diff --git a/lib/init-action.js b/lib/init-action.js
index f1634c88b4..cd372ff404 100644
--- a/lib/init-action.js
+++ b/lib/init-action.js
@@ -106110,9 +106110,6 @@ function initFeatures(gitHubVersion, repositoryNwo, tempDir, logger) {
 }
 
 // src/diff-informed-analysis-utils.ts
-async function shouldPerformDiffInformedAnalysis(codeql, features, logger) {
-  return await getDiffInformedAnalysisBranches(codeql, features, logger) !== void 0;
-}
 async function getDiffInformedAnalysisBranches(codeql, features, logger) {
   if (!await features.getValue("diff_informed_queries" /* DiffInformedQueries */, codeql)) {
     return void 0;
@@ -106129,6 +106126,37 @@ async function getDiffInformedAnalysisBranches(codeql, features, logger) {
   }
   return branches;
 }
+async function prepareDiffInformedAnalysis(codeql, features, logger) {
+  try {
+    const branches = await getDiffInformedAnalysisBranches(
+      codeql,
+      features,
+      logger
+    );
+    if (!branches) {
+      return { shouldRun: false, isAvailable: false };
+    }
+    const isAvailable = await withGroupAsync(
+      "Computing PR diff ranges",
+      async () => {
+        try {
+          return await computeAndPersistDiffRanges(branches, logger);
+        } catch (e) {
+          logger.warning(
+            `Failed to compute diff-informed analysis ranges: ${getErrorMessage(e)}`
+          );
+          return false;
+        }
+      }
+    );
+    return { shouldRun: true, isAvailable };
+  } catch (e) {
+    logger.warning(
+      `Failed to determine diff-informed analysis availability: ${getErrorMessage(e)}`
+    );
+    return { shouldRun: true, isAvailable: false };
+  }
+}
 function writeDiffRangesJsonFile(logger, ranges) {
   const jsonContents = JSON.stringify(ranges, null, 2);
   const jsonFilePath = getDiffRangesJsonFilePath();
@@ -106159,6 +106187,18 @@ async function getPullRequestEditedDiffRanges(branches, logger) {
   }
   return results;
 }
+async function computeAndPersistDiffRanges(branches, logger) {
+  const ranges = await getPullRequestEditedDiffRanges(branches, logger);
+  if (ranges === void 0) {
+    return false;
+  }
+  writeDiffRangesJsonFile(logger, ranges);
+  const distinctFiles = new Set(ranges.map((r) => r.path)).size;
+  logger.info(
+    `Persisted ${ranges.length} diff range(s) across ${distinctFiles} file(s).`
+  );
+  return true;
+}
 async function getFileDiffsWithBasehead(branches, logger) {
   const repositoryNwo = getRepositoryNwoFromEnv(
     "CODE_SCANNING_REPOSITORY",
@@ -106974,6 +107014,19 @@ function userConfigFromActionPath(tempDir) {
 function hasQueryCustomisation(userConfig) {
   return isDefined2(userConfig["disable-default-queries"]) || isDefined2(userConfig.queries) || isDefined2(userConfig["query-filters"]);
 }
+function applyIncrementalAnalysisSettings(config, diffInformedAnalysis, logger) {
+  if (config.overlayDatabaseMode === "overlay" /* Overlay */ && diffInformedAnalysis.shouldRun && !diffInformedAnalysis.isAvailable) {
+    logger.warning(
+      `Diff-informed analysis is not available for this pull request. Reverting overlay database mode to ${"none" /* None */}.`
+    );
+    config.overlayDatabaseMode = "none" /* None */;
+  }
+  if (config.overlayDatabaseMode === "overlay" /* Overlay */ || diffInformedAnalysis.isAvailable) {
+    config.extraQueryExclusions.push({
+      exclude: { tags: "exclude-from-incremental" }
+    });
+  }
+}
 async function initConfig(features, inputs) {
   const { logger, tempDir } = inputs;
   if (inputs.configInput) {
@@ -107083,15 +107136,12 @@ async function initConfig(features, inputs) {
       overlayDisabledReason
     );
   }
-  if (config.overlayDatabaseMode === "overlay" /* Overlay */ || await shouldPerformDiffInformedAnalysis(
+  const diffInformedAnalysis = await prepareDiffInformedAnalysis(
     inputs.codeql,
     inputs.features,
     logger
-  )) {
-    config.extraQueryExclusions.push({
-      exclude: { tags: "exclude-from-incremental" }
-    });
-  }
+  );
+  applyIncrementalAnalysisSettings(config, diffInformedAnalysis, logger);
   if (await isTrapCachingEnabled(features, config.overlayDatabaseMode)) {
     const { trapCaches, trapCacheDownloadTime } = await downloadCacheWithTime(
       inputs.codeql,
@@ -110359,7 +110409,6 @@ async function run(startedAt) {
       logFileCoverageOnPrsDeprecationWarning(logger);
     }
     await checkInstallPython311(config.languages, codeql);
-    await computeAndPersistDiffRanges(codeql, features, logger);
