diff --git a/src/Aspire.Cli/Commands/UpdateCommand.cs b/src/Aspire.Cli/Commands/UpdateCommand.cs
index f3272a04476..b9ce09b319b 100644
--- a/src/Aspire.Cli/Commands/UpdateCommand.cs
+++ b/src/Aspire.Cli/Commands/UpdateCommand.cs
@@ -24,6 +24,7 @@ internal sealed class UpdateCommand : BaseCommand
     private readonly IProjectUpdater _projectUpdater;
     private readonly ILogger<UpdateCommand> _logger;
     private readonly ICliDownloader? _cliDownloader;
+    private readonly ICliUpdateNotifier _updateNotifier;
 
     public UpdateCommand(
         IProjectLocator projectLocator, 
@@ -41,12 +42,14 @@ public UpdateCommand(
         ArgumentNullException.ThrowIfNull(packagingService);
         ArgumentNullException.ThrowIfNull(projectUpdater);
         ArgumentNullException.ThrowIfNull(logger);
+        ArgumentNullException.ThrowIfNull(updateNotifier);
 
         _projectLocator = projectLocator;
         _packagingService = packagingService;
         _projectUpdater = projectUpdater;
         _logger = logger;
         _cliDownloader = cliDownloader;
+        _updateNotifier = updateNotifier;
 
         var projectOption = new Option<FileInfo?>("--project");
         projectOption.Description = UpdateCommandStrings.ProjectArgumentDescription;
@@ -116,6 +119,21 @@ protected override async Task<int> ExecuteAsync(ParseResult parseResult, Cancell
                 cancellationToken);
 
             await _projectUpdater.UpdateProjectAsync(projectFile!, channel, cancellationToken);
+            
+            // After successful project update, check if CLI update is available and prompt
+            if (_cliDownloader is not null && _updateNotifier.IsUpdateAvailable())
+            {
+                var shouldUpdateCli = await InteractionService.ConfirmAsync(
+                    UpdateCommandStrings.UpdateCliAfterProjectUpdatePrompt,
+                    defaultValue: true,
+                    cancellationToken);
+                
+                if (shouldUpdateCli)
+                {
+                    // Use the same channel that was selected for the project update
+                    return await ExecuteSelfUpdateAsync(parseResult, cancellationToken, channel.Name);
+                }
+            }
         }
         catch (ProjectUpdaterException ex)
         {
@@ -125,15 +143,33 @@ protected override async Task<int> ExecuteAsync(ParseResult parseResult, Cancell
         }
         catch (ProjectLocatorException ex)
         {
+            // Check if this is a "no project found" error and prompt for self-update
+            if (string.Equals(ex.Message, ErrorStrings.NoProjectFileFound, StringComparisons.CliInputOrOutput))
+            {
+                // Only prompt for self-update if not running as dotnet tool and downloader is available
+                if (_cliDownloader is not null)
+                {
+                    var shouldUpdateCli = await InteractionService.ConfirmAsync(
+                        UpdateCommandStrings.NoAppHostFoundUpdateCliPrompt,
+                        defaultValue: true,
+                        cancellationToken);
+                    
+                    if (shouldUpdateCli)
+                    {
+                        return await ExecuteSelfUpdateAsync(parseResult, cancellationToken);
+                    }
+                }
+            }
+            
             return HandleProjectLocatorException(ex, InteractionService);
         }
 
         return 0;
     }
 
-    private async Task<int> ExecuteSelfUpdateAsync(ParseResult parseResult, CancellationToken cancellationToken)
+    private async Task<int> ExecuteSelfUpdateAsync(ParseResult parseResult, CancellationToken cancellationToken, string? selectedQuality = null)
     {
-        var quality = parseResult.GetValue<string?>("--quality");
+        var quality = selectedQuality ?? parseResult.GetValue<string?>("--quality");
 
         // If quality is not specified, prompt the user
         if (string.IsNullOrEmpty(quality))
diff --git a/src/Aspire.Cli/Interaction/ConsoleInteractionService.cs b/src/Aspire.Cli/Interaction/ConsoleInteractionService.cs
index 01f65a6b816..0ef62dfb683 100644
--- a/src/Aspire.Cli/Interaction/ConsoleInteractionService.cs
+++ b/src/Aspire.Cli/Interaction/ConsoleInteractionService.cs
@@ -243,10 +243,16 @@ public void DisplayEmptyLine()
 
     private const string UpdateUrl = "https://aka.ms/aspire/update";
 
-    public void DisplayVersionUpdateNotification(string newerVersion)
+    public void DisplayVersionUpdateNotification(string newerVersion, string? updateCommand = null)
     {
         _ansiConsole.WriteLine();
         _ansiConsole.MarkupLine(string.Format(CultureInfo.CurrentCulture, InteractionServiceStrings.NewCliVersionAvailable, newerVersion));
+        
+        if (!string.IsNullOrEmpty(updateCommand))
+        {
+            _ansiConsole.MarkupLine(string.Format(CultureInfo.CurrentCulture, InteractionServiceStrings.ToUpdateRunCommand, updateCommand));
+        }
+        
         _ansiConsole.MarkupLine(string.Format(CultureInfo.CurrentCulture, InteractionServiceStrings.MoreInfoNewCliVersion, UpdateUrl));
     }
 }
diff --git a/src/Aspire.Cli/Interaction/ExtensionInteractionService.cs b/src/Aspire.Cli/Interaction/ExtensionInteractionService.cs
index b782cf45c62..b253c7d5a00 100644
--- a/src/Aspire.Cli/Interaction/ExtensionInteractionService.cs
+++ b/src/Aspire.Cli/Interaction/ExtensionInteractionService.cs
@@ -308,9 +308,9 @@ public void DisplayMarkdown(string markdown)
         _consoleInteractionService.DisplayMarkdown(markdown);
     }
 
