diff --git a/blueprints/fabric-rti/terraform/versions.tf b/blueprints/fabric-rti/terraform/versions.tf
index 099a76361..ab455c98d 100644
--- a/blueprints/fabric-rti/terraform/versions.tf
+++ b/blueprints/fabric-rti/terraform/versions.tf
@@ -10,7 +10,7 @@ terraform {
     }
     fabric = {
       source  = "microsoft/fabric"
-      version = "1.3.0"
+      version = "1.10.0"
     }
   }
   required_version = ">= 1.12.0, < 2.0"
diff --git a/blueprints/fabric/terraform/versions.tf b/blueprints/fabric/terraform/versions.tf
index 6d0575c49..886b93f96 100644
--- a/blueprints/fabric/terraform/versions.tf
+++ b/blueprints/fabric/terraform/versions.tf
@@ -6,7 +6,7 @@ terraform {
     }
     fabric = {
       source  = "microsoft/fabric"
-      version = "1.3.0"
+      version = "1.10.0"
     }
     msgraph = {
       source  = "microsoft/msgraph"
diff --git a/blueprints/full-multi-node-cluster/terraform/versions.tf b/blueprints/full-multi-node-cluster/terraform/versions.tf
index d4b1ac29f..31e84ad32 100644
--- a/blueprints/full-multi-node-cluster/terraform/versions.tf
+++ b/blueprints/full-multi-node-cluster/terraform/versions.tf
@@ -14,7 +14,7 @@ terraform {
     }
     fabric = {
       source  = "microsoft/fabric"
-      version = "1.3.0"
+      version = "1.10.0"
     }
   }
   required_version = ">= 1.12.0, < 2.0"
diff --git a/src/000-cloud/031-fabric/ci/terraform/main.tf b/src/000-cloud/031-fabric/ci/terraform/main.tf
index 8882acd62..fc658408e 100644
--- a/src/000-cloud/031-fabric/ci/terraform/main.tf
+++ b/src/000-cloud/031-fabric/ci/terraform/main.tf
@@ -28,4 +28,8 @@ module "ci" {
   should_create_fabric_workspace  = var.should_create_fabric_workspace
   should_create_fabric_lakehouse  = var.should_create_fabric_lakehouse
   should_create_fabric_eventhouse = var.should_create_fabric_eventhouse
+
+  // CI defaults to skipping validation since capacity may be paused
+  skip_capacity_state_validation = var.skip_capacity_state_validation
+
 }
diff --git a/src/000-cloud/031-fabric/ci/terraform/variables.tf b/src/000-cloud/031-fabric/ci/terraform/variables.tf
index a628f056e..ca777e212 100644
--- a/src/000-cloud/031-fabric/ci/terraform/variables.tf
+++ b/src/000-cloud/031-fabric/ci/terraform/variables.tf
@@ -63,3 +63,9 @@ variable "should_create_fabric_workspace" {
   type        = bool
   default     = false
 }
+
+variable "skip_capacity_state_validation" {
+  type        = bool
+  description = "When true, skips validation of Fabric capacity state during workspace provisioning. Useful for non-production environments where capacity may be paused."
+  default     = true
+}
diff --git a/src/000-cloud/031-fabric/ci/terraform/versions.tf b/src/000-cloud/031-fabric/ci/terraform/versions.tf
index f9f8683d0..5f2167510 100644
--- a/src/000-cloud/031-fabric/ci/terraform/versions.tf
+++ b/src/000-cloud/031-fabric/ci/terraform/versions.tf
@@ -10,7 +10,7 @@ terraform {
     }
     fabric = {
       source  = "microsoft/fabric"
-      version = "1.3.0"
+      version = "1.10.0"
     }
   }
   required_version = ">= 1.12.0, < 2.0"
diff --git a/src/000-cloud/031-fabric/terraform/main.tf b/src/000-cloud/031-fabric/terraform/main.tf
index 117617483..dc7769481 100644
--- a/src/000-cloud/031-fabric/terraform/main.tf
+++ b/src/000-cloud/031-fabric/terraform/main.tf
@@ -70,9 +70,10 @@ module "fabric_workspace" {
 
   source = "./modules/workspace"
 
-  workspace_display_name = local.fabric_workspace_name
-  workspace_description  = var.workspace_description
-  capacity_id            = local.capacity_id
+  workspace_display_name         = local.fabric_workspace_name
+  workspace_description          = var.workspace_description
+  capacity_id                    = local.capacity_id
+  skip_capacity_state_validation = var.skip_capacity_state_validation
 }
 
 module "fabric_lakehouse" {
diff --git a/src/000-cloud/031-fabric/terraform/modules/eventhouse/versions.tf b/src/000-cloud/031-fabric/terraform/modules/eventhouse/versions.tf
index a5d72183c..060dfd46c 100644
--- a/src/000-cloud/031-fabric/terraform/modules/eventhouse/versions.tf
+++ b/src/000-cloud/031-fabric/terraform/modules/eventhouse/versions.tf
@@ -3,7 +3,7 @@ terraform {
   required_providers {
     fabric = {
       source  = "microsoft/fabric"
-      version = "1.3.0"
+      version = "1.10.0"
     }
   }
 }
diff --git a/src/000-cloud/031-fabric/terraform/modules/lakehouse/versions.tf b/src/000-cloud/031-fabric/terraform/modules/lakehouse/versions.tf
index da521f900..25a4f6e8d 100644
--- a/src/000-cloud/031-fabric/terraform/modules/lakehouse/versions.tf
+++ b/src/000-cloud/031-fabric/terraform/modules/lakehouse/versions.tf
@@ -2,7 +2,7 @@ terraform {
   required_providers {
     fabric = {
       source  = "microsoft/fabric"
-      version = "1.3.0"
+      version = "1.10.0"
     }
   }
   required_version = ">= 1.12.0, < 2.0"
diff --git a/src/000-cloud/031-fabric/terraform/modules/workspace/main.tf b/src/000-cloud/031-fabric/terraform/modules/workspace/main.tf
index 714cb6baf..2ddfd4bc0 100644
--- a/src/000-cloud/031-fabric/terraform/modules/workspace/main.tf
+++ b/src/000-cloud/031-fabric/terraform/modules/workspace/main.tf
@@ -2,7 +2,8 @@
 # Documentation: https://aka.ms/fabric/terraform
 
