diff --git a/packages/@aws-cdk-testing/cli-integ/resources/cdk-apps/diff-no-fallback-app/app.js b/packages/@aws-cdk-testing/cli-integ/resources/cdk-apps/diff-no-fallback-app/app.js
new file mode 100644
index 0000000000000..599be28a88b20
--- /dev/null
+++ b/packages/@aws-cdk-testing/cli-integ/resources/cdk-apps/diff-no-fallback-app/app.js
@@ -0,0 +1,38 @@
+const cdk = require('aws-cdk-lib');
+const sns = require('aws-cdk-lib/aws-sns');
+/**
+ * This stack will be deployed in multiple phases, to achieve a very specific effect
+ *
+ * - Deploy Phase: a stack is deployed with an output set to a static string
+ * - Diff Phase: a reference to a non-existing macro is used for the output value
+ *
+ * To exercise this app:
+ *
+ * ```
+ * npx cdk deploy
+ * env DIFF_PHASE=on npx cdk diff --no-fallback
+ * # This will surface an error to the user about the missing macro
+ * ```
+ */
+class DiffNoFallbackTestStack extends cdk.Stack {
+  constructor(scope, id, props) {
+    super(scope, id, props);
+
+    // Have at least one resource so that we can deploy this
+    new sns.Topic(this, 'topic', {
+      removalPolicy: cdk.RemovalPolicy.DESTROY,
+    });
+
+    const outputValue = process.env.DIFF_PHASE ? cdk.Fn.transform('NonExisting', { Param: 'Value' }) : 'static-string'
+   
+    new cdk.CfnOutput(this, 'MyOutput', {
+      value: outputValue
+    })
+  }
+}
+const stackPrefix = process.env.STACK_NAME_PREFIX;
+const app = new cdk.App();
+
+new DiffNoFallbackTestStack(app, `${stackPrefix}-test-diff-no-fallback`);
+
+app.synth();
diff --git a/packages/@aws-cdk-testing/cli-integ/resources/cdk-apps/diff-no-fallback-app/cdk.json b/packages/@aws-cdk-testing/cli-integ/resources/cdk-apps/diff-no-fallback-app/cdk.json
new file mode 100644
index 0000000000000..f0075b1c9e33b
--- /dev/null
+++ b/packages/@aws-cdk-testing/cli-integ/resources/cdk-apps/diff-no-fallback-app/cdk.json
@@ -0,0 +1,4 @@
+{
+  "app": "node app.js",
+  "versionReporting": false
+}
diff --git a/packages/@aws-cdk-testing/cli-integ/tests/cli-integ-tests/cli.integtest.ts b/packages/@aws-cdk-testing/cli-integ/tests/cli-integ-tests/cli.integtest.ts
index f4736584a065f..8e99f59080269 100644
--- a/packages/@aws-cdk-testing/cli-integ/tests/cli-integ-tests/cli.integtest.ts
+++ b/packages/@aws-cdk-testing/cli-integ/tests/cli-integ-tests/cli.integtest.ts
@@ -2931,3 +2931,40 @@ function actions(requests: CompletedRequest[]): string[] {
     .map(x => x.Action as string)
     .filter(action => action != null))];
 }
+
+integTest(
+  'cdk diff noFallback',
+  withSpecificFixture('diff-no-fallback-app', async (fixture) => {
+    // Should succeed
+    await fixture.cdkDeploy('test-diff-no-fallback', {
+      verbose: false,
+    });
+    try {
+      // Should surface the missing transform error from cloudformation in the output
+      const diffOutput = await fixture.cdk(['diff', '--no-fallback', fixture.fullStackName('test-diff-no-fallback')], {
+        modEnv: { DIFF_PHASE: 'on' },
+        allowErrExit: true,
+        captureStderr: true,
+      });
+      expect(diffOutput).toContain('No transform named');
+
+      // Should throw
+      await expect(fixture.cdk(['diff', '--no-fallback', fixture.fullStackName('test-diff-no-fallback')], {
+        modEnv: { DIFF_PHASE: 'on' },
+        captureStderr: true,
+      })).rejects.toThrow();
+
+      // Should fallback to template-only diff as normal
+      const diffOutputWithFallback = await fixture.cdk(['diff', fixture.fullStackName('test-diff-no-fallback')], {
+        modEnv: { DIFF_PHASE: 'on' },
+        captureStderr: true,
+        allowErrExit: true,
+      });
+
+      expect(diffOutputWithFallback).toContain('will base the diff on template differences');
+
+    } finally {
+      await fixture.cdkDestroy('test-diff-no-fallback', { verbose: false });
+    }
+  }),
+);