diff --git a/apps/oxlint/src/lint.rs b/apps/oxlint/src/lint.rs
index 34ebb0f7f058c..731c193f523f3 100644
--- a/apps/oxlint/src/lint.rs
+++ b/apps/oxlint/src/lint.rs
@@ -119,20 +119,20 @@ impl Runner for LintRunner {
 
         let oxlintrc_for_print =
             if misc_options.print_config { Some(oxlintrc.clone()) } else { None };
-        let builder = LinterBuilder::from_oxlintrc(false, oxlintrc);
+        let (builder, builder_error) = LinterBuilder::from_oxlintrc(false, oxlintrc);
         // Gracefully report any linter builder errors as CLI errors
-        let builder = match builder {
-            Ok(builder) => builder,
-            Err(err) => match err {
+        if let Some(builder_error) = builder_error {
+            return match builder_error {
                 LinterBuilderError::UnknownRules { rules } => {
                     let rules = rules.iter().map(|r| r.full_name()).collect::<Vec<_>>().join("\n");
                     let error = Error::from(OxcDiagnostic::warn(format!(
                         "The following rules do not match the currently supported rules:\n{rules}"
                     )));
-                    return CliRunResult::LintError { error: format!("{error:?}") };
+                    CliRunResult::LintError { error: format!("{error:?}") }
                 }
-            },
-        };
+            };
+        }
+
         let builder = builder.with_filters(filter).with_fix(fix_options.fix_kind());
 
         if let Some(basic_config_file) = oxlintrc_for_print {
diff --git a/crates/oxc_language_server/src/main.rs b/crates/oxc_language_server/src/main.rs
index c5d2ef27800b8..d90d5a2694d0b 100644
--- a/crates/oxc_language_server/src/main.rs
+++ b/crates/oxc_language_server/src/main.rs
@@ -17,9 +17,9 @@ use tower_lsp::{
         CodeActionProviderCapability, CodeActionResponse, ConfigurationItem, Diagnostic,
         DidChangeConfigurationParams, DidChangeTextDocumentParams, DidCloseTextDocumentParams,
         DidOpenTextDocumentParams, DidSaveTextDocumentParams, InitializeParams, InitializeResult,
-        InitializedParams, OneOf, ServerCapabilities, ServerInfo, TextDocumentSyncCapability,
-        TextDocumentSyncKind, TextEdit, Url, WorkDoneProgressOptions, WorkspaceEdit,
-        WorkspaceFoldersServerCapabilities, WorkspaceServerCapabilities,
+        InitializedParams, MessageType, OneOf, ServerCapabilities, ServerInfo,
+        TextDocumentSyncCapability, TextDocumentSyncKind, TextEdit, Url, WorkDoneProgressOptions,
+        WorkspaceEdit, WorkspaceFoldersServerCapabilities, WorkspaceServerCapabilities,
     },
     Client, LanguageServer, LspService, Server,
 };
@@ -352,18 +352,17 @@ impl Backend {
             config_path = Some(config);
         }
         if let Some(config_path) = config_path {
-            let mut linter = self.server_linter.write().await;
-            *linter = ServerLinter::new_with_linter(
-                LinterBuilder::from_oxlintrc(
-                    true,
-                    Oxlintrc::from_file(&config_path)
-                        .expect("should have initialized linter with new options"),
-                )
-                // FIXME: Handle this error more gracefully and report it properly
-                .expect("failed to build linter from oxlint config")
-                .with_fix(FixKind::SafeFix)
-                .build(),
+            let (linter_builder, errors) = LinterBuilder::from_oxlintrc(
+                true,
+                Oxlintrc::from_file(&config_path)
+                    .expect("should have initialized linter with new options"),
             );
+            if let Some(errors) = errors {
+                self.client.show_message(MessageType::WARNING, errors).await;
+            }
+            let mut linter = self.server_linter.write().await;
+            *linter =
+                ServerLinter::new_with_linter(linter_builder.with_fix(FixKind::SafeFix).build());
         }
     }
 
diff --git a/crates/oxc_linter/src/builder.rs b/crates/oxc_linter/src/builder.rs
index 53ffdd1bb3f33..0d97d0a96656e 100644
--- a/crates/oxc_linter/src/builder.rs
+++ b/crates/oxc_linter/src/builder.rs
@@ -83,7 +83,7 @@ impl LinterBuilder {
     pub fn from_oxlintrc(
         start_empty: bool,
         oxlintrc: Oxlintrc,
-    ) -> Result<Self, LinterBuilderError> {
+    ) -> (Self, Option<LinterBuilderError>) {
         // TODO: monorepo config merging, plugin-based extends, etc.
         let Oxlintrc { plugins, settings, env, globals, categories, rules: mut oxlintrc_rules } =
             oxlintrc;
@@ -105,12 +105,13 @@ impl LinterBuilder {
         }
 
         if !oxlintrc_rules.unknown_rules.is_empty() {
-            return Err(LinterBuilderError::UnknownRules {
+            let error = LinterBuilderError::UnknownRules {
                 rules: std::mem::take(&mut oxlintrc_rules.unknown_rules),
-            });
+            };
+            return (builder, Some(error));
         }
 
-        Ok(builder)
+        (builder, None)
     }
 
     #[inline]
@@ -311,7 +312,11 @@ impl TryFrom<Oxlintrc> for LinterBuilder {
 
     #[inline]
     fn try_from(oxlintrc: Oxlintrc) -> Result<Self, Self::Error> {
-        Self::from_oxlintrc(false, oxlintrc)
+        let (builder, error) = Self::from_oxlintrc(false, oxlintrc);
+        if let Some(error) = error {
+            return Err(error);
+        }
+        Ok(builder)
     }
 }
 
@@ -338,7 +343,7 @@ impl std::fmt::Display for LinterBuilderError {
             LinterBuilderError::UnknownRules { rules } => {
                 write!(f, "unknown rules: ")?;
                 for rule in rules {
-                    write!(f, "{}", rule.full_name())?;
+                    writeln!(f, "{}", rule.full_name())?;
                 }
                 Ok(())
             }
@@ -643,7 +648,7 @@ mod test {
         "#,
         )
         .unwrap();
-        let builder = LinterBuilder::from_oxlintrc(false, oxlintrc).unwrap();
+        let (builder, _) = LinterBuilder::from_oxlintrc(false, oxlintrc);
         for rule in &builder.rules {
             let name = rule.name();
             let plugin = rule.plugin_name();
diff --git a/crates/oxc_linter/src/tester.rs b/crates/oxc_linter/src/tester.rs
index aad7fdf7ae4ea..530fe90bf2ee8 100644
--- a/crates/oxc_linter/src/tester.rs
+++ b/crates/oxc_linter/src/tester.rs
@@ -432,7 +432,7 @@ impl Tester {
         let linter = eslint_config
             .as_ref()
             .map_or_else(LinterBuilder::empty, |v| {
-                LinterBuilder::from_oxlintrc(true, Oxlintrc::deserialize(v).unwrap()).unwrap()
+                LinterBuilder::from_oxlintrc(true, Oxlintrc::deserialize(v).unwrap()).0
             })
             .with_fix(fix.into())
             .with_plugins(self.plugins)