 resource "fabric_workspace" "this" {
-  display_name = var.workspace_display_name
-  description  = var.workspace_description
-  capacity_id  = var.capacity_id
+  display_name                   = var.workspace_display_name
+  description                    = var.workspace_description
+  capacity_id                    = var.capacity_id
+  skip_capacity_state_validation = var.skip_capacity_state_validation
 }
diff --git a/src/000-cloud/031-fabric/terraform/modules/workspace/variables.tf b/src/000-cloud/031-fabric/terraform/modules/workspace/variables.tf
index 0eca38fca..d811288e3 100644
--- a/src/000-cloud/031-fabric/terraform/modules/workspace/variables.tf
+++ b/src/000-cloud/031-fabric/terraform/modules/workspace/variables.tf
@@ -12,3 +12,8 @@ variable "capacity_id" {
   type        = string
   description = "The capacity ID for the workspace"
 }
+
+variable "skip_capacity_state_validation" {
+  type        = bool
+  description = "When true, skips validation of Fabric capacity state during workspace provisioning. Useful for non-production environments where capacity may be paused."
+}
diff --git a/src/000-cloud/031-fabric/terraform/modules/workspace/versions.tf b/src/000-cloud/031-fabric/terraform/modules/workspace/versions.tf
index da521f900..25a4f6e8d 100644
--- a/src/000-cloud/031-fabric/terraform/modules/workspace/versions.tf
+++ b/src/000-cloud/031-fabric/terraform/modules/workspace/versions.tf
@@ -2,7 +2,7 @@ terraform {
   required_providers {
     fabric = {
       source  = "microsoft/fabric"
-      version = "1.3.0"
+      version = "1.10.0"
     }
   }
   required_version = ">= 1.12.0, < 2.0"
diff --git a/src/000-cloud/031-fabric/terraform/variables.tf b/src/000-cloud/031-fabric/terraform/variables.tf
index e5757c0f5..003074997 100644
--- a/src/000-cloud/031-fabric/terraform/variables.tf
+++ b/src/000-cloud/031-fabric/terraform/variables.tf
@@ -101,3 +101,8 @@ variable "workspace_description" {
   description = "The description of the Microsoft Fabric workspace"
   default     = "Microsoft Fabric workspace for the Edge AI Accelerator solution"
 }
+
+variable "skip_capacity_state_validation" {
+  type        = bool
+  description = "When true, skips validation of Fabric capacity state during workspace provisioning. Useful for non-production environments where capacity may be paused."
+}
diff --git a/src/000-cloud/031-fabric/terraform/versions.tf b/src/000-cloud/031-fabric/terraform/versions.tf
index c8e3fef6e..26c3fa604 100644
--- a/src/000-cloud/031-fabric/terraform/versions.tf
+++ b/src/000-cloud/031-fabric/terraform/versions.tf
@@ -6,7 +6,7 @@ terraform {
     }
     fabric = {
       source  = "microsoft/fabric"
-      version = "1.3.0"
+      version = "1.10.0"
     }
   }
   required_version = ">= 1.12.0, < 2.0"
diff --git a/src/000-cloud/032-fabric-rti/ci/terraform/versions.tf b/src/000-cloud/032-fabric-rti/ci/terraform/versions.tf
index 335a55fff..7ca694bce 100644
--- a/src/000-cloud/032-fabric-rti/ci/terraform/versions.tf
+++ b/src/000-cloud/032-fabric-rti/ci/terraform/versions.tf
@@ -6,7 +6,7 @@ terraform {
     }
     fabric = {
       source  = "microsoft/fabric"
-      version = "1.3.0"
+      version = "1.10.0"
     }
   }
   required_version = ">= 1.12.0, < 2.0"
diff --git a/src/000-cloud/032-fabric-rti/terraform/versions.tf b/src/000-cloud/032-fabric-rti/terraform/versions.tf
index c8e3fef6e..26c3fa604 100644
--- a/src/000-cloud/032-fabric-rti/terraform/versions.tf
+++ b/src/000-cloud/032-fabric-rti/terraform/versions.tf
@@ -6,7 +6,7 @@ terraform {
     }
     fabric = {
       source  = "microsoft/fabric"
-      version = "1.3.0"
+      version = "1.10.0"
     }
   }
   required_version = ">= 1.12.0, < 2.0"
diff --git a/src/100-edge/130-messaging/terraform/modules/fabric-rti/versions.tf b/src/100-edge/130-messaging/terraform/modules/fabric-rti/versions.tf
index 8c27ea68c..5dc415d38 100644
--- a/src/100-edge/130-messaging/terraform/modules/fabric-rti/versions.tf
+++ b/src/100-edge/130-messaging/terraform/modules/fabric-rti/versions.tf
@@ -7,7 +7,7 @@ terraform {
     }
     fabric = {
       source  = "microsoft/fabric"
-      version = ">= 1.3.0"
+      version = "1.10.0"
     }
   }
 }