-    public void DisplayVersionUpdateNotification(string newerVersion)
+    public void DisplayVersionUpdateNotification(string newerVersion, string? updateCommand = null)
     {
-        _consoleInteractionService.DisplayVersionUpdateNotification(newerVersion);
+        _consoleInteractionService.DisplayVersionUpdateNotification(newerVersion, updateCommand);
     }
 
     public void LogMessage(LogLevel logLevel, string message)
diff --git a/src/Aspire.Cli/Interaction/IInteractionService.cs b/src/Aspire.Cli/Interaction/IInteractionService.cs
index 0dadd0775a7..50e5dfdaff9 100644
--- a/src/Aspire.Cli/Interaction/IInteractionService.cs
+++ b/src/Aspire.Cli/Interaction/IInteractionService.cs
@@ -25,6 +25,6 @@ internal interface IInteractionService
     void DisplayCancellationMessage();
     void DisplayEmptyLine();
 
-    void DisplayVersionUpdateNotification(string newerVersion);
+    void DisplayVersionUpdateNotification(string newerVersion, string? updateCommand = null);
     void WriteConsoleLog(string message, int? lineNumber = null, string? type = null, bool isErrorMessage = false);
 }
diff --git a/src/Aspire.Cli/Resources/InteractionServiceStrings.Designer.cs b/src/Aspire.Cli/Resources/InteractionServiceStrings.Designer.cs
index 600c46cfad0..bb4474823b3 100644
--- a/src/Aspire.Cli/Resources/InteractionServiceStrings.Designer.cs
+++ b/src/Aspire.Cli/Resources/InteractionServiceStrings.Designer.cs
@@ -338,5 +338,14 @@ public static string WaitingForDebuggerToAttachToAppHost {
                 return ResourceManager.GetString("WaitingForDebuggerToAttachToAppHost", resourceCulture);
             }
         }
+        
+        /// <summary>
+        ///   Looks up a localized string similar to [dim]To update, run: {0}[/].
+        /// </summary>
+        public static string ToUpdateRunCommand {
+            get {
+                return ResourceManager.GetString("ToUpdateRunCommand", resourceCulture);
+            }
+        }
     }
 }
diff --git a/src/Aspire.Cli/Resources/InteractionServiceStrings.resx b/src/Aspire.Cli/Resources/InteractionServiceStrings.resx
index c1409e5776d..c718ff5ca29 100644
--- a/src/Aspire.Cli/Resources/InteractionServiceStrings.resx
+++ b/src/Aspire.Cli/Resources/InteractionServiceStrings.resx
@@ -208,6 +208,10 @@
     <value>[dim]For more information, see: [link]{0}[/][/]</value>
     <comment>Do not translate [dim] and [link]. Also leave [/] as-is. {0} is a URL</comment>
   </data>
+  <data name="ToUpdateRunCommand" xml:space="preserve">
+    <value>[dim]To update, run: {0}[/]</value>
+    <comment>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</comment>
+  </data>
   <data name="UnbuildableAppHostsDetected" xml:space="preserve">
     <value>No app hosts were found (there may be app hosts project files with syntax errors/invalid SDK versions).</value>
   </data>
diff --git a/src/Aspire.Cli/Resources/UpdateCommandStrings.Designer.cs b/src/Aspire.Cli/Resources/UpdateCommandStrings.Designer.cs
index e18496b9838..823b05bf397 100644
--- a/src/Aspire.Cli/Resources/UpdateCommandStrings.Designer.cs
+++ b/src/Aspire.Cli/Resources/UpdateCommandStrings.Designer.cs
@@ -99,5 +99,7 @@ internal static string ProjectArgumentDescription {
     internal static string MappingRemovedFormat => ResourceManager.GetString("MappingRemovedFormat", resourceCulture);
     internal static string MappingRetainedFormat => ResourceManager.GetString("MappingRetainedFormat", resourceCulture);
     internal static string FallbackParsingWarning => ResourceManager.GetString("FallbackParsingWarning", resourceCulture);
+    internal static string NoAppHostFoundUpdateCliPrompt => ResourceManager.GetString("NoAppHostFoundUpdateCliPrompt", resourceCulture);
+    internal static string UpdateCliAfterProjectUpdatePrompt => ResourceManager.GetString("UpdateCliAfterProjectUpdatePrompt", resourceCulture);
     }
 }
diff --git a/src/Aspire.Cli/Resources/UpdateCommandStrings.resx b/src/Aspire.Cli/Resources/UpdateCommandStrings.resx
index a7dde2726fd..b008782aa1d 100644
--- a/src/Aspire.Cli/Resources/UpdateCommandStrings.resx
+++ b/src/Aspire.Cli/Resources/UpdateCommandStrings.resx
@@ -114,4 +114,10 @@
   <data name="FallbackParsingWarning" xml:space="preserve">
     <value>Note: Update plan generated using fallback parsing due to unresolvable AppHost SDK. Dependency analysis may have reduced accuracy.</value>
   </data>
+  <data name="NoAppHostFoundUpdateCliPrompt" xml:space="preserve">
+    <value>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</value>
+  </data>
+  <data name="UpdateCliAfterProjectUpdatePrompt" xml:space="preserve">
+    <value>An update is available for the Aspire CLI. Would you like to update it now?</value>
+  </data>
 </root>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.cs.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.cs.xlf
index b9392611ebb..71992649c07 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.cs.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.cs.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Zastavuje se Aspire.</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">Vytváří se vztah důvěryhodnosti k certifikátům...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.de.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.de.xlf
index cabbf21608a..88333412831 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.de.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.de.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Aspire wird beendet.</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">Zertifikate werden als vertrauenswürdig eingestuft...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.es.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.es.xlf
index 67c25c40013..d78f3a7571e 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.es.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.es.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Deteniendo Aspire.</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">Confiar en certificados...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.fr.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.fr.xlf
index b5019ce86b4..68c15af41dc 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.fr.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.fr.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Arrêt d’Aspire.</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">Approbation des certificats...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.it.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.it.xlf
index 287d02de9eb..444d6df5fb0 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.it.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.it.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Arresto di Aspire.</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">Conferma dell'attendibilità dei certificati in corso...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ja.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ja.xlf
index 0987dd0d29d..dd70e409f19 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ja.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ja.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Aspire を停止しています。</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">証明書の信頼を処理中です...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ko.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ko.xlf
index 1cf27893c44..44bc0ce8e42 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ko.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ko.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Aspire를 중지하는 중입니다.</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">인증서를 신뢰하는 중...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.pl.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.pl.xlf
index 96e907c278a..6e3cf80b63c 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.pl.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.pl.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Zatrzymywanie platformy Aspire.</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">Ufanie certyfikatom...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.pt-BR.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.pt-BR.xlf
index 446fd104ee6..a37f795c2d7 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.pt-BR.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.pt-BR.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Interrompendo o Aspire.</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">Confiando nos certificados...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ru.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ru.xlf
index 686c7cd4c10..3190188c29a 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ru.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.ru.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Производится остановка Aspire.</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">Выполняется доверие сертификатам...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.tr.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.tr.xlf
index 7c641303d64..6aab52c79e5 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.tr.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.tr.xlf
@@ -137,6 +137,11 @@
         <target state="translated">Aspire durduruluyor.</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">Sertifikalara güveniliyor...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.zh-Hans.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.zh-Hans.xlf
index 1b04a2e41ef..62f55aacaa3 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.zh-Hans.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.zh-Hans.xlf
@@ -137,6 +137,11 @@
         <target state="translated">正在停止 Aspire。</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">正在信任证书...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.zh-Hant.xlf b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.zh-Hant.xlf
