diff --git a/backend/local/backend.go b/backend/local/backend.go
index eb2053b23..8a4050362 100644
--- a/backend/local/backend.go
+++ b/backend/local/backend.go
@@ -9,7 +9,6 @@ import (
 	"os"
 	"path/filepath"
 	"sort"
-	"strings"
 	"sync"
 
 	"github.com/hashicorp/terraform/backend"
@@ -594,25 +593,3 @@ func (b *Local) stateWorkspaceDir() string {
 
 	return DefaultWorkspaceDir
 }
-
-func (b *Local) pluginInitRequired(providerErr *terraform.ResourceProviderError) {
-	b.CLI.Output(b.Colorize().Color(fmt.Sprintf(
-		strings.TrimSpace(errPluginInit)+"\n",
-		providerErr)))
-}
-
-// this relies on multierror to format the plugin errors below the copy
-const errPluginInit = `
-[reset][bold][yellow]Plugin reinitialization required. Please run "terraform init".[reset]
-[yellow]Reason: Could not satisfy plugin requirements.
-
-Plugins are external binaries that Terraform uses to access and manipulate
-resources. The configuration provided requires plugins which can't be located,
-don't satisfy the version constraints, or are otherwise incompatible.
-
-[reset][red]%s
-
-[reset][yellow]Terraform automatically discovers provider requirements from your
-configuration, including providers used in child modules. To see the
-requirements and constraints from each module, run "terraform providers".
-`
diff --git a/terraform/context.go b/terraform/context.go
index 14e3863a6..afdba99c1 100644
--- a/terraform/context.go
+++ b/terraform/context.go
@@ -172,16 +172,18 @@ func NewContext(opts *ContextOpts) (*Context, tfdiags.Diagnostics) {
 	// Bind available provider plugins to the constraints in config
 	var providerFactories map[string]providers.Factory
 	if opts.ProviderResolver != nil {
-		var err error
 		deps := ConfigTreeDependencies(opts.Config, state)
 		reqd := deps.AllPluginRequirements()
 		if opts.ProviderSHA256s != nil && !opts.SkipProviderVerify {
 			reqd.LockExecutables(opts.ProviderSHA256s)
 		}
 		log.Printf("[TRACE] terraform.NewContext: resolving provider version selections")
-		providerFactories, err = resourceProviderFactories(opts.ProviderResolver, reqd)
-		if err != nil {
-			diags = diags.Append(err)
+
+		var providerDiags tfdiags.Diagnostics
+		providerFactories, providerDiags = resourceProviderFactories(opts.ProviderResolver, reqd)
+		diags = diags.Append(providerDiags)
+
+		if diags.HasErrors() {
 			return nil, diags
 		}
 	} else {
diff --git a/terraform/resource_provider.go b/terraform/resource_provider.go
index e666fb6d2..17f93e10d 100644
--- a/terraform/resource_provider.go
+++ b/terraform/resource_provider.go
@@ -3,6 +3,8 @@ package terraform
 import (
 	"fmt"
 
+	"github.com/hashicorp/terraform/tfdiags"
+
 	multierror "github.com/hashicorp/go-multierror"
 	"github.com/hashicorp/terraform/plugin/discovery"
 	"github.com/hashicorp/terraform/providers"
@@ -296,13 +298,35 @@ func ProviderHasDataSource(p ResourceProvider, n string) bool {
 // This should be called only with configurations that have passed calls
 // to config.Validate(), which ensures that all of the given version
 // constraints are valid. It will panic if any invalid constraints are present.
-func resourceProviderFactories(resolver providers.Resolver, reqd discovery.PluginRequirements) (map[string]providers.Factory, error) {
+func resourceProviderFactories(resolver providers.Resolver, reqd discovery.PluginRequirements) (map[string]providers.Factory, tfdiags.Diagnostics) {
+	var diags tfdiags.Diagnostics
 	ret, errs := resolver.ResolveProviders(reqd)
 	if errs != nil {
-		return nil, &ResourceProviderError{
-			Errors: errs,
+		diags = diags.Append(
+			tfdiags.Sourceless(tfdiags.Error,
+				"Could not satisfy plugin requirements",
+				errPluginInit,
+			),
+		)
+
+		for _, err := range errs {
+			diags = diags.Append(err)
 		}
+
+		return nil, diags
 	}
 
 	return ret, nil
 }
+
+const errPluginInit = `
+Plugin reinitialization required. Please run "terraform init".
+
+Plugins are external binaries that Terraform uses to access and manipulate
+resources. The configuration provided requires plugins which can't be located,
+don't satisfy the version constraints, or are otherwise incompatible.
+
+Terraform automatically discovers provider requirements from your
+configuration, including providers used in child modules. To see the
+requirements and constraints from each module, run "terraform providers".
+`