diff --git a/bin/common.ml b/bin/common.ml
index 2c30b1e310dc..042899a95786 100644
--- a/bin/common.ml
+++ b/bin/common.ml
@@ -205,7 +205,11 @@ let init ?log_file c =
   Clflags.promote_install_files := c.promote_install_files;
   Clflags.always_show_command_line := c.always_show_command_line;
   Clflags.ignore_promoted_rules := c.ignore_promoted_rules;
-  Clflags.require_dune_project_file := c.require_dune_project_file;
+  Clflags.dune_project_file :=
+    if c.require_dune_project_file then
+      Error
+    else
+      Warn;
   Dune_util.Log.info
     [ Pp.textf "Workspace root: %s"
         (Path.to_absolute_filename Path.root |> String.maybe_quoted)
diff --git a/bin/init.ml b/bin/init.ml
index 2ba95de27867..2bb323a4852d 100644
--- a/bin/init.ml
+++ b/bin/init.ml
@@ -210,6 +210,7 @@ let term =
       & info [ "pkg" ] ~docv ~doc)
   in
   let _config = Common.init common_term in
+  Dune_engine.Clflags.dune_project_file := Dune_engine.Clflags.Ignore;
   let open Component in
   let context = Init_context.make path in
   let common : Options.Common.t = { name; libraries; pps } in
diff --git a/src/dune_engine/clflags.ml b/src/dune_engine/clflags.ml
index 2b8ba6ebfb7c..a353897b2757 100644
--- a/src/dune_engine/clflags.ml
+++ b/src/dune_engine/clflags.ml
@@ -38,4 +38,9 @@ let promote_install_files = ref false
 
 let ignore_promoted_rules = ref false
 
-let require_dune_project_file = ref false
+type dune_project_file =
+  | Error
+  | Warn
+  | Ignore
+
+let dune_project_file = ref Warn
diff --git a/src/dune_engine/clflags.mli b/src/dune_engine/clflags.mli
index 4b64786e2ec8..8ee1ba149edf 100644
--- a/src/dune_engine/clflags.mli
+++ b/src/dune_engine/clflags.mli
@@ -54,5 +54,10 @@ val promote_install_files : bool ref
 (** Whether we are ignoring rules with [(mode promote)] *)
 val ignore_promoted_rules : bool ref
 
-(** Whether the "no dune-project file in tree" warning should be fatal *)
-val require_dune_project_file : bool ref
+type dune_project_file =
+  | Error
+  | Warn
+  | Ignore
+
+(** Desired behavior when dune project file is absent *)
+val dune_project_file : dune_project_file ref
diff --git a/src/dune_engine/source_tree.ml b/src/dune_engine/source_tree.ml
index bbe17018bc12..9159ed22b62f 100644
--- a/src/dune_engine/source_tree.ml
+++ b/src/dune_engine/source_tree.ml
@@ -477,21 +477,34 @@ end = struct
   end
 
   let ensure_dune_project_file_exists =
-    Memo.create "ensure-dune-project-file-exists"
-      ~input:(module Dune_project)
-      (fun project ->
-        let open Memo.Build.O in
-        let+ exists =
-          Dune_project.file project |> Path.source |> Fs_memo.file_exists
-        in
-        if not exists then
-          User_warning.emit
-            ~is_error:!Clflags.require_dune_project_file
-            [ Pp.text
-                "No dune-project file has been found. A default one is assumed \
-                 but the project might break when dune is upgraded. Please \
-                 create a dune-project file."
-            ])
+    let memo =
+      Memo.create "ensure-dune-project-file-exists"
+        ~input:(module Dune_project)
+        (fun project ->
+          let open Memo.Build.O in
+          let+ exists =
+            Dune_project.file project |> Path.source |> Fs_memo.file_exists
+          in
+          if not exists then
+            let is_error =
+              match !Clflags.dune_project_file with
+              | Error -> true
+              | Warn -> false
+              | Ignore -> assert false
+            in
+            User_warning.emit ~is_error
+              [ Pp.text
+                  "No dune-project file has been found. A default one is \
+                   assumed but the project might break when dune is upgraded. \
+                   Please create a dune-project file."
+              ])
+    in
+    fun inp ->
+      match !Clflags.dune_project_file with
+      | Ignore -> Memo.Build.return ()
+      | Warn
+      | Error ->
+        Memo.exec memo inp
 
   let dune_file ~(dir_status : Sub_dirs.Status.t) ~path ~files ~project =
     let file_exists =
@@ -529,7 +542,7 @@ end = struct
     in
     Memo.Build.Option.map file ~f:(fun file ->
         let open Memo.Build.O in
-        let* () = Memo.exec ensure_dune_project_file_exists project in
+        let* () = ensure_dune_project_file_exists project in
         let file_exists = Option.is_some file_exists in
         let from_parent = Option.map from_parent ~f:snd in
         Dune_file.load file ~file_exists ~project ~from_parent)