index 4cdef524be3..c65595e6c0a 100644
--- a/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.zh-Hant.xlf
+++ b/src/Aspire.Cli/Resources/xlf/InteractionServiceStrings.zh-Hant.xlf
@@ -137,6 +137,11 @@
         <target state="translated">正在停止 Aspire。</target>
         <note />
       </trans-unit>
+      <trans-unit id="ToUpdateRunCommand">
+        <source>[dim]To update, run: {0}[/]</source>
+        <target state="new">[dim]To update, run: {0}[/]</target>
+        <note>Do not translate [dim]. Also leave [/] as-is. {0} is the command to run</note>
+      </trans-unit>
       <trans-unit id="TrustingCertificates">
         <source>Trusting certificates...</source>
         <target state="translated">信任憑證...</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.cs.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.cs.xlf
index bc71025f673..bfe4677fd1a 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.cs.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.cs.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   Mapování: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">V souboru NuGet.config se nezjistily žádné změny.</target>
@@ -157,6 +162,11 @@
         <target state="translated">Neočekávaná cesta kódu.</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">Aktualizovat balíček {0} z {1} na {2}</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.de.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.de.xlf
index 37ce2c7e70f..e052eeafc06 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.de.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.de.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   Zuordnung: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">In NuGet.config wurden keine Änderungen festgestellt.</target>
@@ -157,6 +162,11 @@
         <target state="translated">Unerwarteter Codepfad</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">Paket {0} von {1} auf {2} aktualisieren</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.es.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.es.xlf
index 0090072ba0e..66d02d56dd6 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.es.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.es.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   Asignación: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">No se detectaron cambios en NuGet.config</target>
@@ -157,6 +162,11 @@
         <target state="translated">Ruta de acceso al código inesperada.</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">Actualizar paquete {0} de {1} a {2}</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.fr.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.fr.xlf
index 3cb8ac57456..9a4214d1227 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.fr.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.fr.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   Mappage : {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">Aucune modification n’a été détectée dans NuGet.config</target>
@@ -157,6 +162,11 @@
         <target state="translated">Chemin de code inattendu.</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">Mettre à jour le package {0} de {1} à {2}</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.it.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.it.xlf
index c8ac74cee07..a9e390bcd4e 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.it.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.it.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   Mapping: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">Nessuna modifica rilevata in NuGet.config</target>
@@ -157,6 +162,11 @@
         <target state="translated">Percorso del codice imprevisto.</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">Aggiorna il pacchetto {0} da {1} a {2}</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ja.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ja.xlf
index db386eeef55..86c692f7f2d 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ja.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ja.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   マッピング: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">NuGet.config に変更は検出されませんでした</target>
@@ -157,6 +162,11 @@
         <target state="translated">予期しないコード パスです。</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">パッケージ {0} を {1} から {2} に更新する</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ko.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ko.xlf
index f7c23864ac9..c50482ded37 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ko.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ko.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   매핑: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">NuGet.config에서 변경 내용이 검색되지 않음</target>
@@ -157,6 +162,11 @@
         <target state="translated">예기치 않은 코드 경로입니다.</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">패키지 {0}을(를) {1}에서 {2}(으)로 업데이트</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.pl.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.pl.xlf
index 727fe1f3fc2..c14c49085c5 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.pl.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.pl.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   Mapowanie: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">Nie wykryto żadnych zmian w pliku NuGet.config</target>
@@ -157,6 +162,11 @@
         <target state="translated">Nieoczekiwana ścieżka w kodzie.</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">Aktualizacja {0} z {1} do {2}</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.pt-BR.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.pt-BR.xlf
index a1b80b9a975..31d7822cf09 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.pt-BR.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.pt-BR.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   Mapeamento: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">Nenhuma alteração detectada no NuGet.config</target>
@@ -157,6 +162,11 @@
         <target state="translated">Caminho de código inesperado.</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">Atualizar o pacote {0} de {1} para {2}</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ru.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ru.xlf
index 450b502695c..d2e6723837f 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ru.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.ru.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   Сопоставление: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">Изменений в NuGet.config не обнаружено</target>
@@ -157,6 +162,11 @@
         <target state="translated">Непредвиденный путь к коду.</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">Обновить пакет {0} с{1} до {2}</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.tr.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.tr.xlf
index 8b53b4fa1d1..ba2e6c4691e 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.tr.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.tr.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   Eşleme: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">NuGet.config dosyasında değişiklik algılanmadı</target>
@@ -157,6 +162,11 @@
         <target state="translated">Beklenmeyen kod yolu.</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">{1} olan {0} paketini {2} olarak güncelleyin</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.zh-Hans.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.zh-Hans.xlf
index d0663526544..bf6e2ed0580 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.zh-Hans.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.zh-Hans.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   映射: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">NuGet.config 中未检测到任何更改</target>
@@ -157,6 +162,11 @@
         <target state="translated">意外的代码路径。</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">将包 {0} 从 {1} 更新为 {2}</target>
diff --git a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.zh-Hant.xlf b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.zh-Hant.xlf
index 11bc2dd1594..f9bf326e05e 100644
--- a/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.zh-Hant.xlf
+++ b/src/Aspire.Cli/Resources/xlf/UpdateCommandStrings.zh-Hant.xlf
@@ -97,6 +97,11 @@
         <target state="translated">   對應: {0}</target>
         <note />
       </trans-unit>
+      <trans-unit id="NoAppHostFoundUpdateCliPrompt">
+        <source>No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</source>
+        <target state="new">No Aspire AppHost project found. Would you like to update the Aspire CLI instead?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="NoChangesDetectedInNuGetConfig">
         <source>No changes detected in NuGet.config</source>
         <target state="translated">未偵測到 NuGet.config 中的變更</target>
@@ -157,6 +162,11 @@
         <target state="translated">未預期的程式碼路徑。</target>
         <note />
       </trans-unit>
+      <trans-unit id="UpdateCliAfterProjectUpdatePrompt">
+        <source>An update is available for the Aspire CLI. Would you like to update it now?</source>
+        <target state="new">An update is available for the Aspire CLI. Would you like to update it now?</target>
+        <note />
+      </trans-unit>
       <trans-unit id="UpdatePackageFormat">
         <source>Update package {0} from {1} to {2}</source>
         <target state="translated">將套件 {0} 從 {1} 更新到 {2}</target>
diff --git a/src/Aspire.Cli/Utils/CliUpdateNotifier.cs b/src/Aspire.Cli/Utils/CliUpdateNotifier.cs
index 0b39db95c38..31f9a09c649 100644
--- a/src/Aspire.Cli/Utils/CliUpdateNotifier.cs
+++ b/src/Aspire.Cli/Utils/CliUpdateNotifier.cs
@@ -13,6 +13,7 @@ internal interface ICliUpdateNotifier
 {
     Task CheckForCliUpdatesAsync(DirectoryInfo workingDirectory, CancellationToken cancellationToken);
     void NotifyIfUpdateAvailable();
+    bool IsUpdateAvailable();
 }
 
