +255,6 @@ export type CreateSpecializedAppOptions = {
      */
     apis?: ApiHolder;
 
-    /**
-     * If set to true, the system will silently accept and move on if
-     * encountering config for extensions that do not exist. The default is to
-     * reject such config to help catch simple mistakes.
-     *
-     * This flag can be useful in some scenarios where you have a dynamic set of
-     * extensions enabled at different times, but also increases the risk of
-     * accidentally missing e.g. simple typos in your config.
-     */
-    allowUnknownExtensionConfig?: boolean;
-
     /**
      * Applies one or more middleware on every extension, as they are added to
      * the application.
diff --git a/packages/frontend-defaults/report.api.md b/packages/frontend-defaults/report.api.md
index 75392d2dc1..6457ddb7f7 100644
--- a/packages/frontend-defaults/report.api.md
+++ b/packages/frontend-defaults/report.api.md
@@ -23,7 +23,6 @@ export function createApp(options?: CreateAppOptions): {
 // @public
 export interface CreateAppOptions {
   advanced?: {
-    allowUnknownExtensionConfig?: boolean;
     configLoader?: () => Promise<{
       config: ConfigApi;
     }>;
diff --git a/packages/frontend-defaults/src/createApp.test.tsx b/packages/frontend-defaults/src/createApp.test.tsx
index 55ca0b3772..1d1c5ebf53 100644
--- a/packages/frontend-defaults/src/createApp.test.tsx
+++ b/packages/frontend-defaults/src/createApp.test.tsx
@@ -283,7 +283,9 @@ describe('createApp', () => {
     ).resolves.toBeInTheDocument();
   });
 
-  it('should allow unknown extension config if the flag is set', async () => {
+  it('should warn about unknown extension config', async () => {
+    const warnSpy = jest.spyOn(console, 'warn').mockImplementation(() => {});
+
     const app = createApp({
       features: [
         appPlugin,
@@ -300,7 +302,6 @@ describe('createApp', () => {
         }),
       ],
       advanced: {
-        allowUnknownExtensionConfig: true,
         configLoader: async () => ({
           config: mockApis.config({
             data: {
@@ -316,6 +317,12 @@ describe('createApp', () => {
     await renderWithEffects(app.createRoot());
 
     await expect(screen.findByText('Derp')).resolves.toBeInTheDocument();
+    expect(warnSpy).toHaveBeenCalledWith('App startup encountered warnings:');
+    expect(warnSpy).toHaveBeenCalledWith(
+      'INVALID_EXTENSION_CONFIG_KEY: Extension unknown:lols/wut does not exist',
+    );
+
+    warnSpy.mockRestore();
   });
   it('should make the app structure available through the AppTreeApi', async () => {
     let appTreeApi: AppTreeApi | undefined = undefined;
diff --git a/packages/frontend-defaults/src/createApp.tsx b/packages/frontend-defaults/src/createApp.tsx
index 4ff67f6d5a..fe96b50e31 100644
--- a/packages/frontend-defaults/src/createApp.tsx
+++ b/packages/frontend-defaults/src/createApp.tsx
@@ -58,17 +58,6 @@ export interface CreateAppOptions {
    * Advanced, more rarely used options.
    */
   advanced?: {
-    /**
-     * If set to true, the system will silently accept and move on if
-     * encountering config for extensions that do not exist. The default is to
-     * reject such config to help catch simple mistakes.
-     *
-     * This flag can be useful in some scenarios where you have a dynamic set of
-     * extensions enabled at different times, but also increases the risk of
-     * accidentally missing e.g. simple typos in your config.
-     */
-    allowUnknownExtensionConfig?: boolean;
-
     /**
      * Sets a custom config loader, replacing the builtin one.
      *