diff --git a/TestAssets/NonRestoredTestProjects/AppWithNonExistingToolDependency/AppWithNonExistingToolDependency.csproj b/TestAssets/NonRestoredTestProjects/AppWithNonExistingToolDependency/AppWithNonExistingToolDependency.csproj
new file mode 100644
index 000000000..9223824fb
--- /dev/null
+++ b/TestAssets/NonRestoredTestProjects/AppWithNonExistingToolDependency/AppWithNonExistingToolDependency.csproj
@@ -0,0 +1,23 @@
+<Project Sdk="Microsoft.NET.Sdk" ToolsVersion="15.0">
+
+  <PropertyGroup>
+    <OutputType>Exe</OutputType>
+    <TargetFramework>netcoreapp1.0</TargetFramework>
+  </PropertyGroup>
+
+  <ItemGroup>
+    <Compile Include="**\*.cs" />
+    <EmbeddedResource Include="**\*.resx" />
+  </ItemGroup>
+
+  <ItemGroup>
+    <PackageReference Include="Microsoft.NETCore.App" Version="1.0.1" />
+  </ItemGroup>
+
+  <ItemGroup>
+    <DotNetCliToolReference Include="dotnet-nonexistingtool">
+      <Version>1.0.0</Version>
+    </DotNetCliToolReference>
+  </ItemGroup>
+
+</Project>
diff --git a/TestAssets/NonRestoredTestProjects/AppWithNonExistingToolDependency/Program.cs b/TestAssets/NonRestoredTestProjects/AppWithNonExistingToolDependency/Program.cs
new file mode 100644
index 000000000..51233cffa
--- /dev/null
+++ b/TestAssets/NonRestoredTestProjects/AppWithNonExistingToolDependency/Program.cs
@@ -0,0 +1,12 @@
+using System;
+
+namespace ConsoleApplication
+{
+    public class Program
+    {
+        public static void Main(string[] args)
+        {
+            Console.WriteLine("Hello World!");
+        }
+    }
+}
diff --git a/src/Microsoft.DotNet.Cli.Utils/CommandResolution/ToolPathCalculator.cs b/src/Microsoft.DotNet.Cli.Utils/CommandResolution/ToolPathCalculator.cs
index 770e3e579..3300c4ac6 100644
--- a/src/Microsoft.DotNet.Cli.Utils/CommandResolution/ToolPathCalculator.cs
+++ b/src/Microsoft.DotNet.Cli.Utils/CommandResolution/ToolPathCalculator.cs
@@ -75,6 +75,11 @@ namespace Microsoft.DotNet.Cli.Utils
             var availableVersions = new List<NuGetVersion>();
 
             var toolBase = GetBaseToolPath(packageId);
+            if (!Directory.Exists(toolBase))
+            {
+                return new NuGetVersion[0];
+            }
+            
             var versionDirectories = Directory.EnumerateDirectories(toolBase);
 
             foreach (var versionDirectory in versionDirectories)
@@ -94,4 +99,4 @@ namespace Microsoft.DotNet.Cli.Utils
         }
 
     }
-}
\ No newline at end of file
+}
diff --git a/test/dotnet.Tests/PackagedCommandTests.cs b/test/dotnet.Tests/PackagedCommandTests.cs
index a6542bb5d..0906063d2 100644
--- a/test/dotnet.Tests/PackagedCommandTests.cs
+++ b/test/dotnet.Tests/PackagedCommandTests.cs
@@ -124,6 +124,20 @@ namespace Microsoft.DotNet.Tests
                      .And.Pass();
         }
 
+        [Fact]
+        public void ItShowsErrorWhenToolIsNotRestored()
+        {
+            var testInstance = TestAssets.Get("NonRestoredTestProjects", "AppWithNonExistingToolDependency")
+                .CreateInstance()
+                .WithSourceFiles();
+
+            new TestCommand("dotnet")
+                .WithWorkingDirectory(testInstance.Root)
+                .ExecuteWithCapturedOutput("nonexistingtool")
+                .Should().Fail()
+                    .And.HaveStdErrContaining("Version for package `dotnet-nonexistingtool` could not be resolved.");
+        }
+
         // need conditional theories so we can skip on non-Windows
         //[Theory(Skip="https://github.com/dotnet/cli/issues/4514")]
         //[MemberData("DependencyToolArguments")]