 internal class CliUpdateNotifier(
@@ -49,10 +50,62 @@ public void NotifyIfUpdateAvailable()
 
         if (newerVersion is not null)
         {
-            interactionService.DisplayVersionUpdateNotification(newerVersion.ToString());
+            var updateCommand = IsRunningAsDotNetTool() 
+                ? "dotnet tool update -g Aspire.Cli.Tool" 
+                : "aspire update";
+            
+            interactionService.DisplayVersionUpdateNotification(newerVersion.ToString(), updateCommand);
         }
     }
 
+    public bool IsUpdateAvailable()
+    {
+        if (_availablePackages is null)
+        {
+            return false;
+        }
+
+        var currentVersion = GetCurrentVersion();
+        if (currentVersion is null)
+        {
+            return false;
+        }
+
+        var newerVersion = PackageUpdateHelpers.GetNewerVersion(currentVersion, _availablePackages);
+        return newerVersion is not null;
+    }
+
+    /// <summary>
+    /// Determines whether the Aspire CLI is running as a .NET tool or as a native binary.
+    /// </summary>
+    /// <returns>
+    /// <c>true</c> if running as a .NET tool (process name is "dotnet" or "dotnet.exe"); 
+    /// <c>false</c> if running as a native binary (process name is "aspire" or "aspire.exe") or if the process path cannot be determined.
+    /// </returns>
+    /// <remarks>
+    /// This detection is used to determine which update command to display to users:
+    /// <list type="bullet">
+    /// <item>.NET tool installation: "dotnet tool update -g Aspire.Cli.Tool"</item>
+    /// <item>Native binary installation: "aspire update --self"</item>
+    /// </list>
+    /// The detection works by examining <see cref="Environment.ProcessPath"/>, which returns the full path to the current executable.
+    /// When running as a .NET tool, this path points to the dotnet host executable. When running as a native binary, 
+    /// it points to the aspire executable itself.
+    /// </remarks>
+    private static bool IsRunningAsDotNetTool()
+    {
+        // When running as a dotnet tool, the process path points to "dotnet" or "dotnet.exe"
+        // When running as a native binary, it points to "aspire" or "aspire.exe"
+        var processPath = Environment.ProcessPath;
+        if (string.IsNullOrEmpty(processPath))
+        {
+            return false;
+        }
+
+        var fileName = Path.GetFileNameWithoutExtension(processPath);
+        return string.Equals(fileName, "dotnet", StringComparison.OrdinalIgnoreCase);
+    }
+
     protected virtual SemVersion? GetCurrentVersion()
     {
         return PackageUpdateHelpers.GetCurrentPackageVersion();
diff --git a/tests/Aspire.Cli.Tests/Commands/NewCommandTests.cs b/tests/Aspire.Cli.Tests/Commands/NewCommandTests.cs
index 4a94c66b607..0028707cdc8 100644
--- a/tests/Aspire.Cli.Tests/Commands/NewCommandTests.cs
+++ b/tests/Aspire.Cli.Tests/Commands/NewCommandTests.cs
@@ -682,5 +682,5 @@ public void DisplayEmptyLine() { }
     public void DisplayPlainText(string text) { }
     public void DisplayMarkdown(string markdown) { }
     public void WriteConsoleLog(string message, int? lineNumber = null, string? type = null, bool isErrorMessage = false) { }
-    public void DisplayVersionUpdateNotification(string newerVersion) { }
+    public void DisplayVersionUpdateNotification(string newerVersion, string? updateCommand = null) { }
 }
diff --git a/tests/Aspire.Cli.Tests/Commands/PublishCommandPromptingIntegrationTests.cs b/tests/Aspire.Cli.Tests/Commands/PublishCommandPromptingIntegrationTests.cs
index bfa8ccc7597..042f243d3e9 100644
--- a/tests/Aspire.Cli.Tests/Commands/PublishCommandPromptingIntegrationTests.cs
+++ b/tests/Aspire.Cli.Tests/Commands/PublishCommandPromptingIntegrationTests.cs
@@ -994,7 +994,7 @@ public void DisplayEmptyLine() { }
     public void DisplayPlainText(string text) { }
     public void DisplayMarkdown(string markdown) { }
 
