diff --git a/CHANGELOG.md b/CHANGELOG.md
index 60a59711..f739f510 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -7,6 +7,9 @@ and this project adheres to [Semantic Versioning](https://semver.org/).
 
 ## [Unreleased]
 
+Fixed:
+- CLI now warns users when `.fga.yaml` config file has YAML parsing errors instead of silently ignoring them. Use `--debug` flag or set `FGA_DEBUG=true` for detailed error messages
+
 ## [0.7.8] - 2025-11-05
 
 Fixed:
diff --git a/cmd/root.go b/cmd/root.go
index 46fa3cd1..493b8ffc 100644
--- a/cmd/root.go
+++ b/cmd/root.go
@@ -18,6 +18,7 @@ limitations under the License.
 package cmd
 
 import (
+	"errors"
 	"fmt"
 	"os"
 	"strings"
@@ -51,6 +52,33 @@ func Execute() {
 	}
 }
 
+// isDebugMode checks if debug mode is enabled via --debug flag or FGA_DEBUG env var.
+// We are not following cobra's built-in flag checking here because we want to determine
+// debug mode status before cobra parses flags (to control logging during initConfig).
+// The precedence is:
+// 1. Command-line flag --debug
+// 2. Environment variable FGA_DEBUG
+// Other areas in the code should parse the flag using cobra after initialization rather
+// than rely on this function.
+func isDebugMode() bool {
+	// Command-line flag takes precedence
+	for _, arg := range os.Args {
+		if arg == "--debug=true" {
+			return true
+		}
+		if arg == "--debug=false" {
+			return false
+		}
+	}
+
+	// Check environment variable first
+	if os.Getenv("FGA_DEBUG") == "true" {
+		return true
+	}
+
+	return false
+}
+
 func init() {
 	cobra.OnInitialize(initConfig)
 
@@ -119,6 +147,18 @@ func initConfig() {
 	// If a config file is found, read it in.
 	if err := viperInstance.ReadInConfig(); err == nil {
 		fmt.Fprintln(os.Stderr, "Using config file:", viperInstance.ConfigFileUsed())
+	} else {
+		// Check if error is due to config file not found (this is OK, we continue silently)
+		var configFileNotFoundError viper.ConfigFileNotFoundError
+		if !errors.As(err, &configFileNotFoundError) {
+			// Config file exists but failed to parse - show warning
+			if isDebugMode() {
+				fmt.Fprintf(os.Stderr, "Warning: Failed to load config file %s: %v\n",
+					viperInstance.ConfigFileUsed(), err)
+			} else {
+				fmt.Fprintln(os.Stderr, "Warning: Failed to load config file. Use --debug=true or set FGA_DEBUG=true for details.")
+			}
+		}
 	}
 
 	viperInstance.SetEnvPrefix("FGA")