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If you don't have the Users can create fabric items tenant setting enabled, you can't create an SQL database. It doesn't matter if you enable the Users can create fabric items setting under the Delegate tenant settings tab in Capacity Settings or not.
Status: Fixed: May 19, 2025
Product Experience: Databases
Symptoms
When you try to create an SQL database, you receive an error. The error message is similar to: Fabric tenant setting is not enabled. Visit aka.ms/fabricswitch to learn more.
Solutions and workarounds
To work around the issue, enable the Users can create Fabric items setting at the tenant level. Alternatively, you can use the SQL database public API to create the database instead of using the service.