-    public void DisplayVersionUpdateNotification(string newerVersion) { }
+    public void DisplayVersionUpdateNotification(string newerVersion, string? updateCommand = null) { }
 
     public void WriteConsoleLog(string message, int? lineNumber = null, string? type = null, bool isErrorMessage = false)
     {
diff --git a/tests/Aspire.Cli.Tests/Commands/UpdateCommandTests.cs b/tests/Aspire.Cli.Tests/Commands/UpdateCommandTests.cs
index 153b3b7238a..6b42a247ab1 100644
--- a/tests/Aspire.Cli.Tests/Commands/UpdateCommandTests.cs
+++ b/tests/Aspire.Cli.Tests/Commands/UpdateCommandTests.cs
@@ -5,8 +5,10 @@
 using Aspire.Cli.Commands;
 using Aspire.Cli.Packaging;
 using Aspire.Cli.Projects;
+using Aspire.Cli.Resources;
 using Aspire.Cli.Tests.TestServices;
 using Aspire.Cli.Tests.Utils;
+using Aspire.Cli.Utils;
 using Microsoft.Extensions.DependencyInjection;
 
 namespace Aspire.Cli.Tests.Commands;
@@ -155,6 +157,130 @@ private UpdateCommand CreateUpdateCommand(TemporaryWorkspace workspace)
         var provider = services.BuildServiceProvider();
         return provider.GetRequiredService<UpdateCommand>();
     }
+
+    [Fact]
+    public async Task UpdateCommand_WhenNoProjectFound_PromptsForCliSelfUpdate()
+    {
+        using var workspace = TemporaryWorkspace.Create(outputHelper);
+
+        var confirmCallbackInvoked = false;
+        var services = CliTestHelper.CreateServiceCollection(workspace, outputHelper, options =>
+        {
+            options.ProjectLocatorFactory = _ => new TestProjectLocator()
+            {
+                UseOrFindAppHostProjectFileAsyncCallback = (projectFile, _, _) =>
+                {
+                    // Simulate no project found by throwing ProjectLocatorException
+                    throw new ProjectLocatorException(ErrorStrings.NoProjectFileFound);
+                }
+            };
+
+            options.InteractionServiceFactory = _ => new TestConsoleInteractionService()
+            {
+                ConfirmCallback = (prompt, defaultValue) =>
+                {
+                    // Verify the correct prompt is shown
+                    confirmCallbackInvoked = true;
+                    Assert.Contains("Would you like to update the Aspire CLI", prompt);
+                    return false; // User says no
+                }
+            };
+
+            options.DotNetCliRunnerFactory = _ => new TestDotNetCliRunner();
+        });
+
+        var provider = services.BuildServiceProvider();
+
+        // Act
+        var command = provider.GetRequiredService<RootCommand>();
+        var result = command.Parse("update");
+
+        var exitCode = await result.InvokeAsync().WaitAsync(CliTestConstants.DefaultTimeout);
+
+        // Assert
+        Assert.True(confirmCallbackInvoked, "Confirm prompt should have been shown");
+        Assert.Equal(ExitCodeConstants.FailedToFindProject, exitCode);
+    }
+
+    [Fact]
+    public async Task UpdateCommand_WhenProjectUpdatedSuccessfully_PromptsForCliUpdate()
+    {
+        using var workspace = TemporaryWorkspace.Create(outputHelper);
+
+        var confirmCallbackInvoked = false;
+        var services = CliTestHelper.CreateServiceCollection(workspace, outputHelper, options =>
+        {
+            options.ProjectLocatorFactory = _ => new TestProjectLocator()
+            {
+                UseOrFindAppHostProjectFileAsyncCallback = (projectFile, _, _) =>
+                {
+                    return Task.FromResult<FileInfo?>(new FileInfo(Path.Combine(workspace.WorkspaceRoot.FullName, "AppHost.csproj")));
+                }
+            };
+
+            options.InteractionServiceFactory = _ => new TestConsoleInteractionService()
+            {
+                ConfirmCallback = (prompt, defaultValue) =>
+                {
+                    confirmCallbackInvoked = true;
+                    // Verify the correct prompt is shown after project update
+                    Assert.Contains("An update is available for the Aspire CLI", prompt);
+                    return false; // User says no
+                }
+            };
+
+            options.DotNetCliRunnerFactory = _ => new TestDotNetCliRunner();
+
+            options.ProjectUpdaterFactory = _ => new TestProjectUpdater()
+            {
+                UpdateProjectAsyncCallback = (projectFile, channel, cancellationToken) =>
+                {
+                    return Task.FromResult(new ProjectUpdateResult { UpdatedApplied = true });
+                }
+            };
+
+            options.PackagingServiceFactory = _ => new TestPackagingService();
+
+            // Configure update notifier to report that an update is available
+            options.CliUpdateNotifierFactory = _ => new TestCliUpdateNotifier()
+            {
+                IsUpdateAvailableCallback = () => true
+            };
+        });
+
+        var provider = services.BuildServiceProvider();
+
+        // Act
+        var command = provider.GetRequiredService<RootCommand>();
+        var result = command.Parse("update --project AppHost.csproj");
+
+        var exitCode = await result.InvokeAsync().WaitAsync(CliTestConstants.DefaultTimeout);
+
+        // Assert
+        Assert.True(confirmCallbackInvoked, "Confirm prompt should have been shown after successful project update");
+        Assert.Equal(0, exitCode);
+    }
+}
+
+// Test implementation of ICliUpdateNotifier
+internal sealed class TestCliUpdateNotifier : ICliUpdateNotifier
+{
+    public Func<bool>? IsUpdateAvailableCallback { get; set; }
+
+    public Task CheckForCliUpdatesAsync(DirectoryInfo workingDirectory, CancellationToken cancellationToken)
+    {
+        return Task.CompletedTask;
+    }
+
+    public void NotifyIfUpdateAvailable()
+    {
+        // No-op for tests
+    }
+
+    public bool IsUpdateAvailable()
+    {
+        return IsUpdateAvailableCallback?.Invoke() ?? false;
+    }
 }
 
