@@ -5,6 +5,7 @@
 using System.Collections.Generic;
 using System.IO;
 using System.Management.Automation.Internal;
+using System.Security;
 using System.Text;
 using System.Threading;
 
@@ -411,6 +412,23 @@ private T ReadValueFromFile<T>(ConfigScope scope, string key, T defaultValue = d
 
                         configData = serializer.Deserialize<JObject>(jsonReader) ?? emptyConfig;
                     }
+                    catch (Exception exc) when (
+                        scope == ConfigScope.CurrentUser &&
+                        (exc is IOException || exc is UnauthorizedAccessException || exc is SecurityException || exc is JsonException))
+                    {
+                        // The per-user configuration file is unreadable (e.g. OneDrive cloud file provider
+                        // not running, permission denied, ACL denied, or corrupt/malformed JSON). Rather
+                        // than failing pwsh startup, fall back to defaults and emit a warning so the user
+                        // knows the file was skipped. See https://github.com/PowerShell/PowerShell/issues/27370.
+                        //
+                        // We intentionally do NOT apply this fallback to ConfigScope.AllUsers: that file is
+                        // admin-owned and on non-Windows platforms is the only source for security-relevant
+                        // policies (ScriptBlockLogging, Transcription, ConsoleSessionConfiguration, etc.).
+                        // If we cannot prove the admin's intent we must fail closed.
+                        TryWriteConfigWarning(StringUtil.Format(PSConfigurationStrings.CanNotReadConfigurationFile, fileName, exc.Message));
+
+                        configData = emptyConfig;
+                    }
                     catch (Exception exc)
                     {
                         throw PSTraceSource.NewInvalidOperationException(exc, PSConfigurationStrings.CanNotConfigurationFile, args: fileName);
@@ -435,12 +453,47 @@ private T ReadValueFromFile<T>(ConfigScope scope, string key, T defaultValue = d
 
             if (configData != emptyConfig && configData.TryGetValue(key, StringComparison.OrdinalIgnoreCase, out JToken jToken))
             {
-                return jToken.ToObject<T>(serializer) ?? defaultValue;
+                try
+                {
+                    return jToken.ToObject<T>(serializer) ?? defaultValue;
+                }
+                catch (JsonException exc) when (scope == ConfigScope.CurrentUser)
+                {
+                    // The per-user JSON parsed successfully, but the value at <key> can't be
+                    // materialized as T (wrong type, malformed sub-document, etc.). Fall back
+                    // to the caller's default for this setting and emit a warning, mirroring
+                    // the file-level fallback above. AllUsers stays fail-closed for
+                    // security-relevant policies.
+                    // See https://github.com/PowerShell/PowerShell/issues/27370.
+                    TryWriteConfigWarning(StringUtil.Format(PSConfigurationStrings.CanNotReadConfigurationValue, key, fileName, exc.Message));
+                    return defaultValue;
+                }
             }
 
             return defaultValue;
         }
 
+        /// <summary>
+        /// Best-effort emission of a warning when the per-user configuration file (or one of its
+        /// values) can't be read. <see cref="ReadValueFromFile"/> is invoked very early in pwsh
+        /// startup -- before any host, runspace, or PowerShell warning stream exists -- so we
+        /// write directly to <see cref="Console.Error"/>. This matches existing startup-time
+        /// stderr writes in ConsoleHost (e.g. CannotLoadPSReadline). Centralizing this here
+        /// keeps formatting consistent and gives future hosts a single seam to swap the channel.
+        /// Failures inside the writer itself are swallowed so logging issues never block startup.
+        /// </summary>
+        private static void TryWriteConfigWarning(string message)
+        {
+            try
+            {
+                Console.Error.WriteLine("WARNING: " + message);
+            }
+            catch
+            {
+                // Best-effort warning; never let logging failures block startup.
+            }
+        }
+
         private static FileStream OpenFileStreamWithRetry(string fullPath, FileMode mode, FileAccess access, FileShare share)
         {
             const int MaxTries = 5;
 
@@ -120,4 +120,10 @@
   <data name="CanNotConfigurationFile" xml:space="preserve">
     <value>PowerShell has stopped working because of a security issue: Cannot read the configuration file: {0}</value>
   </data>
+  <data name="CanNotReadConfigurationFile" xml:space="preserve">
+    <value>Cannot read the PowerShell configuration file '{0}': {1}. Falling back to default settings.</value>
+  </data>
+  <data name="CanNotReadConfigurationValue" xml:space="preserve">
+    <value>Cannot read setting '{0}' from PowerShell configuration file '{1}': {2}. Falling back to default for this setting.</value>
+  </data>
 </root>
@@ -382,6 +382,28 @@ public void SetupConfigFile5()
             CreateBrokenConfigFile(currentUserConfigFile);
         }
 
