Upgrade sql 22 to 25 ends with error Azure extension for SQL Server Failed

Question

I have just upgraded my sql 2022 to 2025, everything went OK except at the end, I got an error as follows

Feature: Azure extension for SQL Server Status: Failed Reason for failure: An error occurred during the setup process of the feature. Next Step: Use the following information to resolve the error. Next, uninstall the unconfigured instance or shared features. And then, try to upgrade the instance or shared features by running SQL Server Setup again. Component name: Azure Arc onboard Component error code: 0x80131500 Error description: One or more errors occurred. Error help link: https://go.microsoft.com/fwlink?LinkId=20476&ProdName=Microsoft+SQL+Server&EvtSrc=setup.rll&EvtID=50000&ProdVer=17.0.1000.7&EvtType=0x971D31FE%400xCA09344E&EvtType=0x971D31FE%400xCA09344E

So not sure why it is looking for ARC? For the time being I havn't configured ARC in my Azure subscription. So does this mean that cant get Azure Extensions?

Answer 1

You don't need to configure Arc as such in your Azure subscription to use it.

I have not tried this particular upgrade path, so I cannot say exactly what is going on. Normally, when I have Arc-enabled SQL Server, I have first Arc-enabled the machine on Windows level, and then the Arc extension discovers SQL Server. Since I only Arc-enable machines very occasionally, I don't recall all the steps, but I have to google around. This page can be a good starting point: https://learn.microsoft.com/en-us/azure/azure-arc/servers/overview

Generally, if you want to use Azure Arc, it is better to have a server-operating system, as it is intended for machines that are mainly online.

Answer 2

The Azure extension for SQL Server is optional and independent of Azure Arc configuration. The failure during the SQL Server 2025 upgrade only indicates that the Azure extension component (“Azure Arc onboard”) could not be installed or upgraded; it does not prevent using SQL Server 2025 itself.

Key points:

1. Why “Azure Arc onboard” appears
   • The Azure extension for SQL Server is the component that enables “SQL Server enabled by Azure Arc” capabilities (inventory, governance, billing, etc.).
   • Setup tries to install/upgrade this extension so the instance can be Arc‑enabled later, even if the server is not currently connected to Azure Arc.
   • The reference to “Azure Arc onboard” does not mean the machine is already Arc‑enabled; it is just the name of the extension component.
2. Azure Arc vs. Azure extension
   • Azure Arc–enabling a server is a separate step that connects the machine to Azure.
   • The Azure extension for SQL Server can be installed either:
     • By connecting the server to Azure Arc, or
     • From the SQL Server command line setup.
   • Not having Azure Arc configured in the subscription does not mean the Azure extension can never be used; it only means Arc features will not function until the server is onboarded.
3. What the error means for the current installation
   • SQL Server 2025 engine upgrade completed; only the Azure extension feature failed.
   • You can run SQL Server normally without the Azure extension.
   • If desired, the Azure extension can be installed or repaired later, independently of the SQL Server engine.
4. How to remediate if Azure extension is needed
   • First confirm the SQL Server engine is healthy and running.
   • If the extension is needed:
     1. Use the Azure portal or CLI to verify whether the machine is (or will be) Arc‑enabled.
     2. Install or repair the Azure extension for SQL Server using one of the supported methods:
        • Connect the server to Azure Arc (auto‑onboarding installs the extension by default).
        • Install from the SQL Server command line as described in “Install Azure extension for SQL Server from the command line”.
     3. If the extension still fails or appears unhealthy, use the Azure portal health dashboard or Azure Resource Graph to inspect FailureReasons, RecommendedAction, and LastExtensionStatusMessage, then follow the recommended troubleshooting steps.
5. If the extension remains failed/unhealthy
   • Use the built‑in extension health dashboard in the Azure portal to identify the extension state and recommended actions.
   • If provisioning repeatedly fails, uninstall the extension and reinstall it via portal/CLI, and if needed, check deployer/extension logs as described in the troubleshooting guidance.

In summary, the error does not block SQL Server 2025 usage and does not mean Azure extensions can never be used. It only means the Azure extension component did not complete successfully during this upgrade; it can be installed or fixed later when Azure Arc/extension functionality is actually required.

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References:

• Troubleshoot Azure extension for SQL Server
• Prerequisites - SQL Server enabled by Azure Arc
• SQL Server enabled by Azure Arc