 // Test implementation of IProjectUpdater
diff --git a/tests/Aspire.Cli.Tests/Templating/DotNetTemplateFactoryTests.cs b/tests/Aspire.Cli.Tests/Templating/DotNetTemplateFactoryTests.cs
index 08d2bf3e668..f8a2cfe33f1 100644
--- a/tests/Aspire.Cli.Tests/Templating/DotNetTemplateFactoryTests.cs
+++ b/tests/Aspire.Cli.Tests/Templating/DotNetTemplateFactoryTests.cs
@@ -396,7 +396,7 @@ public void DisplayPlainText(string text) { }
         public void DisplayMarkdown(string markdown) { }
         public void DisplaySubtleMessage(string message, bool escapeMarkup = true) { }
         public void DisplayEmptyLine() { }
-        public void DisplayVersionUpdateNotification(string message) { }
+        public void DisplayVersionUpdateNotification(string message, string? updateCommand = null) { }
         public void WriteConsoleLog(string message, int? resourceHashCode, string? resourceName, bool isError) { }
     }
 
diff --git a/tests/Aspire.Cli.Tests/TestServices/TestConsoleInteractionService.cs b/tests/Aspire.Cli.Tests/TestServices/TestConsoleInteractionService.cs
index c1ff12f4125..2984fda5e4f 100644
--- a/tests/Aspire.Cli.Tests/TestServices/TestConsoleInteractionService.cs
+++ b/tests/Aspire.Cli.Tests/TestServices/TestConsoleInteractionService.cs
@@ -107,7 +107,7 @@ public void WriteConsoleLog(string message, int? lineNumber = null, string? type
 
     public Action<string>? DisplayVersionUpdateNotificationCallback { get; set; }
 
-    public void DisplayVersionUpdateNotification(string newerVersion)
+    public void DisplayVersionUpdateNotification(string newerVersion, string? updateCommand = null)
     {
         DisplayVersionUpdateNotificationCallback?.Invoke(newerVersion);
     }
diff --git a/tests/Aspire.Cli.Tests/TestServices/TestExtensionInteractionService.cs b/tests/Aspire.Cli.Tests/TestServices/TestExtensionInteractionService.cs
index 39e75efc7a2..aa96c446035 100644
--- a/tests/Aspire.Cli.Tests/TestServices/TestExtensionInteractionService.cs
+++ b/tests/Aspire.Cli.Tests/TestServices/TestExtensionInteractionService.cs
@@ -138,7 +138,7 @@ public void WriteConsoleLog(string message, int? lineNumber = null, string? type
 
     public Action<string>? DisplayVersionUpdateNotificationCallback { get; set; }
 
-    public void DisplayVersionUpdateNotification(string newerVersion)
+    public void DisplayVersionUpdateNotification(string newerVersion, string? updateCommand = null)
     {
         DisplayVersionUpdateNotificationCallback?.Invoke(newerVersion);
     }
diff --git a/tests/agent-scenarios/aspire-update/prompt.md b/tests/agent-scenarios/aspire-update/prompt.md
new file mode 100644
index 00000000000..01646174044
--- /dev/null
+++ b/tests/agent-scenarios/aspire-update/prompt.md
@@ -0,0 +1,369 @@
+# Aspire Update Scenario
+
+This scenario tests the `aspire update` command functionality, including updating projects across different CLI versions and testing the new CLI self-update prompting feature introduced in this PR.
+
+## Overview
+
+This test validates that:
+1. The latest released version of the Aspire CLI can be acquired and used to create a new project
+2. A new starter application can be created and runs successfully
+3. The latest daily build of the Aspire CLI can be acquired and used to update the project, and the updated apphost can be run successfully
+4. The PR build of the Aspire CLI can be acquired
+5. The `aspire update` command correctly prompts to update the CLI when a newer CLI version is available
+6. The CLI can be updated to the daily build through the update prompt
+7. The dashboard correctly shows the version from the PR build even when using the daily CLI
+
+## Prerequisites
+
+Before starting, ensure you have:
+- Docker installed and running (for container-based resources if used)
+- Network access to download NuGet packages and CLI builds
+- Browser automation tools available (playwright) for verification
+
+**Note**: The .NET SDK is not required as a prerequisite - the Aspire CLI will install it automatically.
+
+## Step 1: Download the Latest Released Version of the CLI
+
+Acquire the latest stable release version of the Aspire CLI.
+
+**Follow the CLI acquisition instructions already provided in the aspire-playground repository to obtain the latest released version of the Aspire CLI (native AOT build).**
+
+Once acquired, verify the CLI is installed correctly:
+
+```bash
+aspire --version
+```
+
+Expected output should show the latest released version number (e.g., `9.5.2` or similar - released versions do not have `-preview` or `-pr` suffixes, though other metadata may be present).
+
+**Note the version number for comparison in later steps.**
+
+## Step 2: Create a New Starter Project
+
+Create a new Aspire starter application using the released CLI version.
+
+### 2.1 Run the Aspire New Command
+
+Use `aspire new` with interactive template selection. Choose any template randomly - for this test, we'll use whichever template the agent selects.
+
+```bash
+aspire new
+```
+
+**Follow the interactive prompts:**
+1. Select any starter template (e.g., `aspire-starter` or `aspire-py-starter`)
+2. Provide a name for the application (suggestion: `AspireUpdateTest`)
+3. Accept default options for framework, frontend, etc.
+
+### 2.2 Verify Project Creation
+
+After creation, verify the project structure exists:
+
+```bash
+ls -la
+```
+
+Expected: Project files and directories should be created successfully.
+
+## Step 3: Run the AppHost to Verify It Works
+
+Launch the application to verify it works with the released CLI version.
+
+### 3.1 Start the Application
+
+```bash
+aspire run
+```
+
+Wait for the application to start (30-60 seconds). Observe the console output for:
+- Dashboard URL with access token
+- All resources showing as "Running"
+- No critical errors
+
+### 3.2 Verify Dashboard Access
+
+Navigate to the dashboard URL (from console output) and perform a minimal check:
+- Dashboard loads successfully
+- Resources are listed and showing as running
+
+**Take a screenshot of the dashboard showing resources:**
+
+```bash
+playwright-browser navigate $DASHBOARD_URL
+playwright-browser take_screenshot --filename dashboard-released-version.png
+```
+
+**Note:** This is a minimal verification - we just want to confirm the dashboard launches and displays running resources. Detailed resource checks are not needed here.
+
+### 3.3 Stop the Application
+
+Press `Ctrl+C` to stop the application and verify it shuts down cleanly.
+
+## Step 4: Download the Latest Daily Build of the Aspire CLI
+
+Acquire the latest daily build version of the Aspire CLI.
+
+**Follow the CLI acquisition instructions already provided in the aspire-playground repository to obtain the latest daily build of the Aspire CLI (native AOT build).**
+
+This will replace the released version installed in Step 1.
+
+## Step 5: Check the Version Number to Verify Installation
+
+Verify the daily build is now installed:
+
+```bash
+aspire --version
+```
+
+Expected output should show the daily build version number (e.g., `13.0.0-preview.1.xxxxx` or similar).
+
+**The version should be different from (and typically newer than) the released version noted in Step 1.**
+
+## Step 6: Use `aspire update` to Update the AppHost Project
+
+Update the project to use packages from the daily channel.
+
+### 6.1 Run aspire update
+
+```bash
+aspire update
+```
+
+**Follow the interactive prompts:**
+1. When prompted to select a channel, choose the **daily** channel
+2. Confirm the updates when prompted
+
+**Observe the update process:**
+- Package references being analyzed
+- Updates being applied
+- NuGet.config being updated
+- Successful completion message
+
+**Note:** Since the project was originally created with the released version and we're now using the daily CLI, the update should find packages to update.
+
+## Step 7: Run the AppHost to Verify It Worked
+
+Launch the application again with the updated packages.
+
+### 7.1 Start the Application
+
+```bash
+aspire run
+```
+
+Wait for startup and verify all resources are running.
+
+### 7.2 Navigate to Dashboard Help Menu
+
+Access the dashboard and check the version information.
+
+```bash
+# Navigate to dashboard
+playwright-browser navigate $DASHBOARD_URL
+
+# Navigate to the Help menu (typically in the top-right)
+# Look for version information in the Help menu or About dialog
+```
+
+**Take a screenshot showing the dashboard version:**
+
+```bash
+playwright-browser take_screenshot --filename dashboard-daily-version.png
+```
+
+**Verify:** The dashboard version should reflect the daily build packages (matching the CLI version from Step 5).
+
+### 7.3 Stop the Application
+
+Press `Ctrl+C` to stop the application.
+
+## Step 8: Download the PR Build of the CLI
+
+Acquire the CLI build from this PR.
+
+**Follow the CLI acquisition instructions already provided in the aspire-playground repository to obtain the PR build of the Aspire CLI (native AOT build).**
+
+This will replace the daily build installed in Step 4.
+
+## Step 9: Run `aspire --version` to Verify the Version Number
+
+Verify the PR build is now installed:
+
+```bash
+aspire --version
+```
+
+Expected output should show the PR build version number (e.g., `13.0.0-pr.12395.xxxxx` or similar).
+
+**The version should be different from both the released and daily versions noted earlier.**
+
+## Step 10: Do `aspire update` to Update the AppHost
+
+Run the update command again with the PR build CLI.
+
+### 10.1 Run aspire update
+
+```bash
+aspire update
+```
+
+**Expected behavior:**
+- The project should be detected as up-to-date (no package updates needed since we just updated to daily)
+- A prompt should appear: **"An update is available for the Aspire CLI. Would you like to update it now?"**
+
+**This is the NEW functionality being tested - the CLI detects that a newer version (daily) is available compared to the current PR build and prompts to update the CLI itself.**
+
+### 10.2 Respond Yes to the Prompt
+
+When prompted to update the CLI, answer **yes** (or `y`).
+
+**Observe the CLI self-update process:**
+- Current CLI location displayed
+- Quality level prompt (select "daily")
+- Download progress
+- Extraction and installation
+- Backup of current CLI
+- Success message with new version
+
+## Step 11: Check `aspire --version` - Should Be Back at Daily Build
+
+Verify the CLI has been updated back to the daily build:
+
+```bash
+aspire --version
+```
+
+**Expected output:** The version should now match the daily build version from Step 5 (not the PR build from Step 9).
+
+**This confirms the CLI self-update functionality worked correctly.**
+
+## Step 12: Run `aspire run` with Daily CLI, Dashboard Shows PR Build
+
+Launch the application one more time to verify an important behavior.
+
+### 12.1 Start the Application
+
+```bash
+aspire run
+```
+
+Wait for startup and verify all resources are running.
+
+### 12.2 Check Dashboard Version in Help Menu
+
+Access the dashboard and check the version information.
+
+```bash
+playwright-browser navigate $DASHBOARD_URL
+```
+
+Navigate to the Help menu or About section and look for version information.
+
+**Take a screenshot:**
+
+```bash
+playwright-browser take_screenshot --filename dashboard-pr-build-version.png
+```
+
+**Expected behavior:** Even though we're using the daily build CLI (Step 11), the dashboard should show the version from the **PR build** packages because that's what the project's packages were last updated to.
+
+**This demonstrates that:**
+1. The CLI version (what's used to run the project) is independent of the package versions (what the project references)
+2. Downgrading the CLI doesn't downgrade the project packages
+3. The dashboard version reflects the package versions, not the CLI version
+
+### 12.3 Stop the Application
+
+Press `Ctrl+C` to stop the application.
+
+## Step 13: Final Verification Checklist
+
+Confirm all test objectives were met:
+
+- [ ] Latest released CLI acquired and version verified
+- [ ] New project created successfully with released CLI
+- [ ] Application ran successfully with released CLI
+- [ ] Dashboard accessible with released version
+- [ ] Latest daily build CLI acquired and version verified
+- [ ] Project updated to daily channel successfully via `aspire update`
+- [ ] Application ran successfully with daily build CLI and updated packages
+- [ ] Dashboard showed daily build version after update
+- [ ] PR build CLI acquired and version verified
+- [ ] `aspire update` with PR build CLI detected project was up-to-date
+- [ ] **CLI self-update prompt appeared (NEW FEATURE)**
+- [ ] User answered yes to CLI update prompt
+- [ ] CLI self-updated back to daily build
+- [ ] `aspire --version` confirmed CLI is back at daily build version
+- [ ] Application ran with daily build CLI
+- [ ] **Dashboard showed PR build version even with daily CLI (important behavior)**
+
+## Success Criteria
+
+The test is considered **PASSED** if:
+
+1. **Released CLI**: Successfully acquired and used to create a working project
+2. **Daily CLI**: Successfully acquired and used to update the project to daily channel
+3. **PR CLI**: Successfully acquired and detected as older than daily build
+4. **Update Prompt**: The CLI correctly prompted to update itself when running `aspire update` with an older CLI version (NEW FEATURE)
+5. **Self-Update**: The CLI successfully updated itself to the daily build when user confirmed
+6. **Version Independence**: The dashboard correctly showed PR build package version even when running with daily build CLI
+
+The test is considered **FAILED** if:
+
+- CLI acquisition fails for any version
+- Project creation fails
+- Project update fails
+- **Update prompt does NOT appear when expected (this is the key new feature being tested)**
+- CLI self-update fails or doesn't actually update the CLI
+- Dashboard version doesn't correctly reflect package versions
+
+## Key Testing Points for This PR
+
+This scenario specifically tests the NEW functionality added in this PR:
+
+1. **Automatic CLI Update Detection**: After a successful `aspire update` of the project, the CLI checks if a newer CLI version is available
+2. **User Prompt**: The CLI prompts the user to update the CLI itself with a clear, actionable message
+3. **Self-Update Integration**: Accepting the prompt triggers the `aspire update --self` functionality
+4. **Version Awareness**: The CLI correctly compares its own version against available versions
+
+## Notes for Agent Execution
+
+When executing this scenario as an automated agent:
+
+1. **Multiple CLI Versions**: Be prepared to handle multiple CLI installations and version switches
+2. **Interactive Prompts**: Pay careful attention to prompts, especially the new CLI update prompt
+3. **Version Tracking**: Track and compare version numbers at each step
+4. **Screenshots**: Capture dashboard screenshots showing version information
+5. **Confirmation**: When the CLI update prompt appears, this is the key moment - it should happen after a successful `aspire update` when using an older CLI version
+6. **Expected Flow**: Released → Daily → PR → (update prompt) → Daily
+7. **Version Comparison**: The dashboard version should reflect package versions, not CLI version
+
+## Troubleshooting Tips
+
+### CLI Update Prompt Doesn't Appear
+
+If the update prompt doesn't appear when expected:
+- Verify the PR build is actually older than the daily build
+- Check that the project update completed successfully first
+- Ensure the CLI downloader is available (not running as dotnet tool)
+- Check console output for any error messages
+
+### CLI Self-Update Fails
+
+If the self-update fails:
+- Verify network connectivity for downloads
+- Check disk space for installation
+- Ensure proper permissions for file operations
+- Review console output for specific error messages
+
+### Version Confusion
+
+If version numbers are confusing:
+- Remember: CLI version (what runs the app) ≠ Package version (what the app references)
+- The dashboard shows the Aspire.Hosting package version
+- The CLI version is shown by `aspire --version`
+- After CLI self-update, CLI version changes but package versions remain the same
+
+---
+
+**End of Aspire Update Scenario**