diff --git a/doc/whats-new.rst b/doc/whats-new.rst
index a35d03a070d..bbe1abcc6aa 100644
--- a/doc/whats-new.rst
+++ b/doc/whats-new.rst
@@ -26,6 +26,8 @@ Bug fixes
 ~~~~~~~~~
 - Fix distribution of ``auto_complex`` keyword argument for open_datatree (:issue:`10631`, :pull:`10632`).
   By `Kai Mühlbauer <https://github.com/kmuehlbauer>`_.
+- Warn instead of raise in case of misconfiguration of ``unlimited_dims`` originating from dataset.encoding, to prevent breaking users workflows (:issue:`10647`, :pull:`10648`).
+  By `Kai Mühlbauer <https://github.com/kmuehlbauer>`_.
 
 
 Documentation
diff --git a/xarray/backends/api.py b/xarray/backends/api.py
index 39698a686c0..4c4e5d30012 100644
--- a/xarray/backends/api.py
+++ b/xarray/backends/api.py
@@ -262,7 +262,10 @@ def _sanitize_unlimited_dims(dataset, unlimited_dims):
                 f"but not part of current dataset dimensions. "
                 f"Consider removing {undeclared_dims!r} from {msg_origin!r}."
             )
-            raise ValueError(msg)
+            if msg_origin == "unlimited_dims-kwarg":
+                raise ValueError(msg)
+            else:
+                emit_user_level_warning(msg)
         return unlimited_dims
 
 
diff --git a/xarray/tests/test_backends.py b/xarray/tests/test_backends.py
index c336fe7bd0d..87895b815d0 100644
--- a/xarray/tests/test_backends.py
+++ b/xarray/tests/test_backends.py
@@ -1399,8 +1399,8 @@ def test_encoding_unlimited_dims(self) -> None:
         # test unlimited_dims validation
         # https://github.com/pydata/xarray/issues/10549
         ds.encoding = {"unlimited_dims": "z"}
-        with pytest.raises(
-            ValueError,
+        with pytest.warns(
+            UserWarning,
             match=r"Unlimited dimension\(s\) .* declared in 'dataset.encoding'",
         ):
             with self.roundtrip(ds) as _: