diff --git a/src/Framework/Traits.cs b/src/Framework/Traits.cs
index 84fde7c36b5..4dc17f9722d 100644
--- a/src/Framework/Traits.cs
+++ b/src/Framework/Traits.cs
@@ -402,6 +402,13 @@ public bool? LogPropertiesAndItemsAfterEvaluation
         /// </summary>
         public readonly bool UseSingleLoadContext = Environment.GetEnvironmentVariable("MSBUILDSINGLELOADCONTEXT") == "1";
 
+        /// <summary>
+        /// Use custom AssemblyLoadContext for loading dependencies found in the MSBuild tools directory.
+        /// When enabled, assemblies found in the MSBuild tools directory are loaded into the plugin's isolated context
+        /// instead of the shared default context, preventing potential version conflicts with the host application.
+        /// </summary>
+        public readonly bool UseCustomLoadContextForDependenciesInToolsDirectory = Environment.GetEnvironmentVariable("MSBUILDUSECUSTOMLOADCONTEXTFORDEPENDENCIESINTOOLSDIRECTORY") == "1";
+
         /// <summary>
         /// Enables the user of autorun functionality in CMD.exe on Windows which is disabled by default in MSBuild.
         /// </summary>
diff --git a/src/Shared/MSBuildLoadContext.cs b/src/Shared/MSBuildLoadContext.cs
index 3e797529682..db5417b9d78 100644
--- a/src/Shared/MSBuildLoadContext.cs
+++ b/src/Shared/MSBuildLoadContext.cs
@@ -94,13 +94,15 @@ public MSBuildLoadContext(string assemblyPath)
             // If the Assembly is provided via a file path, the following rules are used to load the assembly:
             // - the assembly from the user specified path is loaded, if it exists, into the custom ALC, or
             // - if the simple name of the assembly exists in the same folder as msbuild.exe, then that assembly gets loaded
-            //   into the default ALC (so it's shared with other uses).
+            //   into the default ALC (so it's shared with other uses), or into the custom ALC if the custom load context escape hatch
+            //   is enabled (to isolate MSBuild assemblies from the app's dependencies).
             var assemblyNameInExecutableDirectory = Path.Combine(BuildEnvironmentHelper.Instance.CurrentMSBuildToolsDirectory,
                 $"{assemblyName.Name}.dll");
 
             if (FileSystems.Default.FileExists(assemblyNameInExecutableDirectory))
             {
-                return AssemblyLoadContext.Default.LoadFromAssemblyPath(assemblyNameInExecutableDirectory);
+                AssemblyLoadContext targetAlc = Framework.Traits.Instance.EscapeHatches.UseCustomLoadContextForDependenciesInToolsDirectory ? this : AssemblyLoadContext.Default;
+                return targetAlc.LoadFromAssemblyPath(assemblyNameInExecutableDirectory);
             }
 
             return null;