+        public void SetupBrokenCurrentUserConfigOnly()
+        {
+            CleanupConfigFiles();
+
+            // Only the per-user config file is broken; the system-wide file is absent.
+            // Used to verify the #27370 fail-open path for ConfigScope.CurrentUser.
+            CreateBrokenConfigFile(currentUserConfigFile);
+        }
+
+        public void SetupTypeMismatchedCurrentUserConfig()
+        {
+            CleanupConfigFiles();
+
+            // Per-user config is syntactically valid JSON, but PowerShellPolicies has the
+            // wrong nested shape: ScriptExecution should be an object but is a string.
+            // This triggers JsonSerializationException inside jToken.ToObject<T>() and
+            // exercises the per-key fail-open path for #27370.
+            File.WriteAllText(
+                currentUserConfigFile,
+                "{ \"PowerShellPolicies\": { \"ScriptExecution\": \"not-an-object\" } }");
+        }
+
         private static void CreateBrokenConfigFile(string fileName)
         {
             File.WriteAllText(fileName, "[abbra");
@@ -978,14 +1000,105 @@ public void Utils_GetPolicySetting_BothConfigFilesNotExist()
             fixture.CompareConsoleSessionConfiguration(consoleSessionConfiguration, null);
         }
 
-        [Fact, Priority(11)]
-        public void PowerShellConfig_GetPowerShellPolicies_BrokenSystemConfig()
+        [Fact]
+        [Priority(11)]
+        public void PowerShellConfig_BrokenSystemConfig_Throws_BrokenCurrentUserConfig_FallsBack()
         {
             fixture.SetupConfigFile5();
             fixture.ForceReadingFromFile();
 
+            // Broken system-wide config still hard-fails (admin-owned, security-relevant).
             Assert.Throws<System.Management.Automation.PSInvalidOperationException>(() => PowerShellConfig.Instance.GetPowerShellPolicies(ConfigScope.AllUsers));
-            Assert.Throws<System.Management.Automation.PSInvalidOperationException>(() => PowerShellConfig.Instance.GetPowerShellPolicies(ConfigScope.CurrentUser));
+
+            // Broken per-user config falls back to defaults (#27370).
+            PowerShellPolicies currentUserPolicies = PowerShellConfig.Instance.GetPowerShellPolicies(ConfigScope.CurrentUser);
+            Assert.Null(currentUserPolicies);
+        }
+
+        [Fact]
+        [Priority(12)]
+        public void PowerShellConfig_BrokenCurrentUserConfig_FallsBackToDefaults()
+        {
+            fixture.SetupBrokenCurrentUserConfigOnly();
+            fixture.ForceReadingFromFile();
+
+            // ExecutionPolicy returns null (caller falls back to GP / registry / Restricted).
+            string execPolicy = PowerShellConfig.Instance.GetExecutionPolicy(ConfigScope.CurrentUser, "Microsoft.PowerShell");
+            Assert.Null(execPolicy);
+
+            // Module path returns null (caller uses built-in defaults).
+            string modulePath = PowerShellConfig.Instance.GetModulePath(ConfigScope.CurrentUser);
+            Assert.Null(modulePath);
+
+            // Experimental features list is empty.
+            string[] features = PowerShellConfig.Instance.GetExperimentalFeatures();
+            Assert.Empty(features);
+        }
+
+        [Fact]
+        [Priority(13)]
+        public void PowerShellConfig_TypeMismatchInCurrentUserConfig_FallsBackToDefaults()
+        {
+            // Verifies the per-key fail-open path: the file parses as JSON, but a value
+            // can't be materialized as its target type. Without this fallback the
+            // JsonSerializationException would propagate out of GetPolicySetting and
+            // crash startup just like #27370.
+            fixture.SetupTypeMismatchedCurrentUserConfig();
+            fixture.ForceReadingFromFile();
+
+            PowerShellPolicies policies = PowerShellConfig.Instance.GetPowerShellPolicies(ConfigScope.CurrentUser);
+            Assert.Null(policies);
+        }
+
+        [Fact]
+        [Priority(14)]
+        public void PowerShellConfig_BrokenCurrentUserConfig_EmitsWarningToStderr()
+        {
+            // A regression in the warning path would still let startup succeed (this is the
+            // whole point of the fail-open) -- but the user would silently lose their config
+            // with no indication. This test pins the user-visible warning so that doesn't
+            // happen quietly.
+            fixture.SetupBrokenCurrentUserConfigOnly();
+            fixture.ForceReadingFromFile();
+
+            string stderr = CaptureStderr(() =>
+                PowerShellConfig.Instance.GetExecutionPolicy(ConfigScope.CurrentUser, "Microsoft.PowerShell"));
+
+            Assert.Contains("WARNING:", stderr);
+            Assert.Contains("Falling back to default settings", stderr);
+        }
+
+        [Fact]
+        [Priority(15)]
+        public void PowerShellConfig_TypeMismatchInCurrentUserConfig_EmitsWarningToStderr()
+        {
+            // Pin the user-visible warning for the per-key fail-open path as well.
+            fixture.SetupTypeMismatchedCurrentUserConfig();
+            fixture.ForceReadingFromFile();
+
+            string stderr = CaptureStderr(() =>
+                PowerShellConfig.Instance.GetPowerShellPolicies(ConfigScope.CurrentUser));
+
+            Assert.Contains("WARNING:", stderr);
+            Assert.Contains("PowerShellPolicies", stderr);
+            Assert.Contains("Falling back to default for this setting", stderr);
+        }
+
+        private static string CaptureStderr(Action action)
+        {
+            var captured = new StringWriter();
+            TextWriter originalError = Console.Error;
+            try
+            {
+                Console.SetError(captured);
+                action();
+            }
+            finally
+            {
+                Console.SetError(originalError);
+            }
+
+            return captured.ToString();
         }
     }
 }