diff --git a/sdk/ml/azure-ai-ml/CHANGELOG.md b/sdk/ml/azure-ai-ml/CHANGELOG.md
index f8107b2bbb28..469dd1d4e147 100644
--- a/sdk/ml/azure-ai-ml/CHANGELOG.md
+++ b/sdk/ml/azure-ai-ml/CHANGELOG.md
@@ -6,6 +6,7 @@
 - Added Spark runtime 3.5 support for model monitoring serverless Spark compute while retaining runtime 3.4 support.
 
 ### Bugs Fixed
+- Fixed directory uploads not propagating errors when progress reporting is disabled.
 - Fixed artifact cache path validation, wildcard version handling across supported Python versions, and concurrent downloads for component `additional_includes`.
 - Fixed artifact cache reads failing on transient Windows checksum-sharing errors during initial validation.
 - Improved the missing Azure CLI error reported when initializing the artifact cache.
diff --git a/sdk/ml/azure-ai-ml/azure/ai/ml/_utils/_asset_utils.py b/sdk/ml/azure-ai-ml/azure/ai/ml/_utils/_asset_utils.py
index 56595ba30eda..82e7d30d8801 100644
--- a/sdk/ml/azure-ai-ml/azure/ai/ml/_utils/_asset_utils.py
+++ b/sdk/ml/azure-ai-ml/azure/ai/ml/_utils/_asset_utils.py
@@ -720,6 +720,9 @@ def upload_directory(
                     future.result()  # access result to propagate any exceptions
                     file_path_name = futures_dict[future][0]
                     pbar.update(size_dict.get(file_path_name) or 0)
+        else:
+            for future in as_completed(futures_dict):
+                future.result()
 
 
 @retry(
diff --git a/sdk/ml/azure-ai-ml/tests/internal_utils/unittests/test_asset_utils.py b/sdk/ml/azure-ai-ml/tests/internal_utils/unittests/test_asset_utils.py
index 1146aa49cea9..091977752a7c 100644
--- a/sdk/ml/azure-ai-ml/tests/internal_utils/unittests/test_asset_utils.py
+++ b/sdk/ml/azure-ai-ml/tests/internal_utils/unittests/test_asset_utils.py
@@ -5,6 +5,7 @@
 import tempfile
 from pathlib import Path
 from typing import Callable, List, Tuple
+from unittest.mock import patch
 
 import pytest
 
@@ -19,6 +20,7 @@
     get_ignore_file,
     get_object_hash,
     get_upload_files_from_folder,
+    upload_directory,
 )
 from azure.ai.ml._utils.utils import convert_windows_path_to_unix
 from azure.ai.ml.constants._common import AutoDeleteCondition
@@ -174,6 +176,19 @@ def basic_file(cls) -> "SymbolLinkTestCase":
 @pytest.mark.unittest
 @pytest.mark.core_sdk_test
 class TestAssetUtils:
+    def test_upload_directory_propagates_errors_without_progress(self, tmp_path: Path) -> None:
+        class BlobStorageClient:
+            def check_blob_exists(self):
+                pass
+
+        source = tmp_path / "source"
+        source.mkdir()
+        (source / "file.txt").write_text("content")
+
+        with patch("azure.ai.ml._utils._asset_utils.upload_file", side_effect=RuntimeError("upload failed")):
+            with pytest.raises(RuntimeError, match="upload failed"):
+                upload_directory(BlobStorageClient(), source, "destination", "Uploading", False, IgnoreFile(None))
+
     def test_amlignore_precedence(
         self, storage_test_directory: str, gitignore_file_directory: str, no_ignore_file_directory: str
     ) -> None: