diff --git a/bundle/deploy/terraform/init.go b/bundle/deploy/terraform/init.go
index 02d840bc60..64c00adc00 100644
--- a/bundle/deploy/terraform/init.go
+++ b/bundle/deploy/terraform/init.go
@@ -167,12 +167,19 @@ func inheritEnvVars(ctx context.Context, environ map[string]string) error {
 	}
 
 	// If there's SYSTEM_ACCESSTOKEN set, we need to pass the value of the environment variable to Terraform.
-	// This is necessary to ensure that Terraform can use the same access token as the CLI.
+	// This is necessary to ensure that Terraform can use the same access token as the CLI for Azure DevOps OIDC auth.
 	systemAccessToken, ok := env.Lookup(ctx, "SYSTEM_ACCESSTOKEN")
 	if ok {
 		environ["SYSTEM_ACCESSTOKEN"] = systemAccessToken
 	}
 
+	// If there's SYSTEM_TEAMFOUNDATIONCOLLECTIONURI set, we need to pass the value of the environment variable to Terraform.
+	// This is necessary for Azure DevOps OIDC auth to work properly.
+	systemCollectionUri, ok := env.Lookup(ctx, "SYSTEM_TEAMFOUNDATIONCOLLECTIONURI")
+	if ok {
+		environ["SYSTEM_TEAMFOUNDATIONCOLLECTIONURI"] = systemCollectionUri
+	}
+
 	// Map $DATABRICKS_TF_CLI_CONFIG_FILE to $TF_CLI_CONFIG_FILE
 	// VSCode extension provides a file with the "provider_installation.filesystem_mirror" configuration.
 	// We only use it if the provider version matches the currently used version,
diff --git a/bundle/deploy/terraform/init_test.go b/bundle/deploy/terraform/init_test.go
index e2036bad0d..f0ddbcc652 100644
--- a/bundle/deploy/terraform/init_test.go
+++ b/bundle/deploy/terraform/init_test.go
@@ -291,6 +291,16 @@ func TestInheritSystemAccessToken(t *testing.T) {
 	assert.Equal(t, "foobar", env["SYSTEM_ACCESSTOKEN"])
 }
 
+func TestInheritSystemTeamFoundationCollectionUri(t *testing.T) {
+	t.Setenv("SYSTEM_TEAMFOUNDATIONCOLLECTIONURI", "foobar")
+
+	ctx := context.Background()
+	env := map[string]string{}
+	err := inheritEnvVars(ctx, env)
+	require.NoError(t, err)
+	assert.Equal(t, "foobar", env["SYSTEM_TEAMFOUNDATIONCOLLECTIONURI"])
+}
+
 func TestSetUserProfileFromInheritEnvVars(t *testing.T) {
 	t.Setenv("USERPROFILE", "c:\\foo\\c")