   } catch (unwrappedError) {
     const error3 = wrapError(unwrappedError);
     core15.setFailed(error3.message);
@@ -110627,33 +110676,6 @@ async function loadRepositoryProperties(repositoryNwo, logger) {
     return new Failure(error3);
   }
 }
-async function computeAndPersistDiffRanges(codeql, features, logger) {
-  await withGroupAsync("Computing PR diff ranges", async () => {
-    try {
-      const branches = await getDiffInformedAnalysisBranches(
-        codeql,
-        features,
-        logger
-      );
-      if (!branches) {
-        return;
-      }
-      const ranges = await getPullRequestEditedDiffRanges(branches, logger);
-      if (ranges === void 0) {
-        return;
-      }
-      writeDiffRangesJsonFile(logger, ranges);
-      const distinctFiles = new Set(ranges.map((r) => r.path)).size;
-      logger.info(
-        `Persisted ${ranges.length} diff range(s) across ${distinctFiles} file(s).`
-      );
-    } catch (e) {
-      logger.warning(
-        `Failed to compute and persist PR diff ranges: ${getErrorMessage(e)}`
-      );
-    }
-  });
-}
 async function recordZstdAvailability(config, zstdAvailability) {
   addNoLanguageDiagnostic(
     config,
diff --git a/src/config-utils.test.ts b/src/config-utils.test.ts
index e6485528f2..16db0d3fd9 100644
--- a/src/config-utils.test.ts
+++ b/src/config-utils.test.ts
@@ -2200,3 +2200,80 @@ test.serial(
     });
   },
 );
+
+test.serial(
+  "applyIncrementalAnalysisSettings: no-op when mode is not Overlay and diff-informed is unavailable",
+  (t) => {
+    const config = createTestConfig({});
+    config.overlayDatabaseMode = OverlayDatabaseMode.None;
+    const logger = getRunnerLogger(true);
+
+    configUtils.applyIncrementalAnalysisSettings(
+      config,
+      { shouldRun: false, isAvailable: false },
+      logger,
+    );
+
+    t.is(config.overlayDatabaseMode, OverlayDatabaseMode.None);
+    t.deepEqual(config.extraQueryExclusions, []);
+  },
+);
+
+test.serial(
+  "applyIncrementalAnalysisSettings: keeps overlay mode and adds exclusions when diff-informed analysis is disabled",
+  (t) => {
+    const config = createTestConfig({});
+    config.overlayDatabaseMode = OverlayDatabaseMode.Overlay;
+    const logger = getRunnerLogger(true);
+
+    configUtils.applyIncrementalAnalysisSettings(
+      config,
+      { shouldRun: false, isAvailable: false },
+      logger,
+    );
+
+    t.is(config.overlayDatabaseMode, OverlayDatabaseMode.Overlay);
+    t.deepEqual(config.extraQueryExclusions, [
+      { exclude: { tags: "exclude-from-incremental" } },
+    ]);
+  },
+);
+
+test.serial(
+  "applyIncrementalAnalysisSettings: reverts to None without exclusions when diff-informed analysis is unavailable",
+  (t) => {
+    const config = createTestConfig({});
+    config.overlayDatabaseMode =
+      OverlayDatabaseMode.Overlay as OverlayDatabaseMode;
+    const logger = getRunnerLogger(true);
+
+    configUtils.applyIncrementalAnalysisSettings(
+      config,
+      { shouldRun: true, isAvailable: false },
+      logger,
+    );
+
+    t.is(config.overlayDatabaseMode, OverlayDatabaseMode.None);
+    t.deepEqual(config.extraQueryExclusions, []);
+  },
+);
+
+test.serial(
+  "applyIncrementalAnalysisSettings: adds exclusions for diff-informed-only runs",
+  (t) => {
+    const config = createTestConfig({});
+    config.overlayDatabaseMode = OverlayDatabaseMode.None;
+    const logger = getRunnerLogger(true);
+
+    configUtils.applyIncrementalAnalysisSettings(
+      config,
+      { shouldRun: true, isAvailable: true },
+      logger,
+    );
+
+    t.is(config.overlayDatabaseMode, OverlayDatabaseMode.None);
+    t.deepEqual(config.extraQueryExclusions, [
+      { exclude: { tags: "exclude-from-incremental" } },
+    ]);
+  },
+);
diff --git a/src/config-utils.ts b/src/config-utils.ts
index e8d2ef8e1d..24c78f5dab 100644
--- a/src/config-utils.ts
+++ b/src/config-utils.ts
@@ -31,7 +31,10 @@ import {
   addNoLanguageDiagnostic,
   makeTelemetryDiagnostic,
 } from "./diagnostics";
-import { shouldPerformDiffInformedAnalysis } from "./diff-informed-analysis-utils";
+import {
+  type DiffInformedAnalysisPreparation,
+  prepareDiffInformedAnalysis,
+} from "./diff-informed-analysis-utils";
 import { EnvVar } from "./environment";
 import * as errorMessages from "./error-messages";
 import { Feature, FeatureEnablement } from "./feature-flags";
@@ -1076,6 +1079,42 @@ function hasQueryCustomisation(userConfig: UserConfig): boolean {
   );
 }
 
+/**
+ * Finalize the incremental-analysis configuration for this run.
+ *
+ * If overlay mode was selected for a PR but diff-informed analysis should have
+ * run and could not be prepared, fall back to a full non-overlay analysis.
+ * Query exclusions for incremental-only queries are applied only when the final
+ * configuration still uses overlay analysis or diff-informed analysis is
+ * actually available.
+ */
+export function applyIncrementalAnalysisSettings(
+  config: Config,
+  diffInformedAnalysis: DiffInformedAnalysisPreparation,
+  logger: Logger,
+): void {
+  if (
+    config.overlayDatabaseMode === OverlayDatabaseMode.Overlay &&
+    diffInformedAnalysis.shouldRun &&
+    !diffInformedAnalysis.isAvailable
+  ) {
+    logger.warning(
+      "Diff-informed analysis is not available for this pull request. " +
+        `Reverting overlay database mode to ${OverlayDatabaseMode.None}.`,
+    );
+    config.overlayDatabaseMode = OverlayDatabaseMode.None;
+  }
+
+  if (
+    config.overlayDatabaseMode === OverlayDatabaseMode.Overlay ||
+    diffInformedAnalysis.isAvailable
+  ) {
+    config.extraQueryExclusions.push({
+      exclude: { tags: "exclude-from-incremental" },
+    });
+  }
+}
+
 /**
  * Load and return the config.
  *
@@ -1230,18 +1269,13 @@ export async function initConfig(
     );
   }
 
-  if (
-    config.overlayDatabaseMode === OverlayDatabaseMode.Overlay ||
-    (await shouldPerformDiffInformedAnalysis(
-      inputs.codeql,
-      inputs.features,
-      logger,
-    ))
-  ) {
-    config.extraQueryExclusions.push({
-      exclude: { tags: "exclude-from-incremental" },
-    });
-  }
+  const diffInformedAnalysis = await prepareDiffInformedAnalysis(
+    inputs.codeql,
+    inputs.features,
+    logger,
+  );
+
+  applyIncrementalAnalysisSettings(config, diffInformedAnalysis, logger);
 
   if (await isTrapCachingEnabled(features, config.overlayDatabaseMode)) {
     const { trapCaches, trapCacheDownloadTime } = await downloadCacheWithTime(
diff --git a/src/diff-informed-analysis-utils.ts b/src/diff-informed-analysis-utils.ts
index 1c98d4caca..503b9ddb07 100644
--- a/src/diff-informed-analysis-utils.ts
+++ b/src/diff-informed-analysis-utils.ts
@@ -5,9 +5,9 @@ import type { PullRequestBranches } from "./actions-util";
 import { getApiClient, getGitHubVersion } from "./api-client";
 import type { CodeQL } from "./codeql";
 import { Feature, FeatureEnablement } from "./feature-flags";
-import { Logger } from "./logging";
+import { Logger, withGroupAsync } from "./logging";
 import { getRepositoryNwoFromEnv } from "./repository";
-import { GitHubVariant, satisfiesGHESVersion } from "./util";
+import { getErrorMessage, GitHubVariant, satisfiesGHESVersion } from "./util";
 
 /**
  * This interface is an abbreviated version of the file diff object returned by
@@ -69,6 +69,61 @@ export async function getDiffInformedAnalysisBranches(
   return branches;
 }
 
+export interface DiffInformedAnalysisPreparation {
+  /**
+   * Whether diff-informed analysis applies to this workflow run.
+   */
+  shouldRun: boolean;
+  /**
+   * Whether the diff ranges were successfully prepared and can be used.
+   */
+  isAvailable: boolean;
+}
+
+/**
+ * Prepares the diff ranges needed for diff-informed analysis for the current
+ * run.
+ *
+ * @returns Whether diff-informed analysis applies to this run, and whether it
+ *   was successfully prepared for use.
+ */
+export async function prepareDiffInformedAnalysis(
+  codeql: CodeQL,
+  features: FeatureEnablement,
+  logger: Logger,
+): Promise<DiffInformedAnalysisPreparation> {
+  try {
+    const branches = await getDiffInformedAnalysisBranches(
+      codeql,
+      features,
+      logger,
+    );
+    if (!branches) {
+      return { shouldRun: false, isAvailable: false };
+    }
+
+    const isAvailable = await withGroupAsync(
+      "Computing PR diff ranges",
+      async () => {
+        try {
+          return await computeAndPersistDiffRanges(branches, logger);
+        } catch (e) {
+          logger.warning(
+            `Failed to compute diff-informed analysis ranges: ${getErrorMessage(e)}`,
+          );
+          return false;
+        }
+      },
+    );
+    return { shouldRun: true, isAvailable };
+  } catch (e) {
+    logger.warning(
+      `Failed to determine diff-informed analysis availability: ${getErrorMessage(e)}`,
+    );
+    return { shouldRun: true, isAvailable: false };
+  }
+}
+
 export interface DiffThunkRange {
   /** Relative path from the repository root, using forward slashes as separators. */
   path: string;
@@ -151,6 +206,33 @@ export async function getPullRequestEditedDiffRanges(
   return results;
 }
 
+/**
+ * Compute and persist the diff ranges for a pull request. This fetches the
+ * diff from the GitHub API and writes it to the diff ranges JSON file so that
+ * CodeQL can use it for diff-informed analysis.
+ *
+ * @param branches The base and head branches of the pull request, as returned
+ *   by `getDiffInformedAnalysisBranches`.
+ * @param logger
+ * @returns `true` if the diff ranges were successfully computed and persisted,
+ *   otherwise `false`.
+ */
+export async function computeAndPersistDiffRanges(
+  branches: PullRequestBranches,
+  logger: Logger,
+): Promise<boolean> {
+  const ranges = await getPullRequestEditedDiffRanges(branches, logger);
+  if (ranges === undefined) {
+    return false;
+  }
+  writeDiffRangesJsonFile(logger, ranges);
+  const distinctFiles = new Set(ranges.map((r) => r.path)).size;
+  logger.info(
+    `Persisted ${ranges.length} diff range(s) across ${distinctFiles} file(s).`,
+  );
+  return true;
+}
+
 async function getFileDiffsWithBasehead(
   branches: PullRequestBranches,
   logger: Logger,
diff --git a/src/init-action.ts b/src/init-action.ts
index ffebf49742..86ff03d076 100644
--- a/src/init-action.ts
+++ b/src/init-action.ts
@@ -37,11 +37,6 @@ import {
   makeDiagnostic,
   makeTelemetryDiagnostic,
 } from "./diagnostics";
-import {
-  getDiffInformedAnalysisBranches,
-  getPullRequestEditedDiffRanges,
-  writeDiffRangesJsonFile,
-} from "./diff-informed-analysis-utils";
 import { EnvVar } from "./environment";
 import { Feature, FeatureEnablement, initFeatures } from "./feature-flags";
 import {
@@ -59,7 +54,7 @@ import {
   runDatabaseInitCluster,
 } from "./init";
 import { JavaEnvVars, KnownLanguage } from "./languages";
-import { getActionsLogger, Logger, withGroupAsync } from "./logging";
+import { getActionsLogger, Logger } from "./logging";
 import {
   downloadOverlayBaseDatabaseFromCache,
   OverlayBaseDatabaseDownloadStats,
@@ -427,7 +422,6 @@ async function run(startedAt: Date) {
     }
 
     await checkInstallPython311(config.languages, codeql);
-    await computeAndPersistDiffRanges(codeql, features, logger);
   } catch (unwrappedError) {
     const error = wrapError(unwrappedError);
     core.setFailed(error.message);
@@ -818,42 +812,6 @@ async function loadRepositoryProperties(
   }
 }
 
-/**
- * Compute and persist diff ranges when diff-informed analysis is enabled
- * (feature flag + PR context). This writes the standard pr-diff-range.json
- * file for later reuse in the analyze step. Failures are logged but non-fatal.
- */
-async function computeAndPersistDiffRanges(
-  codeql: CodeQL,
-  features: FeatureEnablement,
-  logger: Logger,
-): Promise<void> {
-  await withGroupAsync("Computing PR diff ranges", async () => {
-    try {
-      const branches = await getDiffInformedAnalysisBranches(
-        codeql,
-        features,
-        logger,
-      );
-      if (!branches) {
-        return;
-      }
-      const ranges = await getPullRequestEditedDiffRanges(branches, logger);
-      if (ranges === undefined) {
-        return;
-      }
-      writeDiffRangesJsonFile(logger, ranges);
-      const distinctFiles = new Set(ranges.map((r) => r.path)).size;
-      logger.info(
-        `Persisted ${ranges.length} diff range(s) across ${distinctFiles} file(s).`,
-      );
-    } catch (e) {
-      logger.warning(
-        `Failed to compute and persist PR diff ranges: ${getErrorMessage(e)}`,
-      );
-    }
-  });
-}
 async function recordZstdAvailability(
   config: configUtils.Config,
   zstdAvailability: ZstdAvailability,